As filed with the Securities and Exchange Commission on July 17, 1998
Registration No. 333-________
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM S-4
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)
------------
Gerald L. Gitner Copies to:
Chairman and Chief Executive Officer David W. Hirsch, Esq.
One City Centre, 515 N. Sixth Street Cleary, Gottlieb, Steen & Hamilton
St. Louis, Missouri 63101 One Liberty Plaza
New York, New York 10006
(314) 589-3000 (212) 225-2000
(Name, Address, Including Zip Code, and
Telephone Number, Including Area Code, of
Agent 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 securities being registered on this form are being
offered in connection with the formation of a holding company and
there is compliance with General Instruction G, check the
following box. |_|
If this form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. |_|
If this form is a post-effective amendment filed pursuant
to Rule 462(d) under the Securities Act, check the following box
and list the Securities Act registration number of the earlier
effective registration statement for the same offering. |_|
CALCULATION OF REGISTRATION FEE
==============================================================================
Title of Each Proposed Proposed
Class of Amount Maximum Maximum Amount of
Securities to be to be Offering Price Aggregate Registration
Registered Registered Per Unit Offering Price Fee
- ------------------------------------------------------------------------------
10 1/4% Senior
Secured Notes
due 2003... $14,500,000 (1) 100% (2) $14,500,000 $4,278
==============================================================================
- -------------------
(1) Plus accrued interest, if any, from the date of issuance.
(2) Calculated pursuant to Rule 457(f).
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 Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
==============================================================================
<PAGE>
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
X Information contained herein is subject to completion X
X or amendment. A registration statement relating to these X
X securities has been filed with the Securities and Exchange X
X Commission. These securities may not be sold nor may offers to X
X buy be accepted prior to the time the registration statement X
X becomes effective. This prospectus shall not constitute an offer X
X to sell or the solicitation of an offer to buy nor shall there be X
X any sale of these securities in any state in which such offer, X
X solicitation or sale would be unlawful prior to registration or X
X qualification under the securities laws of any such state. X
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Subject to Completion, dated July 17, 1998
PROSPECTUS
$14,500,000
OFFER TO EXCHANGE
10 1/4% SENIOR SECURED NOTES DUE 2003
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, FOR ANY AND ALL OUTSTANDING
10 1/4% SENIOR SECURED NOTES DUE 2003
OF
TRANS WORLD AIRLINES, INC.
------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1998, UNLESS EXTENDED.
Trans World Airlines, Inc., a Delaware corporation ("TWA"
or the "Company"), hereby offers, upon the terms and subject to
the conditions set forth in this Prospectus and the accompanying
letter of transmittal (the "Letter of Transmittal" and, together
with this Prospectus, the "Exchange Offer") to exchange its $14.5
million principal amount of 10 1/4% Senior Secured Notes due 2003
(the "Exchange Notes"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement of which this Prospectus is
a part (including all amendments, including post-effective
amendments, and exhibits thereto, the "Registration Statement"),
for an equal principal amount at maturity of its outstanding
10 1/4% Senior Secured Notes due 2003 (the "Old Notes," and
together with the Exchange Notes, the "Notes"), of which $14.5
million aggregate principal amount at maturity is outstanding as
of the date hereof. The Notes were issued in partial payment of
the aggregate purchase price of $27.5 million for one Boeing
767-231 ETOPS airframe and two associated engines (collectively,
the "Aircraft"). Concurrently with the issuance of the Notes, the
Company issued $13.0 million principal amount of 10 1/4%
Mandatory Conversion Equity Notes due 1999 (the "Equity Notes")
to or as directed by the Owner Trustee (as defined) in payment of
the balance of the purchase price for the Aircraft.
The Company will accept for exchange any and all Old Notes
that are validly tendered and not withdrawn on or prior to 5:00
P.M., New York City time, on the date the Exchange Offer expires
(the "Expiration Date"), which will be , 1998 (30 days
following the commencement of the Exchange Offer), unless the
Exchange Offer is extended. Tenders of Old Notes may be withdrawn
at any time prior to 5:00 P.M., New York City time, on the
Expiration Date. The Exchange Offer is not conditioned upon any
minimum principal amount of Old Notes being tendered for
exchange. Old Notes may be tendered only in integral multiples of
maturity of $1,000.
See "The Exchange Offer."
The Notes will bear interest from the date of issuance at a
rate of 10 1/4% per annum (subject to possible increases as
described herein) payable semi-annually in arrears on June 15 and
December 15 of each year, commencing on December 15, 1998. The
Notes will be subject to mandatory redemption by way of sinking
fund payments made in cash sufficient to redeem an aggregate
principal amount of Notes equal to $920,000 on each of June 15,
2001 and June 15, 2002 (subject to possible reductions or
elimination as described herein) (or, if the aggregate principal
amount of Notes outstanding on any such redemption date is less
than the principal amount required to be redeemed on such date,
then the aggregate principal amount of Notes outstanding shall be
redeemed), at a redemption price equal to 100% plus accrued and
unpaid interest and Special Interest (as defined), if any, to the
redemption date. The obligation of the Company to make such
mandatory redemptions may be satisfied in whole or in part by
delivering to the Trustee (as defined) Notes acquired by the
Company through open market purchases. Upon a Change in Control
(as defined), each holder of Notes shall have the right to
require the Company to purchase all, or any part of, such
holder's Notes at a purchase price equal to 101% of the principal
amount thereof, plus accrued and unpaid interest and Special
Interest, if any, to the purchase date. There can be no assurance
that the Company will have sufficient funds available at the time
of any Change in Control to make any debt payment (including
repurchases of Notes) required by the foregoing. Upon a sale of
the Aircraft, the Company will be required to make an Offer to
Purchase (as defined) all the Notes then outstanding, at a
purchase price of 102% of the principal amount thereof, if the
sale occurs before the first anniversary of the date of original
issuance of the Notes, or at a purchase price equal to 101% of
the principal amount thereof, if the sale occurs following such
date, in either case, together with accrued and unpaid interest
and Special Interest, if any, to and including the purchase date.
Following a sale by the Company of the Aircraft, the interest
rate borne by any unpurchased Notes would increase by 1.50% per
annum, and the lien on the Collateral (as defined) would be
released. In the event that there shall occur a Total Loss (as
defined) with respect to the Aircraft, the Company will be
required to make an Offer to Purchase all the Notes then
outstanding. The obligation of the Company to make such Offer to
Purchase upon a sale of or Total Loss with respect to the
Aircraft may be satisfied in whole or in part by delivering to
the Trustee Notes acquired by the Company through open market
purchases. See "Description of Exchange Notes."
The Notes will represent senior secured obligations of the
Company and will rank pari passu in right of payment with all
other senior obligations of the Company. The Notes will be
secured by a lien on the Aircraft.
THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL ARE FIRST
BEING MAILED TO HOLDERS OF OLD NOTES ON OR ABOUT , 1998.
(Continued on page 2)
-------------------
The securities offered hereby involve a high degree of risk.
See "Risk Factors" beginning on page 13.
-------------------
These securities have not been approved or disapproved by the
Securities and Exchange Commission or any state securities
commission, nor has the Securities and
Exchange Commission or any state securities commission passed
upon the accuracy or adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.
---------------
The date of this Prospectus is July , 1998.
<PAGE>
The Exchange Notes will be obligations of the Company
evidencing the same indebtedness as the Old Notes. The Exchange
Notes will be issued under and entitled to the benefits of the
same Indenture (as defined) pursuant to which the Old Notes were
issued such that the Exchange Notes and Old Notes will be treated
as a single class of debt securities under the Indenture. The
form and terms of the Exchange Notes are generally the same as
the form and terms of the Old Notes, except that (i) the exchange
has been registered under the Securities Act and, therefore, the
Exchange Notes will not bear legends restricting the transfer
thereof, and (ii) holders of the Exchange Notes will not be
entitled to any of the registration rights of holders of Old
Notes under the Registration Rights Agreement (as defined), which
rights will terminate upon the consummation of the Exchange
Offer. See "Description of the Exchange Notes."
Based on interpretations by the staff of the Securities and
Exchange Commission ("SEC" or the "Commission"), as set forth in
no-action letters issued to Exxon Capital Holdings Corporation
(available May 13, 1988) (the "Exxon Capital Letter"), Morgan
Stanley & Co. Incorporated (available June 5, 1991) (the "Morgan
Stanley Letter"), Mary Kay Cosmetics, Inc. (available June 5,
1991) and Warnaco, Inc. (available October 11, 1991), the Company
believes that a holder who exchanges Old Notes for Exchange Notes
pursuant to the Exchange Offer may offer for resale, resell and
otherwise transfer such Exchange Notes without compliance with
the registration and prospectus delivery requirements of the
Securities Act, provided, that (i) such Exchange Notes are
acquired in the ordinary course of such holder's business, (ii)
such holder is not engaged in, and does not intend to engage in,
a distribution of such Exchange Notes and has no arrangement or
understanding with any person to participate in the distribution
of such Exchange Notes, and (iii) such holder is not an affiliate
of the Company (as defined under Rule 405 of the Securities Act)
or a broker-dealer tendering Old Notes acquired directly from the
Company for its own account. However, the staff of the Commission
has not considered the Exchange Offer in the context of a
no-action letter and there can be no assurance that the staff of
the Commission would make a similar determination with respect to
the Exchange Offer as in such other circumstances. A holder who
exchanges Old Notes for Exchange Notes pursuant to the Exchange
Offer with the intention to participate in a distribution of the
Exchange Notes may not rely on the staff's position enunciated in
the Exxon Capital Letter, the Morgan Stanley Letter or similar
letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with
any resale transaction.
Each broker-dealer that receives Exchange Notes for its own
account in exchange for Old Notes, where such Old 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." 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 Old Notes
where such Old 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, it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See
"Plan of Distribution." EXCEPT AS DESCRIBED IN THIS PARAGRAPH,
THIS PROSPECTUS MAY NOT BE USED FOR ANY OFFER, SALE OR OTHER
TRANSFER OF EXCHANGE NOTES.
Prior to this Exchange Offer, there has been no public
market for the Old Notes or Exchange Notes. The Old Notes have
traded in the National Association of Securities Dealers, Inc.
Private Offerings, Resales and Trading through Automated Linkages
("PORTAL") market. If a public market were to develop, the
Exchange Notes could trade at prices that may be higher or lower
than their principal amount at maturity. The Company intends to
apply for listing of the Exchange Notes on the American Stock
Exchange. However, there can be no assurance that an active
public market for the Exchange Notes will develop. See "Risk
Factors--Risk Factors Relating to the Notes and the Exchange
Offer--Absence of Public Trading Market."
THE COMPANY WILL NOT RECEIVE ANY PROCEEDS FROM THIS
EXCHANGE OFFER. THE COMPANY HAS AGREED TO PAY THE EXPENSES OF THE
EXCHANGE OFFER. NO UNDERWRITER IS BEING USED IN CONNECTION WITH
THIS EXCHANGE OFFER.
2
<PAGE>
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.
3
<PAGE>
AVAILABLE INFORMATION
TWA is currently 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. Reports,
proxy statements and other information filed by the Company with
the Commission may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., 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 Center, 500 West Madison Street, Chicago, Illinois
60661-2511. Copies of such materials may be obtained from the
Public Reference Section of the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates,
and such reports, proxy statements and other information
regarding the Company can also be inspected at the offices of the
American Stock Exchange, 86 Trinity Place, New York, New York
10006-1881, on which the Company's Common Stock, $.01 par value
per share (the "Common Stock") is listed. The Commission
maintains a Worldwide Web site that contains reports, proxy and
information 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. None of the information contained in such web
site shall be deemed to constitute a part of this Prospectus or
be incorporated herein for any purpose.
This Prospectus contains summaries, believed to be accurate
in all material respects, of certain terms of certain agreements;
however, in each such case, reference is made to the actual
agreements (copies of which will be made available upon request
to the Company) for complete information with respect thereto,
and all such summaries are qualified in their entirety by this
reference.
This Prospectus forms a part of the Registration Statement,
including all amendments (including post-effective amendments)
and exhibits thereto, which the Company has filed under the
Securities Act with respect to the securities offered hereby.
This Prospectus does not contain all the information otherwise
set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the
Registration Statement and the exhibits filed as part thereof.
The Registration Statement may be inspected at the public
reference facilities maintained by the Commission at the
addresses set forth above. 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):
1. The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, as amended on June 30, 1998 (the
"1997 10-K");
2. The Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998 (the "10-Q");
3. The Company's Current Report on Form 8-K filed January
28, 1998; and
4. The Company's Proxy Statement and Notice of Meeting
relating to the Annual Meeting of Stockholders held on May 19,
1998.
In addition, all subsequent documents filed by the Company
with the Commission pursuant to Sections 13(a), 13(c), 14 or
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 herein by
reference and to be a part hereof from the date of filing such
documents. Any statement contained herein or 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 subsequently filed document which also is or is
4
<PAGE>
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.
This Prospectus incorporates documents by reference which
are not presented herein or delivered herewith. These documents
are available without charge upon the written or oral request of
each person, including any beneficial owner, to whom this
Prospectus is delivered. Requests should be made to the Corporate
Secretary of Trans World Airlines, Inc., One City Centre, 515 N.
Sixth Street, St. Louis, Missouri 63101, telephone (314)
589-3285. In order to ensure timely delivery of the documents,
any request should be made at least five business days before the
Expiration Date of the Exchange Offer.
FORWARD-LOOKING STATEMENTS
This Prospectus (including information included or
incorporated by reference herein) includes "Forward-looking
Statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. All statements regarding
the Company's expected financial position, business and financing
plans, including the Company's plans and strategy for improving
its operational and financial performance, are forward-looking
statements. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have
been correct. Important factors that could cause actual results
to differ materially from such expectations ("cautionary
statements") are disclosed in or incorporated by reference into
this Prospectus, including, without limitation, in conjunction
with the forward-looking statements included in or incorporated
by reference into this Prospectus and under "Risk Factors." All
subsequent written and oral forward-looking statements
attributable to the Company, its subsidiaries or persons acting
on the Company's or its subsidiaries' behalf are expressly
qualified in their entirety by the cautionary statements.
5
<PAGE>
PROSPECTUS SUMMARY
This summary does not purport to be complete and is
qualified by reference to the detailed information and financial
statements appearing elsewhere in or incorporated by reference
into this Prospectus. Terms not defined in this summary are
defined elsewhere herein.
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, the Company 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,
excluding all commuter flights. 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 United States and the Caribbean.
As described in the 1997 10-K, 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 Private Placement
Old Notes.............. On June 16, 1998 (the "Issue Date"), the
Company issued and delivered the Old
Notes to or as directed by First
Security Bank, National Association, as
owner trustee (the "Owner Trustee")
under the trust agreement N607TW dated
as of March 28, 1995 between 767 Leasing
HY, LLC, as successor beneficiary (the
"Beneficiary") to Internationale
Nederlanden Aviation Lease Delaware,
Inc. (currently known as ING Lease
Delaware, Inc.), the beneficiary named
therein, and the Owner Trustee. The Old
Notes were subsequently reoffered and
resold to Qualified Institutional Buyers
(as defined in Rule 144A under the
Securities Act) pursuant to Rule 144A
under the Securities Act, to
institutional investors that are
Accredited Investors (as defined in Rule
501(a)(1), (2), (3) or (7) under the
Securities Act) and in offshore
transactions complying with Rule 903 or
Rule 904 of Regulation S under the
Securities Act.
6
<PAGE>
Exchange Offer
Exchange Notes......... Up to $14,500,000 aggregate
principal amount of 10 1/4% Senior
Secured Notes due 2003
of the Company. The terms of the
Exchange Notes and the Old Notes are
identical in all respects, except that
the offer of the Exchange Notes will
have been registered under the
Securities Act and therefore, the
Exchange Notes will not be subject to
certain transfer restrictions and
registration rights and related
provisions for an increase in the
interest rate payable on the Old Notes
under certain circumstances if the
Company defaults with respect to its
registration requirements under the
Registration Rights Agreement (as
defined below) applicable to the Old
Notes.
Exchange Offer......... The Company is offering, upon the terms
and subject to the conditions of the
Exchange Offer, to exchange $1,000
principal amount of Exchange Notes for
each $1,000 principal amount of Old
Notes. See "The Exchange Offer" for a
description of the procedures for
tendering Old Notes. In connection with
the private placement of Old Notes (the
"Private Placement"), the Company
entered into the Registration Rights
Agreement (the "Registration Rights
Agreement") dated as of June 16, 1998
among the Company, Lazard Freres & Co.
LLC ("Lazard") and the Owner Trustee,
which grants holders of the Old Notes
certain exchange and registration
rights. The Exchange Offer is intended
to satisfy obligations of the Company
under the Registration Rights Agreement.
The date of acceptance for exchange of
the Exchange Notes will be the first
business day following the Expiration
Date.
Tenders, Expiration
Date; Withdrawal....... The Exchange Offer will expire
at 5:00 p.m., New York City time, on
_________, 1998, or such later date and
time to which it is extended. The tender
of Old Notes pursuant to the Exchange
Offer may be withdrawn at any time prior
to the Expiration Date. Any Old Notes
not accepted for exchange for any
reason will be returned without expense
to the tendering holder of Notes (a
"Holder") thereof as promptly as
practicable after the expiration or
termination of the Exchange Offer.
Accounting Treatment... No gain or loss for accounting purposes
will be recognized by the Company upon
the consummation of the Exchange Offer.
See "The Exchange Offer--Accounting
Treatment."
Federal Income Tax
Consequences........... The exchange pursuant to the Exchange
Offer will not result in any income,
gain or loss to the Holders of the Notes
or the Company for federal income tax
purposes. See "Certain Federal Income
Tax Considerations--Tax Consequences to
United States Holders."
7
<PAGE>
Use of Proceeds........ The Company will not receive any
proceeds from the issuance of the
Exchange Notes pursuant to the Exchange
Offer.
Exchange Agent......... First Security Bank, National
Association is serving as exchange
agent (the "Exchange Agent") in
connection with the Exchange Offer.
Consequences of Exchanging Old Notes Pursuant to the
Exchange Offer
The Company has not requested, and does not intend to
request, an interpretation by the staff of the Commission with
respect to whether the Exchange Notes issued pursuant to the
Exchange Offer in exchange for the Old Notes may be offered for
sale, resold or otherwise transferred by any holder without
compliance with the registration and prospectus delivery
provisions of the Securities Act. Based on interpretations by the
staff of the Commission set forth in no-action letters issued to
third parties, the Company believes that Exchange Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be
offered for resale, resold and otherwise transferred by any
holder of such Exchange Notes, other than broker-dealers which
must sell in accordance with the provisions set forth below and
other than any holder that is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act, without
compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange
Notes are acquired in the ordinary course of such holder's
business and such holder is not engaged in and does not intend to
engage in, a distribution of such Exchange Notes and has no
arrangement or understanding with any person to participate in
the distribution of such Exchange Notes. Any holder who tenders
in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes or who is an affiliate of the
Company may not rely on such interpretations by the staff of the
Commission and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with
any secondary resale transaction. Each broker-dealer (whether or
not it is also an "affiliate" of the Company) that receives
Exchange Notes for its own account in exchange for Old Notes,
where such Old 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."
By executing the Letter of Transmittal, each holder of Old
Notes will represent to the Company that, among other things, (i)
the Exchange Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the person
receiving such Exchange Notes, whether or not such person is such
holder, (ii) neither the holder of Old Notes, nor any such other
person has an arrangement or understanding with any person to
participate in the distribution of such Exchange Notes, (iii) if
the holder is not a broker-dealer, or is a broker-dealer but will
not receive Exchange Notes for its own account in exchange for
Old Notes, neither the holder nor any such other person is
engaged in or intends to participate in the distribution of such
Exchange Notes and (iv) neither the holder nor any such other
person is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act or, if such Holder is an
"affiliate," that such Holder will comply with the registration
and prospectus delivery requirements of the Securities Act to the
extent applicable. If the tendering Holder is a broker-dealer
(whether or not it is also an "affiliate") that will receive
Exchange Notes for its own account in exchange for Old Notes that
were acquired as a result of market-making activities or other
trading activities, it will be required to acknowledge that it
will deliver a prospectus in connection with any resale of such
Exchange Notes. See "Plan of Distribution." To comply with the
securities laws of certain jurisdictions, it may be necessary to
qualify for sale or register the Exchange Notes prior to offering
or selling such Exchange Notes. The Company does not currently
intend to take any action to register or qualify the Exchange
Notes for resale in any such jurisdictions.
Following the consummation of the Exchange Offer, holders
of Old Notes not tendered will not have any further registration
rights and the Old Notes will continue to be subject to certain
restrictions on transfer. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities
laws. Failure to comply with such requirements in such instance
may result in such Holder incurring liability under the
Securities Act for which such Holder is not indemnified by the
Company. See "The Exchange Offer--Consequences of Failure to
Exchange."
8
<PAGE>
Summary Description of the Exchange Notes
The terms of the Exchange Notes and the Old Notes are
identical in all respects, except that the offer of the Exchange
Notes has been registered under the Securities Act and,
therefore, the Exchange Notes will not be subject to certain
transfer restrictions, registration rights and related provisions
requiring an increase in the interest rate on the Old Notes under
certain circumstances if the Company defaults with respect to its
registration requirements under the Registration Rights Agreement
applicable to the Old Notes.
Exchange Notes
Offered................ Up to $14,500,000 aggregate principal
amount of Exchange Notes of the Company.
Maturity Date.......... June 15, 2003.
Interest............... 10 1/4% per annum (subject to possible
increases as described herein), payable
semi-annually in arrears on June 15 and
December 15 of each year, commencing
December 15, 1998. The Exchange Notes
will bear interest from June 16, 1998.
Holders of Old Notes whose Old Notes are
accepted for exchange will be deemed to
have waived the right to receive any
payment in respect of interest on such
Old Notes accrued from June 16, 1998 to
the date of the issuance of the Exchange
Notes. Consequently, holders who
exchange their Old Notes for Exchange
Notes will receive the same interest
payment on December 15, 1998 (the first
interest payment date with respect to
the Old Notes and the Exchange Notes)
that they would have received had they
not accepted the Exchange Offer.
Sale of Collateral..... In connection with and prior to the
sale of the Aircraft, the Company
will be required to commence an Offer
to Purchase Notes in an aggregate
principal amount equal to the
aggregate principal amount of
Notes outstanding on the date of
commencement of such Offer to Purchase,
at a purchase price equal to 102% of the
principal amount thereof, if such Offer
to Purchase is commenced prior to the
first anniversary of the Issue Date, or
101% of the principal amount thereof, if
such Offer to Purchase is commenced on
or after the first anniversary of the
Issue Date, plus, in each case, accrued
and unpaid interest and Special
Interest, if any, on such Notes to and
including the Payment Date (as defined).
The Company will deposit an amount in
cash equal to the purchase price with
respect to the Offer to Purchase with
the Trustee on or prior to the date of
sale of the Aircraft. Such cash amount
shall remain on deposit with the Trustee
until the payment of such purchase price
on the applicable Payment Date with
respect to such Offer to Purchase. As of
the day immediately following the
Payment Date with respect to any such
Offer to Purchase, the interest rate
borne by any Notes then outstanding will
automatically increase by 1.50% per
annum, and the lien on the Collateral
will be released. The Company may
satisfy in whole or in part its
obligation to make an Offer to Purchase
in connection with a sale of the
Aircraft by delivering to the Trustee
Notes acquired by the Company
9
<PAGE>
through open market purchases. Such
Notes shall be credited by the Trustee
against the principal amount of Notes
required to be purchased at 100% of
their principal amount. See "Description
of Exchange Notes-- Collateral--Use of
Collateral; Total Loss; Release and
Termination of Lien."
Total Loss............. In the event that there shall occur a
Total Loss with respect to the Aircraft,
the Company will be required to make an
Offer to Purchase Notes in an aggregate
principal amount equal to the aggregate
principal amount of Notes outstanding on
the date such Offer to Purchase is
required to be commenced hereunder, at a
purchase price equal to 100% of such
aggregate principal amount, plus accrued
and unpaid interest and Special
Interest, if any, on such Notes, to and
including the date of purchase. The
Company shall commence the Offer to
Purchase within 30 days after the date
of such Total Loss. The Company may
satisfy in whole or in part its
obligation to make an Offer to Purchase
in connection with a Total Loss of the
Aircraft by delivering to the Trustee
Notes acquired by the Company through
open market purchases. Such obligation
shall be credited at 100% of the
principal amount of Notes delivered to
the Trustee. See "Description of
Exchange Notes--Collateral--Use of
Collateral; Total Loss; Release and
Termination of Lien."
Sinking Fund........... The Notes will be subject to mandatory
redemption by way of sinking fund
payments made in cash sufficient to
redeem an aggregate principal amount of
Notes equal to $920,000 on each of June
15, 2001 and June 15, 2002 (subject to
possible reductions or elimination as
described herein) (or, if the aggregate
principal amount of Notes outstanding on
any such redemption date is less than
the principal amount required to be
redeemed on such date, then the
aggregate principal amount of Notes
outstanding shall be redeemed), at a
redemption price equal to 100% of the
principal amount thereof, plus accrued
and unpaid interest and Special
Interest, if any, to the Mandatory
Redemption Date (as defined). The
Company may satisfy in whole or in part
its obligation to make such sinking fund
payments by delivering to the Trustee
Notes acquired by the Company through
open market purchases. The obligation of
the Company to make any sinking fund
payment will be automatically terminated
if the Aircraft is sold or is the
subject of a Total Loss. See
"Description of Exchange Notes--Sinking
Fund."
Change in Control...... Upon a Change in Control, each holder of
Notes shall have the right for a limited
period to require the Company to
repurchase all or any part of such
holder's Notes at a price, in cash,
equal to 101% of the principal amount
thereof, plus accrued and unpaid
interest and Special Interest, if any,
to the date fixed for repurchase. There
can be no assurance
10
<PAGE>
that the Company will have sufficient
funds available at the time of any
Change in Control to make any debt
payment (including repurchases of Notes)
required by the foregoing. In the event
the Company fails to repurchase the
Notes upon a Change in Control, it would
be in default under the Indenture and
the maturity of substantially all of its
long-term debt could be accelerated. See
"Description of Exchange Notes--
Repurchase of Notes Upon a Change in
Control."
Ranking................ The Notes will represent senior secured
obligations of the Company and will rank
pari passu in right of payment with all
other senior obligations of the Company.
Collateral............. The Notes will be secured by a lien on
one Boeing 767-231 ETOPS airframe and
two associated Pratt & Whitney JT9D-
7R4D engines. See "Description of
Exchange Notes--Collateral."
Section 1110
Protection............. The Trustee has received an opinion
of Company Counsel (as defined)
that the Trustee, on behalf of the
holders of the Notes, will be
entitled, subject to certain conditions,
to the benefits of Section 1110 of the
U.S. Bankruptcy Code, as amended (the
"Bankruptcy Code"), with respect to the
Aircraft in the event of a case under
Chapter 11 of the Bankruptcy Code in
which the Company is a debtor. See
"Description of Exchange Notes--Certain
Bankruptcy Issues."
Certain Covenants...... The indenture governing the Notes
(the "Indenture") and certain related
security documents will contain
provisions relating to the
preservation of and release of
Collateral, including a prohibition
against the Company allowing certain
additional liens against such
Collateral. The Indenture will not
contain any financial covenants and will
not limit the Company's ability to incur
additional indebtedness.
Exchange Offer;
Registration Rights.... Pursuant to the Registration
Rights Agreement, in the
event that applicable law or
interpretations of the staff of the
Commission do not permit the Company to
effect this Exchange Offer or if certain
holders of the Old Notes notify the
Company that they are not permitted to
participate in, or would not receive
freely transferable Exchange Notes
pursuant to, the Exchange Offer, the
Company has agreed to use its reasonable
best efforts to cause to become
effective a registration statement (the
"Shelf Registration Statement") with
respect to the resale of the Old Notes
and to keep the Shelf Registration
Statement effective for a period of two
years from the date of original issuance
of the Old Notes or such shorter period
that will terminate when Old Notes
covered by the Shelf Registration
Statement have been sold pursuant
thereto or can be sold pursuant to Rule
144(k). Should the Company fail for any
reason to comply
11
<PAGE>
with certain of its registration
obligations under the Registration
Rights Agreement, Special Interest will
be payable with respect to the Notes and
the Exchange Notes that are, at the time
of the Company's failure to comply with
such obligations, subject to certain
transfer restrictions under the
Securities Act. See "The Exchange
Offer."
Lack of Prior
Market for the
Exchange Notes......... The Exchange Notes are being offered
to holders of the Old Notes.
The Exchange Notes will be new
securities for which there is currently
no established trading market, and none
may develop. The Company intends to
apply for listing of the Exchange Notes
on the American Stock Exchange. If the
Exchange Notes are traded after their
initial issuance, they may trade at a
discount from their initial offering
price, depending upon prevailing
interest rates, the market for similar
securities, the performance of the
Company and certain other factors.
Risk Factors
The Notes offered hereby involve a high degree of
risk. See "Risk Factors."
12
<PAGE>
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
participating in the Exchange Offer or investing in the Exchange
Notes.
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, but net of unamortized discounts)
to shareholders' equity was 5.39 to 1. As of March 31, 1998,
after giving effect to the issuance on April 21, 1998 of the
Company's 11 3/8% Senior Secured Notes due 2003 (the "April
Secured Notes") and the Company's Mandatory Conversion Equity
Notes due 1999 (the "April Equity Notes" and, together with the
April Secured Notes, the "April Notes"), the issuance on June 16,
1998 of the Notes and the Equity Notes and the conversion into
Common Stock of the April Equity Notes on July 7, 1998 and the
Equity Notes on July 13, 1998, the aggregate principal amount of
the Company's total outstanding indebtedness would have been
approximately $1,204.9 million ($1,173.8 net of unamortized
discounts), and the ratio of such long-term debt and capital
leases (including current maturities, but net of unamortized
discounts) to stockholders' equity would have been 4.68 to 1. The
Company's estimated minimum payment obligations under
noncancelable 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 that are more
fully described under "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and
Capital Resources--Commitments" in the 10-Q. 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 March 31, 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 "Capitalization" included
herein and "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--General" and the Consolidated Financial Statements in
the 1997 10-K and the 10-Q.
The degree to which the Company is leveraged could have
important consequences to holders of the Notes offered hereby,
including the following: (i) the Company's ability to obtain
additional financing in the future for working capital, capital
expenditures, acquisitions, general corporate purposes or other
purposes may be impaired; (ii) a substantial portion of the
Company's cash flow from operations must be dedicated to the
payment of principal and interest on the Company's existing
indebtedness; (iii) the Company is placed at a relative
competitive disadvantage to its less highly leveraged competitors
and is more vulnerable to economic downturns; and (iv) such
indebtedness contains restrictive and other covenants, that, if
not complied with, may result in an event of default that, 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). See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources--Certain Other
Capital Requirements" in the 1997 10-K for a discussion of the
potential additional expenditures that may be required by the
Company in order to address the year 2000-related technology
issues. 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.
13
<PAGE>
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 the Company's international operations
and by subsidiaries that, 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. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital
Resources--Liquidity" in the 1997 10-K and the 10-Q.
The Company has no unused credit lines and must satisfy all
of its working capital and capital expenditure requirements from
cash provided by operating activities, from external capital
sources or from the sale of assets. See "The Company--Business
Strategy" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital
Resources--Liquidity" in the 1997 10-K for a description of the
actions taken by the Company to improve its liquidity during
1997. 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 the Company'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. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital
Resources--Availability of NOLs" in the 1997 10-K and the 10- Q
for a discussion of the status of the Company's net operating
loss carryforwards.
The Company's long-term viability as well as its ability to
meet its existing debt and other obligations and future capital
commitments depends upon the Company's financial and operating
performance, which in turn is subject to, among other things,
prevailing economic conditions and certain other financial,
business and other factors beyond the Company's control. As
discussed in the 1997 10-K and the 10-Q, in late 1996 and early
1997, the Company began implementing certain operational changes
that 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
and in the 1997 10-K and the 10-Q under "Management's Discussion
and Analysis of Financial Condition and Results of
Operations--General" and "--Liquidity and Capital Resources."
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 the First Quarter
of 1998
The Company'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
14
<PAGE>
$227.5 million for the combined 12-month period ended December
31, 1995 (including extraordinary gains related to the '95
Reorganization (as defined below)), 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 restructurings effected in 1995 (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. For a discussion
of such operating results and the substantial net losses incurred
during such periods, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "The
Company--Business Strategy" in the 1997 10-K. Although the
Company has taken a number of actions that management believes
will improve future results, the Company will incur additional
expenses relating to these actions, including pilot training and
aircraft leases, and there can be no assurance that such actions
will make the Company's future operations profitable. See
"--Liquidity; Substantial Indebtedness; Capital Expenditure
Requirements" and "The Company--Business Strategy" in the 1997
10-K.
The Company's financial results for the first quarter 1998
reflect 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.
The Company 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, the
Company'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 the Company'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 the
Company 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 (the "Ticket Agreement") governing such program) (see
below and "Management's Discussion and Analysis of Financial
Condition and Results of Operations--General" and "Legal
Proceedings--Icahn Litigation" in the 10-Q). 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 Agreement between the Company and Karabu
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
15
<PAGE>
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 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 opposed this motion and 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. The court
denied both motions on June 25, 1998. TWA has appealed the
denial of its motion for clarification and the court's original
ruling.
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 the Company is currently a defendant in
a number of lawsuits relating to the crash, it is unable to
predict the amount of claims that may ultimately be made against
the Company or how those claims might be resolved. The Company
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, the Company 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 that has resulted
or may result from the public perception of the crash or from any
future findings by the National Transportation Safety Board. See
"Business--Legal Proceedings" in the 1997 10-K.
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, if such changes do occur, that
they will not adversely affect future operations.
16
<PAGE>
Current Executives of the Company
DATE OF ELECTION OR
APPOINTMENT AS
NAME CURRENT TITLE 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 that
include part-time employees). Of these, approximately 84.6% were
represented by the Air Line Pilots Association ("ALPA") and the
International Association of Machinists and Aerospace Workers
(the "IAM"). On March 6, 1997, the IAM was certified to replace
the Independent Federation of Flight Attendants (the "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 that the Company believes to be below many other U.S.
airlines. The '94 Labor Agreements are three-year agreements that
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 currently ongoing. Negotiations on a new collective
bargaining agreement with ALPA commenced in June 1997, and a
tentative agreement was reached on July 11, 1998, subject to
ratification. 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. See
"Business--Employees" in the 1997 10-K.
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
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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 the Company's
operating aircraft fleet was 16.5 years, making the Company's
fleet one of the oldest of U.S. air carriers. As a result, the
Company has incurred increased overall operating costs due to the
higher maintenance, fuel and other operating costs associated
with older aircraft. During 1997, the Company 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, the Company's fleet included 55
aircraft that did not meet the noise reduction requirements under
the Airport Noise and Capacity Act of 1990 (the "Noise Act") and
must therefore be retired or substantially modified by the end of
1999. Although the Company has plans to meet the Noise Act's
noise reduction requirement, there can be no assurance that such
plans will be achieved. In addition, in 1990 the Federal Aviation
Association (the "FAA") issued several Airworthiness Directives
("ADs") mandating changes to maintenance programs for older
aircraft to ensure 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, the
Company spent approximately $3.4 million and $4.2 million,
respectively, to comply with aging aircraft maintenance
requirements. Based on information currently available to the
Company and its current fleet plan, the Company 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 the Company's existing aircraft and that, as a
result, certain aircraft will be retired by the Company before
the Company would be required to make certain aging aircraft
maintenance expenditures. There can be no assurance that the
Company 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" above and "Business--Regulatory Matters--Noise
Abatement" and "--Aging Aircraft Maintenance" in the 1997 10-K.
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") that 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, who 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 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 the By-laws contain
provisions that 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 the By-laws and the Blocking
Coalition Provisions, as well as federal laws limiting foreign
ownership of U.S. flag carriers and the prohibition
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<PAGE>
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 (a "Right") for each outstanding share of Common
Stock and employee preferred stock issued to its union employees
in three series (the "Employee Preferred Stock") and made such
Right payable to holders of record as of the close of business on
January 12, 1996, and thereafter each share of Common Stock or
Employee Preferred Stock issued by the Company has had one Right
attendant to it. The Rights are intended to protect the Company's
stockholders from certain non-negotiated takeover attempts that
present the risk of a change of control on terms that may be less
favorable to the Company's stockholders than would be available
in a transaction negotiated with and approved by the Board of
Directors of the Company. See "Description of Capital
Stock--Rights Plan" and "Certain Provisions of the Certificate of
Incorporation, the By-laws and Delaware Law" below, and
"Business--Regulatory Matters-- Foreign Ownership of Shares" in
the 1997 10-K.
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 the Company's future
operating results. Shares granted or purchased at a discount
under the Employee Stock Incentive Program (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. On February 17, 1998, the first
target price of $11.00 was realized and therefore a grant will be
made on July 15, 1998 in an amount sufficient to increase the
employee ownership by 2.0% based on the then outstanding amount
of Common Stock and Employee Preferred Stock. In addition, on
March 4, 1998, the average market price of the Company's Common
Stock over a 30-day period exceeded the $12.10 target price
necessary to earn the 1998 grant. As a result, on July 15, 1998,
the Company was required to make an additional contribution to
the relevant employee trusts based on the then outstanding amount
of its Common Stock and Employee Preferred Stock in an amount
sufficient to increase the employee ownership by 1.5%. Based on
the number of outstanding shares of Common Stock and Employee
Preferred Stock at July 15, 1998, the aggregate contribution
pursuant to the 1997 and 1998 grants was 2,377,084. As a result
of the grants earned in 1998, an aggregate non-cash charge was
recorded in the first quarter of 1998 in the amount of $26.5
million in connection with such issuance. In addition, an
aggregate non-cash charge of $1.0 million will be recorded in the
third quarter of 1998 to reflect the actual number of shares
issued on July 15, 1998. If the ESIP's target prices for the
Common Stock are realized, the minimum aggregate charge for the
years 1999 to 2002 (the 1997 and 1998 target prices having been
met) would be approximately $[102.6] million based upon such
target prices and the number of shares of Common Stock and
Employee Preferred Stock outstanding at July 15, 1998. The charge
for any year, however, could be substantially higher if the then
market price of the Common Stock exceeds certain target prices.
See "Business--Employees" in the 1997 10-K.
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 of the '95 Reorganization (the "'95 Effective
Date") (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 in
the 1997 10-K to separate the Company's post-reorganization
Consolidated Financial Statements from its pre-'95 Reorganization
consolidated financial statements since they have not been
prepared on a consistent basis of accounting. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and Note 19 to the Consolidated Financial Statements
in the 1997 10-K.
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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 the Company'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. The Company 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 passenger
revenue per available seat mile ("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 the Company 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. The Company 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. Additionally, 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 Department of Transportation (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 represent 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
the Company 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 which have
available lines of credit, significant unencumbered assets and/or
greater access to capital markets. Accordingly, the Company 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.
The Company 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
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<PAGE>
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(cent) per gallon to approximately 69.8(cent) per gallon.
During 1997, the Company's average per gallon cost of fuel
decreased approximately 5.6%, from approximately 69.8(cent) per
gallon to approximately 65.9(cent) 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(cent) per
gallon to approximately 55.6(cent) per gallon, over the same
period in 1997. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the 1997 10-K
and the 10-Q. 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 the
Company than many of its competitors because of the composition
of its fleet and because the Company does not currently maintain
substantial reserves of fuel required for its operations or
otherwise hedge the cost of anticipated purchases of fuel. See
"Business--Aircraft Fuel" in the 1997 10-K.
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 the Company,
thereby adversely affecting the Company'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. The Company 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 the Company'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" above.
Additional laws and regulations have been proposed from
time to time that 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 the
Company. See "Business--Regulatory Matters" in the 1997 10-K.
Management believes that the Company benefited 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
21
<PAGE>
passed on to consumers in the form of increased ticket prices,
might have an adverse effect on passenger traffic, revenue and/or
margins. See "Business--Regulatory Matters" in the 1997 10-K.
Risk Factors Relating to the Notes and the Exchange Offer
Certain Bankruptcy Considerations
If the Company were to become a debtor in a proceeding
under Title 11 of the Bankruptcy Code, it is likely that there
would be delays in payment with respect to the Notes and delays
in or prevention from enforcing remedies and other rights that
may otherwise be available to holders of the Notes, including
rights with respect to the Collateral. It is also possible that
holders of Notes would not ultimately receive repayment, in whole
or in part, of the Notes.
The Trustee has received an opinion of Company Counsel that
the Trustee, on behalf of the holders of the Notes, will be
entitled, subject to certain conditions, to the benefits of
Section 1110 of the Bankruptcy Code with respect to the Aircraft
in the event of a case under Chapter 11 of the Bankruptcy Code in
which the Company is a debtor. See "Description of Exchange
Notes--Certain Bankruptcy Issues."
Ranking of the Notes
The Notes will represent senior secured obligations of the
Company and will rank pari passu in right of payment with other
senior obligations of the Company. None of the Company's
outstanding indebtedness is senior to the Notes. As of March 31,
1998, after giving effect to the issuance of the April Notes, the
Notes and the Equity Notes and the conversion of the April Equity
Notes on July 7, 1998 and the Equity Notes on July 13, 1998, the
aggregate principal amount of the Company's total outstanding
indebtedness, including accrued interest, would have been
approximately $1,235.6 million. While unsecured indebtedness
ranks pari passu with the Notes in right of payment, the holders
of the Notes may, to the exclusion of unsecured creditors, seek
recourse against the Collateral as security for the Notes unless
and until the Notes are satisfied in full. See "Description of
Exchange Notes--Collateral" and "--Certain Bankruptcy Issues."
The Notes are not guaranteed by any subsidiary of the Company and
as a result will effectively rank junior to all creditors
(including trade creditors) of, and holders of preferred stock
issued by, subsidiaries of the Company. As of March 31, 1998,
except for the wholly-owned, bankruptcy remote subsidiary of the
Company that issued $100.0 million aggregate principal amount of
receivables securitization notes, the subsidiaries of the Company
did not have any outstanding indebtedness or preferred stock. The
Notes will contain no limitations on the Company's ability to
incur additional indebtedness. See "Description of Exchange
Notes."
Sufficiency of Collateral
There can be no assurances that the proceeds of any sale of
Collateral pursuant to the Indenture and Collateral Documents (as
defined) following a default would be sufficient to satisfy all
payments due on the Notes. No appraisal has been or will be
obtained with respect to the Collateral. If such proceeds were
not sufficient to repay all such amounts due on the Notes, then
holders (to the extent not repaid from the proceeds of the sale
of Collateral) would have only an unsecured claim against the
Company's remaining assets. In addition, the ability of holders
to realize upon the Collateral may be subject to certain federal
bankruptcy law limitations and, due to the nature of the
Collateral, significant restrictions imposed by governmental
authorities including the DOT and FAA. U.S. citizenship is a
condition of registering aircraft with the FAA. Restrictions on
the ability of non-U.S. citizens to register the Aircraft in the
United States could impact the marketability of the Collateral.
Change in Control; Cross Default Provisions
Upon a Change in Control, each holder of Notes will have
the right, for a limited period of time, to require the Company
to repurchase all or any part of such holder's Notes at a price
in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest and Special Interest, if any, to the
date fixed for repurchase. However, there can be no assurance
that upon the occurrence of such a Change in Control, the Company
will have sufficient funds available at the time to be able to
repurchase the Notes. In the event the Company fails to
repurchase the Notes upon a Change in Control, it would be in
default under the Indenture and the maturity of substantially all
of its long-term debt could be accelerated. See "Description of
Exchange Notes--Repurchase of Notes Upon a Change in Control."
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Lack of Prior Market for the Exchange Notes
The Exchange Notes are being offered to the holders of
the Old Notes. The Old Notes were offered and sold in June 1998
to Qualified Institutional Buyers and to instutional Accredited
Investor and in offshore transactions complying with Rule 903 or
Rule 904 of Regulation S under the Securities Act and are
eligible for trading in the PORTAL market.
The Exchange Notes will constitute a new issue of
securities for which there is currently no established trading
market, and the Exchange Notes may not be widely distributed.
Accordingly, no assurance can be given that an active trading
market for the Exchange Notes will develop. If a market for any
of the Exchange Notes does develop, the price of such Exchange
Notes may fluctuate and liquidity may be limited. If a market for
any of the Exchange Notes does not develop, purchasers may be
unable to resell such Exchange Notes for an extended period of
time, if at all. The Company has agreed to list the Exchange
Notes on the American Stock Exchange or on such other stock
exchange or market as the Common Stock is then principally traded
no later than the earliest to occur of (i) the effectiveness of
the Registration Statement and (ii) the effectiveness of the
Shelf Registration Statement, provided that such Exchange 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 Exchange Notes is outstanding.
Historically, the market for non-investment grade debt has
been subject to disruptions that have caused substantial
volatility in the prices of such securities. There can be no
assurance that the market for the Old Notes or the Exchange Notes
will not be subject to similar disruptions. Any such disruptions
may have an adverse effect on holders of the Old Notes or the
Exchange Notes.
Consequences of Failure to Exchange
Holders of Old Notes who do not exchange their Old Notes
for Exchange Notes pursuant to the Exchange Offer will continue
to be subject to the restrictions on transfer of such Old Notes
as set forth in the legend thereon. In general, the Old Notes may
not be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction
not subject to the Securities Act and applicable state securities
laws. The Company does not intend to register the Old Notes under
the Securities Act. The Company believes that, based upon
interpretations contained in letters issued to third parties by
the staff of the SEC, Exchange Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for
resale, resold or otherwise transferred by each Holder thereof
(other than a broker-dealer, as set forth below, and any such
Holder which is an "affiliate" of the Company within the meaning
of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities
Act provided that such Exchange Notes are acquired in the
ordinary course of such Holder's business and such Holder is not
engaged in, and does not intend to engage in, a distribution of
such Exchange Notes and has no arrangement or understanding with
any person to participate in the distribution of such Exchange
Notes. Eligible Holders wishing to accept the Exchange Offer must
represent to the Company in the Letter of Transmittal that (i)
the Exchange Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the person
receiving such Exchange Notes, whether or not such person is such
holder, (ii) neither the holder of Old Notes nor any such other
person has an arrangement or understanding with any person to
participate in the distribution of such Exchange Notes, (iii) if
the holder is not a broker-dealer or is a broker-dealer but will
not receive Exchange Notes for its own account in exchange for
Old Notes, neither the holder nor any such other person is
engaged in or intends to participate in a distribution of the
Exchange Notes and (iv) neither the holder nor any such other
person is an "affiliate" of the Company within the meaning of
Rule 405 or a broker-dealer tendering Old Notes acquired directly
from the Company for its own account or if such holder is an
"affiliate," that such holder will comply with the registration
and prospectus delivery requirements of the Securities Act to the
extent applicable. Each broker-dealer (whether or not it is also
an "affiliate") that receives Exchange Notes for its own account
pursuant to the Exchange Offer must represent that the Old Notes
tendered in exchange therefor were acquired as a result of
market-making activities or other trading activities and 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 the
resales of Exchange Notes received in exchange for Old Notes
where such Old 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, it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See
"Plan of Distribution." However, to comply with the securities
laws of certain jurisdictions, if applicable, the Exchange Notes
may not
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<PAGE>
be offered or sold unless they have been registered or qualified
for sale in such jurisdiction or an exemption from registration
or qualification is available and is complied with. The Company
does not currently intend to take any action to register or
qualify the Exchange Notes for resale in any such jurisdictions.
In the event the Exchange Offer is consummated, the Company
will not be required to register the transfer of the Old Notes
under the Securities Act or any applicable securities laws. In
such event, holders of Old Notes seeking liquidity in their
investment would have to rely on exemptions to the registration
requirements under such laws. The Old Notes currently may be sold
to Qualified Institutional Buyers and to institutional Accredited
Investors and in offshore transactions complying with Rule 903 or
Rule 904 of Regulation S under the Securities Act or pursuant to
another available exemption under the Securities Act without
registration under the Securities Act. To the extent that Old
Notes are tendered and accepted in the Exchange Offer, the
reduction in the principal amount of Old Notes outstanding could
have an adverse effect upon, and increase the volatility of the
market price for, the untendered and tendered but unaccepted Old
Notes.
Exchange Offer Procedures
To participate in the Exchange Offer, and avoid the
restrictions on Old Notes, each holder of Old Notes must transmit
a properly completed Letter of Transmittal, including all other
documents required by such Letter of Transmittal, to the First
Security Bank, National Association (the "Exchange Agent") at the
address set forth below under "The Exchange Offer--Procedures for
Tendering--Exchange Agent" on or prior to the Expiration Date. In
addition, (i) certificates for such Old Notes must be received by
the Exchange Agent along with the Letter of Transmittal, (ii) a
timely confirmation of a book-entry transfer of such Old Notes,
if such procedure is available, into the Exchange Agent's account
at The Depository Trust Company ("DTC") pursuant to the procedure
for book-entry transfer described below, must be received by the
Exchange Agent prior to the Expiration Date or (iii) the Holder
must comply with the guaranteed delivery procedures. See "The
Exchange Offer."
24
<PAGE>
THE COMPANY
TWA is the eighth largest U.S. air carrier (based on
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, the
Company 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 at St. Louis and a domestic-international hub at 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, excluding all commuter flights. 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 United States and the Caribbean.
As described in the 1997 10-K, 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.
USE OF PROCEEDS
The Company will not receive any proceeds from the Exchange
Offer. The Company has agreed to pay the expenses of the Exchange
Offer. No underwriter is being used in connection with the
Exchange Offer.
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<PAGE>
THE EXCHANGE OFFER
Purpose of the Exchange Offer
On June 16, 1998, the Company issued and delivered one
security evidencing the Notes in definitive fully registered form
in the principal amount of $14.5 million to or as directed by the
Owner Trustee. The Old Notes were subsequently reoffered and
resold to Qualified Institutional Buyers pursuant Rule 144A under
the Securities Act and in offshore transactions complying with
Rule 903 or Rule 904 of Regulation S under the Securities Act. In
connection with the issuance and sale of the Old Notes, the
Company entered into the Registration Rights Agreement with
Lazard and the Owner Trustee, which obligated the Company to (i)
file the Registration Statement of which this Prospectus is a
part for the Exchange Offer within 60 days after the Issue Date,
(ii) use its reasonable best efforts to cause the Registration
Statement to become effective within 150 days after the Issue
Date and (iii) consummate the Exchange Offer within 180 days of
the Issue Date. A copy of the Registration Rights Agreement has
been filed as an exhibit to the Registration Statement. The
Exchange Offer is being made pursuant to the Registration Rights
Agreement to satisfy the Company's obligations thereunder.
Based on interpretations by the staff of the Commission, as
set forth in no-action letters issued to Exxon Capital Holdings
Corporation (available May 13, 1988), Morgan Stanley & Co.
Incorporated (available June 5, 1991), Mary Kay Cosmetics, Inc.
(available June 5, 1991) and Warnaco, Inc. (available October 11,
1991), the Company believes that a holder who exchanges Old Notes
for Exchange Notes pursuant to the Exchange Offer may offer for
resale, resell and otherwise transfer such Exchange Notes without
compliance with the registration and prospectus delivery
requirements of the Securities Act; provided, that (i) such
Exchange Notes are acquired in the ordinary course of such
holder's business, (ii) such holder is not engaged in, and does
not intend to engage in, a distribution of such Exchange Notes
and has no arrangement with any person to participate in the
distribution of such Exchange Notes, and (iii) such holder is not
an affiliate of the Company (as defined under Rule 405 of the
Securities Act). However, the staff of the Commission has not
considered the Exchange Offer in the context of a no-action
letter and there can be no assurance that the staff of the
Commission would make a similar determination with respect to the
Exchange Offer as in such other circumstances. A holder who
exchanges Old Notes for Exchange Notes pursuant to the Exchange
Offer with the intention to participate in a distribution of the
Exchange Notes may not rely on the staff's position enunciated in
the Exxon Capital Letter, the Morgan Stanley Letter or similar
letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with
any resale transaction. Each broker-dealer that receives Exchange
Notes for its own account in exchange for Old Notes, where such
Old 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."
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 (other than a resale of
an unsold allotment from the original sale of the Notes) received
in exchange for Old Notes where such Old 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, it will make this
Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in
this Prospectus and in the accompanying Letter of Transmittal
(which together constitute the Exchange Offer), the Company will
accept any and all Old Notes validly tendered and not withdrawn
prior to 5:00 p.m., New York City time, on the Expiration Date.
The Company will issue a principal amount at maturity of Exchange
Notes in exchange for an equal principal amount at maturity of
outstanding Old Notes validly tendered pursuant to the Exchange
Offer and not withdrawn prior to the Expiration Date. Old Notes
may only be tendered in integral multiples at maturity of $1,000.
Holders may tender some or all of their Old Notes pursuant to the
Exchange Offer.
The terms of the Exchange Notes and the Old Notes are
substantially identical in all material respects, except that (i)
the exchange will be registered under the Securities Act and,
therefore, the Exchange Notes will not bear legends restricting
the transfer of such Exchange Notes, and (ii) holders of the
Exchange Notes will not be entitled to any of the registration
rights of holders of Old Notes under the Registration Rights
Agreement, which rights will terminate upon the consummation
26
<PAGE>
of the Exchange Offer. See "Description of Exchange Notes." The
Exchange Notes will evidence the same indebtedness as the Old
Notes. The Exchange Notes will be issued under and entitled to
the benefits of the Indenture pursuant to which the Old Notes
were issued such that the Exchange Notes and Old Notes will be
treated as a single class of debt securities under the Indenture.
As of the date of this Prospectus, $14.5 million aggregate
principal amount at maturity of the Old Notes are outstanding.
This Prospectus, together with the Letter of Transmittal, is
being sent to all registered holders of the Old Notes.
Holders of Old Notes do not have any appraisal or
dissenters' rights under the DGCL or the Indenture in connection
with the Exchange Offer. The Company intends to conduct the
Exchange Offer in accordance with the provisions of the
Registration Rights Agreement and the applicable requirements of
the Exchange Act, and the rules and regulations of the Commission
thereunder. Old Notes which are not tendered and were not
prohibited from being tendered for exchange in the Exchange Offer
will remain outstanding and continue to accrue interest and to be
subject to transfer restrictions, but will not be entitled to any
rights or benefits under the Registration Rights Agreement.
Upon satisfaction or waiver of all the conditions to the
Exchange Offer, the Company will accept, promptly after the
Expiration Date, all Old Notes properly tendered and not
withdrawn and will issue Exchange Notes in exchange therefor
promptly after acceptance of the Old Notes. For purposes of the
Exchange Offer, the Company shall be deemed to have accepted
properly tendered Old Notes for exchange when, as and if, the
Company has given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the tendering
holders for the purposes of receiving the Exchange Notes from the
Company.
In all cases, issuance of Exchange Notes for Old Notes that
are accepted for exchange pursuant to the Exchange Offer will be
made only after timely receipt by the Exchange Agent of such Old
Notes, a properly completed and duly executed Letter of
Transmittal and all other required documents; provided, however,
that the Company reserves the absolute right to waive any defects
or irregularities in the tender or conditions of the Exchange
Offer. If any tendered Old Notes are not accepted for any reason
set forth in the terms and conditions of the Exchange Offer or if
Old Notes are submitted for a greater principal amount at
maturity than the holder desires to exchange, such unaccepted or
nonexchanged Old Notes or substitute Old Notes evidencing the
unaccepted portion, as appropriate, will be returned without
expense to the tendering holder thereof as promptly as
practicable after the expiration or termination of the Exchange
Offer.
Holders who tender Old Notes in the Exchange Offer will not
be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes
with respect to the exchange of Old Notes pursuant to the
Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes described below, in
connection with the Exchange Offer. See "--Fees and Expenses."
Expiration Date; Extension; Amendments
The term "Expiration Date" shall mean 5:00 p.m., New York
City time, on ___________, 1998 (30 days following the
commencement of the Exchange Offer), unless the Company, in its
sole discretion, extends the Exchange Offer, in which case the
term "Expiration Date" will mean the latest date and time to
which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will
notify the Exchange Agent of any extension by oral or written
notice and will mail to the registered holders an announcement
thereof, prior to 9:00 a.m., New York City time, on the next
business day after the then Expiration Date.
The Company reserves the right, in its sole discretion, (i) to
delay accepting any Old Notes, to extend the Exchange Offer or to
terminate the Exchange Offer if any of the conditions set forth
below under "--Conditions" shall not have been satisfied, by
giving oral or written notice of such delay, extension or
termination to the Exchange Agent or (ii) to amend the terms of
the Exchange Offer. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as
practicable by oral or written notice thereof to the registered
holders. If the Exchange Offer is amended in a manner determined
by the Company to constitute a material change, the Company will
promptly disclose such amendment in a manner reasonably
calculated to inform the holders of Old Notes of such amendment.
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<PAGE>
Without limiting the manner in which the Company may choose
to make a public announcement of any delay, extension, amendment
or termination of the Exchange Offer, the Company shall have no
obligation to publish, advertise, or otherwise communicate any
such public announcement, other than by making a timely release
to an appropriate news agency.
Interest on the Exchange Notes
The Exchange Notes will bear interest from June 16, 1998 at
the rate of 10 1/4% per annum, payable semi-annually in arrears,
in cash, on June 15 and December 15 of each year, commencing
December 15, 1998. Holders of Old Notes whose Old Notes are
accepted for exchange will be deemed to have waived the right to
receive any payment in respect of interest on the Old Notes
accrued from June 16, 1998 until the date of the issuance of the
Exchange Notes. Consequently, holders who exchange their Old
Notes for Exchange Notes will receive the same interest payment
on December 15, 1998 (the first interest payment date with
respect to the Old Notes and the Exchange Notes) that they would
have received had they not accepted the Exchange Offer.
Conditions
Notwithstanding any other term of the Exchange Offer, the
Company will not be required to exchange any Exchange Notes for
any Old Notes, and may terminate or amend the Exchange Offer
before the acceptance of any Old Notes for exchange, if: (a) any
action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange
Offer which seeks to restrain or prohibit the Exchange Offer or,
in the Company's judgment, would materially impair the ability of
the Company to proceed with the Exchange Offer, (b) any law,
statute, rule or regulation is proposed, adopted or enacted, or
any existing law, statute, rule, order or regulation is
interpreted, by any government or governmental authority which,
in the Company's judgment, would materially impair the ability of
the Company to proceed with the Exchange Offer, or (c) the
Exchange Offer or the consummation thereof would otherwise
violate or be prohibited by applicable law.
If the Company determines in its sole discretion that any
of these conditions are not satisfied, the Company may (i) refuse
to accept any Old Notes and return all tendered Old Notes to the
tendering holders, (ii) extend the Exchange Offer and retain all
Old Notes tendered prior to the expiration of the Exchange Offer,
subject, however, to the rights of holders who tendered such Old
Notes to withdraw their tendered Old Notes, or (iii) waive such
unsatisfied conditions with respect to the Exchange Offer and
accept all properly tendered Old Notes which have not been
withdrawn. If the Company's waiver constitutes a material change
to the Exchange Offer, the Company will promptly disclose such
waiver by means of a prospectus supplement that will be
distributed to the registered holders, and the Company will
extend the Exchange Offer for a period of five to ten business
days, depending upon the significance of the waiver and the
manner of disclosure to the registered holders, if the Exchange
Offer would otherwise expire during such five to ten business day
period.
The foregoing conditions are for the sole benefit of the
Company and may be asserted by the Company regardless of the
circumstances giving rise to any such condition or may be waived
by the Company in whole or in part at any time and from time to
time in its sole discretion. The Company's failure at any time to
exercise any of the foregoing rights will not be deemed a waiver
of any such right, and each such right will be deemed an ongoing
right which may be asserted at any time and from time to time.
Any determination by the Company concerning the events described
above will be final and binding on all parties. NO VOTE OF THE
COMPANY'S SECURITYHOLDERS IS REQUIRED TO EFFECT THE EXCHANGE
OFFER AND NO SUCH VOTE (OR PROXY THEREFOR) IS BEING SOUGHT
HEREBY.
Procedures for Tendering
Only a holder of Old Notes may tender such Old Notes in the
Exchange Offer. To tender in the Exchange Offer, a holder must
(i) complete, sign and date the Letter of Transmittal, or a
facsimile thereof, have the signatures thereon guaranteed if
required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together
with the Old Notes (unless such tender is being effected pursuant
to the procedure for book-entry transfer described below) and any
other required documents, to the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date, or (ii) comply
with the guaranteed delivery procedures described below. Delivery
of all documents must be made to the Exchange Agent at its
address set forth herein. Each broker-dealer that receives
Exchange Notes for its own account in exchange for Old Notes,
where such Notes were acquired by such broker-dealer as a result
of market-making
28
<PAGE>
activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with the resale of such
Exchange Notes. See "Plan of Distribution."
The tender of Old Notes by a holder as set forth below will
constitute an agreement between such holder and the Company in
accordance with the terms and subject to the conditions set forth
in this Prospectus and in the Letter of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE
AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF
DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT
OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE
SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE
BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES
TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner(s) whose Old Notes are registered in
the name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender should contact the
registered holder promptly and instruct such registered holder to
tender on such beneficial owner's behalf. If such beneficial
owner wishes to tender on such owner's own behalf, such owner
must, prior to completing and executing the Letter of Transmittal
and delivering such owner's Old Notes, either make appropriate
arrangement to register ownership of the Old Notes in such
owner's name or obtain a properly completed bond power from the
registered holder. The transfer of registered ownership may take
considerable time.
Signatures on a Letter of Transmittal or a notice of
withdrawal (described below), as the case may be, must be
guaranteed by an "eligible guarantor institution" (banks,
stockbrokers, savings and loan associations and credit unions
with membership in an approved signature guarantee medallion
program), pursuant to Rule 17Ad-15 under the Exchange Act (an
"Eligible Institution") unless the Old Notes tendered pursuant
thereto are tendered (i) by a registered holder who has not
completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution.
If a person other than the registered holder of any Old
Notes listed therein signs the Letter of Transmittal, such Old
Notes must be endorsed or accompanied by a properly completed
bond power, signed by such registered holder as such registered
holder's name appears on such Old Notes, with the signature
thereon guaranteed by an Eligible Institution. If the Letter of
Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-
fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when
signing, and unless waived by the Company, evidence satisfactory
to the Company of their authority to so act must be submitted
with the Letter of Transmittal.
The Company will determine, in its sole discretion, all
questions as to the validity, form, eligibility (including time
of receipt), acceptance of tendered Old Notes and withdrawal of
tendered Old Notes, and the Company's determination will be final
and binding. The Company reserves the absolute right to reject
any and all Old Notes not properly tendered or any Old Notes the
Company's acceptance of which would, in the opinion of counsel
for the Company, be unlawful. The Company also reserves the right
to waive any defects, irregularities or conditions of tender as
to particular Old Notes. The Company's interpretation of the
terms and conditions of the Exchange Offer (including the
instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes must be
cured within such time as the Company shall determine. Although
the Company intends to notify holders of defects or
irregularities with respect to tenders of Old Notes, neither the
Company, the Exchange Agent nor any other person shall incur any
liability for failure to give such notification. Tenders of Old
Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Notes received
by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived
will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in the Letter of Transmittal, as soon
as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole
discretion to purchase or make offers for any Old Notes that
remain outstanding subsequent to the Expiration Date or, as set
forth above under "Conditions," to terminate the Exchange
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<PAGE>
Offer and, to the extent permitted by applicable law, to purchase
Old Notes in the open market, in privately negotiated
transactions or otherwise. The terms of any such purchases or
offers could differ from the terms of the Exchange Offer.
By tendering, each holder will represent to the Company
that, among other things, (i) the Notes to be acquired pursuant
to the Exchange Offer are being obtained in the ordinary course
of business of such holder, (ii) such holder has no arrangement
or understanding with any person to participate in the
distribution (within the meaning of the Securities Act) of the
Exchange Notes and (iii) such holder is not an "affiliate," as
defined in Rule 405 under the Securities Act, of the Company, or
that if it is an "affiliate," it will comply with applicable
registration and prospectus delivery requirements of the
Securities Act.
Book-Entry Transfer
Within two business days after the date of this Prospectus,
the Exchange Agent will make a request to establish an account
with respect to the Old Notes at the book-entry transfer facility
for the Old Notes, DTC, for purposes of the Exchange Offer. Any
financial institution that is a participant in DTC's systems may
make book-entry delivery of Old Notes by causing DTC to transfer
such Old Notes into the Exchange Agent's account with respect to
the Old Notes in accordance with DTC's procedures for such
transfer. Although delivery of Old Notes may be effected through
book-entry transfer into the Exchange Agent's account at DTC, an
appropriate Letter of Transmittal with any required signature
guarantee and all other required documents must in each case be
transmitted to and received and confirmed by the Exchange Agent
at its address set forth below on or prior to the Expiration
Date, or, if the guaranteed delivery procedures described below
are complied with, within the time period provided under such
procedures.
Guaranteed Delivery Procedures
Holders who wish to tender their Old Notes and (i) whose
Old Notes are not immediately available, (ii) who cannot deliver
their Old Notes, the Letter of Transmittal or any other required
documents to the Exchange Agent prior to the Expiration Date or
(iii) who cannot complete the procedures for book-entry transfer
of Old Notes to the Exchange Agent's account with DTC prior to
the Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) On or prior to the Expiration Date, the Exchange Agent
receives from such Eligible Institution (by facsimile
transmission, mail or hand delivery) a properly completed and
duly executed notice of guaranteed delivery substantially in the
form provided by the Company (the "Notice of Guaranteed
Delivery"), setting forth the name and address of the holder, the
certificate number(s) of such Old Notes (if possible) and the
principal amount at maturity of Old Notes tendered, stating that
the tender is being made thereby and guaranteeing that, within
five business trading days after the Expiration Date, (i) the
Letter of Transmittal (or facsimile thereof) together with the
certificate(s) representing the Old Notes and any other documents
required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent, or (ii) that
book-entry transfer of such Old Notes into the Exchange Agent's
account at DTC will be effected and confirmation of such
book-entry transfer will be delivered to the Exchange Agent; and
(c) Such properly completed and executed Letter of
Transmittal (or facsimile thereof), as well as the certificate(s)
representing all tendered Old Notes in proper form for transfer
and all other documents required by the Letter of Transmittal, or
confirmation of book-entry transfer of the Old Notes into the
Exchange Agent's account at DTC, are received by the Exchange
Agent within three American Stock Exchange trading days after the
Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed
Delivery will be sent to holders who wish to tender their Old
Notes according to the guaranteed delivery procedures set forth
above.
Withdrawal of Tenders
Except as otherwise provided herein, tenders of Old Notes
may be withdrawn at any time prior to 5:00 p.m., New York City
time, on the Expiration Date.
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<PAGE>
To withdraw a tender of Old Notes in the Exchange
Offer, the Exchange Agent must receive at its address set forth
herein a telegram, telex, facsimile transmission or letter
indicating notice of withdrawal prior to 5:00 p.m., New York City
time, on the Expiration Date. Any such notice of withdrawal must
(i) specify the name of the person having tendered the Old Notes
to be withdrawn (the "Depositor"), (ii) identify the Old Notes to
be withdrawn (including the certificate number or numbers and
principal amount at maturity of such Old Notes), (iii) include a
statement that such holder is withdrawing its election to have
such Old Notes exchanged, (iv) be signed by the holder in the
same manner as the original signature on the Letter of
Transmittal by which such Old Notes were tendered (including any
required signature guarantees) or be accomplished by documents of
transfer sufficient to have the Trustee with respect to the Old
Notes register the transfer of such Old Notes into the name of
the person withdrawing the tender and (v) specify the name in
which any such Old Notes are to be registered, if different from
that of the Depositor. If Old Notes have been tendered pursuant
to the procedure for book-entry transfer, any notice of
withdrawal must specify the name and number of the account at DTC
to be credited with the withdrawn Old Notes or otherwise comply
with DTC's procedures. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be
determined by the Company, whose determination shall be final and
binding on all parties. Any Old Notes so withdrawn will be deemed
not to have been validly tendered for purposes of the Exchange
Offer and no Exchange Notes will be issued with respect thereto
unless the Old Notes so withdrawn are validly retendered. Any Old
Notes which have been tendered but which are not accepted for
payment will be returned to the holder thereof without cost to
such holder as soon as practicable after withdrawal, rejection of
tender or termination of the Exchange Offer. Properly withdrawn
Old Notes may be retendered by following one of the procedures
described above under "--Procedures for Tendering" at any time
prior to the Expiration Date.
Untendered Old Notes
Holders of Old Notes whose Old Notes are not tendered or
are tendered but not accepted in the Exchange Offer will continue
to hold such Old Notes and will be entitled to all the rights and
preferences and subject to the limitations applicable thereto
under the Indenture. Following consummation of the Exchange
Offer, the holders of Old Notes will continue to be subject to
the existing restrictions upon transfer contained in the legend
thereon. In general, the Old Notes may not be offered for resale
or resold, unless registered under the Securities Act, except
pursuant to an exemption from, or in a transaction not subject
to, the Securities Act and applicable state securities laws. The
Company will have no further obligations to such holders, other
than Lazard insofar as it holds Old Notes it obtained from the
Company in the initial issuance or any holder that is not
eligible to participate in the Exchange Offer or does not receive
freely tradable Exchange Notes in the Exchange Offer, to provide
for the registration under the Securities Act of the Old Notes
held by them after the Expiration Date. To the extent that Old
Notes are tendered and accepted in the Exchange Offer, the
trading market for untendered and tendered but unaccepted Old
Notes could be adversely affected.
Exchange Agent
First Security Bank, National Association has been
appointed as Exchange Agent of the Exchange Offer. Questions and
requests for assistance, requests for additional copies of this
Prospectus or of the Letter of Transmittal and requests for
Notices of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
By mail, overnight courier or hand:
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Department
(registered or certified mail recommended)
Telephone: 801/246-5630
Facsimile: 801/246-5053
Delivery to an address other than as set forth above or
transmission of instructions via facsimile to a number other than
as set forth above will not constitute a valid delivery.
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<PAGE>
Fees and Expenses
The Company will bear the expenses of soliciting tenders.
The principal solicitation is being made by mail; however,
officers and regular employees of the Company and its affiliates
may make additional solicitation by telegraph, facsimile
transmission, telephone or in person.
The Company has not retained any dealer-manager in
connection with the Exchange Offer and will not make any payments
to brokers, dealers or others soliciting acceptances of the
Exchange Offer. The Company, however, will pay the Exchange Agent
reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection
therewith.
The Company will pay the cash expenses to be incurred in
connection with the Exchange Offer. Such expenses include
registration fees and expenses of the Exchange Agent and Trustee,
accounting and legal fees and printing costs, among others.
The Company will pay any and all transfer taxes applicable
to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, certificates representing Exchange Notes or Old Notes
for principal amounts not tendered or accepted for exchange are
to be delivered to, or are to be registered or issued in the name
of, any person other than the registered holder of the Old Notes
tendered, or if tendered Old Notes are registered in the name of
any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other
than the exchange of Old Notes pursuant to the Exchange Offer,
satisfactory evidence of the payment of the amount of any such
transfer taxes must be submitted with the Letter of Transmittal
(whether imposed on the registered holder or any other person).
Certificates representing Exchange Notes will not be issued to
such persons until satisfactory evidence of the payment of such
taxes, or an exemption therefrom, is submitted.
Consequences of Failure to Exchange
Upon consummation of the Exchange Offer, holders that were
not prohibited from participating in the Exchange Offer and did
not tender their Old Notes will not have any registration rights
under the Registration Rights Agreement with respect to such
nontendered Old Notes and, accordingly, such Old Notes will
continue to be subject to the restrictions on transfer contained
in the legend thereon as a consequence of the issuance of the Old
Notes pursuant to exemptions from or in transactions not subject
to, the registration requirements of the Securities Act and
applicable state securities laws. In general, the Old Notes may
not be offered for resale or resold, unless registered under the
Securities Act, except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable
state securities laws. The Company does not intend to register
the Old Notes under the Securities Act. The Exchange Notes may
not be offered or sold unless they have been registered or
qualified for sale under applicable state securities laws or an
exemption from registration or qualification is available and is
complied with. The Registration Rights Agreement requires the
Company to register the Exchange Notes in any jurisdiction
requested by the holders, subject to certain limitations. To the
extent the Old Notes are tendered and accepted in the Exchange
Offer, the trading market for untendered and tendered but
unaccepted Old Notes could be adversely affected.
Resale of the Exchange Notes
Under existing interpretations of the staff of the
Commission contained in several no-action letters to third
parties, the Exchange Notes would in general be freely
transferable after the Exchange Offer without further
registration under the Securities Act. However, any purchaser of
Old Notes who intends to participate in the Exchange Offer for
the purpose of distributing the Exchange Notes (i) would not be
able to rely on the interpretations of the staff of the
Commission, (ii) will not be able to tender its Old Notes in the
Exchange Offer and (iii) must comply with the registration and
prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of the Notes unless such
sale or transfer is made pursuant to an exemption from such
requirements. By executing the Letter of Transmittal, each holder
of the Old Notes will represent that (i) it is not an affiliate
of the Company or if such Holder is an "affiliate," that such
Holder will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable, (ii)
any Exchange Notes to be received by it were acquired in the
ordinary course of its business and (iii) at the time of
commencement of the Exchange Offer, it had no arrangement with
any person to participate in the distribution (within the meaning
of the Securities Act) of the Exchange Notes. In addition, in
connection with any resales of Exchange Notes, any broker-dealer
(a "Participating
32
<PAGE>
Broker-Dealer") who acquired the Notes for its own account as a
result of market-making or other trading activities must deliver
a prospectus meeting the requirements of the Securities Act. The
Commission has taken the position that Participating
Broker-Dealers may fulfill their prospectus delivery requirements
with respect to the Exchange Notes (other than a resale of an
unsold allotment from the original sale of the Old Notes) with
this Prospectus. Under the Registration Rights Agreement, the
Company is required to allow Participating Broker-Dealers and
other persons, if any, subject to similar prospectus delivery
requirements to use this Prospectus as it may be amended or
supplemented from time to time, in connection with the resale of
such Exchange Notes.
Other
Participation in the Exchange Offer is voluntary and
holders should carefully consider whether to accept. Holders of
the Old Notes are urged to consult their financial and tax
advisors in making their own decisions on what action to take.
Upon consummation of the Exchange Offer, holders who were
not prohibited from participating in the Exchange Offer and who
did not tender their Old Notes will not have any registration
rights under the Registration Rights Agreement with respect to
such nontendered Old Notes and such Old Notes will continue to be
subject to the restrictions on transfer contained in the legend
thereon. Accordingly, such Old Notes may not be offered, sold,
pledged or otherwise transferred except (i) to a person whom the
seller reasonably believes is a "Qualified Institutional Buyer"
within the meaning of Rule 144A under the Securities Act
purchasing for its own account or for the account of a Qualified
Institutional Buyer in a transaction meeting the requirements of
Rule 144A, (ii) in an offshore transaction complying with Rule
904 of Regulation S under the Securities Act, (ii) pursuant to an
exemption from registration under the Securities Act provided by
Rule 144 thereunder (if available), (iv) pursuant to an effective
registration statement under the Securities Act or (v) to the
Company and, in each case, in accordance with all other
applicable securities laws.
Accounting Treatment
The Exchange Notes will be recorded in the Company's
accounting records at the same carrying value as the Old Notes as
reflected in the Company's accounting records on the date of the
exchange. Accordingly, the Company will recognize no gain or loss
for accounting purposes upon the consummation of the Exchange
Offer. The expenses of the Exchange Offer will be amortized over
the remaining term of the Exchange Notes.
RATIO OF EARNINGS TO FIXED CHARGES
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.
33
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated cash
and the capitalization of the Company as of March 31, 1998 and as
adjusted to give effect to the issuance on April 21, 1998 of the
April Notes, the issuance on June 16, 1998 of the Notes and the
Equity Notes and the conversion into Common Stock of the April
Equity Notes on July 7, 1998 and the Equity Notes on July 13,
1998. This information should be read in conjunction with the
Consolidated Financial Statements incorporated by reference in
this Prospectus.
March 31, 1998
-------------------
As
Actual Adjusted
------ --------
(in millions)
Cash and cash equivalents(1) ................... $346.1 $346.1
====== ======
Long-term debt and capital
lease obligations (net of unamortized
discounts and including current maturities,
as applicable):(2)
10 1/4% Senior Secured Notes due 2003 ......... -- 14.5
11 3/8% Senior Secured Notes due 2003 ......... -- 43.2
11 3/8% Senior Notes due 2006 ................. 150.0 150.0
9.80% Airline Receivable Asset
Backed Notes, Series 1997 ................... 100.0 100.0
11 1/2% Senior Secured Notes due 2004 ......... 138.4 138.4
12% Senior Secured Notes due 2002 ............. 43.5 43.5
8% IAM Backpay Notes. ......................... 13.7 13.7
PBGC Notes. ................................... 117.1 117.1
Various secured notes, 4.0% to 12.4%,
due 1997-2001 ............................... 36.7 36.7
Installment Purchase Agreements,
10.00% to 10.53%, due 2002-2003 ............. 115.3 115.3
Boeing Co. 757 Purchase Agreements,
11.85% to 12.38%, due 2015 .................. 147.9 147.9
IRS Deferral Note ............................. 4.8 4.8
Predelivery Financing Agreement ............... 6.4 6.4
Worldspan Note 31.2 31.2
Capital lease obligations ..................... 211.1 211.1
------ -----
Total long-term debt and
and capital lease obligations ............. 1,116.1 1,173.8
------ -----
Stockholders' equity:
Preferred Stock, $0.01 par value;
137,500,000 shares authorized:
8% Preferred Stock, 4,025,000 shares
authorized; 3,869,000 shares issued
and outstanding and as adjusted ........... -- --
9 1/4% Preferred Stock, 1,725,000
shares authorized;
1,725,000 shares issued and
outstanding and as adjusted ................ -- --
Employee Preferred Stock, $0.01 par value;
6,959,860 shares authorized;
6,020,145 shares issued and
outstanding and as adjusted (3) ............. 0.1 0.1
Common Stock, $0.01 par value;
150,000,000 shares authorized; 51,946,129
shares issued and outstanding; 56,462,755
shares issued and outstanding, as
adjusted(4) ................................ 0.5 0.5
Additional paid-in capital .................. 687.8 731.2
Accumulated deficit ......................... (481.3) (481.3)
--------- --------
Total stockholders' equity ............... 207.1 250.6
--------- --------
Total capitalization ..................... $1,323.2 $1,424.4
======== ========
34
<PAGE>
-----------------------
(1) Includes cash and cash equivalents held in the Company's
international operations and by its subsidiaries that, based
upon foreign monetary regulations and other factors, might
not be immediately available to the Company.
(2) Current maturities of long-term debt and capital lease
obligations at March 31, 1998 were $49.2 million and $36.6
million, respectively.
(3) Composed of 3,191,759 shares of the Company's IAM
Preferred Stock, 962,892 shares of the Company's IFFA
Preferred Stock, and 1,865,494 shares of the Company's
ALPA Preferred Stock distributed and allocated to
employees through employee stock ownership plans for
the benefit of employees represented by IAM and ALPA
(collectively, the "Employee Preferred Stock").
(4) As adjusted column includes 3,290,901 shares of Common
Stock issued upon conversion of the April Equity Notes and
1,225,719 shares of Common Stock issued upon conversion of
the Equity Notes. Actual and as adjusted columns do not
include approximately (i) approximately 10.9 million shares
of Common Stock initially reserved for issuance upon
conversion of the 9 1/4% Cumulative Convertible Exchangeable
Preferred Stock, (ii) approximately 6.3 million shares of
Common Stock reserved for issuance upon exercise of warrants
issued in connection with the March 1997 offering of the
Company's 50,000 Units, each consisting of (x) one 12%
Senior Secured Note due 2002, in the principal amount of
$1,000, and (y) one Redeemable Warrant to purchase 126.26
shares of Common Stock at an exercise price of approximately
$7.92 per share, (iii) approximately 9.5 million shares of
Common Stock reserved for issuance upon conversion of the 8%
Cumulative Convertible Exchangeable Preferred Stock, (iv)
approximately 3.7 million shares of Common Stock that may be
issued upon exercise of outstanding stock options granted to
officers and employees of the Company under the Key Employee
Stock Incentive Plan at prices ranging from $4.64 to $18.37
per share and Common Stock issuable upon the exercise of
warrants, and (v) shares of Common Stock that may be granted
or sold at a discount to employees under the ESIP. See "Risk
Factors--Risk Factors Related to the Company--Corporate
Governance Provisions; Special Voting Arrangements" above
and "Business--Employees" in the 1997 10-K and the 10-Q.
35
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial and operating data
presented below relates to periods in the three months ended
March 31, 1998 and 1997, the 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. This data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Consolidated Financial Statements
in the 1997 10-K and the 10-Q. The consolidated financial data
for the above periods other than the three months ended March 31,
1998 and 1997 was 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 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 in the 1997 10-K. 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>
<S> <C> <C> <C> <C> <C> <C>
Reorganized Company
-------------------------------------------------------------------
Four Months
Three Months Ended Year Ended Ended
March 31, December 31, December 31,
-------------------- -------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
(Dollars in thousands, except per share amounts)
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)
Ratio of earnings to fixed
charges(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)
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)
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
Ratio of earnings to fixed
charges(4) .............. -- -- -- --
Per share amounts(5):
Loss before
extraordinary
items ...................
Net loss ..................
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Reorganized Company Predecessor Company
----------------------------------------------------- -------------------------
March 31, December 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
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 in the 1997 10-K.
(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.
37
<PAGE>
DESCRIPTION OF NOTES
The Company issued the Old Notes and will issue the
Exchange Notes under the Indenture dated as of the Issue Date by
and between the Company and First Security Bank, National
Association, as trustee (the "Trustee"), a copy of which has been
filed as an exhibit to the Registration Statement. The Notes are
entitled to the benefits of and are subject to those terms set
forth in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (the
"TIA"), as in effect on the date of the Indenture. Copies of the
Indenture can be obtained from the Company upon request. The
following description of material provisions of the Notes, the
Indenture, the Registration Rights Agreement and the Collateral
Documents is intended as a summary only and is qualified by
reference to those documents, including the definitions in those
documents of certain terms. Whenever particular articles,
sections or defined terms of the Notes, the Indenture, the
Registration Rights Agreement or the Collateral Documents are
referred to, it is intended that those articles, sections or
defined terms are to be incorporated herein by reference. See
"--Certain Definitions" for definitions of certain capitalized
terms used herein.
General
The Notes will represent senior secured obligations of the
Company and will rank pari passu in right of payment with other
senior obligations of the Company. None of the Company's
outstanding indebtedness is senior to the Notes. As of March 31,
1998, after giving effect to the issuance of the Notes, the
Equity Notes and the April Notes and the conversion of the April
Equity Notes and the Equity Notes, the aggregate principal amount
of the Company's total outstanding indebtedness, including
accrued interest, would have been approximately $1,235.6 million.
While unsecured indebtedness ranks pari passu with the Notes in
right of payment, the holders of the Notes may, to the exclusion
of unsecured creditors, seek recourse against the Collateral as
security for the Notes unless and until the Notes are satisfied
in full. See "--Collateral" and "--Certain Bankruptcy Issues."
The Notes are issued only in fully registered form, without
coupons, in minimum denominations of $1,000 and integral
multiples of $1,000. Holders will not be charged for any
registration of transfer or exchange of the Notes, but the
Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection with any such
transaction.
Principal, Maturity and Interest
The Notes will be limited to $14.5 million of principal in
the aggregate and will mature on June 15, 2003. The Notes will
bear interest at the annual rate of 10 1/4% (subject to possible
increases as described herein) from the date of original
issuance, or from the most recent interest payment date to which
interest has been paid or provided for, payable semiannually in
arrears on June 15 and December 15 of each year, commencing on
December 15, 1998, to the person in whose name the Note is
registered at the close of business on the preceding June 1 and
December 1, as the case may be. Interest and Special Interest, if
any, will be payable to the holders of record as they appear on
the register of the Company kept by the registrar on such record
dates. Interest and Special Interest, if any, will be computed on
the basis of a 360-day year of twelve 30-day months. The Notes
will be subject to a sinking fund as set forth under
"--Redemptions--Sinking Fund." Principal of, interest on, and
Special Interest, if any, with respect to the Notes will be
payable, and the transfer of the Notes will be registrable, at
the office or agency of the Company maintained for such purposes.
In addition, payment of interest and Special Interest, if any,
may, at the option of the Company, be made by check mailed to the
address of the person entitled thereto as it appears in the
register of the holders of Notes; provided, however, that
payments on a certificated Note will be made by wire transfer to
a U.S. dollar account maintained by the payee with a bank in New
York City if such payee owns at least $250,000 in aggregate
principal amount of certificated Notes and elects payment by wire
transfer by giving written notice to the Company and the Trustee
to such effect designating such account no later than ten days
immediately preceding the relevant due date for payment (or such
other date as the Company and the Trustee may accept in their
discretion). The Trustee will initially act as paying agent and
registrar for the Notes. The Company may change the paying agent
and registrar in accordance with the Indenture.
38
<PAGE>
Redemptions
Redemption. Except as set forth under "--Sinking Fund,"
"--Repurchase of Notes Upon a Change in Control" and
"--Collateral--Use of Collateral; Total Loss; Release and
Termination of Lien," the Company will not be required to
repurchase or make mandatory redemption payments with respect to
the Notes, and the Notes will not at any time be redeemable at
the option of the Company.
Sinking Fund. The Company shall, until all the Notes are
paid or payment thereof has been provided for, deposit, at least
one Business Day (as defined herein) prior to each of June 15,
2001 and June 15, 2002 (each such date being hereinafter referred
to as a "Mandatory Redemption Date") an amount in cash sufficient
to redeem an aggregate principal amount of Notes (the "Mandatory
Redemption Amount") equal to $920,000 (or, if the aggregate
principal amount of Notes outstanding on any such redemption date
is less than the principal amount required to be redeemed on such
date, then the aggregate principal amount of Notes outstanding
shall be redeemed), at a redemption price equal to 100% plus
accrued and unpaid interest and Special Interest, if any, to the
Mandatory Redemption Date.
At its option the Company may reduce or eliminate its
obligation to pay any Mandatory Redemption Amount in cash by
delivering to the Trustee at least 45 days before the Mandatory
Redemption Date (i) Notes that have been acquired by the Company
in open market purchases (and, for avoidance of doubt, not
acquired by way of any redemption or Offer to Purchase under the
Indenture) and have not been called for redemption pursuant to
the Indenture, together with (ii) an Officers' Certificate (as
defined in the Indenture) directing the Trustee to cancel the
Notes and stating the election of the Company to have credited
against such Mandatory Redemption Amount a specified principal
amount of Notes so delivered. All Notes made the basis of a
credit against a Mandatory Redemption Amount shall be credited at
100% of their principal amount. Although the Company may obtain
credit against any Mandatory Redemption Amount in advance of the
related Mandatory Redemption Date, any such credit will be
applied against Mandatory Redemption Amounts in the order in
which they become due.
The obligation of the Company to make mandatory redemption
payments with respect to the Notes shall be automatically
terminated in the event that the Aircraft is sold in accordance
with the applicable provisions under "-- Collateral--Use of
Collateral; Total Loss; Release and Termination of Lien" below,
or is the subject of a Total Loss; provided, that the Company has
complied in full with the applicable provisions under
"--Collateral--Use of Collateral; Total Loss; Release and
Termination of Lien" below, with respect to such sale or Total
Loss, as the case may be. The effective date of any such
termination shall be the Payment Date with respect to the related
Offer to Purchase (so long as the Company does not default in the
payment of the purchase price with respect to such Offer to
Purchase); provided, however, that such termination shall not
apply to any Mandatory Redemption Amount for which a notice of
redemption has been given on or prior to such effective date.
Repurchase of Notes Upon a Change in Control
The Company must commence, within 30 days of the occurrence
of a Change in Control, and consummate an Offer to Purchase all
Notes then outstanding, at a purchase price equal to 101% of the
principal amount thereof on the relevant Payment Date, plus
accrued and unpaid interest and Special Interest, if any, to the
Payment Date.
There can be no assurance that the Company will have
sufficient funds available at the time of any Change in Control
to make any debt payment (including repurchases of Notes)
required by the foregoing covenant (as well as may be contained
in other securities or agreements of the Company which might be
outstanding at the time).
Future indebtedness of the Company may contain prohibitions
on the occurrence of certain events that would constitute a
Change in Control or require such indebtedness to be purchased
upon a Change in Control. Moreover, the exercise by the holders
of their right to require the Company to repurchase the Notes
could cause a default under such indebtedness, even if the Change
in Control itself does not, due to the financial effect of such
purchase on the Company. Finally, the Company's ability to pay
cash to the holders of Notes following the occurrence of a Change
in Control may be limited by the Company's then existing
financial resources. The provisions under the Indenture relative
to the Company's obligation to make an offer to repurchase the
Notes as a
39
<PAGE>
result of a Change in Control may be waived or modified with the
written consent of the holders of a majority in principal amount
of the Notes.
One of the events that constitutes a Change in Control
under the Indenture is the disposition of "all or substantially
all" of the Company's assets. This term has not been interpreted
under New York law (the law governing the Indenture) to represent
a specific quantitative test. As a consequence, in the event the
holders of the Notes elect to require the Company to repurchase
the Notes and the Company elects to contest such election, there
can be no assurance as to how a court interpreting New York law
would interpret the phrase.
The Company could, in the future, enter into certain
significant transactions that would not constitute a Change in
Control with respect to the Change in Control purchase feature of
the Notes. The Change in Control purchase feature of the Notes
may in certain circumstances make more difficult or discourage a
takeover of the Company and, thus, the removal of incumbent
management. The Change in Control purchase feature, however, is
not the result of, to management's knowledge, any specific effort
to obtain control of the Company by means of a merger, tender
offer, solicitation or otherwise, nor is it part of a plan by
management to adopt a series of anti-takeover provisions.
The right to require the repurchase of Notes shall
terminate after a discharge of the Company from its obligations
under the Notes and the Indenture in accordance therewith.
Repurchase of the Notes may, under certain circumstances,
constitute a default or event of default under senior
indebtedness then outstanding and, in such instances, repurchase
of the Notes would be prohibited unless and until such default
has been cured or waived. The failure to repurchase the Notes in
such instance would constitute an Event of Default (as defined in
the Indenture). See "--Events of Default."
Merger, Sale or Consolidation
Without limitation of the provisions of the Indenture
described above regarding a Change in Control, the Company may
merge, consolidate or transfer all or substantially all of its
properties and assets and the Company may permit any person to
consolidate with or merge into the Company, or transfer or lease
all or substantially all of its properties and assets to the
Company; provided that, among other things, (a) the successor
person is the Company or another corporation organized and
existing under the laws of the United States, any state thereof
or the District of Columbia that expressly assumes the Company's
obligations on the Notes and under the Indenture and the other
Operative Documents (as defined herein) and (b) immediately
before and immediately after giving effect to such transaction,
no Default (as defined in the Indenture) or Event of Default
shall have occurred and be continuing.
Upon any permitted consolidation, merger or conveyance or
transfer of the properties and assets of all or substantially all
of the assets of the Company, the surviving or acquiring entity,
as the case may be (if other than the Company), shall succeed to,
and be substituted for, the Company under the Indenture, the
Notes and the other Operative Documents, but the predecessor
Company in the case of a conveyance or transfer shall not be
released from the obligation to pay the principal of, interest
on, and Special Interest, if any, with respect to, the Notes.
Exchange Offer; Registration Rights
Pursuant to the Registration Rights Agreement made and
entered into as of the Issue Date (the "Registration Rights
Agreement") by and among the Company, the Owner Trustee and
Lazard, upon the effectiveness of the Registration Statement, the
Company will offer the Exchange Notes in exchange for surrender
of the Notes. The Company will keep the Exchange Offer open for
not less than 20 business days (or longer if required by
applicable law) after the date notice of the Exchange Offer is
first mailed to the holders of the Notes. For each Note
surrendered to the Company pursuant to the Exchange Offer, the
holder of such Note will receive an Exchange Note having a
principal amount equal to that of the surrendered Note. Under
existing Commission interpretations, the Exchange Notes would be
freely transferable by holders other than affiliates of the
Company after the Exchange Offer without further registration
under the Securities Act if the holder of the Exchange Notes
represents that it is acquiring the Exchange Notes in the
ordinary course of its business, that it has no arrangement or
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understanding with any person to participate in the distribution
of the Exchange Notes and that it is not an affiliate of the
Company, as such terms are interpreted by the Commission;
provided, however, that Participating Broker-Dealers receiving
Exchange Notes in the Exchange Offer will have a prospectus
delivery requirement with respect to resales of such Exchange
Notes. The Commission has taken the position that Participating
Broker-Dealers may fulfill their prospectus delivery requirements
with respect to Exchange Notes (other than a resale of an unsold
allotment from the original sale of the Notes) with this
Prospectus. Under the Registration Rights Agreement, the Company
is required to allow Participating Broker-Dealers and other
persons, if any, with similar prospectus delivery requirements to
use this Prospectus in connection with the resale of such
Exchange Notes.
A Holder of Old Notes (other than certain specified
holders) who wishes to exchange such Old Notes for Exchange Notes
in the Exchange Offer will be required to represent that any
Exchange Notes to be received by it will be acquired in the
ordinary course of its business and that at the time of the
commencement of the Exchange Offer it has no arrangement or
understanding with any person to participate in the distribution
(within the meaning of the Securities Act) of the Exchange Notes
and that it is not an "affiliate" of the Company, as defined in
Rule 405 of the Securities Act, or if it is an affiliate, that it
will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable.
In the event that applicable interpretations of the staff
of the Commission do not permit the Company to effect the
Exchange Offer, or if for any other reason the Exchange Offer is
not consummated within 180 days of the date of the Registration
Rights Agreement, or if the Owner Trustee or Lazard so requests
with respect to Notes not eligible to be exchanged for Exchange
Notes in the Exchange Offer, or if any holder of Notes is not
eligible to participate in the Exchange Offer or does not receive
freely tradable Exchange Notes in the Exchange Offer, the Company
will, at its cost, (a) as promptly as practicable, file the Shelf
Registration Statement covering resales of the Notes or the
Exchange Notes, as the case may be, (b) use its reasonable best
efforts to cause the Shelf Registration Statement to be declared
effective under the Securities Act and (c) use its reasonable
best efforts to keep the Shelf Registration Statement effective
for a period of two years from the date of original issuance of
the Notes or such shorter period that will terminate when Notes
covered by the Shelf Registration Statement have been sold
pursuant thereto or can be sold pursuant to Rule 144(k) under the
Securities Act, or any successor provision thereof. The Company
will, in the event a Shelf Registration Statement is filed, among
other things, provide to each holder for whom such Shelf
Registration Statement was filed copies of the prospectus which
is a part of the Shelf Registration Statement, notify each such
holder when the Shelf Registration Statement has become effective
and take certain other actions as are required to permit
unrestricted resales of the Notes or the Exchange Notes, as the
case may be. A holder selling such Notes or Exchange Notes
pursuant to the Shelf Registration Statement generally would be
required to be named as a selling security holder in the related
prospectus and to deliver a prospectus to purchasers, will be
subject to certain of the civil liability provisions under the
Securities Act in connection with such sales and will be bound by
the provisions of the Registration Rights Agreement which are
applicable to such holder (including certain indemnification
obligations).
If (i) on or prior to 180 days after the original issuance
of the Old Notes, neither the Exchange Offer is consummated nor
the Shelf Registration Statement is declared effective; (ii)
notwithstanding the filing of the Registration Statement or the
effectiveness thereof or the consummation of the Exchange Offer,
by the later of (x) 60 days after the date of original issuance
of the Old Notes and (y) 30 days after a request made by Lazard
or certain other holders of Old Notes pursuant to the
Registration Rights Agreement that the Company file a Shelf
Registration Statement, 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 (iii) after either the
Registration Statement or the Shelf Registration Statement is
declared effective, such registration statement thereafter ceases
to be effective or usable (subject to certain exceptions) in
connection with resales of Old Notes or Exchange Notes in
accordance with and during the periods specified in the
Registration Rights Agreement (each such event referred to in
clauses (i) through (iii), a "Registration Default," and each
period during which a Registration Default has occurred and is
continuing, a "Registration Default Period"), then special
interest ("Special Interest") on the Old Notes and the Exchange
Notes will accrue at a per annum rate of 0.50% for the first 90
days of the Registration Default Period, at a per annum rate of
1.0% for the second 90 days of the Registration Default Period,
at a per annum rate of 1.50% thereafter for the remaining portion
of the Registration Default Period. From and including the date
on which all Registration Defaults have been cured, the accrual
of Special Interest will cease.
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Special Interest is payable in addition to any other interest
payable from time to time pursuant to the terms of the Old Notes
and the Exchange Notes.
A Registration Default 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 of the Notes 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.
If the Company effects the Exchange Offer contemplated
hereby, it will be entitled (subject to applicable law) to
consummate the Exchange Offer 20 business days after the
commencement thereof provided that it has accepted all Notes
theretofore validly tendered in accordance with the terms of the
Exchange Offer.
Listing of Notes on the American Stock Exchange
The Company has agreed to use its reasonable best efforts
to list the Notes on the American Stock Exchange or on such other
stock exchange or market as the Common Stock is then principally
traded no later than the earliest to occur of (i) the
effectiveness of the 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
use its reasonable best efforts to maintain such listing for so
long as any of the Notes are outstanding.
Events of Default
The following shall constitute "Events of Default" with
respect to the Notes: (i) failure to pay the principal of or
Offer to Purchase repurchase amount, if any, with respect to, any
Note when such amounts become due and payable at maturity, upon
acceleration, redemption or otherwise; (ii) failure to pay
interest or Special Interest on the Notes when due, where such
failure continues for a 30-day period; (iii) the failure by the
Company to comply with its obligations under
"--Redemptions--Sinking Fund" or "--Merger, Sale or
Consolidation" above or to observe or perform certain other
covenants or agreements in the Indenture or the Collateral
Documents or the discontinuance or agreement to discontinue
substantially all of the Company's commercial airline operations;
(iv) any of the Operative Documents cease, without the consent of
the Trustee, to be in full force and effect; (v) any
representation or warranty of the Company in the Indenture or any
of the Collateral Documents shall prove to have been untrue in
any material respect when made and such default continues for the
period and after the notice specified below, or a default in any
material respect in the observance or performance of any other
covenant or agreement of the Company in the Notes, the Indenture
or any of the Collateral Documents, in each case that continues
for the period and after the notice specified below; (vi) a
default or event of default shall have occurred and be continuing
under any other evidence of indebtedness of the Company or any
Significant Subsidiary (as defined in Commission Regulation S-X)
of the Company in excess of $10.0 million in principal amount,
whether such indebtedness now exists or is created hereafter,
which default or event of default results in the acceleration of
such indebtedness or the failure to pay such indebtedness at
maturity; (vii) any final judgment or judgments for payment of
money in excess of $10.0 million in the aggregate shall be
rendered against the Company or any of its Significant
Subsidiaries and shall remain unstayed, unsatisfied and
undischarged for the period and after the notice specified below;
and (viii) certain events of bankruptcy, insolvency or
reorganization involving the Company or any of its Significant
Subsidiaries. The Company is required to deliver to the Trustee
within 120 days after the end of each fiscal year of
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the Company an officer's certificate stating whether or not the
signatories know of any default by the Company under the
Indenture and the Notes and, if any default exists, describing
such default.
A default under clause (v), (vi) or (vii) above is not an
Event of Default until the Trustee notifies the Company or the
holders of at least 25% in principal amount of the then
outstanding Notes notify the Company and the Trustee of the
default and the Company does not cure the default within 60 days
with respect to clauses (v) or (vii), or within 30 days with
respect to clause (vi) after receipt of the notice. The notice
must specify the default, demand that it be remedied and state
that the notice is a "Notice of Default."
In case an Event of Default (other than an Event of Default
resulting from bankruptcy, insolvency or reorganization of the
Company or any of its Significant Subsidiaries) shall have
occurred and be continuing, the Trustee, by notice to the
Company, or the holders of 25% or more of the principal amount of
the Notes then outstanding, by notice to the Company and the
Trustee, may declare the principal amount of the Notes, plus
accrued and unpaid interest and Special Interest, if any, to be
immediately due and payable. In case an Event of Default
resulting from certain events of bankruptcy, insolvency or
reorganization of the Company or any of its Significant
Subsidiaries shall occur, such amounts shall be due and payable
without any declaration or other act on the part of the Trustee
or the holders of the Notes. Such declaration of acceleration may
be rescinded and past defaults may be waived by the holders of a
majority of the principal amount of the Notes then outstanding
upon conditions provided in the Indenture, except a default in
the payment of principal, or interest on, or Special Interest, if
any, with respect to any Note cannot be waived or amended without
payment of the amount then due otherwise than for the
acceleration. Except to enforce the right to receive payment when
due of principal, interest, and Special Interest, if any, no
holder of a Note may institute any proceeding with respect to the
Indenture or the Notes or for any remedy thereunder unless such
holder has previously given to the Trustee written notice of a
continuing Event of Default and unless the holders of 25% or more
of the principal amount of the Notes then outstanding have
requested the Trustee to institute proceedings in respect of such
Event of Default and have offered the Trustee reasonable
indemnity against loss, liability and expense to be thereby
incurred, the Trustee has failed so to act for 60 days after
receipt of the same and during such 60-day period the holders of
a majority of the principal amount of the Notes then outstanding
have not given the Trustee a direction inconsistent with the
request. Subject to certain restrictions, the holders of a
majority in principal amount of the Notes then outstanding will
have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee with
respect to the Collateral or otherwise or exercising any trust or
power conferred on the Trustee. The Trustee, however, may refuse
to follow any direction that conflicts with law or the Indenture,
that is unduly prejudicial to the rights of any holder of a Note
or that would involve the Trustee in personal liability, and the
Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Modifications and Waivers of the Indenture
Supplemental indentures modifying or amending the Indenture
may be made by the Company and the Trustee with the consent of
the holders of not less than a majority in aggregate principal
amount of the then outstanding Notes; provided, however, that no
such modification or amendment may, without the consent of the
holders of each Note affected thereby, (a) change the fixed
maturity of any Note, reduce the rate or extend the time of
payment of interest on, or Special Interest, if any, with respect
to, any Note, reduce the principal amount or Special Interest, if
any, with respect to (in each case, whether on redemption,
repurchase or otherwise), any Note, change the time at which any
Note may or must be redeemed as described under "--Redemptions"
above, impair the right of a holder to institute suit for payment
thereof, or change the place of payment of the Notes, or the
currency in which the Notes are payable or (b) reduce the
percentage of Notes, the consent of the holders of which is
required for any modification or waiver. Without the consent of
any holders of the Notes, the Company and the Trustee may amend
or supplement the Notes, the Indenture or any Collateral Document
to (i) provide for uncertificated Notes in addition to or in
place of certificated Notes, (ii) provide for the assumption of
the Company's obligations to holders of the Notes in the case of
a merger or consolidation or transfer of all or substantially all
of the Company's assets, (iii) comply with the TIA or (iv) cure
any ambiguity, defect or inconsistency, or make any other change,
in each case provided that such action does not materially
adversely affect the interests of the holders of the Notes.
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The holders of a majority in aggregate principal amount of
outstanding Notes may waive any past default under the Indenture,
except a default in the payment of principal, interest or Special
Interest, if any, or default with respect to certain covenants
under the Indenture.
The consent of the holders of the Notes is not necessary
under the Indenture to approve the particular form of any
proposed amendment. It is sufficient if such consent approves the
substance of the proposed amendment. After the amendment under
the Indenture becomes effective, the Company is required to mail
to holders of the Notes a notice briefly describing such
amendment. However, the failure to give such notice to all
holders of the Notes, or any defect therein, will not impair or
affect the validity of the amendment.
No Personal Liability of Directors, Officers, Employees and
Stockholders
No past, present or future director, officer, employee or
stockholder, as such, of the Company shall have any liability for
any obligations of the Company under the Notes or the Indenture
or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each holder of the Notes by
accepting a Note waives and releases all such liability.
Satisfaction and Discharge of the Indenture
The Indenture provides that the Company may terminate its
obligations under the Indenture and obtain the release of the
Collateral at any time by delivering all outstanding Notes to the
Trustee for cancellation and paying all sums required to be paid
pursuant to the terms of the Indenture. In addition, the Company
will be permitted to terminate all of its obligations under the
Indenture and obtain the release of the Collateral by irrevocably
depositing with the Trustee money or U.S. government obligations
sufficient to pay principal of, interest and Special Interest, if
any, with respect to the Notes to maturity or redemption and all
other sums payable pursuant to the terms of the Indenture, after
complying with certain other procedures set forth in the
Indenture.
Transfer and Exchange
A holder may transfer or exchange the Notes in accordance
with the Indenture. The Company may require a holder to, among
other things, furnish appropriate endorsements and transfer
documents and pay any taxes and fees required by law or permitted
by the Indenture.
The registered holder of a Note may be treated as the owner
of it for all purposes.
Delivery and Form
The Notes are issued in registered form.
Reports
As soon as practicable after it files with the Commission,
the Company shall deliver to the Trustee and to each holder of a
Note, at the address as set forth in the register of the Company
with respect thereto, copies of the annual reports, quarterly
reports and the information, documents and other reports with the
Company furnished by it to its stockholders generally.
Concurrently with the reports delivered pursuant to the
preceding paragraph, the Company is required to furnish the
Trustee an officer's certificate to the effect that such officer
has conducted or supervised a review of the activities of the
Company and of performance under the Indenture and that, to the
knowledge of such officer, based on such review, the Company has
fulfilled all of its obligations under the Indenture or, if there
has been a default, specifying each default known to him, its
nature and status.
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Concerning the Trustee
The Indenture contains certain limitations on the rights of
the Trustee, should it become a creditor of the Company, to
obtain payment of claims in certain cases or to realize on
certain property received in respect of any such claim as
security or otherwise. Subject to the TIA, the Trustee will be
permitted to engage in other transactions; however, if it
acquires any conflicting interest, as described in the TIA, it
must eliminate such conflict or resign. The Trustee shall have a
lien prior to the Notes on all money or property held or
collected by the Trustee or otherwise distributable to holders of
Notes (except money, securities or property held in trust to pay
principal and/or interest and Special Interest, if any, on
particular Notes) to secure the Company's payment and indemnity
obligations to the Trustee (as trustee under the Indenture and
under the Security Agreement (defined below)).
Governing Law
The Indenture provides that it and the Notes will be
governed by the laws of the State of New York without regard to
principles of conflict of laws.
Collateral
Pursuant to an Aircraft Mortgage and Security Agreement
between the Company and the Trustee (the "Security Agreement")
and the Mortgage Supplement referred to therein (the "Mortgage
Supplement"; the Security Agreement and the Mortgage Supplement
being referred to herein collectively as the "Collateral
Documents"), the indebtedness evidenced by the Notes will be
secured by a lien on (among other related collateral) (i) the
Pledged Airframe (as defined below) and (ii) the Pledged Engines
(as defined below). The Pledged Airframe and the Pledged Engines
are currently leased to the Company, which lease will be
terminated on the Issue Date. The Pledged Airframe, the Pledged
Engines and the other collateral under the Collateral Documents
are sometimes referred to herein collectively as the
"Collateral."
Airframe
The term "Pledged Airframe" refers to the Boeing 767-231
ETOPS airframe, together with any part, spare part, appliance,
accessory, appurtenance, instrument, furnishing, seat or other
item of equipment (other than complete engines) installed in or
attached to this airframe or removed therefrom but remaining
subject to the liens created by the Collateral Documents. The
Pledged Airframe was manufactured in 1983.
Engines
The term "Pledged Engines" refers to the two Pratt &
Whitney JT9D-7R4D engines associated with the Pledged Airframe or
any other engines that the Trustee and the Company agree will be
substituted therefor pursuant to the Security Agreement, together
with any part, spare part, appliance, accessory, appurtenance,
instrument, furnishing, seat or other item of equipment installed
in or attached to the engines or removed therefrom but remaining
subject to the liens created by the Collateral Documents.
Use of Collateral; Total Loss; Release and Termination of Lien
The Indenture and the Collateral Documents provide, among
other things, that the Company may (i) use and deal with the
Collateral in any manner consistent with the Company's ordinary
course of business and (ii) unless an Event of Default has
occurred and is continuing, cause certain Collateral to be leased
or subleased in accordance with the applicable Collateral
Documents.
Upon the payment in full of all amounts outstanding under
the Notes and the Indenture, the liens created by the Collateral
Documents will terminate.
In addition, such Indenture and Collateral Documents permit
the sale of the Aircraft for cash or any other consideration
acceptable to the Company at any time; provided that upon such a
sale, the Company will be required
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to commence an Offer to Purchase Notes in an amount (the "Sale
OTP Amount") equal to the aggregate principal amount of Notes
outstanding on the date of commencement of such Offer to
Purchase, at a purchase price (expressed as a percentage of
principal amount of the Notes) equal to (a) 102%, if such Offer
to Purchase is commenced prior to the first anniversary of the
Issue Date, or (b) 101%, if such Offer to Purchase is commenced
on or after the first anniversary of the Issue Date, plus, in
either case, accrued and unpaid interest and Special Interest, if
any, on such Notes to and including the Payment Date. At least 15
days prior to the date of the commencement of the Offer to
Purchase, the Company shall give the Trustee notice of such
pending sale and, on or prior to the date of such sale, shall
have deposited with the Trustee the purchase price with respect
to the Offer to Purchase. Such purchase price shall remain on
deposit with the Trustee until the payment of such purchase price
on the applicable Payment Date with respect to the Offer to
Purchase. As of the day immediately following the Payment Date
with respect to the Offer to Purchase, the interest rate borne by
any then outstanding Notes will automatically increase by 1.50%
per annum, and the Trustee shall release from the liens created
by the Collateral Documents all right, title and interest of the
Trustee in and to the Collateral. Such increase shall be in
addition to Special Interest, if any, then accruing with respect
to the Notes, which Special Interest shall continue to accrue in
accordance with the provisions of the Notes.
In the event that there shall occur a Total Loss with
respect to the Aircraft, the Company will be required to make an
Offer to Purchase Notes in an aggregate principal amount (the
"Total Loss OTP Amount") equal to the aggregate principal amount
of Notes outstanding on the date such Offer to Purchase is
required to be commenced hereunder, at a purchase price equal to
100% of the aggregate principal amount of Notes to be purchased,
plus accrued and unpaid interest and Special Interest, if any, on
such Notes, to and including the date of purchase. The Company
shall commence the Offer to Purchase within 30 days after the
date of any such Total Loss.
At its option the Company may reduce or eliminate its
obligation to pay any Sale OTP Amount or Total Loss OTP Amount in
cash by delivering to the Trustee at least 15 days before the
date of commencement of the related Offer to Purchase (i) Notes
that have been acquired by the Company in open market purchases
(and, for avoidance of doubt, not acquired by way of any
redemption or Offer to Purchase under the Indenture) and have not
been called for redemption pursuant to the Indenture, together
with (ii) an Officers' Certificate directing the Trustee to
cancel the Notes and stating the election of the Company to have
credited against such Sale OTP Amount or Total Loss OTP Amount,
as the case may be, a specified principal amount of Notes so
delivered. All Notes made the basis of a credit against a Sale
OTP Amount or Total Loss OTP Amount shall be credited at 100% of
their principal amount. In case of the failure of the Company to
deliver such Officers' Certificate, the Sale OTP Amount or Total
Loss OTP Amount, as the case may be, due on the payment date
therefor shall be paid entirely in cash without the option to
reduce the Company's obligation to make such payment as described
above.
Under the terms of the Indenture and the Collateral
Documents, the Trustee, acting upon instructions from holders of
at least 66 2/3% in aggregate principal amount of Notes then
outstanding, will determine the circumstances under and the
manner in which the Collateral may be disposed of, including, but
not limited to, the determination of whether to release all or
any portion of the Collateral from the liens created by the
Collateral Documents other than in accordance with the terms
thereof and of the Indenture. The holders of at least a majority
in aggregate principal amount of the Notes then outstanding may
determine whether and under what circumstances to foreclose on
the Collateral. Upon any foreclosure, cash or other property
realized by the Trustee will be applied first to pay the expenses
of such foreclosure and fees and other amounts then payable to
the Trustee under the Collateral Documents and the Indenture, and
thereafter for the equal and ratable benefit of the holders pro
rata to the aggregate principal amounts of Notes held by such
holders. In connection with any release of Collateral, the
Trustee shall determine whether the Trustee has received all
documentation required by Section 314 of the TIA (to the extent
applicable) to permit such release.
Filing and Perfection Requirements for Collateral
The security interest in the Collateral was required to
be, and was duly perfected generally in accordance with applicable
federal, state and local laws.
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Restriction on Liens
The Indenture and the Security Agreement require that the
Collateral be maintained free of any liens, other than the liens
created by the Security Agreement, any second priority lien
created to secure the Equity Notes pursuant to the Equity Notes
Documents (as defined), liens for taxes either not yet due and
payable, liens for taxes due but whose validity is being
contested in good faith by the Company, materialmen's, mechanics'
or other similar liens that are not overdue (except to the extent
being contested in good faith by appropriate proceedings),
judgment liens in existence less than 60 days that are being
appealed in good faith and with respect to which a stay of
execution pending appeal has been secured or the payment of which
is covered in full by insurance (as long as the related judgments
do not constitute an Event of Default) and certain other liens
permitted under the Security Agreement.
Certain Bankruptcy Issues
Subject to the provisions of Section 1110 of the Bankruptcy
Code described below, the right of the Trustee to repossess and
dispose of the Collateral, or otherwise to exercise rights or
remedies with respect to the Collateral, upon the occurrence of
an Event of Default is likely to be significantly impaired by
applicable bankruptcy law if a bankruptcy proceeding were to be
commenced by or against the Company prior to the date when, or
possibly even after, the Trustee has effected any such action.
Under bankruptcy law, secured creditors such as the holders of
the Notes are prohibited from repossessing their security from a
debtor in a bankruptcy case, or from disposing of security
repossessed from such debtor, without bankruptcy court approval.
Moreover, bankruptcy law permits the debtor to continue to retain
and to use collateral even though the debtor is in default under
the applicable debt instruments, provided generally that the
secured creditor is given "adequate protection." The meaning of
the term "adequate protection" may vary according to
circumstances, but it is intended in general to protect the value
(as determined by the Bankruptcy Court) of the secured creditor's
interest in the collateral and may include cash payments or the
granting of additional security, if and at such times as the
court in its discretion determines, for any diminution in the
value of the collateral as a result of the stay of repossession
or disposition or any use of the collateral by the debtor during
the pendency of the bankruptcy case. In view of the lack of a
precise definition of the term "adequate protection" and the
broad discretionary powers of a bankruptcy court, it is
impossible to predict how long payments under the Notes could be
delayed following commencement of a bankruptcy case, whether or
when the Trustee could repossess or dispose of the Collateral or
whether or to what extent holders would be compensated for any
delay in payment or loss of value of the Collateral through the
requirement of "adequate protection." Furthermore, in the event
that the Bankruptcy Court determines the value of the Collateral
is not greater than or equal to all amounts due on the Notes, the
holders would, in part, hold "unsecured deficiency" claims.
Applicable federal bankruptcy laws do not permit the payment
and/or accrual of interest, costs and attorney's fees for
"unsecured deficiency" claims or for the related "undersecured"
claim during the pendency of a debtor's bankruptcy case.
Section 1110 of the Bankruptcy Code provides in relevant
part that the right of lessors, conditional vendors and -- with
respect to the Collateral -- holders of purchase money equipment
security interests, in each case, with respect to covered
"equipment" (as defined in Section 1110 of the Bankruptcy Code)
to take possession of such equipment in compliance with the
provisions of a lease, conditional sale contract or purchase
money equipment security agreement, as the case may be, is not
affected by (a) the automatic stay provision of the Bankruptcy
Code, which provision enjoins, among other things, repossessions
by creditors for the duration of the reorganization period, (b)
the provision of the Bankruptcy Code allowing the trustee in
reorganization to use, sell or lease property of the debtor
during the reorganization period, (c) Section 1129 of the
Bankruptcy Code (which governs the confirmation of plans of
reorganization in Chapter 11 cases) and (d) any power of the
bankruptcy court to enjoin a repossession, in each case, unless
the debtor in possession or bankruptcy trustee meets certain
conditions. Section 1110 provides in relevant part that the right
of a lessor, conditional vendor or -- with respect to the
Collateral -- holder of a purchase money equipment security
interest to take possession of such "equipment" upon the
occurrence of an event of default may not be exercised for 60
days from the date of commencement of the reorganization
proceedings (unless specifically permitted by the bankruptcy
court) and may not be exercised thereafter if, within such 60-day
period (or such longer period consented to by the lessor,
conditional vendor or holder of a Section 1110-covered security
interest), the trustee in reorganization or the debtor in
possession, subject to bankruptcy court
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approval, agrees to perform the debtor's obligations that become
due on or after the date of commencement of reorganization
proceedings and cures all existing defaults (other than defaults
resulting solely from the financial condition, bankruptcy,
insolvency or reorganization of the debtor) within certain
prescribed time periods. "Equipment" is defined in Section 1110
of the Bankruptcy Code, in part, as an aircraft, aircraft engine,
propeller, appliance, or spare part (as defined in Section 40102
of Title 49 of the U.S. Code) that is subject to a security
interest granted by, leased to, or conditionally sold to a debtor
that is a citizen of the United States (as defined in Section
40102 of Title 49 of the U.S. Code) holding an air carrier
operating certificate issued by the Secretary of Transportation
pursuant to chapter 447 of title 49 of the U.S. Code for aircraft
capable of carrying ten or more individuals or 6,000 pounds or
more of cargo.
The Trustee has received an opinion of Cleary,
Gottlieb, Steen & Hamilton, counsel to the Company ("Company
Counsel"), that the Trustee, on behalf of the holders of the
Notes, will be entitled, subject to certain conditions, to the
benefits of Section 1110 of the Bankruptcy Code with respect to
the Aircraft in the event of a case under Chapter 11 of the
Bankruptcy Code in which the Company is a debtor.
The opinion of Company Counsel does not address the
availability of Section 1110 to any possible lease or sublease of
the Aircraft, nor does it address any part of the Aircraft that
does not fall within the definition of "equipment" under Section
1110. The opinion of Company Counsel also does not address the
period of time during which the benefits of Section 1110 will
remain available because of the Western Pacific Airlines decision
described immediately below.
On March 10, 1998, the U.S. District Court for the District
of Colorado issued an opinion arising from the bankruptcy
proceedings of Western Pacific Airlines, Inc. (Civil Action No.
98-K-358). The decision, reversing an order of the bankruptcy
court, held that, once an airline debtor reaffirms its
obligations and cures its defaults under an aircraft lease within
the prescribed period in accordance with Section 1110 of the
Bankruptcy Code, the lessor under such lease is not entitled to
repossess the aircraft under Section 1110 if the airline
subsequently defaults under such lease. On May 1, 1998, the U.S.
District Court reaffirmed its prior decision in response to a
motion for rehearing and reconsideration by certain parties in
the case. Certain parties in the case have been granted their
motion for immediate certification of the decision to the Tenth
Circuit Court of Appeals. This decision, therefore, casts doubt
on the continuing applicability of Section 1110's protections
after an airline debtor reaffirms its obligations and cures any
defaults with respect to an aircraft lease or mortgage within the
original period provided by Section 1110.
Settlement
Initial settlement in the Notes will be in same-day funds.
Investors holding their Notes through DTC will follow settlement
practices applicable to United States corporate debt obligations.
The Indenture will require that payments in respect of Notes
(including principal, interest and Special Interest) meeting
certain conditions set forth in the Indenture be made by wire
transfer of same-day funds to the accounts specified by the
holders thereof or, under certain circumstances, by mailing a
check to each such holder's registered address.
Certain Definitions
"Business Day" means each day that is not a Legal Holiday.
"Change in Control" means the occurrence of any of the
following events: (i) any person (including any entity or group
deemed to be a "person" under Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) is or becomes the direct or
indirect beneficial owner (as determined in accordance with Rule
13d-3 under the Exchange Act) of shares of the Company's capital
stock representing greater than 50% of the total voting power of
all shares of capital stock of the Company entitled to vote in
the election of directors under ordinary circumstances or to
elect a majority of the Board of Directors, (ii) the Company
sells, transfers or otherwise disposes of all or substantially
all of its assets, (iii) when, during any period of 12
consecutive months after the Issue Date, individuals who at the
beginning of any such 12-month period constituted the Board of
Directors (together with any new directors whose election by such
Board or whose nomination for election by the stockholders of the
Company was approved by a
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vote of a majority of the directors still in office entitled to
vote with respect to such nomination who were either directors at
the beginning of such period or whose election or nomination for
election was previously so approved, but excluding any of the
individuals who at the beginning of such 12-month period
constituted such Board but who ceased to be a member of the Board
pursuant to the Company's mandatory retirement policy as in
effect as of the Issue Date), cease for any reason to constitute
a majority of the Board of Directors then in office or (iv) the
date of the consummation of the merger or consolidation of the
Company with another corporation where the stockholders of the
Company, immediately prior to the merger or consolidation, would
not beneficially own, immediately after the merger or
consolidation, shares entitling such stockholders to 50% or more
of all votes (without consideration of the rights of any class of
stock to elect directors by a separate class vote) to which all
stockholders of the corporation issuing cash or securities in the
merger or consolidation would be entitled in the election of
directors or where members of the Board of Directors, immediately
prior to the merger or consolidation, would not, immediately
after the merger or consolidation, constitute a majority of the
board of directors of the corporation issuing cash or securities
in the merger or consolidation.
"Equity Notes Documents" means the Indenture pursuant to
which the Equity Notes are issued and the other Operative
Documents (as defined in such Indenture).
"Legal Holiday" means a Saturday, Sunday or any other day
on which banks located in New York City or the city and state of
the Trustee's Corporate Trust Office as of the date of original
issuance are authorized or obligated by law to remain closed.
"Offer to Purchase" means an offer to purchase all or a
portion, as the case may be, of the Notes by the Company from the
holders of the Notes commenced by the mailing (by first-class
mail, postage prepaid) by the Company (or, if requested by the
Company on at least five Business Days' prior notice to the
Trustee and at the Company's expense, by the Trustee) of a notice
to each holder (and, if mailed by the Company, to the Trustee) at
such holder's address appearing in the register, stating: (i) the
covenant pursuant to which the offer is being made and that all
Notes validly tendered will be accepted for payment; (ii) the
purchase price and the date of purchase (which shall be a
business day no earlier than 30 days nor later than 60 days from
the date such notice is mailed) (the "Payment Date"); (iii) that
any Note not tendered will continue to accrue interest and
Special Interest, if, any, pursuant to its terms; (iv) that,
unless the Company defaults in the payment of the purchase price
on the Payment Date, any Note accepted for payment pursuant to
the Offer to Purchase shall cease to accrue interest and Special
Interest, if, any, on and after the Payment Date; (v) that
holders electing to have a Note purchased pursuant to the Offer
to Purchase will be required to surrender the Note, together with
the form entitled "Option of the Holder to Elect Purchase" on the
reverse side of the Note completed, to the paying agent at the
address specified in the notice at any time beginning with the
date of such notice but prior to the close of business on the
Business Day immediately preceding the Payment Date, and such
holder shall be entitled to receive from the paying agent a
non-transferable receipt of deposit evidencing such deposit; (vi)
that, unless the Company defaults in making the payment of the
purchase price or shall otherwise, in its sole discretion,
consent thereto, holders will be entitled to withdraw their
election only if the Trustee receives, not later than the close
of business on the fifth business day immediately preceding the
Payment Date, a telegram, facsimile transmission or letter
setting forth the name of such holder, the principal amount of
Notes delivered for purchase and a statement that such holder is
withdrawing his election to have such Notes purchased; and (vii)
that holders whose Notes are being purchased only in part will be
promptly issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered; provided that each
Note purchased and each new Note issued shall be in a principal
amount of $1,000 or integral multiples thereof. The Company shall
place such notice in the national edition of The New York Times
or The Wall Street Journal or, if such newspapers are not then in
circulation, in a financial newspaper of general circulation in
New York City. No failure of the Company to give the foregoing
notice shall limit any holder's right to exercise a repurchase
right. On the Payment Date, the Company shall (i) accept for
payment Notes or portions thereof tendered pursuant to an Offer
to Purchase; (ii) deposit with the Trustee money sufficient to
pay the purchase price of all Notes or portions thereof so
accepted; and (iii) deliver, or cause to be delivered, to the
Trustee all Notes or portions thereof so accepted together with
an officers' certificate specifying the Notes or portions thereof
accepted for payment by the Company. The Trustee shall promptly
mail to the holders of Notes so accepted payment in an amount
equal to the purchase price, and the Trustee shall promptly
authenticate, and the Company shall promptly execute and mail (or
cause to be mailed) to such holders a new Note equal in principal
amount to any unpurchased
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portion of the Note surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount
of $1,000 or integral multiples thereof; provided, further, that
if the payment date is between a regular record date and the next
succeeding interest payment date, Notes to be repurchased must be
accompanied by payment of an amount equal to the interest and
Special Interest, if any, on the principal amount of the Note
being repurchased, and the interest and the Special Interest, if
any, on the principal amount of the Note being repurchased will
be paid on such next succeeding interest payment date to the
registered holder of such Note on the immediately preceding
record date. A Note repurchased on an interest payment date need
not be accompanied by any such payment, and the interest and
Special Interest, if any, on the principal amount of the Note
being repurchased, if any, will be paid on such interest payment
date to the registered holder of such Note on the corresponding
record date. The Company will publicly announce the results of an
Offer to Purchase as soon as practicable after the Payment Date.
The Trustee shall act as the paying agent for an Offer to
Purchase. The Company will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are
applicable, in the event that the Company is required to
repurchase Notes pursuant to an Offer to Purchase. Both the
notice of the Company and the notice of the holder having been
given as specified above, the Notes so to be repurchased shall,
on the Payment Date become due and payable at the purchase price
applicable thereto and from and after such date (unless the
Company shall default in the payment of such purchase price) such
Notes shall cease to bear interest or Special Interest, if any.
If any Note shall not be paid upon surrender thereof for
repurchase, the principal shall, until paid, bear interest and
Special Interest, if any, from the Payment Date at the rate and
in accordance with the provisions set forth in such Note and the
Indenture. Any Note that is to be submitted for repurchase only
in part shall be delivered pursuant to the above provisions with
(if the Company or Trustee so requires) due endorsement by, or a
written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the holder thereof or
such holder's attorney duly authorized in writing.
"Operative Documents" means the Indenture and the Collateral
Documents.
"Payment Date" with respect to any Offer to Purchase has
the meaning specified in the definition herein of Offer to
Purchase.
"Total Loss" means any of the following in relation to the
Aircraft, the Pledged Airframe or any Pledged Engine, and "Total
Loss Date" means the date set forth in parentheses after each
Total Loss:
(i) Destruction, damage beyond repair or being
rendered permanently unfit for normal use for any reason
whatsoever (the date such event occurs or, if not known,
the date on which the Aircraft, the Pledged Airframe or
Pledged Engine was last heard of).
(ii) Actual, constructive, compromised, arranged or
agreed total loss (the earlier of the date on which the
loss is agreed or compromised by the insurers or 30 days
after the date of notice to the Company's brokers or
insurers claiming such total loss).
(iii) Requisition of title, confiscation, forfeiture
or any compulsory acquisition whatsoever, except for any
acquisition of the Aircraft, Pledged Airframe or Pledged
Engines by the Air Mobility Command pursuant to the Civil
Reserve Air Fleet Program (the date on which the same takes
effect).
(iv) Sequestration, detention or seizure for more than
30 consecutive days (the earlier of the date on which
insurers make payment on the basis of a total loss or the
date of expiration of such period).
(v) Requisition for use for more than 180 consecutive
days (the earlier of the date on which the insurers make
payment on the basis of a total loss or the date of
expiration of such period).
(vi) Loss or loss of use due to theft or disappearance
for a period greater than 60 consecutive days (the date of
expiration of such period).
(vii) Any other occurrence that deprives the Company
of use or possession for a period of 180 consecutive days
or longer (the 180th day of such period).
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BOOK-ENTRY, DELIVERY AND FORM
General
Old Notes resold after the Issue Date within the United
States to Qualified Institutional Buyers ("QIBs") in compliance
with Rule 144A under the Securities Act or outside the United
States to non-U.S. persons in reliance on Regulation S under the
Securities Act were delivered and available only in global form
("Old Global Notes"). Old Notes resold after the Issue Date to
any Accredited Investors were delivered and available only in
definitive, fully registered form bearing a legend containing
restrictions on transfers ("Old Definitive Notes"). All Exchange
Notes issued in the Exchange Offer for Old Notes represented by
Old Global Notes or Old Definitive Notes will be represented by
one or more Exchange Notes in global form (the "Global Exchange
Notes," and together with the Old Global Notes, the "Global
Notes"), which will be deposited with, or on behalf of, the DTC
and registered in the name of the DTC or its nominee, unless the
holder of such Old Notes elects to take physical delivery of its
certificates instead of holding its interest through the Global
Exchange Notes (collectively referred to herein as the
"Non-Global Holders"). Non-Global Holders will be issued in
registered form a certificated Exchange Note ("Certificated
Exchange Note"). Upon the transfer of any Certificated Exchange
Note initially issued to a Non-Global Holder, such Certificated
Exchange Note will, unless the transferee requests otherwise or
the Global Exchange Note has previously been exchanged in whole
for Certificated Exchange Notes, be exchanged for an interest in
the Global Exchange Note.
Global Notes
Upon deposit of the Global Exchange Notes, DTC will credit,
on its book-entry registration and transfer system interests in
the Global Exchange Notes to the accounts of institutions that
have accounts with DTC (including Euroclear and Cedel)
("participants"). Ownership of beneficial interests in the Global
Exchange Notes will be limited to participants or persons that
may hold interests through participants. Ownership of beneficial
interests in the Global Exchange Notes will be shown on, and the
transfer of that ownership will be effected only through, records
maintained by DTC (with respect to participants' interests) for
the Global Exchange Notes, or by participants or persons that
hold interests through participants (with respect to beneficial
interests of persons other than participants). The laws of some
jurisdictions may require that certain purchasers of securities
take physical delivery of such securities in definitive form.
Such limits and laws may impair the ability to transfer or pledge
beneficial interests in the Global Exchange Notes.
So long as DTC, or its nominee, is the registered holder of
any Global Notes, DTC or such nominee, as the case may be, will
be considered the sole legal owner and holder of such Notes
represented by the Global Notes for all purposes under the
Indenture and the Notes. Except as set forth below, owners of
beneficial interests in Global Notes will not be entitled to have
such Global Notes represented thereby registered in their names,
will not receive or be entitled to receive physical delivery of
certificates representing Notes in definitive, fully registered
form bearing a legend containing the applicable restrictions on
transfers ("Definitive Notes") in exchange therefor and will not
be considered to be the owners or holders of such Global Notes
represented thereby for any purpose under the Notes or the
Indenture. The Company understands that under existing industry
practice, in the event an owner of a beneficial interest in a
Global Note desires to take any action that DTC, as the holder of
such Global Note, is entitled to take, DTC would authorize the
participants to take such action, and that the participants would
authorize beneficial owners owning through such participants to
take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
Any payment of principal, interest or Special Interest due
on the Notes on any interest payment date or at maturity will be
made available by the Company to the Trustee by such date. As
soon as possible thereafter, the Trustee will make such payments
to DTC or its nominee, as the case may be, as the registered
owner of the Global Notes representing such Notes in accordance
with existing arrangements between the Trustee and DTC.
The Company expects that DTC or its nominee, upon receipt
of any payment of principal, interest or Special Interest in
respect of the Global Notes, will credit immediately the accounts
of the related participants with payments in amounts
proportionate to their respective beneficial interests in the
principal amount of such Global
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Note as shown on the records of DTC. The Company also expects
that payments by participants to owners of beneficial interests
in the Global Notes held through such participants will be
governed by standing instructions and customary practices, as is
now the case with securities held for the accounts of customers
in bearer form or registered in "street name," and will be the
responsibility of such participants.
None of the Company, the Trustee, or any payment agent for
the Global Notes will have any responsibility or liability for
any aspect of the records relating to or payments made on account
of beneficial ownership interests in any of the Global Notes or
for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests or for other aspects of the
relationship between DTC and its participants or the relationship
between such participants and the owners of beneficial interests
in the Global Notes owning through such participants.
As long as the Notes are represented by a Global Note,
DTC's nominee will be the holder of the Notes and therefore will
be the only entity that can exercise a right to repayment or
repurchase of the Notes. See "Description of Exchange Notes--
Repurchase of Notes Upon a Change in Control." Notice by
participants, or by owners of beneficial interests in a Global
Note held through such participants, of the exercise of the
option to elect repayment of beneficial interests in Notes
represented by a Global Note must be transmitted to DTC in
accordance with its procedures on a form required by DTC and
provided to participants. In order to ensure that DTC's nominee
will timely exercise a right to repayment with respect to a
particular Note, the beneficial owner of such Note must instruct
the broker or other participant to exercise a right to repayment.
Different firms have cut-off times for accepting instructions
from their customers and, accordingly, each beneficial owner
should consult the broker or other participant through which it
holds an interest in a Note in order to ascertain the cut-off
time by which such an instruction must be given in order for
timely notice to be delivered to DTC. The Company will not be
liable for any delay in delivery of notices of the exercise of
the option to elect repayment.
Unless and until exchanged in whole or in part for Notes in
definitive form in accordance with the terms of the Notes, the
Global Notes may not be transferred except as a whole by DTC to a
nominee of DTC, or by a nominee of DTC to DTC or another nominee
of DTC, or by DTC or any such nominee to a successor of DTC or a
nominee of each successor.
Although DTC has agreed to the foregoing procedures in
order to facilitate transfers of interests in the Global Notes
among its participants, it is under no obligation to perform or
continue to perform such procedures, and such procedures may be
discontinued at any time. Neither the Trustee nor the Company
will have any responsibility for the performance by DTC or its
participants or indirect participants of their respective
obligations under the rules and procedures governing their
operations. The Company and the Trustee may conclusively rely on,
and shall be protected in relying on, instructions from DTC for
all purposes.
Definitive Notes
Upon consummation of the Exchange Offer, Old Global Notes
and the Global Exchange Notes shall be exchangeable for
corresponding Old Definitive Notes registered in the name of
persons other than DTC or its nominee at the option of the holder
thereof or if (A) DTC (i) notifies the Company that it is
unwilling or unable to continue as depositary for any of the
Global Notes or (ii) at any time ceases to be a clearing agency
registered under the Exchange Act, (B) there shall have occurred
and be continuing an Event of Default (as defined in the
Indenture) with respect to the Notes or (C) the Company executes
and delivers to the Trustee an order that the Global Notes shall
be so exchangeable. Any Definitive Notes or Certificated Exchange
Notes will be issued only in fully registered form and shall be
issued without coupons in denominations of $1,000 and integral
multiples thereof. Any Old Definitive Notes or Certificated
Exchange Notes issued in exchange for a Global Note will be
registered in such names and in such denominations as DTC shall
request.
The Clearing System
DTC has advised the Company as follows: DTC is a
limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the
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meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of
the Exchange Act. DTC was created to hold securities of
participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities
through electronic book-entry changes in accounts of
participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities
brokers and dealers (which may include Lazard), banks, trust
companies, clearing corporations and certain other organizations.
Access to DTC's book-entry system is also available to others
such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a participant,
whether directly or indirectly.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain United
States federal income tax considerations applicable to the
initial holders of the Old Notes who purchased the Old Notes at
their "issue price," that is, the first price at which a
substantial amount of the Old Notes is sold for money to the
public (not including bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters, placement
agents or wholesalers). This discussion does not address special
tax considerations relevant to any person that acquired the Old
Notes in exchange for a direct or indirect interest in the
Aircraft. This summary is based upon provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), regulations,
rulings and decisions currently in effect, all of which are
subject to change (possibly with retroactive effect). The
discussion does not purport to deal with all aspects of the
United States federal income taxation that may be relevant to
particular investors in light of their particular circumstances
(for example, to persons holding Notes as part of a conversion
transaction or as part of a hedge or hedging transaction, or as a
position in a straddle for tax purposes), nor does it discuss the
United States federal income tax considerations applicable to
certain types of investors subject to special treatment under the
federal income tax laws (for example, dealers in securities or
currencies, traders in securities electing to mark to market
their securities positions, insurance companies, tax-exempt
organizations or financial institutions). In addition, the
discussion does not consider the effect of any foreign, state,
local or other tax laws that may be applicable to a particular
investor. The discussion assumes that investors hold the Notes as
"capital assets" within the meaning of Section 1221 of the Code.
Prospective investors considering the Exchange Offer should
consult their tax advisors with regard to the application of the
United States federal income tax laws to their particular
situations as well as any tax consequences arising under the laws
of any state, local or foreign taxing jurisdiction.
As used herein, a "United States Holder" is an individual
who is a citizen or resident of the United States, a U.S.
domestic corporation or any other person that is subject to U.S.
federal income tax on a net income basis in respect of its
investment in the Notes.
Tax Consequences to United States Holders
The exchange of the Old Notes for Exchange Notes pursuant
to the Exchange Offer will not result in any United States
federal income tax consequences to the United States Holders.
When a United States Holder exchanges an Old Note for an Exchange
Note pursuant to the Exchange Offer, the Holder will have the
same adjusted tax basis and holding period in the Exchange Note
as in the Old Note immediately before the exchange.
Interest and Special Interest, if any, on a Note will
generally be taxable to a United States Holder as ordinary
interest income at the time it accrues or is received in
accordance with the United States Holder's method of accounting
for United States federal income tax purposes.
Upon the sale or retirement of a Note, a United States
Holder will recognize taxable gain or loss equal to the
difference between the amount realized on the sale or retirement
and such Holder's adjusted tax basis in the Note.
Tax Consequences to Non-United States Holders
Any payment of interest on a Note by the Company or any
paying agent to a holder that is a Non-United States Holder would
not be subject to withholding of U.S. federal income tax,
provided that (i) the holder does not actually or constructively
own 10 percent or more of the combined voting power of all
classes of stock of the Company and is not a controlled foreign
corporation related to the Company through stock ownership and
(ii) the beneficial owner provides a statement signed under
penalties of perjury that includes its name and address and
certifies that it is a Non-United States Holder in compliance
with applicable requirements.
Any gain realized on any sale or exchange of Notes by a
Non-United States Holder will not be subject to U.S. federal
income tax, including withholding tax, unless (i) such gain is
effectively connected with the conduct by
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the holder of a trade or business in the United States or (ii) in
the case of gain realized by an individual holder, the holder is
present in the United States for 183 days or more in the taxable
year of the sale and either (A) such gain or income is
attributable to an office or other fixed place of business
maintained in the United States by such holder or (B) such holder
has a tax home in the United States.
A Note held by an individual who is not a citizen or
resident of the United States at the time of his death will not
be subject to United States federal estate tax as a result of
such individual's death, provided that the individual does not
own, actually or constructively, 10 percent or more of the total
combined voting power of all classes of stock of the Company
entitled to vote and, at the time of such individual's death,
payments with respect to such Note would not have been
effectively connected to the conduct by such individual of a
trade or business in the United States.
As used herein, a "Non-United States Holder" is a holder of
a Note that is not a United States person. A "United States
person" is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in
or under the laws of the United States or any political
subdivision thereof, an estate the income of which is subject to
U.S. federal income taxation regardless of its source or a trust
if (i) a U.S. court is able to exercise primary supervision over
the trust's administration and (ii) one or more United States
persons have the authority to control all of the trust's
substantial decisions.
Information Reporting and Backup Withholding
In general, information reporting requirements will apply
to payments of interest on a Note and to the proceeds of the sale
of a Note made to a United States person other than certain
exempt recipients (such as corporations). Backup withholding at a
31 percent rate will apply to such payments if the United States
person fails to provide its taxpayer identification number or, in
the case of interest payments, fails either to report in full
interest income or to make certain certifications. Persons
holding Notes who are not United States persons may be required
to comply with applicable certification procedures to establish
that they are not United States persons to avoid the application
of such reporting requirements and backup withholding tax.
Any amounts withheld under the backup withholding rules
will be allowed as a refund or a credit against the person's U.S.
federal income tax liability provided the required information is
furnished to the Internal Revenue Service.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own
account (a Participating Broker-Dealer) pursuant to the Exchange
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 Participating Broker-Dealer in connection
with resales of Exchange Notes received in exchange for Old Notes
where such Old 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 Participating Broker-Dealer for use in connection with any
such resale. In addition, until _____________, 1998 (90 days
after the date of this Prospectus), all dealers effecting
transactions in the Exchange Notes may be required to deliver a
prospectus.
The Company will not receive any proceeds from any sale of
Exchange Notes by Participating Broker-Dealers. Exchange Notes
received by Participating 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 Participating
Broker-Dealer or the purchasers of any such Exchange Notes. Any
Participating 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 Participating 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
Participating 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 the Notes (including any broker-dealers)
against certain liabilities, including liabilities under the
Securities Act.
56
<PAGE>
LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be
passed upon for the Company by Cleary, Gottlieb, Steen &
Hamilton, New York, New York.
EXPERTS
The consolidated financial statements of the Company as of
December 31, 1997 and 1996 and for each of the periods in the
three-year period ended December 31, 1997 incorporated by
reference into this Prospectus, have been audited by KPMG Peat
Marwick LLP, independent auditors, as set forth in their report
incorporated by reference herein and are incorporated by
reference herein in reliance upon the report of such firm given
and upon their authority as experts in accounting and auditing.
Their report refers to the application of fresh start reporting
in connection with the '95 Reorganization.
57
<PAGE>
================================== ==================================
No dealer, salesperson or other OFFER TO EXCHANGE
person has authorized to give any
information or to make any 10 1/4% SENIOR SECURED
representations other than those NOTES DUE 2003
contained or incorporated by WHICH HAVE BEEN
reference in this Prospectus, and, REGISTERED UNDER THE
if given or made, such information SECURITIES ACT
or representations must not be OF 1933, AS AMENDED,
relied upon. This Prospectus does FOR ANY AND ALL OUTSTANDING
not constitute an offer to sell or 10 1/4% SENIOR SECURED
a solicitation by anyone in any NOTES DUE 2003
jurisdiction in which such offer
or solicitation is not authorized, OF
or in which the person making such
offer or solicitation is not TRANS WORLD
qualfied to do so, or to any AIRLINES, INC
person to whom it is unlawful to
make such offer or solicitation.
Neither the delivery of this
Prospectus nor the sale made
hereunder shall, under any
circumstances, create an
implication that the informtion ----------
contained herein is correct as of PROSPECTUS
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........4
Forward-Looking Statements....5
Prospectus Summary............6
Risk Factors.................13
The Company..................25
Use of Proceeds..............25
The Exchange Offer...........26
Ratio of Earnings to
Fixed Charges................33
Capitalization...............34
Selected Consolidated
Financial Data...............36
Description of Exchange
Notes........................38
Book-Entry, Delivery
and Form.....................51
Certain Federal Income
Tax Considerations ..........54
Plan of Distribution.........56
Legal Matters................57 July __, 1998
Experts......................57
================================== ==================================
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. 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.
II-1
<PAGE>
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 Third 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.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933, as amended (the "Securities Act"),
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 (the "Commission"), such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the 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 Securities Act and will be governed by the final adjudication
of such issue.
ITEM 21. 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)
II-2
<PAGE>
*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 herein), 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)
II-3
<PAGE>
*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
*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
*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.
*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
*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 --Indenture dated as of April 21, 1998 by and between TWA
and First Security Bank, National Association, as Trustee,
relating to TWA's Mandatory Conversion Equity Notes due 1999
4.31 --Form of Mandatory Conversion Equity Note due 1999
(contained as Exhibit A to Indenture in Exhibit 4.30)
*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 11
3/8% Senior Secured Notes Due 2003 (Exhibit 4.31 to
Registrant's Registration Statement on Form S-3, filed
with the SEC on June 16, 1998)
*4.33 --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 (Exhibit 4.32
to Registrant's Registration Statement on Form S-3,
filed with the SEC on June 16, 1998)
4.34 --Indenture dated as of June 16, 1998 by and between TWA
and First Security Bank, National Association, as
Trustee, relating to TWA's 10 1/4% Senior Secured Notes
due 2003
4.35 -- Form of 10 1/4% Senior Secured Notes due 2003 (contained
as Exhibit 1 to Rule 144A/Regulation S Appendix to Indenture
in Exhibit 4.34)
4.36 -- Registration Rights Agreement dated as of June 16,1998
between the Company, Lazard Freres & Co. LLC and First
Security Bank, National Association relating to the 10 1/4 %
Senior Secured Notes Due 2003
II-4
<PAGE>
4.37 --Indenture dated as of June 16, 1998 by and between TWA
and First Security Bank, National Association, as
Trustee, relating to TWA's 10 1/4% Mandatory Conversion
Equity Notes due 1999
4.38 --Form of 10 1/4% Mandatory Conversion Equity Notes due
1999 (contained as Exhibit A to Indenture in Exhibit 4.37)
4.39 --Registration Rights Agreement dated as of June 16,
1998 between the Company, Lazard Freres & Co. LLC and
First Security Bank, National Association relating to
the 10 1/4% Mandatory Conversion Equity Notes Due 1999
5 --Opinion of Cleary, Gottlieb, Steen & Hamilton, Counsel
to the Registrant, regarding the validity of the
securities being registered
*12 --Statement re: Computation of Ratio of Fixed Charges
(Exhibit 12 to Registrant's Registration Statement on
Form S-3, Regis. No. 333-58481)
23.1 --Consent of KPMG Peat Marwick LLP
23.2 --Consent of Cleary, Gottlieb, Steen & Hamilton, Counsel
to the Registrant (included in Exhibit 5)
24 --Powers of Attorney
25 --Statement of Eligibility of First Security Bank, National
Association
99.1 --Form of Letter of Transmittal
99.2 --Form of Notice of Guaranteed Delivery
99.3 --Form of Instruction to Registered Holder and/or
Book-Entry Transfer Facility Participant from Owner of
Old Notes
99.4 --Form of Letter to Registered Holders and Depository Trust
Company Participants
99.5 --Form of Letter to Clients of Depository Trust
Company Participants
---------------
* Incorporated by reference
(b) Schedules
All supplementary schedules relating to the Registration
Statement are omitted because they are not required or because
the required information, where material, is contained in the
Consolidated Financial Statements incorporated by reference from
the 12/31/97 Form 10-K and 3/31/98 Form 10-Q.
ITEM 22. 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:
II-5
<PAGE>
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the registration statement. 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,
II-5
<PAGE>
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.
(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,
each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act), that is incorporated by reference in
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 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 Commission, such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
(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 (the "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 or 11 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 a 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.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant has duly caused this Registration Statement on
Form S-4 to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of St. Louis, State of Missouri,
July 17, 1998.
TRANS WORLD AIRLINES, INC.
July 17, 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-4 has been signed by the
following persons in the capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
/s/ Gerald L. Gitner Director, Chairman of the Board July 17, 1998
- ---------------------- and Chief Executive Officer
Gerald L. Gitner (Principal Executive Officer)
/s/ Michael J. Palumbo
- ---------------------- Senior Vice President and Chief July 17, 1998
Michael J. Palumbo Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)
* Director July 17, 1998
- ----------------------
John W. Bachmann
* Director July 17, 1998
- ----------------------
William F. Compton
* Director July 17, 1998
- ----------------------
Eugene P. Conese
* Director July 17, 1998
- ----------------------
Sherry L. Cooper
* Director July 17, 1998
- ----------------------
Edgar M. House
* Director July 17, 1998
- ----------------------
Thomas H. Jacobsen
* Director July 17, 1998
- ----------------------
Myron Kaplan
* Director July 17, 1998
- ----------------------
David M. Kennedy
<PAGE>
* Director July 17, 1998
- ----------------------
General Merrill A. McPeak
* Director July 17, 1998
- ----------------------
Thomas F. Meagher
* Director July 17, 1998
- ----------------------
Brent S. Miller
* Director July 17, 1998
- ----------------------
William O'Driscoll
* Director July 17, 1998
- ----------------------
G. Joseph Reddington
* Director July 17, 1998
- ----------------------
Blanche M. Touhill
*By: /s/ Kathleen A. Soled July 17, 1998
- --------------------------
Kathleen A. Soled
as Attorney-in-fact
<PAGE>
EXHIBIT INDEX
*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
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 herein), 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)
<PAGE>
*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
*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
<PAGE>
*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.
*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
*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 -- Indenture dated as of April 21, 1998 by and between TWA
and First Security Bank, National Association, as Trustee,
relating to TWA's Mandatory Conversion Equtiy Notes due 1999
4.31 --Form of Mandatory Conversion Equity Note due 1999
(contained as Exhibit A to Indenture in Exhibit 4.30)
*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 11 3/8% Senior Secured Notes Due
2003 (Exhibit 4.31 to Registrant's Registration
Statement on Form S-3, filed with the SEC on
June 16, 1998)
*4.33 --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 (Exhibit 4.32 to Registrant's
Registration Statement on Form S-3, filed with the
SEC on June 16, 1998)
4.34 --Indenture dated as of June 16, 1998 by and
between TWA and First Security Bank, National
Association, as Trustee, relating to TWA's 10 1/4%
Senior Secured Notes due 2003
4.35 --Form of 10 1/4% Senior Secured Notes Due 2003
(contained as Exhibit 1 to Rule 144A/Regulation S
Appendix to Indenture in Exhibit 4.34)
4.36 --Registration Rights Agreemnt dated as of June 16,1998
between the Company, Lazard Freres & Co. LLC and First
Security Bank, National Association relating to the 10 1/4%
Senior Secured Notes Due 2003
4.37 --Indenture dated as of June 16, 1998 by and
between TWA and First Security Bank, National
Association, as Trustee, relating to TWA's 10 1/4%
Mandatory Conversion Equity Notes due 1999
4.38 --Form of 10 1/4% Mandatory Conversion Equity
Notes due 1999 (contained as Exhibit A to
Indenture in Exhibit 4.37)
4.39 --Registration Rights Agreement dated as of June
16, 1998 between the Company, Lazard Freres & Co.
LLC and First Security Bank, National Association
relating to the 10 1/4% Mandatory Conversion
Equity Notes Due 1999
5 --Opinion of Cleary, Gottlieb, Steen & Hamilton,
Counsel to the Registrant, regarding the validity
of the securities being registered
*12 --Statement re: Computation of Ratio Earnings to Fixed Charges
(Exhibit 12 to Registrant's Registration Statement on
Form S-3, Regis. No. 333-58481)
23.1 --Consent of KPMG Peat Marwick LLP
23.2 --Consent of Cleary, Gottlieb, Steen & Hamilton,
Counsel to the Registrant (included in Exhibit 5)
24 --Powers of Attorney
25 --Statement of Eligibility of First Security Bank,
National Association
99.1 --Form of Letter of Transmittal
<PAGE>
99.2 --Form of Notice of Guaranteed Delivery
99.3 --Form of Instruction to Registered Holder and/or
Book-Entry Transfer Facility Participant from
Owner of Old Notes
99.4 --Form of Letter to Registered Holders and
Depository Trust Company Participants
99.5 --Form of Letter to Clients of Depository Trust
Company Participants
---------------
* Incorporated by reference
=================================================================
TRANS WORLD AIRLINES, INC.
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Trustee
INDENTURE
Dated as of April 21, 1998
$31,800,000
Mandatory Conversion Equity Notes due 1999
=================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1.
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 Definitions ................................. 1
Section 1.2 Rules of Construction ....................... 1
ARTICLE 2.
THE SECURITIES
Section 2.1 Designation, Form and Dating ................ 1
Section 2.2 Execution, Amount, Authentication and
Delivery .................................... 2
Section 2.3 Registrar and Paying Agent .................. 4
Section 2.4 Paying Agent to Hold Payments In Trust ...... 5
Section 2.5 Securityholder Lists ........................ 6
Section 2.6 Transfer and Exchange ....................... 6
Section 2.7 Mutilated, Defaced, Destroyed, Lost and
Stolen Securities ........................... 7
Section 2.8 Treasury Securities ......................... 8
Section 2.9 Temporary Securities ........................ 9
Section 2.10 Cancellation ................................ 9
Section 2.11 Defaulted Interest; Interest on Defaulted
Principal ................................... 9
Section 2.12 CUSIP Numbers ............................... 10
ARTICLE 3.
REDEMPTIONS ..................... 10
ARTICLE 4.
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 4.1 Payment of Securities ....................... 10
Section 4.2 Maintenance of Office or Agency ............. 11
-i-
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
Section 4.3 Limitation on Dividends and Acquisition of
Common Stock ................................ 11
Section 4.4 Corporate Existence ......................... 12
Section 4.5 Payment of Taxes and Other Claims ........... 12
Section 4.6 Notices ..................................... 13
Section 4.7 Maintenance of Properties and Insurance ..... 13
Section 4.8 Default Notices and Compliance Certificates . 14
Section 4.9 SEC Reports ................................. 14
Section 4.10 Waiver of Stay, Extension or Usury Laws ..... 15
Section 4.11 Amendment to Certain Agreements ............. 16
Section 4.12 Title to Collateral and Limitation on Liens;
Sale of Aircraft; Total Loss With Respect to
Aircraft .................................... 16
Section 4.13 Books, Records, Access; Confidentiality ..... 17
Section 4.14 Security Interests .......................... 18
Section 4.15 Repurchase of Securities Upon a Change in
Control ..................................... 18
Section 4.16 Restrictions on Becoming an Investment
Company ..................................... 19
ARTICLE 5.
SUCCESSOR CORPORATION
Section 5.1 Covenant Not to Consolidate, Merge,
Convey or Transfer Except Under Certain
Conditions .................................. 19
Section 5.2 Successor Person Substituted ................ 20
Section 5.3 Limitation on Lease of Properties ........... 20
ARTICLE 6.
DEFAULT AND REMEDIES
Section 6.1 Events of Default ........................... 20
Section 6.2 Acceleration ................................ 22
Section 6.3 Other Remedies .............................. 23
Section 6.4 Waiver of Past Defaults ..................... 23
Section 6.5 Control by Majority ......................... 23
Section 6.6 Limitation on Suits ......................... 24
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<PAGE>
TABLE OF CONTENTS
(Continued)
Page
Section 6.7 Rights of Holders to Receive Payment ........ 24
Section 6.8 Collection Suit by Trustee .................. 25
Section 6.9 Trustee May File Proofs of Claim ............ 25
Section 6.10 Application of Proceeds ..................... 25
Section 6.11 Undertaking for Costs ....................... 26
Section 6.12 Restoration of Rights on Abandonment of
ProceedingS ................................. 27
Section 6.13 Powers and Remedies Cumulative; Delay or
Omission Not Waiver of Default .............. 27
ARTICLE 7.
TRUSTEE
Section 7.1 Duties of Trustee ........................... 27
Section 7.2 Rights of Trustee ........................... 28
Section 7.3 Individual Rights of Trustee ................ 29
Section 7.4 Trustee's Disclaimer ........................ 29
Section 7.5 Notice of Defaults .......................... 29
Section 7.6 Reports by Trustee to Holders ............... 29
Section 7.7 Compensation and Indemnity .................. 30
Section 7.8 Replacement of Trustee ...................... 30
Section 7.9 Successor Trustee by Merger, etc. ........... 31
Section 7.10 Eligibility; Disqualification ............... 31
Section 7.11 Preferential Collection of Claims Against
Company ..................................... 32
ARTICLE 8.
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligations ........ 32
Section 8.2 Application of Trust Money .................. 33
Section 8.3 Repayment to Company ........................ 34
Section 8.4 Reinstatement ............................... 34
-iii-
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
ARTICLE 9.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Without Consent of Holders .................. 35
Section 9.2 With Consent of Holders ..................... 35
Section 9.3 Compliance with Trust Indenture Act ......... 36
Section 9.4 Revocation and Effect of Consents ........... 36
Section 9.5 Notation on or Exchange of Securities ....... 37
Section 9.6 Trustee to Sign Amendments, etc. ............ 37
Section 9.7 Effect of Supplement and/or Amendment ....... 37
ARTICLE 10.
SECURITY
Section 10.1 Other Operative Documents ................... 37
Section 10.2 Opinions, Certificates and Appraisals ....... 38
Section 10.3 Authorization of Actions to be Taken by the
Trustee Under the Operative Documents ....... 38
Section 10.4 Payment of Expenses ......................... 39
Section 10.5 Authorization of Receipt of Funds by the
Trustee Under the Operative Documents ....... 39
ARTICLE 11.
MISCELLANEOUS
Section 11.1 Conflict with Trust Indenture Act of 1939 ... 39
Section 11.2 Notices; Waivers ............................ 39
Section 11.3 Communications by Holders with Other
Holders ..................................... 40
Section 11.4 Certificate and Opinion as to Conditions
Precedent ................................... 40
Section 11.5 Statements Required in Certificate or
Opinion ..................................... 41
Section 11.6 Rules by Trustee, Paying Agent, Registrar ... 42
Section 11.7 Holidays .................................... 42
Section 11.8 Governing Law; Waiver of Jury Trial ......... 42
Section 11.9 No Adverse Interpretation of Other
Agreements .................................. 43
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<PAGE>
TABLE OF CONTENTS
(Continued)
Page
Section 11.10 No Recourse Against Others .................. 43
Section 11.11 Benefits of Indenture and the Securities
Restricted .................................. 43
Section 11.12 Successors and Assigns ...................... 43
Section 11.13 Counterpart Originals ....................... 43
Section 11.14 Severability ................................ 43
Section 11.15 Effect of Headings .......................... 44
ARTICLE 12.
RELEASE OF COLLATERAL
Section 12.1 Release of Collateral ....................... 44
ARTICLE 13.
MANDATORY CONVERSION OF SECURITIES
Section 13.1 Mandatory Conversion and Conversion
Price ....................................... 44
Section 13.2 Effect of Consolidation, Merger or
Conveyance on Conversion .................... 46
Section 13.3 Costs of Conversion ......................... 47
Section 13.4 No Liability to Trustee ..................... 48
Section 13.5 Applicable Laws ............................. 48
Section 13.6 Other Funds ................................. 48
Section 13.7 Release of Collateral Upon Conversion ....... 48
Section 13.8 Company to Provide Stock .................... 48
ARTICLE 14.
POSSIBLE SUBORDINATION ............... 49
APPENDIX I Definitions Appendix
EXHIBIT A Form of Mandatory Conversion Equity Note
EXHIBIT B Form of Aircraft Second Mortgage and Security
Agreement
-v-
<PAGE>
INDENTURE dated as of April 21, 1998 between TRANS WORLD
AIRLINES, INC., a Delaware corporation (the "Company"), and FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the
Company's Mandatory Conversion Equity Notes due 1999 (the
"Securities").
ARTICLE 1.
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 Definitions.
-----------
Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in Section
1 of the Definitions Appendix attached hereto as Appendix I,
which shall be a part of this Indenture as if fully set forth in
this place.
Section 1.2 Rules of Construction.
---------------------
The rules of construction for this Indenture are set forth
in Section 2 of the Definitions Appendix.
ARTICLE 2.
THE SECURITIES
Section 2.1 Designation, Form and Dating.
----------------------------
The Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A
hereto (with such appropriate insertions, omissions,
substitutions and other variations as are required by this
Indenture) and is hereby incorporated in and expressly made a
part of this Indenture. The Securities may have imprinted or
otherwise reproduced thereon such notations, legends or
endorsements, not inconsistent with the provisions of this
Indenture, as may be required to comply with any law or with any
rules or regulations pursuant thereto, or with the rules of any
securities market in which the Securities are admitted to
trading, or to conform to general usage. The Company shall
approve the form of the Securities and any notation, legend or
endorsement on them. Each Security shall be dated the date of its
authentication and shall be payable, unless previously Tendered,
on the dates as specified herein or in the form of the Security.
The principal of the Securities shall not bear interest except in
the case of a default in payment of such principal or a
Registration Default, and in such cases the Securities shall bear
interest as specified herein or in the form of the Security.
The Person in whose name any Security is registered at the
close of business on any Record Date with respect to any Interest
Payment Date shall be entitled to receive the interest, if
<PAGE>
2
any, payable on such Interest Payment Date to the extent provided
by such Security, except if and to the extent the Company shall
default in the payment of the interest due on such Interest
Payment Date, in which case defaulted interest shall be paid to
the Person in whose name the Outstanding Security is registered
at the close of business on the subsequent record date (which
shall be not less than five (5) Business Days prior to the date
of payment of such defaulted interest) established by notice
given by mail by or on behalf of the Company to the Holders of
Securities not less than fifteen (15) days preceding such
subsequent record date (a "Special Record Date").
Section 2.2 Execution, Amount, Authentication and Delivery.
----------------------------------------------
The Securities shall be signed for the Company by the
manual or facsimile signatures of an Officer and a Certifying
Officer. The Company's seal shall be affixed to or reproduced on
the Securities. Typographical or other errors or defects in any
such reproduction of the seal or any such signature shall not
affect the validity or enforceability of any Security which has
been duly authenticated and delivered by the Trustee.
If an officer whose signature is on a Security no longer
holds that office at the time the Trustee authenticates the
Security, the Security shall be valid nevertheless.
A Security shall not be valid until the Trustee manually
signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to
$31,800,000 except for Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu
of, other Securities pursuant to Sections 2.6, 2.7, 2.9, 4.15 or
9.5.
The Securities shall be known and designated as the
"Mandatory Conversion Equity Notes due 1999" of the Company.
Their Stated Maturity shall be April 15, 1999, and they shall not
bear interest; provided, however, that upon a default in payment
of principal on the Securities (whether on acceleration, at
maturity, upon tender for repurchase or otherwise) or a
Registration Default (and for so long as such default or
Registration Default, as the case may be, shall continue uncured
and unwaived), they shall bear interest at the rate of 12% per
annum, from the date of such default or Registration Default, as
the case may be, payable (a) in the case of a Registration
Default, monthly in arrears on the 15th day of each month
commencing the 15th day of the month next succeeding the month in
which such Registration Default occurred, and (b) in the case of
a default in payment of principal, payable on demand. In the
event a Registration Default shall occur and be continuing and
the Company shall have failed to use its reasonable best efforts
to avoid or cure such Registration Default, Holders shall be
entitled to make a claim for damages incurred as a result of such
Registration Default which damages shall not necessarily be
limited to the increase in the interest rate hereunder to 12% per
annum; provided, however, that any amount of interest paid
pursuant to this Section 2.2 shall be credited against any amount
of damages to be paid by the Company in connection with such
claim.
<PAGE>
3
Subject to the limits set forth in the second preceding paragraph
of this Indenture, the Trustee shall authenticate Securities for
original issue upon written order of the Company signed by an
Officer and by a Certifying Officer of the Company. The order
shall specify the amount of Securities to be authenticated and
the date on which the original issue of Securities is to be
authenticated, shall provide instructions with respect to the
delivery thereof and shall be accompanied by the documents
specified in Sections 10.2 and 11.4 and by the following
(provided, however, that the Trustee shall be authorized
conclusively to rely upon the documents specified in Section
11.4):
(a) the grant to the Trustee, by assignment, pledge, or
otherwise pursuant to the Mortgage, of a security interest in the
Collateral;
(b) Officers' Certificates or other satisfactory
confirmation (i) with respect to the Mortgage and the Collateral,
that the Company is the legal and beneficial owner of the
Collateral, free and clear of all Liens except Permitted Liens;
and (ii) describing the actions taken to make, obtain and
accomplish all necessary filings, confirmations and
identifications referred to in Section 4.14 hereof;
(c) compliance with all applicable provisions of Sections 4.12
and 4.14 hereof;
(d) an Officers' Certificate confirming all representations
and warranties of the Company contained in this Indenture and the
other Operative Documents as of the date of authentication;
(e) an Officers' Certificate containing representations and
warranties of the type usual and customary to the issuance of the
Securities such as, but not limited to, representations regarding
due authorization of this Indenture; due authorization of the
issuance and delivery of the Securities; that the Securities,
when so issued and delivered against delivery of the Aircraft
under the Aircraft Sale Agreement will be duly and validly
issued, and constitute valid and binding obligations of the
Company, enforceable in accordance with their terms; that the
Common Stock issuable upon conversion of the Securities has been
duly authorized and reserved for issuance and, when issued and
delivered by the Company upon conversion of the Securities, will
be duly and validly issued, fully paid and non-assessable and
free of preemptive rights; that no consent, approval or
authorization of, or designation, declaration, or filing with,
any governmental authority or any other person or entity is
required of the Company in connection with the execution and
delivery of this Indenture or the issuance and delivery of the
Securities; and that the Securities have been registered under
the Securities Act or that registration is not required in
connection with the offer, issuance and delivery of the
Securities, nor does the Securities Act require registration of
the conversion of the Securities into shares of Common Stock as
provided in Article 13;
(f) an Opinion of Counsel to the effect that the Company
has the requisite corporate power and authority to execute,
deliver and perform its obligations under this Indenture and the
other Operative Documents; that the Securities have been duly
authorized and validly issued; and that the offer and issuance of
the Securities have been registered or will be exempt from the
registration requirements under the Securities Act and that the
Securities Act does not require
<PAGE>
4
registration of the conversion of the Securities into
shares of Common Stock as provided in Article 13; and
(g) execution and delivery by the Company of the Securities
and by all parties thereto of this Indenture and all other
Operative Documents;
provided, however, that any Securities in fact authenticated by
the Trustee upon written order of the Company as set forth in the
first sentence of this paragraph shall be deemed to have been
duly authenticated hereunder and to constitute an enforceable
contractual obligation of the Company and shall be entitled to
all the benefits of this Indenture and the other Operative
Documents equally and proportionately with any and all other
Securities duly authenticated and delivered hereunder, in each
case, notwithstanding any failure of the Company to deliver any
of the documents specified in Sections 10.2 and 11.4 or above in
this sentence.
The Securities shall be issuable only in registered form,
without coupons, in denominations of $1,000 and any integral
multiple thereof.
The Trustee may appoint an authenticating agent acceptable
to the Company to authenticate Securities. An authenticating
agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent
has the same rights as an Agent to deal with the Company, any
guarantor or any Affiliate of the Company.
Section 2.3 Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency where
Securities eligible for transfer or exchange may be presented for
registration of transfer or for exchange ("Registrar") and an
office or agency where Securities may be presented for payment or
repurchase ("Paying Agent"). The Registrar shall keep a register
of the Securities and of their transfer and exchange
("Register"). Such Register shall be in written form in the
English language or any other form capable of being converted
into such form within a reasonable time. At all reasonable times
such Register shall be open for inspection by the Trustee. The
Company may have one or more co-Registrars and one or more
additional paying agents. The term "Paying Agent" includes any
additional paying agent.
The Company may enter into an appropriate agency agreement
with any Agent not a party to this Indenture. Such agency
agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee of the
name and address of any such Agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as
such.
The Company initially appoints the Trustee as Registrar and
Paying Agent.
<PAGE>
5
Section 2.4 Paying Agent to Hold Payments In Trust.
--------------------------------------
Each Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all Payments held by the Paying
Agent for the payment of principal of, repurchase or redemption
price, if any, of, and interest, if any, on, the Securities
(whether such Payment has been paid to it by the Company or any
other obligor on the Securities), and shall promptly notify the
Trustee of any default by the Company (or any other obligor on
the Securities) in making any such Payment. The Company at any
time may require a Paying Agent to Pay all Payments held by it to
the Trustee and account for any funds disbursed and the Trustee
may at any time during the continuance of any payment default,
upon written request to a Paying Agent, require such Paying Agent
to Pay all Payments held by it to the Trustee and to account for
any Payments distributed. Upon doing so the Paying Agent shall
have no further liability for the Payments.
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of,
repurchase or redemption price, if any, of, or interest, if any,
on, any of the Securities, segregate and hold in trust for the
benefit of the Persons entitled thereto Payments sufficient to
pay the principal, repurchase or redemption price, if any, of, or
interest, if any, so becoming due until such Payments shall be
Paid to such Persons or otherwise disposed of as herein provided,
and will promptly notify the Trustee of such action or any
failure so to act.
The Company will, on or before each due date for the
payment of the principal of, repurchase or redemption price, if
any, of, or interest, if any, on, any of the Securities, deposit
with a Paying Agent Payments (in same day funds) sufficient to
pay the principal, repurchase or redemption price, if any, of, or
interest, if any, so becoming due, such Payments to be held in
trust for the benefit of the Persons entitled to such principal,
repurchase or redemption price, if any, of, or interest, if any,
and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to
act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(a) hold all Payments received by it as such agent for the
payment of the principal of, repurchase or redemption price, if
any, of, or interest, if any, on, the Securities (whether such
Payments have been paid to it by the Company or by any other
obligor on the Securities) in trust for the benefit of the
Persons entitled thereto until such Payments shall be paid to
such Persons or otherwise disposed of as herein provided;
(b) promptly give the Trustee notice of any failure by the
Company (or any other obligor upon the Securities) to make any
payment of the principal of, repurchase or redemption price, if
any, of, or interest, if any, on, the Securities when the same
shall be due and payable; and
(c) at any time during the continuance of any such failure,
upon the written request of the Trustee, forthwith pay to the
Trustee all Payments so held in trust by such Paying Agent.
<PAGE>
6
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other
purpose, Pay, or direct any Paying Agent to Pay, to the Trustee
all Payments held in trust by the Company or such Paying Agent,
such Payments to be held by the Trustee upon the same trusts as
those upon which such Payments were held by the Company or such
Paying Agent; and, upon such Payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further
liability with respect to such Payments held by it as Paying
Agent.
Any Payments deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of
the principal of, redemption or repurchase price, if any, of, or
interest, if any, on, any Security and unclaimed for two (2)
years after such principal, redemption, repurchase price or
interest has become due and payable shall be paid to the Company
on its request, or (if then held by the Company) shall be
discharged from such trust, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or
unclaimed property law, and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the
Company for payment thereof and all liability of the Trustee or
such Paying Agent with regard to such Payments, and all liability
of the Company as trustee thereof, shall thereupon cease.
Section 2.5 Securityholder Lists.
--------------------
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of Securityholders. If the Trustee is not
the Registrar, the Company shall furnish to the Trustee on or
before each Interest Payment Date and at such other times as the
Trustee may request in writing a list in such form and as of such
date as the Trustee may reasonably require of the names and
addresses of Securityholders.
Section 2.6 Transfer and Exchange.
---------------------
When Securities are presented to the Registrar or a
co-Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Securities of
other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements
for such transactions are met. To permit registrations of
transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's request.
All Securities presented for registration of transfer, exchange,
redemption or payment shall (if so required by the Company or the
Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the
Company and the Trustee, duly executed by the Holder or his
attorney duly authorized in writing. The Company may require
payment of a sum sufficient to pay all taxes, assessments or
other governmental charges in connection with any registration of
transfer or exchange, but not for any exchange pursuant to
Sections 2.9, 4.15 or 9.5 or any other Tender not involving any
transfer of Securities (other than to the Company). No service
charge shall be made for any such transaction.
In the case of any Security which is Tendered in part only,
upon such Tender the Company shall execute and the Trustee shall
authenticate and make available for delivery to the Holder
thereof, without service charge, a new Security or Securities of
any authorized
<PAGE>
7
denomination as requested by such Holder in aggregate principal
amount equal to the non-Tendered portion of the principal of such
Security. No Securities will be issued in denominations of less
than $1,000 upon tender of the Securities.
All Securities issued upon any transfer or exchange of
Securities shall be valid obligations of the Company, evidencing
the same debt of the same series and entitled to the same
benefits under this Indenture, as the Securities surrendered upon
such transfer or exchange.
Section 2.7 Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. ----------------------------------------------
- -----------
In case any temporary or definitive Security shall become
mutilated, defaced or be apparently destroyed, lost or stolen,
subject to compliance with the following sentence and in the
absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company
shall execute, and the Trustee shall authenticate and deliver, a
new Security, bearing a number not contemporaneously outstanding,
in exchange and substitution for the mutilated or defaced
Security, or in lieu of and substitution for the Security so
apparently destroyed, lost or stolen. In every case the applicant
for a substitute Security shall furnish to the Company and to the
Trustee and any agent of the Company or the Trustee such security
or indemnity as may reasonably be required by them to indemnify
and defend and to save each of them harmless and, in every case
of destruction, loss or theft, evidence to their satisfaction of
the apparent destruction, loss or theft of such Security and of
the ownership thereof.
Upon the issuance of any substitute Security pursuant to
the preceding paragraph, the Company may require the payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected
therewith. In case any Security which has matured or is about to
mature, or has been tendered for repurchase pursuant to any of
the provisions hereof (as evidenced by an irrevocable written
notice from the Holder to the Company and the Trustee), shall
become mutilated or defaced or be apparently destroyed, lost or
stolen, the Company may, instead of issuing a substitute
Security, pay or authorize the payment of such Security (without
surrender of such Security except in the case of a mutilated or
defaced Security), as applicable, if the applicant for such
payment shall furnish to the Company and to the Trustee and any
agent of the Company or the Trustee such security or indemnity as
any of them may reasonably require to save each of them harmless
from all risks, however remote, and, in every case of apparent
destruction, loss or theft, the applicant shall also furnish to
the Company and the Trustee and any agent of the Company or the
Trustee evidence to their satisfaction of the apparent
destruction, loss or theft of such Security and of the ownership
thereof.
Every substitute Security issued pursuant to the provisions
of this Section by virtue of the fact that any Security is
apparently destroyed, lost or stolen shall constitute an
additional contractual obligation of the Company, whether or not
the apparently destroyed, lost or stolen Security shall be at any
time enforceable by anyone and shall be entitled to all the
benefits of (but shall also be subject to all the limitations of
rights set forth in) this Indenture equally and proportionately
with any and all other Securities duly authenticated and
delivered hereunder. Every substitute Security issued pursuant to
the provisions of this Section by virtue of the fact
<PAGE>
8
that any Security is mutilated or defaced shall constitute an
additional contractual obligation of the Company and shall be
entitled to all the benefits of (but shall also be subject to all
the limitations of rights set forth in) this Indenture equally
and proportionately with any and all other Securities of the same
series duly authenticated and delivered hereunder. All Securities
shall be held and owned upon the express condition that, to the
extent permitted by law, the foregoing provisions are exclusive
with respect to the replacement or payment of mutilated or
defaced or apparently destroyed, lost or stolen Securities and
shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted
to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their
surrender.
Section 2.8 Treasury Securities.
-------------------
In determining whether the Holders of the required
principal amount of Securities have given or concurred in any
amendment, request, demand, authorization, direction, notice,
consent or waiver under this Indenture or any other Operative
Document, Securities owned by the Company (including Securities
Tendered), an Affiliate of the Company, any other obligor upon
the Securities, any Affiliate of such obligor upon the Securities
or any Person who has given or concurred in any such amendment,
request, demand, authorization, direction, notice, consent or
waiver under the direction of, by agreement with, or as a
condition or in consideration of any exchange offer by or
transfer of such Person's Securities to the Company, an Affiliate
of the Company, any other obligor, any Affiliate of such obligor
or any such Person, shall be disregarded and deemed not to be
Outstanding for the purpose of any such determination, except
that, for the purposes of determining whether the Trustee shall
be protected in relying on any such amendment, request, demand,
authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee that neither the Company nor
any such other obligor, Affiliate or Person is affiliated with
the pledgee or any Affiliate of the pledgee and that the pledgee
has the present right (subject to no contrary obligation or
understanding) so to act with respect to the Securities on the
basis of its best interests as a Holder independently of any
direction by or interest of the Company. In case of a dispute as
to such right, the Trustee in good faith shall be entitled to
rely upon the advice of counsel, including counsel for the
Company. Upon request of the Trustee, the Company shall promptly
furnish to the Trustee a certificate of a Certifying Officer
listing and identifying all Securities, if any, known by the
Company to be owned or held by or for the account of any of the
above-described Persons; and subject to Sections 7.1 and 7.2
herein, the Trustee shall be entitled to accept such certificate
as conclusive evidence of the facts therein set forth and of the
fact that all Securities not listed therein are Outstanding for
the purpose of any such determination. The Company shall not,
directly or indirectly, pay or cause to be paid any remuneration,
whether by way of supplemental or additional interest, fee or
otherwise, or grant any additional security, to any Holder of
Securities as consideration for or as an inducement to giving or
concurring in any amendment, request, demand, authorization,
direction, notice, consent or waiver under this Indenture or any
other Operative Document unless such remuneration is concurrently
paid, or such security is concurrently granted, as the case may
be, on the same terms ratably to the Holders of all Securities
then Outstanding (regardless of
<PAGE>
9
whether any such Holder has given or concurred in such amendment,
request, demand, authorization, direction, notice, consent or
waiver under this Indenture or any other Operative Document).
For purposes of this Section and without limiting the
generality of the foregoing, Securities which are subject to a
binding contract or irrevocable tender offer (including an offer
which is in any way conditioned upon or simultaneous with, or
requires as a condition precedent (whether by contract or
otherwise) or which cannot be effected without, the agreement or
consent of the transferor to any amendment, request, demand,
authorization, direction, notice, consent or waiver hereunder)
pursuant to which ownership (direct or indirect) is to be
transferred (including for example, Securities tendered to the
Company or any other Person in an exchange transaction) shall be
deemed owned by such transferee, and therefore, any such
simultaneous agreement or consent by the transferor shall be
invalid.
Section 2.9 Temporary Securities.
--------------------
Until definitive Securities are ready for delivery, the
Company may prepare, and, upon written order of the Company, the
Trustee shall authenticate, temporary Securities in any
authorized denominations. Temporary Securities shall be
substantially in the form of definitive Securities of the same
series but may have variations that the Company reasonably
considers appropriate and necessary for temporary Securities.
Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate and deliver definitive Securities in
exchange for temporary Securities. Until so exchanged, the
temporary Securities shall be entitled to the same benefits under
this Indenture as definitive Securities of the same series.
Section 2.10 Cancellation.
------------
The Company may at any time deliver Securities to the
Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them
for transfer, exchange, repurchase or payment. All Securities
purchased pursuant to any Offer to Purchase shall be canceled.
The Trustee and no one else shall cancel all Securities
surrendered for transfer, exchange, repurchase or cancellation.
The Company may not issue new Securities to replace Securities it
has paid or that have been converted (upon Tender or otherwise)
or which have been delivered to the Trustee for cancellation. The
Trustee shall destroy all canceled Securities and, if requested,
deliver a certificate of such destruction to the Company. If the
Company shall acquire any of the Securities, such acquisition
shall not operate as a satisfaction of the indebtedness
represented by such Securities unless and until the same are
delivered to the Trustee for cancellation.
Section 2.11 Defaulted Interest; Interest on Defaulted
Principal. -----------------------------------------
- ---------
If the Company defaults in a payment of any interest on the
Securities, it shall pay the defaulted interest, plus interest on
the defaulted interest at the rate then borne on the Securities
to the extent permitted by law and the terms thereof, to the
persons who are Securityholders on a subsequent Special Record
Date. The Company shall fix the Special Record Date and payment
date. At least fifteen (15) days before the Special Record Date,
the Company shall mail to each
<PAGE>
10
Securityholder a notice that states the Special Record Date, the
payment date and the amount of defaulted interest to be paid. If
the Company defaults in the payment of principal on the
Securities (whether on acceleration at maturity, upon tender for
repurchase or otherwise), it shall pay interest on such defaulted
principal at the rate of 12% per annum to the Trustee upon
demand. The Trustee shall apply any such payment in accordance
with the provisions of Section 6.10.
Section 2.12 CUSIP Numbers.
-------------
The Company in issuing the Securities may use "CUSIP"
numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that
no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of
such numbers.
ARTICLE 3.
REDEMPTIONS
The Securities Outstanding shall not be subject to
redemption in whole or in part at any time.
ARTICLE 4.
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 4.1 Payment of Securities.
The Company shall pay the principal of, and interest, if
any, on, the Securities on the dates and in the manner provided
in this Indenture and in the Securities. The Securities shall not
bear interest except as set forth in the fifth paragraph of
Section 2.2 or in the Securities. All interest due and payable on
the Securities shall be paid in cash, except that the Company may
at its option, make such Payments by check mailed to the address
of the Person entitled thereto as it appears in the Register;
provided, however, that such Payments on a certificated Security
will be made by wire transfer to a U.S. dollar account maintained
by a Holder with a bank in New York City if such Holder owns at
least $250,000 in aggregate principal amount of certificated
Securities and elects payment by wire transfer by giving written
notice to the Company and the Trustee to such effect designating
such account no later than 10 days immediately preceding the
relevant due date for payment (or such other date as the Company
and the Trustee may accept in their discretion).
An installment of principal or interest shall be considered
paid on the date due if the Trustee or Paying Agent (other than
the Company or any Affiliate thereof) holds on that date
<PAGE>
11
Payments designated for and sufficient to pay such installment
and the Trustee or Paying Agent is not prohibited from Paying
such Payments to the Holders of the Securities pursuant to this
Indenture.
The Company shall pay interest, if any, at the rate set
forth in this Indenture and the Securities and the Company shall
pay interest on unpaid interest at the same rate to the extent
legally permitted.
Section 4.2 Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in the Borough of Manhattan, The
City of New York, an office or agency where Securities may be
surrendered for registration of transfer or exchange or for
presentation for payment, repurchase or conversion and where
notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. At the request of
the Company, said office or agency may be the office of an agent
appointed by the Trustee for such purpose. The Company shall give
prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency not designated
or appointed by the Trustee. If at any time the Company shall
fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office.
The Company may also from time to time designate one or
more other offices or agencies where the Securities may be
presented or surrendered for any or all such purposes and may
from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, The City of New York, for
such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.
Section 4.3 Limitation on Dividends and Acquisition of
Common Stock. ------------------------------------------
- -------------
The Company will not declare or pay any dividend or make
any distribution on its Common Stock, Employee Preferred Stock or
other Capital Stock of the Company (other than dividends or
distributions payable in the Company's Common Stock or Employee
Preferred Stock or options, warrants or other rights to acquire,
subscribe for or purchase the Company's Common Stock or Employee
Preferred Stock) and will not, and will not permit any of its
Subsidiaries to, purchase, redeem or otherwise acquire for value
any shares of its Common Stock, Employee Preferred Stock or other
Capital Stock of the Company, whether in cash or Property or in
obligations of the Company, if, at the time of such declaration,
payment, distribution, purchase, redemption or other acquisition
or, after giving effect thereto, a Default or Event of Default
shall have occurred and be continuing; provided, that
notwithstanding anything to the contrary written above, this
Section 4.3 shall not apply to: (a) any purchase or redemption of
Common Stock or Preferred Stock by the Company or an employee
stock ownership or benefit plan (i) from union employees or
former union employees, or their respective transferees, pursuant
to the terms of agreements with labor unions existing on the date
hereof; (ii) from recipients or their transferees of such stock
from employee stock ownership or benefit plans
<PAGE>
12
subject to ERISA; (iii) from employee stock ownership or benefit
plans subject to ERISA in order to provide cash benefits to
employees pursuant to the terms of such plans; and (iv) as
required by ERISA; (b) any purchase or redemption of Common Stock
or Preferred Stock by an employee stock ownership or benefit plan
subject to ERISA for an aggregate consideration, without regard
to purchases or redemptions pursuant to clause (a) above, of up
to $200,000,000; (c) the payment of fixed or mandatory dividends
on or scheduled redemptions or exchanges of any of the Company's
8% Preferred Stock and 9 1/4% Preferred Stock and the payment of
any interest on the securities issuable upon such exchange; (d)
the payment of any dividends on or the purchase, redemption or
other acquisition or retirement of the Common Stock or Preferred
Stock of the Company within sixty (60) days after the date of
declaration of such dividend or the commitment to make such
purchase, redemption or other acquisition or retirement, if at
said date of declaration or commitment such payment or commitment
complied with this Section 4.3; (e) the purchase, redemption,
retirement or other acquisition of any shares of the Company's
Common Stock or Preferred Stock in exchange for, or out of the
proceeds of the substantially concurrent sale of, Common Stock or
Preferred Stock of the Company; (f) any consolidation or merger
with or into any Person or conveyance or transfer of all or
substantially all of the Company's Property to one or more
Persons substantially as an entirety, not prohibited by the terms
of Section 5.1; and (g) the conversion of Employee Preferred
Stock into Common Stock.
Section 4.4 Corporate Existence.
-------------------
(a) Except as otherwise provided in Article 5, the Company
shall do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and the
corporate existence of each of its Subsidiaries engaged in
substantial business activity each in accordance with the
respective organizational documents of the Company and each such
Subsidiary and the rights (charter and statutory), licenses,
permits, approvals and governmental franchises of the Company and
each such Subsidiary necessary to the conduct of its respective
business; provided, however, that the Company shall not be
required to preserve any such right, license or franchise, or to
preserve the corporate existence of any such Subsidiary, if the
Board of Directors shall determine that the preservation thereof
is no longer in the interest of the Company and that termination
of the corporate existence is not disadvantageous to the Holders
in any material respect.
(b) The Company shall continue to be an air carrier
certificated under Section 604(b) of the Federal Aviation Act.
(c) The Company is and, to the extent required to operate
its business as presently conducted and to perform its
obligations under this Indenture and the Operative Documents,
shall remain a "citizen of the United States" as defined in
Section 101(16) of the Federal Aviation Act.
Section 4.5 Payment of Taxes and Other Claims.
---------------------------------
The Company shall, and shall cause each of its Subsidiaries
to, pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company and each
Subsidiary or upon the income, profits or Property of the Company
and each Subsidiary or upon the Collateral and
<PAGE>
13
(b) all lawful claims for labor, materials and supplies which, if
unpaid, might by law become a Lien upon the Collateral or the
other Property of the Company or a Subsidiary; provided, however,
that the Company or a Subsidiary, as the case may be, shall not
be required to pay or discharge or cause to be paid or discharged
any such tax, assessment, charge or claim (i) the amount,
applicability or validity of which is being contested in good
faith by appropriate proceedings as permitted by and in
accordance with the provisions of the Operative Documents, to the
extent applicable, and for which adequate reserves have been
established in accordance with GAAP, as in effect from time to
time, or (ii) if the Company delivers to the Trustee a
Certificate of an Officer stating that such non-payment and
non-discharge is in the interest of the Company and not
prejudicial in any material respect to the Holders.
Nothing contained herein or in the Securities shall be
deemed to impose on the Trustee or on the Company any obligation
to pay on behalf of the Holder of any Securities any tax,
assessment or governmental charge required by any present or
future law of the U.S. or of any state, county, municipality or
other taxing authority thereof to be paid on behalf of, or
withheld from the amount payable to, the Holder of any
Securities; rather any tax, assessment or governmental charge
shall, to the extent required by law, be withheld from the
amounts provided for herein.
Section 4.6 Notices.
-------
The Company shall notify the Trustee in writing of any of
the following promptly (and in any event within five (5) Business
Days after an Officer learns of the occurrence thereof)
describing the same and, if applicable, the steps being taken by
the Person(s) affected with respect thereto:
(a) In the event that any Indebtedness of the Company or
any Significant Subsidiary of the Company in a principal amount
in excess of $10,000,000 (i) is declared due and payable before
its stated maturity because of the occurrence of any default (or
any event which, with notice or the lapse of time, or both, shall
constitute such default) under such Indebtedness or (ii) is not
paid at its stated maturity; or
(b) Any litigation, arbitration proceeding or governmental
proceeding involving damages or potential liability in excess of
$10,000,000 is instituted against the Company or any of its
Subsidiaries which, if adversely determined, would have a
material adverse effect on the business, operations or financial
condition of the Company and its Subsidiaries taken as a whole.
Section 4.7 Maintenance of Properties and Insurance.
---------------------------------------
Except as otherwise provided in this Indenture, the Company
shall, and shall cause each of its Subsidiaries to, cause all
Collateral and other Properties owned by or leased to it and used
or useful in the conduct of the business of the Company or any
such Subsidiary, as the case may be, to be maintained and kept in
good repair, working order and condition, except for reasonable
wear and use, and supplied with all necessary equipment and shall
cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of
the Company may be necessary, so that the business carried on in
connection therewith may be
<PAGE>
14
properly and advantageously conducted at all times, except, in
every case, as and to the extent that the Company or any such
Subsidiary may be prevented by fire, strikes, lockouts, acts of
God, inability to obtain labor or materials, governmental
restrictions, enemy action, civil commotion or unavoidable
casualty or similar causes beyond the control of the Company or
such Subsidiary; provided, however, that subject to all
requirements of the Operative Documents, nothing in this Section
4.7 shall prevent the Company or any such Subsidiary from
discontinuing the use, operation or maintenance of any such
Properties, or disposing of any of them, if such discontinuance
or disposal is, in the good faith judgment of an Officer of the
Company (or other agent employed by the Company) having
managerial responsibility for any such Property (or, in the case
of any materially important item, with respect to operations or
value, in the good faith judgment of the Company as expressed in
a resolution of the Board of Directors), desirable in the conduct
of the Company's business or that of its Subsidiaries.
For so long as any Collateral or Property is deemed to be
useful to the conduct of the business of the Company or its
Subsidiaries, the Company shall, or shall cause such Subsidiaries
to, maintain appropriate insurance, in accordance with industry
practice, on such Collateral and Properties and as required under
the provisions of the applicable Operative Documents.
Notwithstanding the provisions of this Section 4.7, to the
extent there exists any inconsistency between the provisions
hereof and the provisions of the Mortgage relating to Property
which constitutes Collateral, the provisions of the Mortgage
shall prevail as to all Collateral.
Section 4.8 Default Notices and Compliance Certificates.
-------------------------------------------
Contemporaneously with furnishing quarterly financial
reports to the Trustee under Section 4.9(a) or mailing quarterly
statements to the Trustee and Holders under Section 4.9(c), the
Company shall furnish to the Trustee a Certifying Officer's
Certificate to the effect that no Default or Event of Default has
occurred or is continuing, or, if there is any such Default or
Event of Default, describing it and the steps, if any, being
taken to cure it.
The Company shall deliver to the Trustee within one hundred
twenty (120) days after the end of each fiscal year in which any
of the Securities remain Outstanding a certificate of the
principal executive officer, principal financial officer or
principal accounting officer of the Company (which need not
comply with the provisions of Section 11.5) stating whether or
not, to the knowledge of the signer after due inquiry, the
Company is in compliance with all conditions and covenants under
this Indenture and the Operative Documents (determined without
regard to any period of grace or requirement of notice), and if
the Company is not in compliance with all such conditions and
covenants, describing each Default or Event of Default and its
status. The first certificate to be delivered by the Company
pursuant to this Section 4.8 shall be for the fiscal year ending
December 31, 1998.
Section 4.9 SEC Reports.
-----------
(a) The Company shall deliver to the Trustee as soon as
practicable after it files them with the SEC, copies of the
annual reports and of the information, documents, and other
reports
<PAGE>
15
(or copies of such portions of any of the foregoing as the SEC
may by rules and regulations prescribe) which the Company is
required to file with the SEC pursuant to Sections 13 or 15(d) of
the Exchange Act. The Company also shall comply with the other
provisions of TIA ss. 314(a).
(b) So long as any of the Securities remain Outstanding,
the Company shall cause its annual report to stockholders and any
quarterly or other financial reports furnished by it to
stockholders generally, to be mailed to the Holders of such
Outstanding Securities at their addresses appearing in the
Register.
(c) At any time the Company does not have a class of
securities registered, or is not otherwise required to file
quarterly and other reports under the Exchange Act, the Company
will prepare or cause to be prepared, for each of the first three
(3) quarters of each fiscal year, an unaudited balance sheet of
the Company and its consolidated Subsidiaries as at the end of
such quarter and related unaudited consolidated statements of
income and retained earnings and cash flow of the Company and its
consolidated Subsidiaries for such quarter and the portion of the
fiscal year through such date, setting forth in each case in
comparative form the figures for the corresponding year-to-date
period in the previous year, certified by the principal financial
officer of the Company, and for each fiscal year, an audited
balance sheet of the Company and its consolidated Subsidiaries as
at the end of such year and related audited consolidated
statements of income and retained earnings and cash flow of the
Company and its consolidated Subsidiaries for such year, setting
forth in comparative form the figures for the previous year,
reported on without a qualification arising out of the scope of
the audit, by the Company's independent public accountants. All
financial statements will be prepared by a nationally recognized
auditing firm and will be prepared in accordance with generally
accepted accounting principles, as in effect from time to time,
consistently applied, except for changes with which the Company's
independent public accountants concur and except that quarterly
statements may be subject to year-end adjustments. The Company
will cause a copy of the respective financial statements to be
mailed to the Trustee and each of the Holders of the Securities
within forty-five (45) days after the close of each of the first
three (3) quarters of each fiscal year and within one hundred
twenty (120) days after the close of each fiscal year, to the
addresses set forth in Section 11.2 or, in the case of each of
the Holders, to such Holder's address as set forth in the
Register of the Securities.
Section 4.10 Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim, and will resist any and all efforts
to be compelled to take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit
or forgive the Company from paying all or any portion of the
principal of or interest on the Securities as contemplated
herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this
Indenture and the Operative Documents; and (to the extent that it
may lawfully do so) the Company hereby expressly waives all
benefit or advantage of any such law, and covenants that it will
not hinder, delay or impede the execution of any power granted to
the Trustee herein and in the Operative
<PAGE>
16
Documents, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 4.11 Amendment to Certain Agreements.
-------------------------------
The Company shall not enter into or consent to any
amendment, supplement or other modification of the Operative
Documents except as permitted under Article 9 hereof.
Section 4.12 Title to Collateral and Limitation on Liens;
--------------------------------------------
Sale of Aircraft; Total Loss With Respect to Aircraft.
- ------------------------------------------------------
(a) The Company represents and warrants that it has, and
covenants that it shall continue to have, full power and lawful
authority to grant, release, convey, assign, transfer, mortgage,
pledge, hypothecate and otherwise create the security interests
in the Collateral referred to in Article 10; the Company shall
warrant, preserve and defend the interest and title of the
Trustee to the Collateral, against the claims of all persons and
will maintain and preserve the security interests contemplated by
Article 10; and the Company shall not, and not permit any of its
Subsidiaries to, directly or indirectly, incur, assume or suffer
to exist any Lien of any nature whatsoever upon or with respect
to the Collateral, other than Permitted Liens. The Company shall
cause the Operative Documents, including all necessary financing
statements, notifications of secured transactions and other
assurances or instruments to be properly recorded, registered and
filed and to be kept, recorded, registered and filed in such
manner and in such places as may be required by law and shall
take all such other actions as may be required in order to make
effective the security interests intended to be created in
connection with this Indenture. The Company shall furnish to the
Trustee the Opinions of Counsel required by Section 10.2 to
confirm such action.
(b) The Company shall not, directly or indirectly,
consummate any sale, lease, transfer or other disposition of any
Collateral for so long as any of the Securities remain
Outstanding.
(c) In the event that there shall occur a Total Loss with
respect to any Aircraft, the Company shall (unless the Company is
not required to make such Offer to Purchase pursuant to the next
succeeding sentence or the provisions of Section 4.12(d)) make an
Offer to Purchase an aggregate principal amount of Outstanding
Securities (the "Total Loss OTP Amount") equal to (for each
Aircraft subject to such Total Loss) (i) the aggregate principal
amount of the Securities Outstanding on the date such Offer to
Purchase (if any) is required to be commenced hereunder minus
(ii) the product of (A) $10,600,000 multiplied by (B) the number
of Aircraft remaining that were not subject to such Total Loss,
at a purchase price equal to 100% of the aggregate principal
amount of Securities to be purchased, plus accrued and unpaid
interest, if any, on such Securities, to and including the
Payment Date. If the foregoing calculation with respect to any
such Total Loss results in a negative number, no Offer to
Purchase shall be required with respect to such Total Loss. The
Company shall commence such Offer to Purchase (if any) within
thirty (30) days after the Total Loss Date with respect to any
such Total Loss. Upon Request by the Company and payment by the
Company of the purchase price with respect to such Offer to
Purchase (if any) and the Trustee's costs (including reasonable
legal fees and disbursements)
<PAGE>
17
incurred in complying with such Request, the Trustee shall
release from the Lien of the Operative Documents, all right,
title and interest of the Trustee in and to the Aircraft that was
the subject of such Total Loss.
(d) At its option the Company may reduce in whole or in
part its obligation to pay any Total Loss OTP Amount in cash by
delivering to the Trustee at least 15 days before the date the
related Offer to Purchase is or would be required to be commenced
under Section 4.12(c), (i) Securities which have been acquired by
the Company in open market purchases (and, for avoidance of
doubt, not acquired by way of any Offer to Purchase hereunder),
together with (ii) an Officers' Certificate directing the Trustee
to cancel such Securities and stating the election of the Company
to have credited against such Total Loss OTP Amount a specified
principal amount of Securities so delivered. Each such Officers'
Certificate shall state that the Securities forming the basis of
such credit do not include any Securities theretofore credited
against any Total Loss OTP Amount pursuant to this Section
4.12(d). All Securities made the basis of credit against a Total
Loss OTP Amount shall be credited at 100% of their principal
amount. Although the Company may obtain credit against any Total
Loss OTP Amount in advance of the related Payment Date as
provided herein, any such credit shall be applied against such
Total Loss OTP Amounts in the order in which they become due. In
case of the failure of the Company to deliver such Officers'
Certificate, the Total Loss OTP Amount due on the Payment Date
therefor shall be paid entirely in cash without the option to
reduce the Company's obligation to make such payment as specified
in this Section 4.12(d). If the principal amount of the
Securities made the basis of a credit against any Total Loss OTP
Amount (calculated, for this purpose, as of the date twenty-five
days after the Total Loss Date with respect to such Total Loss)
equals or exceeds such Total Loss OTP Amount, and the Company has
otherwise complied with the applicable provisions of this Section
4.12(d), then the Company shall not be required to make the Offer
to Purchase for which such Total Loss OTP Amount was calculated.
Such calculations shall be set forth in detail in the Officers'
Certificate required under this Section 4.12(d). The Trustee
shall promptly authenticate and mail to the Company a new
Security or Securities in an aggregate principal amount equal to
that portion (if any) of the Securities delivered to the Trustee
and not used by the Company as a credit under this Section
4.12(d) (provided, that the Company has previously delivered to
the Trustee sufficient executed Securities to enable the Trustee
to so authenticate such Securities).
Section 4.13 Books, Records, Access; Confidentiality.
---------------------------------------
(a) The Company shall, and shall cause each of its
Subsidiaries to, (i) maintain complete and accurate books and
records in which full and correct entries in conformity with GAAP
shall be made of all dealings and transactions in relation to its
respective business and activities, and (ii) permit authorized
representatives of the Trustee to visit and inspect the
Properties of the Company or its Subsidiaries, and any or all
books, records and documents in the possession of the Company
relating to the Collateral, including the records, logs, and
other materials referred to in Section 2.1(c) of the Mortgage,
and to make copies and take extracts therefrom and to visit and
inspect the Collateral, all upon reasonable notice and at such
reasonable times during normal business hours and as often as may
be reasonably requested.
<PAGE>
18
(b) The Trustee and its authorized representatives referred to in
clause (a) above agree not to use any information obtained
pursuant to this Section 4.13 for any purpose other than as
required in order to discharge their respective duties hereunder
and under the Operative Documents and except as otherwise
required for such purpose to keep confidential and not to
disclose any such information to any person except that (i) the
recipient of the information may disclose any information which
becomes publicly available other than as a result of disclosure
by such recipient, (ii) the recipient of the information may
disclose any information which its counsel reasonably concludes
is necessary to be disclosed by law or legal process, pursuant to
any court or administrative order or ruling or in any pending
legal or administrative proceeding or investigation after notice
to the Company adequate, subject to applicable laws, to allow the
Company to obtain a protective order or other appropriate remedy,
provided that the recipient of the information will (if not
otherwise required in order to discharge its duties as aforesaid)
cooperate at the Company's expense with the Company's efforts to
obtain a protective order or other reliable assurance that
confidential treatment will be accorded any such information
required to be so disclosed, and (iii) the recipient of the
information may disclose any information necessary to be
disclosed pursuant to any provision of the TIA.
Section 4.14 Security Interests.
------------------
The Company and its Subsidiaries shall perform any and all
acts and execute any and all documents (including, without
limitation, the execution, amendment or supplementation of any
financing statement and continuation statement or other
statement) for filing under the provisions of the Federal
Aviation Act and the applicable Uniform Commercial Code and the
rules and regulations thereunder or any other statute, rule or
regulation of any applicable federal, state or local
jurisdiction, which are necessary or advisable, from time to
time, in order to grant and maintain in favor of the Trustee for
the benefit of the Holders a valid, perfected Lien on the
Collateral.
The Company and its Subsidiaries shall deliver or cause to
be delivered to the Trustee from time to time such other
documentation, consents, authorizations, approvals and orders in
form and substance satisfactory to the Trustee as it shall deem
reasonably necessary or advisable to perfect or maintain the
Liens for the benefit of the Holders.
Section 4.15 Repurchase of Securities Upon a Change in Control.
-------------------------------------------------
(a) In the event that there shall occur a Change in
Control, the Company shall make an Offer to Purchase all of the
Outstanding Securities, at a purchase price equal to 101% of the
aggregate principal amount of the Securities Outstanding, plus
accrued and unpaid interest, if any, to and including the
repurchase date. The right to require such repurchase of
Securities shall not continue after a discharge of the Company
from its obligations with respect to the Securities in accordance
with Article 8.
(b) The Company shall commence such Offer to Purchase
within thirty (30) days after the occurrence of a Change in
Control.
<PAGE>
19
Section 4.16 Restrictions on Becoming an Investment Company.
----------------------------------------------
The Company shall not become an investment company within
the meaning of the Investment Company Act of 1940 as such statute
and the regulations thereunder and any successor statute or
regulations thereto may from time to time be in effect.
ARTICLE 5.
SUCCESSOR CORPORATION
Section 5.1 Covenant Not to Consolidate, Merge, Convey
------------------------------------------
or Transfer Except Under Certain Conditions.
- -------------------------------------------
The Company shall not consolidate with, or merge with or
into, or convey or transfer (excluding by way of lease) all or
substantially all of its Properties (as determined at the time of
such transfer without regard to any prior conveyance or transfer
or series of conveyances or transfers made on unrelated
transactions) to any other Person, or permit any Person to
convey, lease or transfer all or substantially all of its
Properties to the Company, unless:
(a) The Company shall be the continuing Person or the
Person (if other than the Company) formed by such consolidation
or into which the Company is merged or to which all or
substantially all of the Properties of the Company are conveyed
or transferred (the "surviving Person"): (i) shall be a
corporation organized and existing under the laws of the United
States of America or any state thereof or the District of
Columbia; (ii) shall expressly assume prior to or simultaneously
with the consummation of such transaction, by an indenture and
other agreements supplemental hereto and to the Operative
Documents, executed and delivered to the Trustee in form
reasonably satisfactory to the Trustee, the due and punctual
payment of the principal of, and interest, if any, on, all the
Securities and the observance and performance of every covenant,
condition and obligation of this Indenture, the Securities and
the Operative Documents on the part of the Company to be observed
or performed;
(b) Immediately before and immediately after giving effect
to such transaction, no Default or Event of Default shall have
occurred and be continuing hereunder;
(c) In the case of any such conveyance or transfer, such
conveyance or transfer includes, without limitation, all of the
Collateral and in any event such consolidation, merger,
conveyance or transfer shall be on such terms as shall fully
preserve the Lien and security of each of the Operative
Documents, the priority thereof purported to be established
thereby and the rights and powers of the Trustee and the Holders
of the Securities under each of the Operative Documents; and
(d) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that (i) such
merger, consolidation, transfer, conveyance, or acquisition of
assets and such supplemental indenture (if any) comply with the
terms of this Indenture, (ii) this Indenture and the Securities
constitute the valid and legally binding obligations of the
<PAGE>
20
surviving Person, and (iii) this Indenture and the other
Operative Documents are enforceable against the surviving Person
in accordance with their terms.
Section 5.2 Successor Person Substituted.
----------------------------
Upon any consolidation or merger, or any conveyance or
transfer (excluding by way of lease) of all or substantially all
of the Properties of the Company in accordance with Section 5.1,
the surviving entity formed by such consolidation or into which
the Company is merged or the surviving entity to which such
conveyance or transfer is made shall succeed to, and be
substituted for, and be bound by and obligated to pay the
obligations of, and may exercise every right and power of, the
Company under this Indenture, the Securities and the Operative
Documents with the same effect as if such successor had been
named as the Company herein and therein; but the predecessor
Company in the event of any such conveyance or transfer shall not
be released from the obligation to pay the principal of and
interest, if any, with respect to, the Securities.
Such surviving entity may cause to be signed, and may issue
either in its own name or in the name of the Company prior to
such succession any or all of the Securities issuable hereunder
which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such surviving
entity, instead of the Company, and subject to all the terms,
conditions and limitations in this Indenture prescribed, the
Trustee shall authenticate and shall deliver any Securities which
previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication, and any
Securities which such surviving entity thereafter shall cause to
be signed and delivered to the Trustee for that purpose. All of
the Securities so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of
this Indenture as though all of such Securities had been issued
at the date of the execution hereof.
In case of any such consolidation, merger, sale, transfer
or conveyance such changes in phraseology and form (but not in
substance) may be made in the Securities thereafter to be issued
as may be appropriate.
Section 5.3 Limitation on Lease of Properties.
---------------------------------
Without limitation of the prohibitions set forth in the
other Operative Documents, the Company shall not lease all or
substantially all of its Properties to any Person.
ARTICLE 6.
DEFAULT AND REMEDIES
Section 6.1 Events of Default.
-----------------
An "Event of Default" occurs if:
<PAGE>
21
(a) the Company defaults in the payment of interest on any
Security when the same becomes due and payable and the default
continues for thirty (30) days;
(b) the Company defaults in the payment of the principal
amount of any Securities when the same becomes due and payable at
maturity, upon acceleration, redemption, tender for repurchase or
otherwise;
(c) the Company fails to comply with the agreements or
covenants contained in Article 13 hereof or in Sections 4.3 or
4.12 hereof, takes or agrees to take any action prohibited by
Section 5.1 hereof, discontinues or agrees to discontinue
substantially all of its commercial airlines operations or fails
to comply with the covenants contained in Sections 3, 6.3, 6.5 or
6.8 of the Mortgage within the time periods (if any) provided
therein;
(d) (i) the Company fails in any material respect to comply
with any of its other agreements contained in the Securities,
this Indenture or the other Operative Documents or (ii) any
representation or warranty made by the Company in this Indenture,
the other Operative Documents or any Mortgage Supplement or in
any certificate of the Company delivered hereunder or under any
such document shall prove to have been untrue in any material
respect when made, and in any such case such default continues
for the period and after the notice specified below;
(e) there shall be a default or an event under or with
respect to any Indebtedness of the Company or any of its
Significant Subsidiaries in excess of $10,000,000 in principal
amount, whether such Indebtedness now exists or shall hereafter
be created, and the effect of any such default or event is to
cause the principal amount of any such Indebtedness to become
due, to have the date of payment thereof fixed prior to its
stated maturity or the date it would otherwise become due and
while any Securities are Outstanding, or to be unpaid at maturity
while any Securities are Outstanding;
(f) the Company or any of its Significant Subsidiaries
pursuant to or within the meaning of any Bankruptcy Law (as
hereinafter defined):
(i) commences a voluntary case or proceeding,
(ii) consents to the entry of an order for relief
against it in an involuntary case or proceeding,
(iii) consents to the appointment of a Custodian (as
hereinafter defined) of it or or all or substantially all of
its Property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is unable to pay its debts as the same
become due;
(g) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
<PAGE>
22
(i) is for relief against the Company or any of its Significant
Subsidiaries in an involuntary case or proceeding,
(ii) appoints a Custodian of the Company or any of its
Significant Subsidiaries for all or substantially all of
its properties, or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries,
and in each case the order and decree remains unstayed and in effect
for sixty (60) consecutive days;
(h) final, non-appealable judgments for the payment of
money, which judgments, in the aggregate, exceed $10,000,000
shall be rendered against the Company or any of its Significant
Subsidiaries by a court of competent jurisdiction and remain
undischarged, unstayed and unsatisfied for the period and after
the notice specified below; or
(i) any of the Operative Documents ceases, without the
consent of the Trustee, to be in full force and effect.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
A Default under clause (d), (e) or (h) of this Section 6.1
is not an Event of Default until the Trustee notifies the
Company, or the Holders of at least twenty-five percent (25%) in
aggregate principal amount of the Securities Outstanding notify
the Company and the Trustee, of the Default and the Company does
not cure the Default within sixty (60) days with respect to
clauses (d) and (h), or within thirty (30) days with respect to
clause (e), after receipt of the notice; provided, however, that
the Company shall be permitted such longer period of time, if
any, as may be provided for under the other Operative Documents
in respect of any particular Default. The notice must specify the
Default, demand that it be remedied and state that the notice is
a "Notice of Default." When a Default is cured, it ceases.
Section 6.2 Acceleration.
------------
If an Event of Default (other than an Event of Default
specified in Section 6.1(f) or (g)) occurs, and is continuing,
the Trustee may, by notice to the Company, or the Holders of at
least twenty-five percent (25%) in aggregate principal amount of
the Securities Outstanding may, by notice to the Company and the
Trustee, and the Trustee shall, upon the request of such Holders,
declare all unpaid principal of and accrued interest, if any, to
the date of acceleration on the Securities Outstanding (if not
then due and payable) to be due and payable and upon any such
declaration, the same shall become and be immediately due and
payable. If an Event of Default specified in Section 6.1(f) or
(g) occurs, all unpaid principal of and accrued interest, if any,
on the Securities Outstanding shall ipso facto become and be
immediately due and payable without any declaration or other act
on the part of the Trustee or any Securityholder. Upon payment of
<PAGE>
23
such principal amount and interest, if any, all of the Company's
obligations under the Securities and this Indenture, other than
obligations under Sections 7.7 and 8.4, shall terminate. The
Holders of a majority in principal amount of the Securities then
Outstanding by notice to the Trustee may rescind an acceleration
and its consequences if (a) all existing Events of Default, other
than the non-payment as to the Securities of the principal and
interest, if any, which has become due solely by such declaration
of acceleration, have been cured or waived, (b) to the extent the
payment of such interest is permitted by law, interest on overdue
installments of interest and on overdue principal which has
become due otherwise than by such declaration of acceleration,
has been paid, (c) the rescission would not conflict with any
judgment or decree of a court of competent jurisdiction, and (d)
all payments due to the Trustee and any predecessor Trustee under
Section 7.7 have been made.
Section 6.3 Other Remedies.
--------------
If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of and interest, if
any, on the Securities or to enforce the performance of any
provision of the Securities or this Indenture including, without
limitation, instituting proceedings and exercising and enforcing,
or directing exercise and enforcement of, all rights and remedies
of the Trustee under the other Operative Documents.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in
the proceeding. A delay or omission by the Trustee or any
Securityholder in exercising any right or remedy accruing upon an
Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default.
No remedy is exclusive of any other remedy. All available
remedies are cumulative.
Section 6.4 Waiver of Past Defaults.
-----------------------
Subject to Sections 6.7, 9.2 and 9.6, the Holders of a
majority in aggregate principal amount of the Securities
Outstanding by notice to the Trustee may authorize the Trustee to
waive an existing Default or Event of Default and its
consequences, except a Default (a) in the payment of principal
of, or interest on, any Security as specified in clauses (a) and
(b) of Section 6.1 or (b) in respect of a covenant or provision
hereof which cannot be modified or amended without the consent of
the Holder of each Security affected. When a Default or Event of
Default is waived, it is cured and ceases, and the Company, the
Holders and the Trustee shall be restored to their former
positions and rights hereunder respectively; but no such waiver
shall extend to any subsequent or other Default or Event of
Default or impair any right consequent thereon.
Section 6.5 Control by Majority.
-------------------
The Holders of a majority in aggregate principal amount of
the Securities Outstanding may direct the time, method and place
of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on it;
provided that the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction. The
Trustee may refuse to follow any direction hereunder or
authorization under Section 6.4 that
<PAGE>
24
legal counsel to the Trustee determines in good faith conflicts
with law or this Indenture, that the Trustee reasonably
determines may be unduly prejudicial to the rights of another
Securityholder, or that the Trustee reasonably determines may
subject the Trustee to personal liability. However, the Trustee
shall have no liability for any actions or omissions to act which
are in accordance with any such direction or authorization.
Section 6.6 Limitation on Suits.
-------------------
A Securityholder may not pursue any remedy with respect to
this Indenture or the Securities unless:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least twenty-five percent (25%) in
principal amount of the Securities Outstanding make a written
request to the Trustee to pursue the remedy;
(c) such Holder or Holders offer to the Trustee indemnity
reasonably satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within
sixty (60) days after receipt of the request and the offer of
indemnity; and
(e) during such 60-day period the Holders of a majority in
aggregate principal amount of the Securities Outstanding do not
give the Trustee a direction which, in the reasonable opinion of
the Trustee, is inconsistent with such request.
A Securityholder may not use this Indenture to prejudice
the rights of another Securityholder or to obtain a preference or
priority over such other Securityholder.
Section 6.7 Rights of Holders to Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of principal
of and interest on the Security in cash, on or after the
respective due dates expressed in the Security, or to bring suit
for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the
consent of the Holder.
It is hereby expressly understood, intended and agreed that
any and all actions which a Holder of the Securities may take to
enforce the provisions of this Indenture and/or collect Payments
due hereunder or under the Securities, except to the extent that
such action is determined to be on behalf of all Holders of the
Securities, shall be in addition to and shall not in any way
change, adversely affect or impair the rights and remedies of the
Trustee or any other Holder of the Securities thereunder or under
this Indenture and the other Operative Documents, including the
right to foreclose upon and sell the Collateral or any part
thereof and to apply any proceeds realized in accordance with the
provisions of this Indenture.
<PAGE>
25
Section 6.8 Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of interest or principal
specified in clause (a) or (b) of Section 6.1 occurs and is
continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company or any other
obligor on the Securities for the whole amount of principal and
accrued interest remaining unpaid, together with interest on
overdue principal and on overdue installments of interest to the
extent that payment of such interest is permitted by law, in each
case at the rate per annum provided for by the Securities, and
such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel.
Section 6.9 Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and the Securityholders allowed
in any judicial proceedings relative to the Company (or any other
obligor upon the Securities), its creditors or its Property and
shall be entitled and empowered to collect and receive any moneys
or other Property payable or deliverable on any such claims and
to distribute the same, and any Custodian in any such judicial
proceedings is hereby authorized by each Securityholder to make
such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agent and counsel, and any other amounts due
the Trustee under Section 7.7, and unless prohibited by law or
applicable regulations to vote on behalf of the Holders of
Securities for the election of a trustee in bankruptcy or other
person performing similar functions. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent
to or accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding except, as aforesaid, for
the election of a trustee in bankruptcy or person performing
similar functions.
Section 6.10 Application of Proceeds.
-----------------------
Any moneys collected by the Trustee pursuant to this
Article shall be applied in the following order at the date or
dates fixed by the Trustee and, in case of the distribution of
such moneys on account of principal or interest, if any, upon
presentation of the several Securities and stamping (or otherwise
noting) thereon the payment, or issuing Securities in reduced
principal amounts in exchange for the presented Securities if
only partially paid, or upon surrender thereof if fully paid:
FIRST: To the payment of reasonable costs and expenses
actually incurred, including reasonable compensation to the
Trustee, its predecessors, if any, and their respective
agents and attorneys (including amounts due and unpaid under
Section 7.7),
<PAGE>
26
and of all reasonable costs, fees, expenses and liabilities
incurred, and all advances made, by any and all of the
foregoing (including amounts due and unpaid under Section
7.7), except as a result of negligence or bad faith;
SECOND: In case the entire principal of the Securities
shall not have become and be then due and payable, as to
any Securities (a) first to the payment of interest, if
any, in default in the order of the maturity of the
installments of such interest, with interest (to the extent
that such interest has been collected by the Trustee) upon
the overdue installments of interest, at the rate of
interest specified in the Securities and (b) second to the
payment of principal of the Securities as the same shall
become due and payable, such payments to be made ratably to
the Persons entitled thereto, without discrimination or
preference;
THIRD: In case the entire principal of the Securities
shall have become and shall be then due and payable, as to
any Securities, to the payment of the whole amount then
owing and unpaid upon all the Securities for principal and
interest, with interest upon the overdue principal, and (to
the extent that such interest has been collected by the
Trustee) upon overdue installments of interest, at the same
rate as the rate of interest specified in this Indenture or
in the Securities; and in case such moneys shall be
insufficient to pay in full the whole amount so due and
unpaid upon the Securities, then to the payment of such
principal and interest, without preference or priority of
either of principal or interest over the other, or any
installment of interest over any other installment of
interest, or of any Security over any other Security,
ratably to the aggregate of such principal, and accrued and
unpaid interest; and
FOURTH: To the payment of the remainder, if any, after
payment in full of the entire principal balance, if any, of
the Securities and all interest and other amounts due upon
or in respect of such Securities, to the Company or any
other Person lawfully entitled thereto.
The Trustee, upon prior written notice to the Company, may
fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10.
Section 6.11 Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have
agreed, that any court of competent jurisdiction in its
discretion may require in any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the
Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess
reasonable costs, including reasonable attorneys' fees, against
any party litigant in the suit, having due regard to the merits
and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.7, or a suit by
Holders of more than ten percent (10%) in principal amount of the
Securities Outstanding.
<PAGE>
27
Section 6.12 Restoration of Rights on Abandonment of Proceedings.
---------------------------------------------------
In case the Trustee shall have proceeded to enforce any
right under this Indenture and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been
determined adversely to the Trustee, then and in every such case
the Company, the Trustee and the Securityholders shall be
restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of the Company,
the Trustee and the Securityholders shall continue as though no
such proceedings had been taken.
Section 6.13 Powers and Remedies Cumulative; Delay or Omission
-------------------------------------------------
Not Waiver of Default.
- ---------------------
No right or remedy herein conferred upon or reserved to the
Trustee or to the Securityholders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
No delay or omission of the Trustee or of any Holder of any
of the Securities to exercise any right or power accruing upon
any Event of Default occurring and continuing as aforesaid shall
impair any such right or power or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein;
and, subject to the other applicable provisions of this
Indenture, every power and remedy given by this Indenture or by
law to the Trustee or to the Securityholders may be exercised
from time to time, and as often as shall be deemed expedient, by
the Trustee or by the Securityholders.
Any right or remedy herein conferred upon or reserved to
the Trustee may be exercised by it in its capacity as Trustee, as
it may deem most efficacious, if it is then acting in such
capacity.
ARTICLE 7.
TRUSTEE
Section 7.1 Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested
in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under
the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties as are
specifically set forth in this Indenture and the other
Operative Documents and no others.
<PAGE>
28
(ii) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act, or its
own willful misconduct or bad faith, except that:
(i) This paragraph (c) does not limit the effect of
paragraph (b) of this Section 7.1 or of Section 7.2.
(ii) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it
is proved that the Trustee was negligent in ascertaining
the pertinent facts.
(iii) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 6.5.
(d) The Trustee shall be under no obligation to exercise
any of the rights, trusts or powers vested in it by this
Indenture at the request, order or direction of any of the
Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee security or indemnity reasonably
satisfactory to the Trustee against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request, order or direction.
(e) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b), (c) and
(d) of this Section 7.1.
(f) Funds held in trust for the benefit of the Holders of
the Securities by the Trustee or any Paying Agent on deposit with
itself or elsewhere shall be held in distinct, identifiable
accounts, and other funds or investments of any nature or from
any source whatsoever may be held in such accounts, except, in
each case, to the extent required by law. The Trustee shall not
be liable for interest on any money received by it except as the
Trustee may agree with the Company.
Section 7.2 Rights of Trustee.
-----------------
(a) The Trustee may rely on any document reasonably
believed by it to be genuine and to have been signed or presented
by the proper person. Subject to Section 7.1(b)(ii), the Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, which
shall conform to Section 11.5. The Trustee shall not be liable
for any action it takes or omits to take in good faith in
reliance on such certificate or opinion.
<PAGE>
29
(c) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through
its attorneys and agents and the Trustee shall not be responsible
for the misconduct or negligence of any agent or attorney
appointed with due care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.
Section 7.3 Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal
with and collect obligations owed to it by the Company or
Affiliates of the Company with the same rights it would have if
it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee is subject to Sections 7.10 and 7.11.
Section 7.4 Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the
Securities, and it shall not be responsible for any statement in
the Securities or in this Indenture other than its certificate of
authentication.
Section 7.5 Notice of Defaults.
------------------
If a Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to each Securityholder notice
of the Default within ninety (90) days after the occurrence
thereof except as otherwise permitted by the TIA. Except in the
case of a Default in payment of principal of, or interest on, any
Security, the Trustee may withhold the notice if and so long as
it, in good faith, determines that withholding the notice is in
the interests of the Securityholders.
Section 7.6 Reports by Trustee to Holders.
-----------------------------
If circumstances require any report to Holders under TIA
ss. 313(a), it shall be mailed to Securityholders within sixty
(60) days after each May 15 (beginning with the May 15 following
the date of this Indenture) as of which such circumstances exist.
The Trustee also shall comply with the remainder of TIA ss. 313.
The Company shall promptly notify the Trustee if the
Securities become listed on or delisted from any stock exchange
or other recognized trading market.
The Trustee shall, upon the written request of any Holder
of Securities but subject to applicable laws and contractual
limitations, provide to such Holder copies of any reports,
certificates, opinions or other materials of any kind or nature
required to be delivered to the Trustee under this Indenture or
any of the other Operative Documents or otherwise delivered by or
on behalf of the Company to the Trustee.
<PAGE>
30
Section 7.7 Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time
reasonable compensation, as agreed upon from time to time, for
its services hereunder and under the other Operative Documents.
The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it in
any such capacities. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents
and counsel and all agents and other persons not regularly in its
employ.
The Company shall indemnify the Trustee and each
predecessor Trustee for, and hold each of them harmless against,
any loss or liability incurred by each of them in connection with
the administration of this Indenture and its duties hereunder. In
connection with any defense of such a claim, the Trustee may have
separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not reimburse any
expense or indemnify against any loss or liability incurred by
the Trustee or any predecessor Trustee through the negligence or
bad faith of such Trustee or each such predecessor Trustee.
To secure the Company's payment obligations in this Section
7.7, the Trustee shall have a Lien (legal and equitable) prior to
the Securities on all money or Property held or collected by the
Trustee, in its capacity as Trustee, or otherwise distributable
to Securityholders, except money, securities or Property held in
trust to pay principal of or interest on particular Securities
(including, without limitation, pursuant to Section 8.1(b)
hereof).
When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 6.1(f) or (g) occurs,
the expenses and the compensation for the services are intended
to constitute expenses of administration under any Bankruptcy
Law.
Section 7.8 Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company and the
Holders in writing. The Holders of a majority in aggregate
principal amount of the Securities Outstanding may remove the
Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee with the Company's consent, which consent shall
not be unreasonably refused or delayed. The Company may remove
the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of the
Trustee or its Property;
(d) the Trustee becomes incapable of acting; or
(e) no Default or Event of Default has occurred and is
continuing and the Company determines in good faith to remove the
Trustee.
<PAGE>
31
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly
appoint a successor Trustee. Within one year after any such
successor Trustee takes office, the Holders of a majority in
aggregate principal amount of the Securities Outstanding may
appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company.
Immediately after that, the retiring Trustee shall transfer all
Property held by it as Trustee to the successor Trustee, subject
to the Lien provided in Section 7.7, the resignation or removal
of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Securityholder.
No resignation or removal of the Trustee and no appointment
of a successor Trustee, pursuant to this Article, shall become
effective until the acceptance of appointment by the successor
Trustee under this Section 7.8. If a successor Trustee does not
take office within sixty (60) days after the retiring Trustee
resigns or is removed, the retiring Trustee, the Company or the
Holders of at least ten percent (10%) in principal amount of the
Securities Outstanding may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Holder of Securities may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment
of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's obligations under Section 7.7 shall
continue for the benefit of the retiring Trustee which shall
retain its claim pursuant to Section 7.7.
Section 7.9 Successor Trustee by Merger, etc.
--------------------------------
If the Trustee consolidates with, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the resulting, surviving or
transferee corporation without any further act shall be the
successor Trustee.
Section 7.10 Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies
the requirements of TIA ss. 310(a)(1). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth
in its most recent, published annual report of condition. The
Trustee shall comply with TIA ss. 310(b); provided, however, that
there shall be excluded from the operation of TIA ss. 310(b)(1)
any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of
the Company are outstanding, if the requirements for such
exclusion set forth in TIA ss. 310(b)(1) are met.
<PAGE>
32
Section 7.11 Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has
resigned or been removed shall be subject to TIA ss. 311(a) to
the extent indicated.
ARTICLE 8.
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligations.
------------------------------------
(a) The Company may terminate its obligations under this
Indenture, except those obligations referred to in the last
paragraph of Section 8.1(b), if all Securities previously
authenticated and delivered (other than destroyed, lost or stolen
Securities which have been replaced or paid or Securities for
whose payment Payments have theretofore been held in trust and
thereafter repaid to the Company, as provided in Section 8.3)
have been delivered to the Trustee for cancellation and the
Company has paid all sums payable by it hereunder.
(b) The Company may terminate all its obligations under
this Indenture except those obligations referred to in the
immediately succeeding paragraph if
(i) the Company has irrevocably deposited or caused to
be irrevocably deposited with the Trustee or a Paying
Agent, under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Trustee and any such
Paying Agent, as trust funds in trust solely for the
benefit of the Holders for that purpose, cash or U.S.
Government Obligations maturing as to principal and
interest, in such amounts and at such times as are
sufficient without consideration of any reinvestment of any
such interest to pay the then maximum possible principal
of, and the then maximum possible interest on the
Securities Outstanding to maturity provided, that the
Trustee or such Paying Agent shall have been irrevocably
instructed to apply such money or the proceeds of such U.S.
Government Obligations to the payment of said principal of
and interest on the Securities.
(ii) No Default or Event of Default with respect to
the Securities shall have occurred and be continuing (A) on
the date of such deposit described in clause (i), or (B)
insofar as paragraph (f) of Section 6.1 is concerned, at
any time during the period ending on the 91st day after the
date of such deposit or, if longer, ending on the day
following the expiration of the longest preference period
applicable to the Company in respect of such deposit (it
being understood that the condition in this clause (B) is a
condition subsequent and shall not be deemed satisfied
until the expiration of such period);
(iii) Such termination and deposit described in clause
(i) shall not (A) cause the Trustee to have a conflicting
interest as defined in TIA Section 310(b) or otherwise for
purposes of the TIA with respect to any securities of the
Company, or (B) result in the
<PAGE>
33
trust arising from such deposit to constitute, unless it is
qualified as, a regulated investment company under the
Investment Company Act of 1940, as amended;
(iv) Such termination and deposit described in clause
(i) shall not result in a breach or violation of or
constitute a default under, this Indenture or any other
material agreement or instrument to which the Company is a
party or by which it is bound;
(v) The Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the
Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such termination
and deposit described in clause (i) and will be subject to
federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such
termination and deposit had not occurred; and
(vi) The Company shall have delivered to the Trustee
and any Paying Agent an Officer's Certificate and an
Opinion of Counsel, each stating that all conditions
precedent and subsequent provided for above in this Section
8.1(b) have been complied with.
Notwithstanding the foregoing paragraph, the Company's
obligations in Article 13 and in Sections 2.3, 2.4, 2.5, 2.6,
2.7, 4.1, 4.2, 4.8, 7.7, 7.8, 8.2, 8.3, 8.4 and 10.4 shall
survive until the Securities are no longer Outstanding.
Thereafter, the Company's obligations in Sections 7.7 and 8.3
shall survive.
(c) After the effectiveness of any termination of its
obligations (except, in the case of Section 8.1(b), as set forth
in the last paragraph thereof), under this Indenture in
accordance with Section 8.1(a) or (b) above (such effective date,
the "Indenture Discharge Date") and payment of all obligations of
the Company accrued under Section 7.7, the Trustee upon Request
shall acknowledge in writing the discharge of the Company's
obligations under this Indenture except for those surviving
obligations specified above.
Section 8.2 Application of Trust Money.
--------------------------
The Trustee or Paying Agent shall hold in trust money or
U.S. Government Obligations deposited with it pursuant to Section
8.1, and shall apply the deposited money and the money from U.S.
Government Obligations in accordance with this Indenture to the
payment of principal of, and interest, if any, on, the
Securities. The obligations of the Trustee and Paying Agent under
this Section 8.2 shall survive, notwithstanding any termination
or discharge of the Company's obligations pursuant to Section
8.1, until all Securities are paid in full.
The Company shall pay and indemnify the Trustee or Paying
Agent, as the case may be, against any tax, fee or other charge
imposed on or assessed against the money or U.S. Government
Obligations deposited pursuant to Section 8.1(b)(i) or the
principal and interest received in respect thereof.
<PAGE>
34
Section 8.3 Repayment to Company.
--------------------
Anything in Section 8.1(b) to the contrary notwithstanding,
the Trustee or Paying Agent, as the case may be, shall deliver or
pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations (or other Property and any
proceeds therefrom) held by it as provided in Section 8.1(b)
which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee and to the Paying
Agent, if applicable, are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent
termination under said Section 8.1(b). The Trustee and the Paying
Agent shall Pay to the Company any Payments held by them for the
payment of principal and interest that remains unclaimed for two
(2) years after the Stated Maturity of such payment of principal
or interest, as the case may be; provided, however, that the
Trustee or such Paying Agent before making any Payment shall at
the expense of the Company cause to be published once in the
national edition of The New York Times or The Wall Street Journal
or, if such newspapers are not then in circulation, in a
newspaper of general circulation in the City of New York and mail
to each Holder entitled to such money, notice that such Payments
remain unclaimed and that, after a date specified therein which
shall be at least thirty (30) days from the date of such
publication or mailing, any unclaimed balance of such Payments
then remaining will be repaid to the Company. After payment to
the Company, Securityholders entitled to Payments must look to
the Company for payment as general creditors unless an applicable
abandoned property law designates another person.
Section 8.4 Reinstatement.
-------------
Anything herein to the contrary notwithstanding, (i) if the
Trustee or Paying Agent, as the case may be, is unable to apply
any money or U.S. Government Obligations in accordance with
Section 8.1 by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application,
or (ii) the deposited money or U.S. Government Obligations (or
the proceeds thereof) are, for any reason (including any
repayment to the Company under Section 8.3), insufficient in
amount, then the Company's obligations under this Indenture shall
be revived and reinstated as though no deposit had occurred
pursuant to Section 8.1 until such time as the Trustee, or Paying
Agent, as the case may be, is permitted to apply all such money
or U.S. Government Obligations and the proceeds of the investment
thereof in accordance with Section 8.1, or the deficiency is
cured in the manner set forth in Section 8.1(b), as the case may
be. In such event, the Trustee will invest all such money or the
proceeds from U.S. Government Obligations at the Company's
request in other U.S. Government Obligations and, upon written
notice from the Company, so long as there exists no Event of
Default, to the extent and only to the extent provided in the
first sentence of Section 8.3 return to the Company any money or
U.S. Government Obligations deposited with the Trustee pursuant
to Section 8.1. If the Company has made any payment of interest
on or principal of any Securities because of an event described
in clause (i) of the first sentence of this Section 8.4, the
Company shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent, as
the case may be.
<PAGE>
35
ARTICLE 9.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Without Consent of Holders.
--------------------------
The Company and the Trustee, as the case may be, may amend
or supplement this Indenture, the Securities or the other
Operative Documents without notice to or consent of any
Securityholder:
(a) to provide for uncertificated Securities in
addition to or in place of certificated
Securities;
(b) to provide for the assumption of the Company's
obligations to the Holders of the Securities in the case of a
merger or consolidation or transfer of all or substantially all
of the assets of the Company or otherwise to comply with Article
5;
(c) to comply with any requirements of the SEC in
connection with the qualification of this Indenture under the
TIA; or
(d) to cure any ambiguity, defect or inconsistency or to
make any other change, in each case, provided that such action
does not materially adversely affect the interests of any
Securityholder.
Section 9.2 With Consent of Holders.
-----------------------
Subject to Section 6.7, the Company (by resolution of its
Board of Directors if required) and the Trustee may amend or
supplement this Indenture, the Securities or the other Operative
Documents without notice to any Securityholder but with the
written consent of the Required Holders. Subject to Sections 6.4,
6.5 and 6.7, the Required Holders may authorize the Trustee to,
and the Trustee, subject to Section 9.6, upon such authorization
shall, waive compliance by the Company with any provision of this
Indenture, the Securities or the other Operative Documents.
However, an amendment, supplement or waiver, including a waiver
pursuant to any provision of Section 6.4, may not without the
consent of each Securityholder affected:
(a) reduce the amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the rate or extend the time for payment of
interest on any Security;
(c) reduce the principal of (whether on repurchase or
otherwise), or change the fixed maturity of any Security;
(d) change the place of payment where, or the coin or
currency in which, any Security (or the repurchase price
thereof), or interest, if any, thereon, is payable;
(e) waive a default in the payment of the principal of, or
interest on, any Security;
<PAGE>
36
(f) make any changes in Article 3, Sections 2.8, 6.4, 6.7 or
6.10, or the third sentence of this Section 9.2;
(g) reduce any amount payable upon exercise of any
repurchase rights thereof or otherwise change any repurchase
right provision or impair the right of any Holder to institute
suit for the enforcement of any such payment on any Security when
due or adversely effect any repurchase rights hereunder; or
(h) except as otherwise permitted or required under this
Indenture, change the Conversion Date or the Conversion Price or
otherwise modify or affect Article 13 or any other provision of
this Indenture in any manner that would adversely affect any
Holder's conversion rights hereunder.
It shall not be necessary for the consent of the Holders
under this Section to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if
such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section
9.2 becomes effective, the Company shall mail to the Holders
affected thereby a brief notice describing such amendment,
supplement or waiver. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such amendment, supplement
or waiver.
Section 9.3 Compliance with Trust Indenture Act.
-----------------------------------
Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 9.4 Revocation and Effect of Consents.
---------------------------------
Until an amendment or waiver becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security, even
if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to
his Security or portion of a Security. Such revocation shall be
effective only if the Trustee receives the notice of revocation
before the date the amendment, supplement or waiver becomes
effective.
After an amendment, supplement or waiver becomes effective,
it shall bind every Securityholder, unless it makes a change
described in any of clauses (a) through (h) of Section 9.2. In
that case the amendment, supplement or waiver shall bind each
Holder of a Security who has consented to it and every subsequent
Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security; provided, however,
that no amendment, supplement or waiver relating to any
impairment of the right to receive principal and interest when
due and payable consented to by a Holder shall be binding upon
any subsequent Holder of a Security or a portion of a Security
that evidences the same debt as the
<PAGE>
37
consenting Holder's Security unless notation with regard thereto
is made upon such Security or the Security representing such
portion.
Section 9.5 Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of
a Security, the Trustee may require the Holder of the Security to
deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue
and the Trustee shall authenticate a new Security that reflects
the changed terms.
Section 9.6 Trustee to Sign Amendments, etc.
-------------------------------
The Trustee shall be entitled to receive and rely upon an
Officers' Certificate and an Opinion of Counsel stating that the
execution of any amendment, supplement or waiver authorized
pursuant to this Article 9 has been duly authorized by the
Company and is authorized or permitted by this Indenture and the
other applicable Operative Documents. The Trustee may, but shall
not be obligated to, execute any such amendment, supplement or
waiver which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 9.7 Effect of Supplement and/or Amendment.
-------------------------------------
Upon the execution of any supplemental indenture and/or any
such amendment or supplement to the other Operative Documents
pursuant to the provisions of this Article 9, this Indenture and
such Operative Documents shall be and be deemed to be modified
and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties and immunities under
this Indenture and the other Operative Documents of the Trustee,
the Company and the Holders of Securities shall thereafter be
determined, exercised and enforced hereunder and thereunder
subject in all respects to such modifications and amendments, and
all terms and conditions of any such supplemental indenture
and/or any such amendment or supplement to the other Operative
Documents shall be and be deemed to be part of the terms and
conditions of this Indenture and the other Operative Documents
for any and all purposes.
ARTICLE 10.
SECURITY
Section 10.1 Other Operative Documents.
-------------------------
To secure the due and punctual payment, performance and
observance of the Obligations (but not to exceed, in any event,
the aggregate amount of $24,300,000), the Company has
simultaneously with the execution of this Indenture entered into
or caused to be assigned to the Trustee the other Operative
Documents and has made an assignment and pledge of or otherwise
transferred or caused to be transferred its right, title and
interest in and to the Collateral to the
<PAGE>
38
Trustee pursuant to the other Operative Documents and in the
manner and to the extent therein provided. Each Securityholder,
by accepting a Security, agrees to all of the terms and
provisions of each Operative Document (including, without
limitation, the provisions providing for the release of
Collateral and for the subordination of the Lien of the Mortgage
to the Lien of the First Mortgage), as the same may be in effect
or may be amended from time to time pursuant to its terms and the
terms hereof. The Company will execute, acknowledge and deliver
to the Trustee such further assignments, transfers, assurances or
other instruments as the Trustee may reasonably require or
request, and will do or cause to be done all such acts and things
as may be necessary or proper, or as may be reasonably required
by the Trustee to assure and confirm to the Trustee the security
interest in the Collateral contemplated hereby and by the other
Operative Documents or any part thereof, as from time to time
constituted, so as to render the same available for the security
and benefit of this Indenture and of the Securities secured
hereby, according to the intent and purposes herein expressed.
Section 10.2 Opinions, Certificates and Appraisals.
-------------------------------------
(a) The Company shall furnish to the Trustee promptly after
the execution and delivery of this Indenture but prior to
authentication of any Securities, Opinions of Counsel covering
such jurisdictions as the Owner Trustee may reasonably request
either (i) stating that in the opinion of such Counsel the
actions necessary to be taken under the Federal Aviation Act, the
Uniform Commercial Code of all applicable jurisdictions, or
otherwise with respect to the recording, registering and filing
of this Indenture, the other Operative Documents, financing
statements or other instruments to make effective and to perfect
the Liens intended to be created by the Mortgage have been taken
and reciting with respect to the security interests in the
Collateral, the details of such actions, or (ii) stating that, in
the opinion of such Counsel, no such action is necessary to make
such Liens effective and perfected.
(b) [Intentionally omitted.]
(c) The release of any Collateral from the terms of the
Mortgage will not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to the
extent the Collateral is released pursuant to the Mortgage or
this Indenture, as applicable. To the extent applicable, the
Company shall cause TIA ss. 314(d) relating to the release of
Property or securities from the Lien of the Mortgage and relating
to the substitution therefor of any Property or securities to be
subjected to the Lien of the Mortgage, to be complied with. Any
certificate or opinion required by TIA ss. 314(d) may be made by
an Officer of the Company, except in cases where TIA ss. 314(d)
requires that such certificate or opinion be made by an
independent person.
Section 10.3 Authorization of Actions to be Taken by
---------------------------------------
the Trustee Under the Operative Documents.
- -----------------------------------------
The Trustee may, in its sole discretion and without the
consent of the Securityholders, take all actions it deems
necessary or appropriate to (a) enforce any of the terms of the
Operative Documents and (b) collect and receive any and all
amounts payable in respect of the obligations of the Company
hereunder and thereunder. Subject to the provisions of this
Indenture and the other Operative Documents, the Trustee shall
have power to institute and to maintain such suits
<PAGE>
39
and proceedings as it may deem expedient to prevent any
impairment of the Collateral by any acts which may be unlawful or
in violation of the other Operative Documents or this Indenture,
and such suits and proceedings as it may deem expedient to
preserve or protect its interest and the interests of the
Securityholders in the Collateral (including power to institute
and maintain suits or proceedings to restrain the enforcement of
or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of, or compliance with, such
enactment, rule or order would impair the security interest
hereunder or be prejudicial to the interests of the
Securityholders or of the Trustee).
Section 10.4 Payment of Expenses.
-------------------
On demand of the Trustee, the Company forthwith shall pay
or satisfactorily provide for all reasonable expenditures
incurred by the Trustee under this Article 10, and all such sums
shall be a Lien upon the Collateral and shall be secured thereby.
Section 10.5 Authorization of Receipt of Funds by the
----------------------------------------
Trustee Under the Operative Documents.
- -------------------------------------
The Trustee is authorized to receive any funds for the
benefit of Securityholders distributed under the Operative
Documents, and to make further distributions of such funds to the
Holders according to the provisions of this Indenture and the
other Operative Documents.
ARTICLE 11.
MISCELLANEOUS
Section 11.1 Conflict with Trust Indenture Act of 1939.
-----------------------------------------
If and to the extent that any provision of this Indenture
limits, qualifies, or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the TIA, such imposed duties
shall control.
Section 11.2 Notices; Waivers.
----------------
Any request, demand, authorization, direction, notice,
consent, waiver or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with
(a) the Company shall be sufficient for every purpose
hereunder if in writing (including telecopied communications) and
made, given, furnished or filed by personal delivery or mailed by
registered or certified mail or by nationally recognized
overnight courier, postage or courier charges, as the case may
be, prepaid, to or with the Company at:
Trans World Airlines, Inc.
One City Centre
515 N. 6th Street
<PAGE>
40
St. Louis, Missouri 63101
Attention: Senior Vice President & General Counsel
Telecopier No.: (314) 589-3267
(b) the Trustee shall be sufficient for every purpose
hereunder if in writing (including telecopied communications) and
made, given, furnished or filed by personal delivery or mailed by
registered or certified mail or by nationally recognized
overnight courier, postage or courier charges, as the case may
be, prepaid, to or with the Trustee at:
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Services
Telecopier No.: (801) 246-5053
or to any of the above parties at any other address or telecopier
number subsequently furnished in writing by it to each of the
other parties listed above. An affidavit by any person
representing or acting on behalf of the Company or the Trustee as
to such mailing, having any registry receipt required by this
Section attached, shall be conclusive evidence of the giving of
such demand, notice or communication.
Any notice or communication mailed to a Holder shall be
mailed to such holder by first-class mail or by nationally
recognized overnight courier, postage or courier charges, as the
case may be, prepaid, at such holder's address as it appears on
the Register and shall be sufficiently given to such holder if so
mailed within the time prescribed.
Failure to mail a notice or send a communication to a
Holder or any defect in it shall not affect its sufficiency with
respect to other Holders. Notices to the Trustee or to the
Company are deemed given only when received. Where this Indenture
provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by the Holders shall
be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in
reliance upon such waiver.
Section 11.3 Communications by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA ss. 312(b)
with other Securityholders with respect to their rights under
this Indenture or the Securities. The Company, the Trustee, the
Registrar and any other person shall have the protection of TIA
ss. 312(c).
Section 11.4 Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any Request or application by the Company to the
Trustee to take any action under this Indenture or the other
Operative Documents, the Company shall furnish to the Trustee:
(a)
<PAGE>
41
an Officers' Certificate, and (b) an Opinion of Counsel, each
stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, provided, that in the
case of any such application or Request as to which the
furnishing of an Officers' Certificate or Opinion of Counsel is
specifically required by any provision of this Indenture or the
other Operative Documents relating to such particular application
or Request, no additional certificate or opinion, as the case may
be, need be furnished.
Section 11.5 Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion provided for and delivered to
the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture or the other Operative
Documents shall include: (a) a statement that the Person signing
such certificate or opinion has read such condition or covenant
and the definitions herein or therein relating thereto; (b) a
brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in
such certificate or opinion are based; (c) a statement that, in
the opinion of such Person, he has made such examination or
investigation as is necessary to enable him to express an
informed opinion as to whether or not such condition or covenant
has been complied with; and (d) a statement as to whether or not
in the opinion of such Person, such condition or covenant has
been complied with.
Any certificate or opinion of an Officer or an engineer,
insurance broker, accountant or other expert may be based,
insofar as it relates to legal matters, upon a certificate or
opinion of or upon representations by counsel, unless such
officer, engineer, insurance broker, accountant or other expert
knows that the certificate or opinion or representations with
respect to the matters upon which his opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care
should have known that the same were erroneous.
Any certificate or Opinion of Counsel may be based, insofar
as it relates to factual matters, upon the certificate or opinion
of or representations by an officer or officers of the Company
stating that the information with respect to such factual matters
is in possession of the Company, unless such counsel knows that
the certificate or opinion or representations with respect to the
matters upon which his opinion may be based as aforesaid are
erroneous and insofar as it relates to legal matters in a
jurisdiction or area of law beyond the expertise of such counsel,
such counsel may rely upon the opinion of counsel qualified in
such other jurisdiction or area of law.
Wherever in this Indenture or the other Operative Documents
in connection with any application, certificate or report to the
Trustee it is provided that the Company shall deliver any
document as a condition of the granting of such application or as
evidence of the Company's compliance with any term hereof, it is
intended that the truth and accuracy at the time of the granting
of such application or at the effective date of such certificate
or report, as the case may be, of the facts and opinions stated
in such document shall in each such case be a condition precedent
to the right of the Company to have such application granted or
to the sufficiency of such certificate or report. Nevertheless,
in the case of any such application, certificate or report,
<PAGE>
42
any document required by any provision of this Indenture or the
other Operative Documents to be delivered to the Trustee as a
condition of the granting of such application or as evidence of
such compliance may be received by the Trustee as conclusive
evidence of any statement therein contained and shall be full
warrant, authority and protection to the Trustee acting on the
faith thereof.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Whenever any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements or opinions or other instruments under this Indenture
or any other Operative Document such Person may, but need not,
consolidate such instruments into one.
Section 11.6 Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Registrar, Paying Agent or Tender
Agent may make reasonable rules for their respective functions.
Section 11.7 Holidays.
--------
In the event that any date for the payment of any amount
due hereunder shall not be a Business Day, then (notwithstanding
any other provision of this Indenture) such payment need not be
made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the due
date, and no interest shall accrue from such due date to and
including the next succeeding Business Day.
Section 11.8 Governing Law; Waiver of Jury Trial.
-----------------------------------
(a) The laws of the State of New York shall govern this
Indenture and the Securities without regard to principles of
conflict of laws.
(b) The Company and the Trustee each waive any right to
have a jury participate in resolving any dispute, whether
sounding in contract, tort, or otherwise arising out of,
connected with, related to or incidental to the relationship
established between them in connection with this Indenture.
Instead, any disputes resolved in court will be resolved in a
bench trial without a jury.
<PAGE>
43
Section 11.9 No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret any agreement
of the Company or any of its Subsidiaries which is unrelated to
this Indenture, the Securities or the other Operative Documents.
Any such agreement may not be used to interpret this Indenture.
Section 11.10 No Recourse Against Others.
--------------------------
A director, officer, employee or stockholder, as such, of
the Company shall not have any liability for any obligations of
the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or
their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
Section 11.11 Benefits of Indenture and the Securities Restricted.
---------------------------------------------------
Subject to the provisions of Section 11.12 hereof, nothing
in this Indenture or the Securities, express or implied, shall
give or be construed to give to any Person, firm or corporation,
other than the parties hereto and the Holders, any legal or
equitable right, remedy or claim under or in respect of this
Indenture or under any covenant, condition, or provision herein
contained, all such covenants, conditions and provisions, subject
to Section 11.12 hereof, being for the sole benefit of the
parties hereto and of the Holders.
Section 11.12 Successors and Assigns.
----------------------
This Indenture and all obligations of the Company hereunder
shall be binding upon the successors and permitted assigns of the
Company, and shall, together with the rights and remedies of the
Trustee hereunder, inure to the benefit of the Trustee, the
Holders, and their respective successors and assigns. Any
assignment in violation hereof shall be null and void ab initio.
Section 11.13 Counterpart Originals.
---------------------
This Indenture may be signed in two or more counterparts,
each of which shall be deemed an original, but all of which shall
together constitute one and the same agreement.
Section 11.14 Severability.
------------
The provisions of this Indenture are severable, and if any
clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect in that jurisdiction
only such clause or provision, or part thereof, and shall not in
any manner affect such clause or provision in any other
jurisdiction or any other clause or provision of this Indenture
in any jurisdiction, and a Holder shall have no claim therefor
against any party hereto.
<PAGE>
44
Section 11.15 Effect of Headings.
------------------
The Article and Section headings and the Table of Contents
contained in this Indenture have been inserted for convenience of
reference only, and are and shall be without substantive meaning
or content of any kind whatsoever and are not a part of this
Indenture.
ARTICLE 12.
RELEASE OF COLLATERAL
Section 12.1 Release of Collateral.
---------------------
The Collateral securing the obligations evidenced by the
Securities shall be subject to release from the Lien of this
Indenture and the other Operative Documents from and to the
extent provided by this Indenture and the other Operative
Documents.
ARTICLE 13.
MANDATORY CONVERSION OF SECURITIES
Section 13.1 Mandatory Conversion and Conversion Price.
-----------------------------------------
(a) Subject to the other provisions of this Article 13, on
the Conversion Date, so long as no Default or Event of Default
shall then exist, each then Outstanding Security shall be
automatically converted into that number of fully paid and
non-assessable shares of Common Stock equal to the sum of (i) the
then outstanding principal amount of such Security, plus (ii)
accrued and unpaid interest, if any, on such Security to the
Conversion Date, divided by the lesser of (A) 0.95 multiplied by
the Average Market Price per share of Common Stock or (B) $107/8
(the "Fixed Price") (such lesser amount being hereinafter
referred to as the "Conversion Price"); provided, however, that
the aggregate number of shares of Common Stock issuable upon any
such conversion shall not exceed the Maximum Share Amount. If, on
the Conversion Date, the Company has taken all action required to
authorize the issuance of the Common Stock in conversion of the
Securities and no Default or Event of Default shall then exist,
then, notwithstanding that such Securities have not been
Tendered, from and after the Conversion Date, all of the
Securities shall no longer be deemed Outstanding and all rights
relating to such Securities shall terminate, except only the
right to receive, upon Tender of the Securities therefore, the
Common Stock and cash (if any) pursuant to the provisions hereof,
and the Person or Persons entitled to receive the Common Stock
issuable upon the conversion shall be treated for all purposes as
the record holder or holders of such Common Stock. If all the
foregoing conditions have been satisfied, interest, if any, will
cease to accrue on the Securities on the Conversion Date. The
Fixed Price will be appropriately and equitably adjusted to
reflect the effects of any stock dividend, stock split (including
a reverse stock split), reclassification, recapitalization,
combination or distribution of assets, securities or other
Property (in each of the foregoing cases, except if clause (i),
(ii) or (iii) of Section 13.2(a) is applicable to any of such
<PAGE>
45
events) to holders of Common Stock by the Company in the case of
any of the foregoing affecting the Common Stock, the record date,
ex-dividend date or similar date of which occurs during the
period from the Issue Date through the Conversion Date. Except as
expressly provided herein, no other payment or adjustment will be
made for dividends or distributions on shares of Common Stock
issued upon conversion which were declared for payment to holders
of Common Stock of record as of a date prior to the Conversion
Date.
(b) As promptly as practicable on the Shelf Effective Date,
the Company shall send (or cause to be sent) a notice to each
Holder and the Trustee (which notice shall be sent to such Holder
and the Trustee by telex or telecopier if (with respect to such
Holder) such Holder has, at least five Business Days prior
thereto, provided such telex or telecopier information to the
Company or the Trustee), stating the Shelf Effective Date and, to
the extent then known, the following: (i) the Conversion Date,
(ii) the Conversion Price, (iii) the office or offices
(including, in any event, the office required to be maintained by
the Company pursuant to the first paragraph of Section 4.1) to
which the Securities should be Tendered for Common Stock, (iv)
that unless otherwise notified by such Holder, the certificate or
certificates of Common Stock issuable to such Holder on such
Conversion Date will be issued in the name of and delivered to
the address of such Holder as shown on the Register as of the
close of business of the Registrar on such Conversion Date and
(v) that interest, if any, will cease to accrue on the Securities
on the Conversion Date. Such a notice containing the information
in the foregoing clauses (i) through (v) shall in any event be so
sent as promptly as practicable on the Conversion Date.
(c) As promptly as practicable (but in any event not later
than five Business Days) after receipt of a Security at any
office set forth in the notice referred to in paragraph (b)
above, the Company shall issue, execute and deliver to the Holder
of such Security, in such Holder's name and to such Holder's
address as shown on the Register as of the close of business of
the Registrar on the Conversion Date (or otherwise in accordance
with such Holder's written order received by the Company), a
certificate or certificates for the number of shares of Common
Stock resulting from such conversion, together with any cash
adjustment in lieu of fractional shares or cash payable as a
result of the Maximum Share Amount, as hereinafter provided.
(d) No fractional shares of Common Stock shall be issued
upon any conversion of Securities. In lieu of any fraction of a
share of Common Stock to which any Holder would otherwise be
entitled upon conversion of any Security, the Company shall pay
to such Holder (in accordance with paragraph (c) above) a cash
adjustment for such fraction in an amount equal to the same
fraction of the Conversion Price, together with the amount (if
any) by which the Conversion Price per share then in effect
exceeds the Closing Price of the Common Stock on the Conversion
Date, multiplied by such fraction.
(e) The principal amount, if any, of any Security that
cannot be converted into Common Stock as a result of the Maximum
Share Amount (excluding any amount payable pursuant to paragraph
(d) above), shall be paid by the Company to the Holder thereof,
together with accrued and unpaid interest, if any, thereon,
together with the amount (if any) by which the Conversion Price
per share then in effect exceeds the Closing Price of the Common
Stock on the Conversion Date, multiplied by the number of shares
which could then have been received upon
<PAGE>
46
conversion of such portion of the principal amount of such
Security. Any such amounts shall be paid in cash in accordance
with paragraph (c) above.
Section 13.2 Effect of Consolidation, Merger or
----------------------------------
Conveyance on Conversion.
- ------------------------
(a) If any of the following shall occur, namely: (i) any
consolidation or merger to which the Company is a constituent
party other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification of,
or change (other than a change in name, or in par value, or from
par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination) in, outstanding
shares of Common Stock; (ii) any conveyance or transfer of all or
substantially all of the assets of the Company; or (iii) any
share exchange pursuant to which all of the outstanding shares of
Common Stock are converted into or exchanged for other securities
or Property (including cash), then the Company, or such successor
or purchasing corporation, as the case may be, shall, as a
condition precedent to such consolidation, merger, conveyance,
transfer or share exchange, execute and deliver to the Trustee a
supplemental indenture providing that immediately after the
consummation of such consolidation, merger, conveyance, transfer
or share exchange, the Securities shall automatically convert
into and the Holder of each Security then outstanding shall have
the right thereafter to receive the kind and amount of shares of
stock and other securities and Property (including cash)
receivable upon such consolidation, merger, conveyance, transfer
or share exchange by a holder of the number of shares of Common
Stock deliverable upon conversion of such Security immediately
prior to the effective date of such consolidation, merger,
conveyance, transfer or share exchange, assuming that the Average
Market Price is determined utilizing the 20 consecutive Trading
Days ending on the Trading Day immediately prior to such
effective date. If, in the case of any such consolidation,
merger, conveyance, transfer or share exchange, the stock or
other securities and Property (including cash) receivable
thereupon by a holder of Common Stock include shares of stock or
other securities and Property of a corporation other than the
successor or purchasing corporation, as the case may be, in such
consolidation, merger, conveyance, transfer or share exchange,
then such supplemental indenture shall also be executed by such
other corporation and shall contain such additional provisions to
protect the interests of the Holders as the Board of Directors
shall reasonably consider necessary by reason of the foregoing.
If in connection with any such consolidation, merger, conveyance,
transfer, or share exchange each holder of shares of Common Stock
is entitled to elect to receive either securities, cash or other
assets (or any combination thereof) upon completion of such
transaction, the Company will provide or cause to be provided to
each Holder the right to elect to receive the securities, cash or
other assets into which the Securities held by such Holder will
be convertible after completion of any such transaction on the
same terms and subject to the same conditions applicable to
holders of the Common Stock (including, without limitation,
notice of the right to elect, limitations on the period in which
such election will be made and the effect of failing to exercise
the election). In the case of any such consolidation, merger,
conveyance, transfer or share exchange, where the Holders of
shares of Common Stock will be entitled to receive securities
upon completion of such transaction, the Company will cause such
successor or purchasers respectively to provide that the securities
upon conversion of the Securities will be freely transferable
issuable without any restrictions imposed by federal, state or foreign
securities laws. The provisions of this Section 13.2 shall
similarly apply to successive consolidations,
<PAGE>
47
mergers, conveyances, transfers or share exchanges. In the event
the Company shall execute a supplemental indenture pursuant to
this Section 13.2, the Company shall promptly file with the
Trustee (x) an Officers' Certificate briefly stating the reasons
therefor, the kind or amount of shares of stock or securities or
Property (including cash) receivable by Holders upon the
automatic conversion of their Securities immediately after any
such consolidation, merger, conveyance, transfer or share
exchange, any adjustment to be made with respect thereto and that
all conditions precedent have been complied with and (y) an
Opinion of Counsel that all conditions precedent have been
complied with.
(b) The Trustee, subject to the provisions of Section 7.1,
shall not be responsible for any such consolidation, merger,
conveyance, transfer or share exchange, the form or substance of
any plan relating thereto, or the consequences thereof to any
Holder or the correctness of any provision contained in any such
supplemental indenture relating to the kind or amount of shares
of stock or securities or Property receivable by any Holder upon
conversion of Securities immediately after any such
consolidation, merger, conveyance, transfer or share exchange.
(c) As evidence of the kind and amount of stock or other
securities or Property into which Securities will be
automatically converted after any such consolidation, merger,
conveyance, transfer or share exchange, the Trustee, subject to
the provisions of Section 7.1, may accept the certificate of a
nationally recognized firm of independent public accountants with
respect thereto; and, in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely thereon, and shall
not be responsible or accountable to any Holder for any provision
in conformity therewith which may be contained in the said
supplemental indenture.
(d) The Company or the Trustee may retain accountants to
make any computation required under this Article 13, and the
certificate of a nationally recognized firm of independent public
accountants shall be conclusive evidence of the correctness of
any computation made under this Article 13.
Section 13.3 Costs of Conversion.
-------------------
The issuance of certificates for shares of Common Stock
issued upon the conversion of Securities shall be made without
charge to the Holders for such certificates or for any
documentary, stamp or similar issue or transfer tax in respect of
the issuance of such certificates; provided, however, that the
Company shall not be required to pay any such tax which may be
payable in respect of any transfer involved in the issuance and
delivery of any such certificate in a name other than that of the
Holder as shown on the Register as of the close of business of
the Registrar on the Conversion Date, and the Company shall not
be required to issue or deliver such certificates unless or until
the Person or Persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has
been paid. Nothing herein shall preclude any tax withholding
required by applicable law.
<PAGE>
48
Section 13.4 No Liability to Trustee.
-----------------------
The Trustee shall not at any time be under any duty or
responsibility to any Holder to determine whether any facts exist
which may require any adjustment of the Conversion Price, or with
respect to the nature or extent of any such adjustment when made,
or with respect to the method employed, or herein or in any
supplemental indenture provided to be employed, in making the
same. The Trustee shall not be accountable with respect to the
validity or value (or the kind or amount) of any Common Stock or
of any securities or Property which may at any time be issued or
delivered upon the conversion of any Security; and it does not
make any representation with respect thereto. The Trustee shall
not be responsible for any failure of the Company to make any
cash payment or to issue, transfer or deliver any shares of
Common Stock or stock certificates or other securities or
Property upon the conversion of any Security or to comply with
any of the covenants of the Company contained in this Article 13.
Section 13.5 Applicable Laws.
---------------
Anything herein to the contrary notwithstanding, the rights
and obligations of the Holders and the Company to convert the
Securities into Common Stock or to vote said stock shall be
subject to all applicable laws then in effect.
Section 13.6 Other Funds.
-----------
Anything elsewhere contained in this Indenture to the
contrary notwithstanding, any funds which at any time shall have
been deposited by the Company or on its behalf with the Trustee
or any other Paying Agent for the purpose of paying any
Securities which shall have been converted pursuant to the
provisions of this Article 13 into Common Stock, shall forthwith
upon such conversion be repaid upon demand to the Company by the
Trustee or such other Paying Agent.
Section 13.7 Release of Collateral Upon Conversion.
-------------------------------------
On or after the effectiveness of the conversion pursuant to
this Article 13, upon request by the Company and payment by the
Company of the Trustee's costs (including reasonable legal fees
and disbursements) incurred in complying with such Request, the
Trustee shall release from the Lien of the Operative Documents,
all right, title and interest of the Trustee in and to any
Collateral.
Section 13.8 Company to Provide Stock.
------------------------
The Company shall, prior to issuance of any Securities
hereunder, and from time to time as it may be necessary, reserve,
out of its authorized but unissued Common Stock, a sufficient
number of shares of Common Stock to permit the conversion of all
outstanding Securities into shares of Common Stock.
<PAGE>
49
All shares of Common Stock delivered upon conversion of the
Securities shall be newly issued shares or treasury shares, shall
be duly authorized, validly issued, fully paid and nonassessable
and shall be free from preemptive rights and free of any lien or
adverse claim.
The Company will list or cause to have quoted all shares of
Common Stock deliverable upon conversion of the Securities on the
American Stock Exchange and each other national securities
exchange or in the over-the-counter market or such other market
on which the Common Stock is then listed or quoted.
ARTICLE 14.
POSSIBLE SUBORDINATION
If, on the Business Day immediately succeeding the Issue
Date, the Holders (other than Lazard Freres & Co. LLC, as Holder
of the Compensation Notes, as defined in the Placement Agreement)
do not include at least one of the Owner Trustee, Seven Sixty
Seven Leasing, Inc. or any member of the Bank Group, then the
Securities shall automatically, without any further act or deed,
become unsecured obligations of the Company and shall rank junior
in priority to all secured indebtedness of the Company and pari
passu with all unsecured indebtedness of the Company, in each
case whether such indebtedness is existing on the Issue Date or
thereafter incurred, and the Trustee shall be authorized to enter
into or execute and deliver such agreements, instruments or other
documents as may be reasonably requested by (and at the cost and
expense of) the Company to evidence or confirm the release of
Liens on the Collateral or such subordination of the Securities.
<PAGE>
50
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, all as of the date first written above.
TRANS WORLD AIRLINES, INC.
By:
Name:
Title:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Trustee
By:
Name:
Title:
<PAGE>
DEFINITIONS APPENDIX
Appendix I
To the Indenture between
Trans World Airlines, Inc.
and
First Security Bank, National Association, as Trustee
dated as of April 21, 1998
for the Company's Mandatory Conversion Equity Notes due 1999
and the Aircraft Second Mortgage and Security Agreement
dated as of an even date therewith
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Definitions................................... 1
Act........................................... 1
Affiliate..................................... 1
Agent......................................... 1
Aircraft...................................... 1
Aircraft Sale Agreement....................... 1
Airframe...................................... 1
Applicable Percentage......................... 1
Average Market Price.......................... 2
Bank Group.................................... 2
Bankruptcy Law................................ 2
Bills of Sale................................. 2
Board of Directors............................ 2
Business Day.................................. 2
Capital Stock................................. 2
Capitalized Lease Obligation.................. 2
Certificated Air Carrier...................... 2
Certifying Officer............................ 3
Change in Control............................. 3
CL/PK......................................... 3
Closing Price................................. 3
Code.......................................... 4
Collateral.................................... 4
Common Stock.................................. 4
Company....................................... 4
Conversion Date............................... 4
Conversion Price.............................. 4
Corporate Trust Office........................ 4
Custodian..................................... 5
Default....................................... 5
Definitions Appendix.......................... 5
8% Preferred Stock............................ 5
11 3/8% Secured Notes......................... 5
Employee Preferred Stock...................... 5
Engine........................................ 5
ERISA......................................... 5
Event of Default.............................. 5
Exchange Act.................................. 5
FAA........................................... 5
FAA Bill of Sale.............................. 6
Federal Aviation Act.......................... 6
First Mortgage................................ 6
(i)
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
GAAP.......................................... 6
Holder or Holder of Securities................ 6
Indebtedness.................................. 6
Indenture..................................... 7
Indenture Discharge Date...................... 7
Indenture Trustee............................. 7
Interest Payment Date......................... 7
Issue Date.................................... 7
Legal Holiday................................. 7
Lien.......................................... 7
Maximum Share Amount.......................... 7
Mortgage...................................... 7
Mortgage Supplement........................... 7
9 1/4% Preferred Stock........................ 8
Notes Indenture............................... 8
Notes Trustee................................. 8
Obligations................................... 8
Offer to Purchase............................. 8
Officer....................................... 10
Officers' Certificate......................... 10
Operative Documents........................... 10
Opinion of Counsel............................ 10
Outstanding or outstanding.................... 10
Owner Trustee................................. 11
Parts......................................... 11
Paying Agent.................................. 11
Payment Date.................................. 11
Payments...................................... 11
Permitted Liens............................... 11
Person........................................ 12
Placement Agreement........................... 12
Preferred Stock............................... 12
principal..................................... 12
Property...................................... 12
Record Date................................... 12
Register...................................... 13
Registrar..................................... 13
Registration Default.......................... 13
Registration Rights Agreement................. 13
Replacement Engine............................ 13
Request....................................... 13
Required Holders.............................. 13
SEC........................................... 13
(ii)
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
Securities.................................... 14
Securities Act................................ 14
Securityholder................................ 14
Seven Leasing................................. 14
Shelf Effective Date.......................... 14
Shelf Registration Statement.................. 14
Significant Subsidiary........................ 14
Special Record Date........................... 14
Stated Maturity............................... 14
Subsidiary.................................... 14
Taxes......................................... 14
Tender........................................ 15
TIA........................................... 15
Total Loss and Total Loss Date................ 15
Total Loss OTP Amount......................... 15
Trading Day................................... 15
Trust Agreement............................... 15
Trust Officer................................. 15
Trustee....................................... 15
TWA........................................... 15
U.S. or United States......................... 15
U.S. Government Obligations................... 15
Warranty Bill of Sale......................... 16
Section 2. Rules of Construction......................... 16
(iii)
<PAGE>
DEFINITIONS APPENDIX
Section 1. Definitions. Unless the context otherwise requires,
each of the terms included in this Section 1 shall have the
respective meanings given in this Section 1 for all purposes of
the Indenture and the other Operative Documents (including this
appendix and any other appendices, exhibits or schedules to any
thereof) and of such other agreements as may incorporate this
appendix by reference except as otherwise specifically provided
herein or therein.
"Act" means the Federal Aviation Act.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under
direct or indirect common control with such specified Person. For
the purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-Registrar
or co-Paying Agent.
"Aircraft" means each Airframe together with the two
associated Engines identified by manufacturer's serial number in
the Mortgage Supplement for such Airframe executed and delivered
on the Issue Date, whether or not any of such Engines may at any
time be installed on such Airframe or installed on any other
airframe.
"Aircraft Sale Agreement" means the Aircraft Sale and Note
Purchase Agreement, made and entered into as of the 9th day of
April, 1998, among the Company, the Owner Trustee and Seven
Leasing.
"Airframe" means each Boeing Model 767-231 ETOPS airframe
(excluding any Engines and any other engines, but including any
and all Parts which may from time to time be incorporated or
installed in, or attached to such airframe, and including any and
all Parts removed therefrom so long as the removed Parts remain
subject to the Lien of the Mortgage under the terms thereof)
purchased by the Company under the Aircraft Sale Agreement and
identified by the FAA registration number and manufacturer's
serial number in the Mortgage Supplements executed and delivered
on the Issue Date.
"Applicable Percentage" means (i) with respect to any
amendment, supplement or waiver of the Indenture or any other
Operative Document that would (A) terminate the Lien of the
Mortgage with respect to any Collateral or permit the release of
any Collateral (other than releases permitted by the applicable
Operative Document, which releases shall not require any consent
of the Holders) or permit the creation of any Lien on any
Collateral (other than Permitted Liens), (B) increase the
aggregate principal amount of Securities that may be issued under
the Indenture or (C) modify this definition, 66 2/3%, and (ii)
otherwise, a majority.
<PAGE>
2
"Average Market Price" means, with respect to Common Stock,
the average of the daily Closing Prices per share of Common Stock
for the 20 consecutive Trading Days ending on the Trading Day
immediately prior to the Conversion Date. The Average Market
Price of Common Stock will be appropriately and equitably
adjusted to reflect the effects of any stock dividend, stock
split (including a reverse stock split), reclassification,
recapitalization, combination or distribution of assets,
securities or other Property (in each of the foregoing cases,
except if clause (i), (ii) or (iii) of Section 13.2(a) of the
Indenture is applicable to any of such events) to holders of
Common Stock by the Company in the case of any of the foregoing
affecting the Common Stock, the record date, ex-dividend date or
similar date of which occurs during the period in which the
Average Market Price is to be determined.
"Bank Group" means any Person who, immediately prior to the
issuance of the Securities on the Issue Date, held a beneficial
interest (through participation or otherwise) in Seven Leasing,
or any Affiliate of any such Person.
"Bankruptcy Law" has the meaning provided in Section 6.1 of
the Indenture.
"Bills of Sale" means, for each Aircraft, the FAA Bill of
Sale and the Warranty Bill of Sale.
"Board of Directors" means the Board of Directors of the
Company or any committee of such board duly authorized to act in
respect of any particular matter.
"Business Day" means each day which is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations
or other equivalents of or interests in (however designated)
equity of such Person, including any Preferred Stock, but
excluding any debt securities convertible into such equity.
"Capitalized Lease Obligation" means, as applied to any
Person for any period, an obligation of such Person to pay rent
or other amounts under a lease that is required to be capitalized
for financial reporting purposes in accordance with GAAP, and the
amount of such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP.
"Certificated Air Carrier" means a United States "air
carrier" within the meaning of the Act, holding an air carrier
operating certificate issued pursuant to chapter 447 of the Act
and of the type referred to in 11 U.S.C. ss. 1110, or if such
certification shall cease to be available, a carrier of
comparable status under the laws of the United States then in
force.
"Certifying Officer" means an Officer or an assistant
secretary of the Company.
"Change in Control" means the occurrence of any of the
following events: (i) any person (including any entity or group
deemed to be a "person" under Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) is or becomes the direct or
indirect beneficial owner (as
<PAGE>
3
determined in accordance with Rule 13d-3 under the Exchange Act)
of shares of the Company's Capital Stock representing greater
than 50% of the total voting power of all shares of Capital Stock
of the Company entitled to vote in the election of directors of
the Company under ordinary circumstances or to elect a majority
of the Board of Directors of the Company, (ii) the Person then
constituting the "Company" under the Indenture sells, transfers
or otherwise disposes of all or substantially all of its assets,
(regardless of whether such Person thereupon ceases to constitute
the "Company" under the Indenture pursuant to Section 5.2
thereof), (iii) when, during any period of 12 consecutive months
after the date of original issuance of the Securities,
individuals who at the beginning of any such 12-month period
constituted the Board of Directors (together with any new
directors whose election by such Board or whose nomination for
election by the stockholders of the Company was approved by a
vote of majority of the directors still in office entitled to
vote with respect to such nomination who were either directors at
the beginning of such period or whose election or nomination for
election was previously so approved, but excluding any of the
individuals who at the beginning of such 12-month period
constituted such Board but who ceased to be a member of the Board
pursuant to the Company's mandatory retirement policy as in
effect as of the Issue Date), cease for any reason to constitute
a majority of the Board of Directors then in office or (iv) the
date of the consummation of the merger or consolidation of the
Person then constituting the "Company" under the Indenture with
another corporation where the stockholders of such Person,
immediately prior to the merger or consolidation, would not
beneficially own, immediately after the merger or consolidation,
shares entitling such stockholders to 50% or more of all votes
(without consideration of the rights of any class of stock to
elect directors by a separate class vote) to which all
stockholders of the corporation issuing cash or securities in the
merger or consolidation would be entitled in the election of
directors or where members of the Board of Directors of the
Person then constituting the "Company" under the Indenture,
immediately prior to the merger or consolidation, would not,
immediately after the merger or consolidation, constitute a
majority of the board of directors of the corporation issuing
cash or securities in the merger or consolidation.
"CL/PK" means Credit Lyonnais/PK Airfinance, a financial
sector corporation organized and existing under and by virtue of
the laws of the Grand Duchy of Luxembourg.
"Closing Price" means, for any day, the last reported sales
price, regular way, per share of Common Stock, or, in case no
such reported sale takes place on such date, the average of the
reported closing bid and asked prices, regular way, per share of
Common Stock, in either case on the American Stock Exchange, or,
if the Common Stock is not listed or admitted to trading on the
American Stock Exchange, on the principal national securities
exchange on which the Common Stock is listed or admitted to
trading, or, if not listed or admitted to trading on any national
securities exchange, the closing sales price, regular way, of the
Common Stock as quoted by National Association of Securities
Dealers Automated Quotation System ('NASDAQ"), or, in case no
reported sale takes place, the average of the closing bid and
asked prices, regular way, as quoted by NASDAQ or any comparable
system, or, if the Common Stock is not quoted on NASDAQ or any
comparable system, the closing sales price, regular way, or, in
case no reported sale takes place, the average of the closing bid
and asked prices, regular way, as furnished by any two members of
the National Association of Securities Dealers, Inc. selected
from time to time by the Company for that purpose.
<PAGE>
4
"Code" means the United States Internal Revenue Code of
1986, as amended from time to time, or any similar legislation of
the United States enacted to supersede, amend or supplement such
Code, and any reference to a provision or provisions of the Code
shall also mean and refer to any successor provision or
provisions, however designated or distributed.
"Collateral" has the meaning specified in Section 2.1 of
the Mortgage.
"Common Stock" includes any stock of any class of the
Company which has no preference in respect to 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; initially it refers
to the common stock, $0.01 par value, of the Company.
"Company" means the party named as such in the Indenture or
any obligor on the Securities until a successor replaces it
pursuant to the Indenture and thereafter means the successor.
"Conversion Date" means the first Business Day following
the earliest date on which either (a) both of the following
statements shall be true: (i) the Shelf Effective Date shall have
occurred and (ii) the Common Stock issuable on conversion of the
Equity Notes shall be listed on the American Stock Exchange or
such other stock exchange or market as the Common Stock of the
Company is then principally traded or (b) a transaction
contemplated by Section 13.2 (a) of the Indenture has been
consummated.
"Conversion Price" has the meaning provided in Section 13.1
of the Indenture.
"Corporate Trust Office" when used with respect to the
Trustee means the office of the Trustee at which at any
particular time its corporate trust business is administered and
which, at the Issue Date, is located at First Security Bank,
National Association, as Trustee, 79 South Main Street, Salt Lake
City, Utah 84111, Attention: Corporate Trust Services.
"Custodian" has the meaning provided in Section 6.1 of the
Indenture.
"Default" means any event which is, or after notice or
passage of time, or both, would be, an Event of Default.
"Definitions Appendix" means this Definitions Appendix
attached as Appendix I to the Indenture and the Mortgage and
constituting a part of the Indenture and each other Operative
Document.
"8% Preferred Stock" means the 8% Cumulative Convertible
Exchangeable Preferred Stock of the Company and dividends on such
stock, and payments on account of which are to be deemed
equivalent to distributions on such stock.
"11 3/8% Secured Notes" means the 11 3/8% Senior Secured
Notes due 2003 of the Company issued concurrently with the
Securities.
<PAGE>
5
"Employee Preferred Stock" means the IFFA Preferred Stock,
the ALPA Preferred Stock and the IAM Preferred Stock of the
Company and dividends on such stock, and payments on account of
which are to be deemed equivalent to distributions on such stock.
"Engine" means (i) each of the Pratt & Whitney Model
JT9D-7R4D aircraft engines identified by manufacturer's serial
number in the Mortgage Supplements executed and delivered on the
Issue Date, so long as a Replacement Engine shall not have been
substituted therefor pursuant to the Mortgage, and (ii) each
Replacement Engine, so long as another Replacement Engine shall
not have been substituted therefor pursuant to the Mortgage,
whether or not such engine or Replacement Engine, as the case may
be, is from time to time installed on an Airframe or installed on
another airframe, and including, in each case all Parts
incorporated or installed in or attached thereto and any and all
Parts removed therefrom so long as such Parts remain subject to
the Lien of the Mortgage under the terms thereof.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Event of Default" has the meaning provided in Section 6.1
of the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time.
"FAA" means the Federal Aviation Administration or similar
regulatory authority established to replace it.
"FAA Bill of Sale" means, for each Aircraft, the bill of
sale for such Aircraft on AC Form 8050-2 or such other form as
may be acceptable to the FAA for recordation with it, executed by
the Owner Trustee in favor of the Company.
"Federal Aviation Act" means Title 49 of the United States
Code, "Transportation," as amended from time to time, or any
similar legislation of the United States enacted in substitution
or replacement thereof. In the event there is enacted any
legislation replacing, modifying or repealing, in whole or in
part, the Federal Aviation Act, then the term "certificated,"
when used with reference to the Federal Aviation Act or any
particular provision thereof, shall mean authorized to provide,
or not prohibited from providing, air transportation services.
"First Mortgage" means the Aircraft Mortgage and Security
Agreement, dated as of April 21, 1998, between the Company and
the Notes Trustee, securing, among other things, the obligations
of the Company under the Notes Indenture.
"GAAP" means generally accepted accounting principles in
the United States of America as in effect as of the Issue Date,
including those set forth in (i) the opinions and pronouncements
of the Accounting Principles Board of the American Institute of
Certified Public Accountants, (ii) statements and pronouncements
of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant
segment of the accounting profession and (iv) the rules and
regulations of the SEC governing the inclusion of financial
statements
<PAGE>
6
(including pro forma financial statements) in periodic reports
required to be filed pursuant to Section 13 of the Exchange Act,
including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting
staff of the SEC.
"Holder" or "Holder of Securities" means the Person in
whose name a Security is registered on the Registrar's books.
"Indebtedness" means, with respect to any Person at any
date, without duplication, (a) all indebtedness, obligations and
other liabilities (contingent or otherwise) of such Person for
borrowed money (whether or not the recourse of the lender is to
the whole of the assets of such Person or only to a portion
thereof), (b) all obligations and other liabilities (contingent
or otherwise) of such Person evidenced by bonds, notes or others
similar instruments, (c) all obligations and other liabilities
(contingent or otherwise) of such Person in respect of letters of
credit or other similar instruments (and reimbursement
obligations with respect thereto), (d) all obligations and other
liabilities (contingent or otherwise) of such Person to pay the
deferred and unpaid purchase price of property or services (other
than any such obligations that represent trade payables or
accrued expenses incurred in the ordinary course of business),
(e) all Capitalized Lease Obligations of such Person, (f) all
Indebtedness of others secured by a Lien on any asset or assets
of such Person, whether or not such Indebtedness is assumed by
such Person (and, if not assumed, such Indebtedness shall be
limited to the fair market value of such asset or assets as
determined on the date such Indebtedness was incurred), and (g)
all Indebtedness of others guaranteed by such Person to the
extent of such guarantee. The amount of Indebtedness of any
Person at any date shall be the outstanding balance at such date
of all unconditional obligations as described above and the
maximum liability of such Person for any such contingent
obligations at such date. A change in GAAP that results in an
obligation of the Company existing at the time of such change
becoming Indebtedness shall not be deemed an incurrence of such
Indebtedness.
"Indenture" means the Indenture dated as of April 21, 1998
between the Company and the Trustee, under which the Securities
are issued, as amended or supplemented from time to time.
"Indenture Discharge Date" means the date of the
effectiveness of the termination of the Company's obligations
under the Indenture pursuant to Section 8.1(a) or (b) thereof.
"Indenture Trustee" means the Trustee.
"Interest Payment Date" means the 15th day of each month
during which any Security is Outstanding (commencing the 15th day
of the month next succeeding the month in which a Registration
Default, if any, occurs) and (if a Registration Default has
occurred) the date on which the Securities mature, if different.
"Issue Date" means the date on which the Securities are
originally issued.
"Legal Holiday" means a Saturday, Sunday or any other day
on which banks located in New York City or the city and state of
the Trustee's Corporate Trust Office as of the Issue Date are
authorized or obligated by law to remain closed.
<PAGE>
7
"Lien" means any conveyance in trust, assignment, mortgage,
pledge, security interest, encumbrance, lien or charge of any
kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Maximum Share Amount" means the maximum number of shares
of Common Stock that can be issued upon conversion of the
Securities on the Conversion Date without causing the Company to
be (without prior stockholder approval) in violation of any
applicable listing requirement of the American Stock Exchange.
"Mortgage" means the Aircraft Second Mortgage and Security
Agreement, dated as of April 21, 1998, between the Company and
the Trustee in substantially the form attached to the Indenture
as Exhibit B.
"Mortgage Supplement" means (i) each Second Mortgage and
Security Agreement Supplement executed and delivered on the Issue
Date for an Aircraft, in substantially the form attached to the
Mortgage as Exhibit A, which describes with particularity the
Airframe and Engines associated with such Aircraft, (ii) each
other Second Mortgage and Security Agreement Supplement from time
to time executed and delivered, in substantially the form
attached to the Mortgage as Exhibit A, which shall describe with
particularity any Replacement Engine and (iii) any other
supplement to the Mortgage from time to time executed and
delivered in accordance with the provisions of the Mortgage or
any other Operative Document.
"9 1/4% Preferred Stock" means the 9 1/4% Cumulative
Convertible Exchangeable Preferred Stock of the Company and
dividends on such stock, and payments on account of which are to
be deemed equivalent to distributions on such stock.
"Notes Indenture" means the Indenture dated as of April 21,
1998 between the Company and First Security Bank, National
Association, as trustee, pursuant to which the Company is issuing
the 11 3/8% Secured Notes.
"Notes Trustee" means First Security Bank, National
Association, as trustee under the Notes Indenture, and its
successors and assigns in such capacity.
"Obligations" has the meaning provided in Section 2.1 of
the Mortgage.
"Offer to Purchase" means an offer to purchase all or a
portion, as the case may be, of the Securities by the Company
from the Holders commenced by the mailing (by first class mail,
postage prepaid) by the Company (or if requested by the Company
on at least five Business Days' prior notice to the Trustee and
at the Company's expense, by the Trustee) of a notice to each
Holder (and, if mailed by the Company, to the Trustee) at such
Holder's address appearing in the Register, stating: (i) the
covenant pursuant to which the offer is being made and that all
Securities validly tendered will be accepted for payment,
provided, that if Securities in excess of
the aggregate principal amount that the Company has offered to
purchase are tendered by the Holders, then Securities will be
purchased from the tendering Holders pro rata, based on the
aggregate principal amount of Securities tendered by each such
Holder; (ii) the purchase price and the date of purchase (which
shall be a Business Day no earlier than 30 days nor later than 60
<PAGE>
8
days from the date such notice is mailed) (the "Payment Date");
(iii) that any Security not tendered will continue to accrue
interest (if any) pursuant to its terms; (iv) that, unless the
Company defaults in the payment of the purchase price on the
Payment Date, any Security accepted for payment pursuant to the
Offer to Purchase shall cease to accrue interest on and after the
Payment Date; (v) that Holders electing to have a Security
purchased pursuant to the Offer to Purchase will be required to
surrender the Security, together with the form entitled "Option
of the Holder to Elect Purchase" attached to or on the reverse
side of the Security completed, to the Paying Agent at the
address specified in the notice at any time beginning with the
date of such notice but prior to the close of business on the
Business Day immediately preceding the Payment Date (or, if such
day is a Legal Holiday, on the next subsequent day which is not a
Legal Holiday), and such Holder shall be entitled to receive from
the Paying Agent a non-transferable receipt of deposit evidencing
such deposit; (vi) that, unless the Company defaults in making
the payment of the purchase price or shall otherwise, in its sole
discretion, consent thereto, Holders will be entitled to withdraw
their election only if the Trustee receives, not later than the
close of business on the fifth Business Day immediately preceding
the Payment Date, a telegram, facsimile transmission or letter
setting forth the name of such Holder, the principal amount of
Securities delivered for purchase and a statement that such
Holder is withdrawing his election to have such Securities
purchased; and (vii) that Holders whose Securities are being
purchased only in part will be promptly issued new Securities
equal in principal amount to the unpurchased portion of the
Securities surrendered; provided that each Security purchased and
each new Security issued shall be in a principal amount of $1,000
or integral multiples thereof. The Company shall place such
notice in the national edition of The New York Times or The Wall
Street Journal or, if such newspapers are not then in
circulation, in a financial newspaper of general circulation in
New York City. No failure of the Company to give the foregoing
notice shall limit any Holder's right to exercise a repurchase
right. On the Payment Date, the Company shall (i) accept for
payment Securities or portions thereof tendered pursuant to an
Offer to Purchase, provided, that if Securities in excess of the
aggregate principal amount that the Company has offered to
purchase are tendered by the Holders, then Securities will be
purchased from the tendering Holders pro rata, based on the
aggregate principal amount of Securities tendered by each such
Holder; (ii) deposit with the Trustee money sufficient to pay the
purchase price of all Securities or portions thereof so accepted;
and (iii) deliver, or cause to be delivered, to the Trustee all
Securities or portions thereof so accepted together with an
Officers' Certificate specifying the Securities or portions
thereof accepted for payment by the Company. The Trustee shall
promptly mail to the Holders of Securities so accepted payment in
an amount equal to the purchase price, and the Trustee shall
promptly authenticate, and the Company shall promptly execute and
mail (or cause to be mailed) to such Holders a new Security equal
in principal amount to any unpurchased portion of the Securities
surrendered; provided that each Security purchased and each new
Security issued shall be in a principal amount of $1,000 or
integral multiples thereof; provided further that if the Payment
Date is between a regular Record Date and the next succeeding
Interest Payment Date, Securities to be repurchased must be
accompanied by payment of an amount equal to the interest, if
any, payable on such succeeding Interest Payment Date on the
principal amount to be repurchased, and the interest, if any, on
the principal amount of the Security being repurchased will be
paid on such next succeeding Interest Payment Date to the
registered holder of such Security on the immediately preceding
Record Date. A Security repurchased on an Interest Payment Date
need not be accompanied by any such
<PAGE>
9
payment, and the interest on the principal amount of the Security
being repurchased, if any, will be paid on such Interest Payment
Date to the registered holder of such Security on the
corresponding Record Date. The Company will publicly announce the
results of an Offer to Purchase as soon as practicable after the
Payment Date. The Trustee shall act as the Paying Agent for an
Offer to Purchase. The Company will comply with Rule 14e-l under
the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are
applicable, in the event that the Company is required to
repurchase Securities pursuant to an Offer to Purchase. Both the
notice of the Company and the notice of the Holder having been
given as specified above, the Securities so to be repurchased
shall, on the Payment Date become due and payable at the purchase
price applicable thereto and from and after such date (unless the
Company shall default in the payment of such purchase price) such
Securities shall cease to bear interest. If any Security shall
not be paid upon surrender thereof for repurchase, the principal
shall, until paid, bear interest from the Payment Date at the
rate and in accordance with the provisions set forth in such
Security and the Indenture. Any Security which is to be submitted
for repurchase only in part shall be delivered pursuant to the
above provisions with (if the Company or Trustee so requires) due
endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in
writing.
"Officer" means the Chairman of the Board, the President,
any Vice President of any grade, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Secretary or the
Controller of the Company.
"Officers' Certificate" means a certificate signed by an
Officer and by a Certifying Officer satisfying the requirements
of Sections 11.4 and 11.5 of the Indenture.
"Operative Documents" means the Indenture, the Mortgage and
the Mortgage Supplements.
"Opinion of Counsel" means a written opinion from the
General Counsel of the Company, legal counsel to the Company or
another legal counsel who is reasonably acceptable to the
Trustee, which Opinion of Counsel shall comply with Sections 11.4
and 11.5 of the Indenture. The counsel may be an employee of the
Company. The acceptance by the Trustee (without written objection
to the Company during the fifteen (15) Business Days following
receipt) of, or its action on, an opinion of counsel not
specifically referred to above shall be sufficient evidence that
such counsel is acceptable to the Trustee.
"Outstanding" or "outstanding" when used with respect to
Securities or a Security, means all Securities theretofore
authenticated and delivered under the Indenture, except:
(a) Securities theretofore canceled by the Trustee,
delivered to the Trustee for cancellation or converted in
accordance with Article 13 of the Indenture;
(b) Securities for which payment has been deposited
with the Trustee or any Paying Agent in trust other than
deposits pursuant to Section 8.1 of the Indenture; and
<PAGE>
10
(c) Securities which have been paid, or for which
other Securities shall have been authenticated and
delivered in lieu thereof or in substitution therefor
pursuant to the terms of Section 2.7 of the Indenture,
unless proof satisfactory to the Trustee is presented that
any such Securities are held by holders in due course.
A Security does not cease to be Outstanding because the Company
or one of its Affiliates holds the Security; provided, however,
that in determining whether the Holders of the requisite
aggregate principal amount of Securities Outstanding have given
any request, demand, authorization, direction, notice, consent or
waiver under the Indenture, Section 2.8 of the Indenture shall be
applicable.
"Owner Trustee" means First Security Bank, National
Association (f/k/a First Security Bank of Utah, National
Association), not in its individual capacity (except as otherwise
expressly set forth) but as trustee f/b/o Seven Leasing pursuant
to the Trust Agreement.
"Parts" means any and all appliances, parts, spare parts,
instruments, appurtenances, accessories, furnishings, seats and
other equipment of whatever nature (other than Engines or
engines) which may from time to time be incorporated or installed
in or attached to any Airframe or any Engine, or which have been
removed therefrom but which remain subject to the Lien of the
Mortgage in accordance with the terms thereof, exclusive of any
items (i) permitted by the Mortgage to be leased by the Company
in the ordinary course of business from third parties (and
installed without discrimination with respect to other Boeing
Model 767-231 ETOPS aircraft (or improved models) owned or
operated by the Company) and (ii) not required in the navigation
of the Aircraft in which they are installed. The terms "spare
parts" and "appliances" (as used in this definition) shall
include, but not be limited to, the definitions assigned to those
terms by Section 40102 of Title 49 of the United States Code as
amended from time to time or any recodification thereof or any
regulation of the FAA.
"Paying Agent" has the meaning provided in Section 2.3 of
the Indenture, except that for the purposes of Article 8 of the
Indenture and any Offer to Purchase, the Paying Agent shall not
be the Company.
"Payment Date" with respect to any Offer to Purchase, has
the meaning specified in the definition herein of Offer to
Purchase.
"Payments" means such monies as the Company shall cause to
be delivered to the Trustee or any Paying Agent for the purpose
of paying principal, purchase price or redemption price of, or
interest, if any, on the Securities on any Interest Payment Date,
Payment Date, redemption date or acceleration; and "Pay" means
paying such monies.
"Permitted Liens" shall mean any of the following Liens:
(a) Liens in favor of the Trustee arising by reason of
the Mortgage or any other Operative Document and Liens in
favor of the Notes Trustee arising by reason of the First
Mortgage or any other Operative Document (as defined in the
Notes Indenture);
<PAGE>
11
(b) Liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter
payable without penalty or being contested by the Company
in good faith by appropriate proceedings and for which
adequate reserves have been established if required in
accordance with GAAP, and which Lien presents no material
risk of sale, forfeiture or loss of any Collateral;
(c) Liens of carriers, warehousemen, mechanics,
materialmen and landlords incurred in the Company's
ordinary course of business for sums not overdue or being
contested by the Company in good faith by appropriate
proceedings and for which adequate reserves have been
established if required in accordance with GAAP, and which
Lien presents no material risk of sale, forfeiture or loss
of any Collateral;
(d) Liens incurred in the ordinary course of business
in connection with workmen's compensation, unemployment
insurance or other forms of governmental insurance or
benefits, or to secure performance of tenders and statutory
obligations entered into in the ordinary course of business
or to secure obligations on surety or appeal bonds;
(e) judgment Liens (so long as the related judgments
do not, individually or in the aggregate, constitute an
Event of Default) in existence less than thirty (30) days
after the entry thereof or with respect to which execution
has been stayed or the payment of which is covered in full
by insurance;
(f) Liens on an Aircraft in favor of a permitted
lessee of such Aircraft which result solely from the lease
(so long as it is a permitted lease under the Mortgage) on
such Aircraft; and
(g) Liens on the Aircraft which are "Permitted Liens"
arising under, and defined by definitions substantially
similar to above subparagraphs (b) and (c) in, the leases
(if any) for the Aircraft; provided, however, that such
leases are permitted under the Mortgage.
"Person" means any individual, corporation, partnership,
limited liability issuer, joint venture, association, joint-stock
issuer, trust, unincorporated organization, government or any
agency or political subdivision thereof or any other entity.
"Placement Agreement" means the Placement Agreement, dated
April 9, 1998, between Lazard Freres & Co. LLC and the Company.
"Preferred Stock" as applied to the Capital Stock of any
Person means Capital Stock of any class or classes (however
designated) which is preferred as to the payment of dividends or
distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such
Person.
"principal" of a Security means the principal of the
Security plus the premium, if any, payable on the Security which
is due or overdue or is to become due at the relevant time.
<PAGE>
12
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, present or future, or
tangible or intangible.
"Record Date" means the fifteenth (15th) day preceding any
Interest Payment Date, whether or not a Business Day.
"Register" has the meaning provided in Section 2.3 of the
Indenture.
"Registrar" has the meaning provided in Section 2.3 of the
Indenture.
"Registration Default" means the occurrence of any of the
following events: (a) the Company shall fail to file with the SEC
the Shelf Registration Statement on or before the sixtieth (60th)
day following the Issue Date, (b) the Shelf Effective Date shall
not occur on or before the one hundred and fiftieth (150th) day
following the Issue Date or (c) the Company shall fail to list,
on or prior to the Shelf Effective Date, the Common Stock
issuable on conversion of the Equity Notes on the American Stock
Exchange or such other stock exchange or market as the Common
Stock of the Company is then principally traded.
"Registration Rights Agreement" means the Registration
Rights Agreement, made and entered into as of April 21, 1998, by
and among the Company, Lazard Freres & Co. LLC and the Owner
Trustee, relating to the shares of Common Stock to be issuable
upon conversion of the Securities.
"Replacement Engine" means a Pratt & Whitney Model
JT9D-7R4D aircraft engine (or engine of the same or another
manufacturer of a comparable or an improved model and suitable
for installation and use on an Airframe) (i) which has a value,
utility and remaining useful life at least equal to the Engine
which it is replacing, assuming such Engine was of the value and
utility required by the terms of the Mortgage; provided that any
such engine shall be of the same make and model as the other
engine then installed on such Airframe, shall be an engine model
then being utilized by the Company on other Boeing Model 767-231
ETOPS aircraft operated by the Company and, for so long as such
engine has been operated by Company, shall have been maintained,
serviced, repaired and overhauled in substantially the same
manner as the Company maintains, services, repairs and overhauls
similar engines utilized by the Company, and (ii) which shall
have been made subject to the Lien of the Mortgage pursuant to
Section 2 and Section 3.3 of the Mortgage.
"Request" means a written request for the action therein
specified signed on behalf of the Company by any Officer and
delivered to the Trustee. Each Request shall be accompanied by an
Officers' Certificate if and to the extent required by Section
11.4 of the Indenture.
"Required Holders" means from time to time the Holders of
the Applicable Percentage in principal amount of the Securities
then Outstanding.
"SEC" means the Securities and Exchange Commission and any
government agency succeeding to its functions.
<PAGE>
13
"Securities" means the "Securities" (as defined in the
preamble to the Indenture and includes the Company's Mandatory
Conversion Equity Notes due 1999), as amended or supplemented
from time to time, that are issued under the Indenture.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Seven Leasing" means Seven Sixty Seven Leasing, Inc., a
Delaware corporation.
"Shelf Effective Date" means the date that the Shelf
Registration Statement shall become effective as declared by the
SEC.
"Shelf Registration Statement" has the meaning provided in
Section 3(a) of the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary which is a
Significant Subsidiary within the meaning of Article I of
Regulation S-X under the Exchange Act.
"Special Record Date" has the meaning provided in Section
2.1 of the Indenture.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the
final payment of principal of such security is due and payable,
including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening
of any contingency unless such contingency has occurred).
"Subsidiary" means, in respect of any Person, any
corporation, association, partnership or other business entity of
which more than 50% of the total voting power of shares of
Capital Stock or other interests (including membership or
partnership interests) entitled (without regard to the occurrence
of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by (i) such Person, (ii) such Person and
one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.
"Taxes" means any and all fees (including, without
limitation, license, documentation and registration fees), taxes
(including, without limitation, income, gross receipts, sales,
rental, use, turnover, value-added, property (tangible and
intangible), excise and stamp taxes), levies, imposts, duties,
recording charges or fees, charges, assessments or withholdings
of any nature whatsoever, together with any and all assessments,
penalties, additions to tax, fines or interest thereon.
"Tender" means, with respect to any Security, the effective
tender of such Security (in whole or in part) for repurchase or
conversion in accordance with the provisions of the Indenture.
<PAGE>
14
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture;
provided, however, that in the event the Trust Indenture Act of
1939 is amended after such date, "Trust Indenture Act" means, to
the extent required by any such amendment, the Trust Indenture
Act of 1939 as so amended.
"Total Loss" and "Total Loss Date" have the meanings
provided in Section 1.1 of the Mortgage.
"Total Loss OTP Amount" has the meaning provided in Section
4.12 of the Indenture.
"Trading Day" means, with respect to any Common Stock, each
Monday, Tuesday, Wednesday, Thursday and Friday, other than any
day on which securities are not generally traded on the exchange
or market in which such Common Stock is traded.
"Trust Agreement" means the Trust Agreement, dated as of
January 24, 1995, between Seven Leasing and First Security Bank,
National Association (f/k/a First Security Bank of Utah, National
Association).
"Trust Officer" means any officer in the corporate trust
department of the Trustee, or any other officer or assistant
officer of the Trustee assigned by the Trustee to administer its
corporate trust matters.
"Trustee" means the party named as such in the Indenture
until a successor replaces it in accordance with the provisions
of the Indenture and thereafter means the successor.
"TWA" means the Company.
"U.S." or "United States" means the United States of
America.
"U.S. Government Obligations" means securities which are
(i) direct obligations of the United State government or (ii)
obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States government, are
full faith and credit obligations of the United States government
and are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a
bank or trust Company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or
principal of any such U.S. Government Obligation held by such
custodian for the account of the holder of a depository receipt,
provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the
specific payment of interest on or principal of the U.S.
Government Obligation evidenced by such depository receipt.
"Warranty Bill of Sale" means, for each Aircraft, the full
warranty (as to title) bill of sale covering such Aircraft
executed by the Owner Trustee in favor of the Company.
<PAGE>
15
Section 2. Rules of Construction. Unless the context otherwise
requires, the following rules of construction shall apply to all
purposes of the Indenture and the other Operative Documents
(including this appendix) and of such agreements as may
incorporate this appendix by reference.
(a) a term has the meaning assigned to it;
(b) whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and
neuter forms;
(c) the words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without
limitation";
(d) all terms used in Article 9 of the Uniform
Commercial Code as in effect in the State of New York that
are used but not defined herein shall have the meaning
assigned to such terms therein;
(e) references to a specific Person shall include the
Person and (except as limited by any agreement by which
such Person is bound) the successors and assigns of such
Person;
(f) references to "applicable laws" shall include
statutes, ordinances, rules, regulations, court and
administrative decisions and conditions, restrictions and
limitations in licenses, permits, approvals and
authorizations issued or granted by federal, state or local
United States or foreign governmental bodies and agencies;
(g) unless otherwise specified in the computation of a
period of time from a specified date to a later specified
date, the word "from" means "from and including", and the
words "to" and "until" each mean "to but excluding";
(h) words in the singular include the plural, and
words in the plural include the singular;
(i) provisions apply to successive events and
transactions;
(j) "herein", "hereto" and other words of similar
import in any agreement refer to that agreement as a whole
and not to any particular Article, Section or other
subsection of that agreement;
(k) unless otherwise specified, all references in any
Operative Document to Sections, Articles, Exhibits,
Appendices and Schedules are to Sections of, Articles of,
Exhibits to, Appendices to and Schedules to such Operative
Document;
(l) all accounting terms used herein and not expressly
defined shall have the meanings given to them in accordance
with GAAP; and
(m) unless otherwise specified, references in this
Definitions Appendix to any instrument, contract, agreement
or other document shall be deemed to be references to
<PAGE>
16
such instrument, agreement or other document as it may be
amended, restated, supplemented or otherwise modified from
time to time pursuant to and as permitted by the terms
thereof, whether or not so stated in any particular
definition.
<PAGE>
EXHIBIT A
to
INDENTURE
[FORM OF FACE OF SECURITY]
[Restricted Securities Legend]
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT, OR ANY STATE SECURITIES LAWS. NEITHER THESE
SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
THE HOLDER OF THESE SECURITIES BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL, OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE RESALE RESTRICTION TERMINATION DATE WHICH
IS THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE DATE OF
ORIGINAL ISSUANCE OF THESE SECURITIES AND THE LAST DATE ON WHICH
THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THESE SECURITIES (OR ANY PREDECESSOR OF THESE SECURITIES) ONLY
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2) (3), OR
(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT
TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S
RIGHT PRIOR TO ANY SUCH OFFER, SALE, OR TRANSFER (i) PURSUANT TO
CLAUSES (C), (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT
A CERTIFICATE OF TRANSFER IN THE FORM ATTACHED TO OR ON THE
REVERSE SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.
<PAGE>
2
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL
DELIVER TO THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS
THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.
<PAGE>
3
No. CUSIP No.
$
Mandatory Conversion Equity Note due 1999
TRANS WORLD AIRLINES, INC., a Delaware corporation
promises to pay to __________, or registered assigns, the
principal sum of __________ Dollars on April 15, 1999.
Interest Payment Dates (if any): The 15th day of each month.
Record Dates: The 1st day of each month.
Additional provisions of this Security are set forth
on the other side of this Security.
Dated:
TRANS WORLD AIRLINES, INC.
By:__________________________
Name:
Title:
Attest:
__________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
First Security Bank, National Association,
as Trustee, certifies that this is one of
the Securities referred to in the
Indenture.
By:__________________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF SECURITY]
Mandatory Conversion Equity Note due 1999
This Security is one of a duly authorized issue of
securities of the Company designated as its Mandatory Conversion
Equity Notes due 1999 (hereinafter called the "Securities"),
limited in aggregate principal amount Outstanding to $31,800,000,
issued or to be issued pursuant to an Indenture, dated as of
April 21, 1998 (hereinafter called the "Indenture") between the
Company and First Security Bank, National Association, as Trustee
(herein called the "Trustee", which term includes any successor
trustee under the Indenture).
1. Interest. This Security shall not bear interest;
provided, however, that upon a default in payment of principal on
the Securities (whether on acceleration, at maturity, upon tender
for repurchase or otherwise) or a Registration Default (as for so
long as such default or Registration Default, as the case may be,
shall continue uncured and unwaived), this Security shall bear
interest at the rate of Twelve percent (12%) per annum, from the
date of such default or Registration Default, as the case may be,
payable (a) in the case of a Registration Default, monthly in
arrears on the 15th day of each month commencing the 15th day of
the month next succeeding the month in which such Registration
Default occurred, and (b) in the case of a default in payment of
principal, payable on demand, in each case until the principal
thereof is paid or made available for payment. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company and each Holder of a Security, by the acceptance
hereof, agree that in the event a Registration Default shall
occur and be continuing and the Company shall have failed to use
its reasonable best efforts to avoid or cure such Registration
Default, Holders shall be entitled to make a claim for damages
incurred as a result of such Registration Default, which damages
shall not necessarily be limited to the increase in the interest
rate hereunder to 12% per annum; provided, however, that any
amount of interest paid pursuant to this provision shall be
credited against any amount of damages to be paid by the Company
in connection with such claim.
2. Method of Payment. Subject to the provisions of
paragraph 8 hereof, the Company will pay interest, if any, on the
Securities (except defaulted interest and interest on defaulted
principal) to the persons who are registered Holders of
Securities at the close of business on the Record Date set forth
on the face of this Security next preceding the applicable
Interest Payment Date. Defaulted interest and interest on
defaulted principal will be paid by the Company in accordance
with the applicable provisions of the Indenture. Holders must
surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest, if any, at
the office or agency of the Company maintained for that purpose
in the Borough of Manhattan, The City of New York and at any
other office or agency maintained by the Company for such purpose
in money of the United States that at the time of payment is
legal tender for payment of public and private debts; provided,
however, that at the option of the Company, payment of interest,
if any, on the Securities may be by check payable in such money
and mailed to a Holder's registered address; provided further,
however, that payments on a certificated Security will be made by
wire transfer to a U.S. dollar account maintained by a
<PAGE>
5
Holder with a bank in New York City if such Holder owns at least
$250,000 in aggregate principal amount of certificated Securities
and elects payment by wire transfer by giving written notice to
the Company and the Trustee to such effect designating such
account no later than 10 days immediately preceding the relevant
due date for payment (or such other date as the Company and the
Trustee may accept in their discretion). If a payment date is a
legal holiday at a place of payment, payment may be made at that
place on the next succeeding Business Day, and no interest shall
accrue for the intervening period.
3. Registrar, Paying Agent and Tender Agent. Initially, the
Trustee will act as Registrar and Paying Agent. The Company may
change any Paying Agent or Registrar or co-registrar without
prior notice to any Securityholder. The Company may act in any
such capacity, except in certain circumstances.
4. Indenture. The Company issued the Securities under the
Indenture. The terms of the Securities include those stated in
the Indenture and those made applicable to the Indenture by the
TIA. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and such Act for a
statement of such terms. Until converted to Common Stock as
described in paragraph 8 hereof and in the Indenture and subject
to paragraphs 6 and 9 hereof, the Securities are senior secured
obligations of the Company limited to $31,800,000 aggregate
principal amount, except as otherwise provided in the Indenture.
Terms used in this Security and not defined in this Security
shall have the meaning set forth in Section 1 of the Definitions
Appendix attached as Appendix I to the Indenture, which shall be
a part of this Security as if fully set forth in this place. The
rules of construction for this Security are set forth in Section
2 of the Definitions Appendix.
5. Redemption. This Security is not subject to redemption
in whole or in part at any time.
6. Security. The Securities are secured by second priority
Liens on certain Properties of the Company pursuant to the
Mortgage and the other Operative Documents described in the
Indenture and such Liens are subject to release as provided
herein and in the Mortgage and the other Operative Documents.
Enforcement of the Lien of the Mortgage is limited to an
aggregate amount of Obligations not exceeding $24,300,000 and is
further restricted due to its second priority status, as more
fully set forth in the Mortgage, and each Holder, by accepting a
Security, agrees to all the provisions thereof.
7. Offers to Purchase. In the event that there shall occur
a Change in Control, the Company shall make an Offer to Purchase
all of the Outstanding Securities, at a purchase price equal to
101% of the aggregate principal amount of the Securities
Outstanding, plus accrued and unpaid interest, if any, to and
including the repurchase date. The right to require such
repurchase of Securities shall not continue after a discharge of
the Company from its obligations with respect to the Securities
in accordance with Article 8 of the Indenture. The Company shall
commence such Offer to Purchase within thirty (30) days after the
occurrence of a Change in Control.
<PAGE>
6
In the event that there shall occur a Total Loss with respect
to any Aircraft, the Company shall (unless the Company is not
required to make such Offer to Purchase pursuant to the
provisions of Section 4.12 of the Indenture) make an Offer to
Purchase an aggregate principal amount of Outstanding Securities
(the "Total Loss OTP Amount") equal to (for each Aircraft subject
to such Total Loss) (a) the aggregate principal amount of the
Securities Outstanding on the date such Offer to Purchase (if
any) is required to be commenced under the Indenture, minus (b)
the product of (i) $10,600,000 multiplied by (ii) the number of
Aircraft remaining that were not subject to such Total Loss, at a
purchase price equal to 100% of the aggregate principal amount of
Securities to be purchased, plus accrued and unpaid interest, if
any, on such Securities, to and including the Payment Date, and
the Aircraft that was the subject of such Total Loss shall be
released from the Lien of the Operative Documents in accordance
with the provisions thereof. The Company shall commence such
Offer to Purchase (if any) within thirty (30) days after the
Total Loss Date with respect to any such Total Loss. The Company
may receive credit against any or all of the Total Loss OTP
Amount for open market purchases of Securities as provided in the
Indenture.
"Offer to Purchase" means an offer to purchase all, or a
portion, as the case may be, of the Securities by the Company
from the Holders commenced by the mailing (by first class mail,
postage prepaid) by the Company (or, if requested by the Company
on at least five Business Days' prior notice to the Trustee and
at the Company's expense, by the Trustee) of a notice to each
Holder (and, if mailed by the Company, to the Trustee) at such
Holder's address appearing in the Register, stating: (i) the
covenant pursuant to which the offer is being made and that all
Securities validly tendered will be accepted for payment,
provided, that if Securities in excess of the aggregate principal
amount that the Company has offered to purchase are tendered by
the Holders, then Securities will be purchased from the tendering
Holders pro rata, based on the aggregate principal amount of
Securities tendered by each such Holder; (ii) the purchase price
and the date of purchase (which shall be a Business Day no
earlier than 30 days nor later than 60 days from the date such
notice is mailed) (the "Payment Date"); (iii) that any Security
not tendered will continue to accrue interest (if any) pursuant
to its terms; (iv) that, unless the Company defaults in the
payment of the purchase price on the Payment Date, any Security
accepted for payment pursuant to the Offer to Purchase shall
cease to accrue interest on and after the Payment Date; (v) that
Holders electing to have a Security purchased pursuant to the
Offer to Purchase will be required to surrender the Security,
together with the form entitled "Option of the Holder to Elect
Purchase" attached to or on the reverse side of the Security
completed, to the Paying Agent at the address specified in the
notice at any time beginning with the date of such notice but
prior to the close of business on the Business Day immediately
preceding the Payment Date (or, if such day is a Legal Holiday,
on the next subsequent day which is not a Legal Holiday), and
such Holder shall be entitled to receive from the Paying Agent a
non-transferable receipt of deposit evidencing such deposit; (vi)
that, unless the Company defaults in making the payment of the
purchase price or shall otherwise, in its sole discretion,
consent thereto, Holders will be entitled to withdraw their
election only if the Trustee receives, not later than the close
of business on the fifth Business Day immediately preceding the
Payment Date, a telegram, facsimile transmission or letter
setting forth the name of such Holder, the principal amount of
Securities delivered for purchase and a statement that such
Holder is withdrawing his election to have such Securities
purchased; and (vii) that Holders whose Securities are being
purchased only
<PAGE>
7
in part will be promptly issued new Securities equal in principal
amount to the unpurchased portion of the Securities surrendered;
provided that each Security purchased and each new Security
issued shall be in a principal amount of $1,000 or integral
multiples thereof. The Company shall place such notice in the
national edition of The New York Times or The Wall Street Journal
or, if such newspapers are not then in circulation, in a
financial newspaper of general circulation in New York City. No
failure of the Company to give the foregoing notice shall limit
any Holder's right to exercise a repurchase right. On the Payment
Date, the Company shall (i) accept for payment Securities or
portions thereof tendered pursuant to an Offer to Purchase,
provided, that if Securities in excess of the aggregate principal
amount that the Company has offered to purchase are tendered by
the Holders, then Securities will be purchased from the tendering
Holders pro rata, based on the aggregate principal amount of
Securities tendered by each such Holder; (ii) deposit with the
Trustee money sufficient to pay the purchase price of all
Securities or portions thereof so accepted; and (iii) deliver, or
cause to be delivered, to the Trustee all Securities or portions
thereof so accepted together with an Officers' Certificate
specifying the Securities or portions thereof accepted for
payment by the Company. The Trustee shall promptly mail to the
Holders of Securities so accepted payment in an amount equal to
the purchase price, and the Trustee shall promptly authenticate,
and the Company shall promptly execute and mail (or cause to be
mailed) to such Holders a new Security equal in principal amount
to any unpurchased portion of the Securities surrendered;
provided that each Security purchased and each new Security
issued shall be in a principal amount of $1,000 or integral
multiples thereof; provided further that if the Payment Date is
between a regular Record Date and the next succeeding Interest
Payment Date, Securities to be repurchased must be accompanied by
payment of an amount equal to the interest, if any, payable on
such succeeding Interest Payment Date on the principal amount to
be repurchased, and the interest, if any, on the principal amount
of the Security being repurchased, will be paid on such next
succeeding Interest Payment Date to the registered holder of such
Security on the immediately preceding Record Date. A Security
repurchased on an Interest Payment Date need not be accompanied
by any such payment, and the interest, if any, on the principal
amount of the Security being repurchased, will be paid on such
Interest Payment Date to the registered holder of such Security
on the corresponding Record Date. The Company will publicly
announce the results of an Offer to Purchase as soon as
practicable after the Payment Date. The Trustee shall act as the
Paying Agent for an Offer to Purchase. The Company will comply
with Rule 14e-l under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and
regulations are applicable, in the event that the Company is
required to repurchase Securities pursuant to an Offer to
Purchase. Both the notice of the Company and the notice of the
Holder having been given as specified above, the Securities so to
be repurchased shall, on the Payment Date become due and payable
at the purchase price applicable thereto and from and after such
date (unless the Company shall default in the payment of such
purchase price) such Securities shall cease to bear interest. If
any Security shall not be paid upon surrender thereof for
repurchase, the principal shall, until paid, bear interest from
the Payment Date at the rate and in accordance with the
provisions set forth in this Security and the Indenture. Any
Security which is to be submitted for repurchase only in part
shall be delivered pursuant to the above provisions with (if the
Company or Trustee so requires) due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing.
<PAGE>
8
8. Mandatory Conversion. Subject to the provisions of Article 13
of the Indenture, on the Conversion Date, so long as no Default
or Event of Default shall then exist, this Security (if then
Outstanding) shall be automatically converted into that number of
fully paid and non-assessable shares of Common Stock equal to the
sum of (i) the then outstanding principal amount of this
Security, plus (ii) accrued and unpaid interest, if any, on this
Security to the Conversion Date, divided by the lesser of (A)
0.95 multiplied by the Average Market Price per share of Common
Stock or (B) $107/8 (such lesser amount being hereinafter
referred to as the "Conversion Price").
Any such conversion is subject to the procedures,
restrictions and adjustments to the Conversion Price as set forth
in Article 13 of the Indenture, and on or after the effectiveness
of the conversion, the Liens on the Collateral are subject to
release as provided in the Indenture.
9. Possible Subordination. If, on the Business Day
immediately succeeding the Issue Date, the Holders (other than
Lazard Freres & Co. LLC, as Holder of the Compensation Notes, as
defined in the Placement Agreement) do not include at least one
of the Owner Trustee, Seven Sixty Seven Leasing, Inc. or any
member of the Bank Group, then this Security shall automatically,
without any further act or deed, become an unsecured obligation
of the Company and shall rank junior in priority to all secured
indebtedness of the Company and pari passu with all unsecured
indebtedness of the Company, in each case whether such
indebtedness is existing on the Issue Date or thereafter
incurred, and the Trustee shall be authorized to enter into or
execute and deliver such agreements, instruments or other
documents as may be reasonably requested by (and at the cost and
expense of) the Company to evidence or confirm the release of
Liens on the Collateral or such subordination of the Securities.
10. Denominations, Transfer, Exchange. The Securities shall
be issuable only in registered form without coupons and in
denominations of $1,000 and integral multiples thereof. The
transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes required by law or
permitted by the Indenture.
11. Persons Deemed Owners. The Company, the Trustee and any
agent of the Company or the Trustee may treat the person in whose
name the Security is registered with the Registrar as the owner
for all purposes.
12. Discharge. Subject to certain conditions set forth in
Article 8 of the Indenture, the Company may terminate its
obligations under the Securities and the Indenture, except those
obligations referred to in Section 8.1(b) of the Indenture, if
the Company deposits with the Trustee or a Paying Agent cash or
U.S. Government Obligations for the payment of principal of,
interest, if any, on the Securities to Stated Maturity.
13. Amendments and Waivers. Subject to certain exceptions,
the Indenture, the Securities, or the other Operative Documents
may be amended with the consent of the Holders of at least a
majority in principal amount of the then Outstanding Securities,
and any existing Default, Event of Default or acceleration may be
waived with the consent of the Holders of a
<PAGE>
9
majority in principal amount of the then Securities Outstanding.
Without the consent of any Holder, the Indenture, the Securities
or any of the Operative Documents may be amended to, among other
things, cure any ambiguity, defect or inconsistency.
14. Defaults and Remedies. Events of Default under the
Indenture include the following: default for the period specified
in the Indenture in payment of interest, if any, on the
Securities; default in payment of the principal amount of any
Securities when the same becomes due and payable (at maturity,
upon acceleration, redemption, tender for repurchase or
otherwise); failure by the Company to comply with specific
covenants of the Indenture or of the Mortgage within the time
periods provided therein, discontinuing substantially all of its
commercial airlines operations, or failure to pay over amounts
required under the Mortgage; failure to comply in any material
respect with any of its other agreements contained in the
Indenture, the other Operative Documents or the Securities; a
representation or warranty of the Company in the Indenture, the
other Operative Documents or any Mortgage Supplement or in any
certificate of the Company delivered under any such document
proves to be untrue in any material respect when made; the
occurrence of certain defaults under any Indebtedness of the
Company or any of its Significant Subsidiaries in excess of
$10,000,000 in principal amount; the rendering or domestication
of final judgments by a court of competent jurisdiction against
the Company or any of its Significant Subsidiaries in an
aggregate amount of $10,000,000 or more which remain undischarged
for a period (during which execution is not stayed) of sixty (60)
days after the date on which the right to appeal has expired;
cessation of effectiveness of Operative Documents without the
consent of the Trustee; and certain events of bankruptcy,
insolvency or reorganization. Subject to certain limitations in
the Indenture, if an Event of Default occurs and is continuing,
the Trustee or the Holders of twenty-five percent (25%) in
principal amount of the Securities Outstanding may declare all
the Securities to be due and payable immediately, except that in
the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all Securities Outstanding become due
and payable immediately without further action or notice.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture and the Mortgage. Enforcement
of the Lien of the Mortgage is limited to an aggregate amount of
Obligations not exceeding $24,300,000 and is further restricted
due to its second priority status, as more fully set forth in the
Mortgage. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Securities. Subject to
certain limitations, Holders of a majority in principal amount of
the then Outstanding Securities may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing default (except a
default in payment of principal or interest) if it determines
that withholding notice is in their interests. The Company must
furnish compliance certificates to the Trustee. The above
description of Events of Default and remedies is qualified by
reference, and subject in its entirety to the more complete
description thereof contained in the Indenture and the other
Operative Documents.
15. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with
and collect obligations owed to it by the Company or Affiliates
of the Company with the same rights it would have if it were not
Trustee.
<PAGE>
10
16. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or the
Indenture or for any claim based on, in respect of or by reason
of such obligations or their creation. Each Securityholder by
accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for the issue of
the Securities.
17. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an
authenticating agent.
18. Unclaimed Money. If money for the payment of principal
of, or interest, if any, on, or the purchase price for the
Securities remains unclaimed for two (2) years, the Trustee or
Paying Agent will pay the money back to the Company at its
request. After such payment, Holders entitled to any portion of
such money must look to the Company for payment unless an
applicable law designates another person.
19. Abbreviations. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants
in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
20. CUSIP Numbers. The Company in issuing this Security may
use a "CUSIP" number (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a
convenience to Holders; provided, however, that any such notice
may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any
defect in or omission of such numbers.
21. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Security, by acceptance hereof, acknowledges and
agrees to the provisions of the Registration Rights Agreement,
including, without limitation, the obligations of the Holders
with respect to a registration and the indemnification of the
Company to the extent provided therein.
22. Governing Law. THIS SECURITY SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF
LAWS.
The Company will furnish to any Holder of this
Security, upon written request and without charge, a copy of the
Indenture. Request may be made to: Trans World Airlines, Inc.,
One City Centre, 515 N. 6th Street, St. Louis, Missouri 63101,
Attention: Corporate Secretary.
<PAGE>
11
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to:
(Insert Assignee's Soc. Sec. or Tax I.D. No.)
(Print or type assignee's name, address and zip
code)
and irrevocably appoint ______________
agent to transfer this Security on the books of
the Company. The agent may substitute
another to act for him.
Date:______________________________ Signature(s):__________________________
__________________________
_________________________________________
(Sign exactly as your name(s) appear(s)
on the other side of this Security)
Signature(s) guaranteed by:
_________________________________________
(All signatures must be guaranteed by
a member of a national securities
exchange or of the National Association
of Securities Dealers, Inc. or by a
commercial bank or trust company located
in the United States)
<PAGE>
12
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security repurchased
by the Company pursuant to any Offer to Purchase under the
Indenture, check the box:
|_|
If you want to elect to have only part of this
Security repurchased by the Company pursuant to any Offer to
Purchase under the Indenture, state the amount to be repurchased:
$ _________________________________
(in an integral multiple of $1,000)
Date:______________________________ Signature(s):__________________________
__________________________
_________________________________________
(Sign exactly as your name(s) appear(s)
on the other side of this Security)
Signature(s) guaranteed by:
_________________________________________
(All signatures must be guaranteed by
a member of a national securities
exchange or of the National Association
of Securities Dealers, Inc. or by a
commercial bank or trust company located
in the United States)
<PAGE>
13
CERTIFICATE OF TRANSFER
Re: Mandatory Conversion Equity Notes due 1999 (the "Notes") of Trans
World Airlines, Inc. (the "Company")
This Certificate relates to Notes held in definitive
form by ___________ (the "Transferor").
The Transferor has requested the Registrar by written
order to exchange or register the transfer of a Note or Notes. In
connection with such request and in respect of each such Note,
the Transferor does hereby certify that the Transferor is
familiar with the Indenture relating to the above captioned Notes
and that the transfer of this Note does not require registration
under the Securities Act of 1933 (the "Securities Act"),
because:*
|_| Such Note is being transferred to the Company.
|_| Such Note is being transferred pursuant to an
effective Registration Statement under the Securities Act.
|_| Such Note is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the Securities
Act) in reliance on Rule 144A.
|_| Such Note is being transferred pursuant to an
offshore transaction in accordance with Rule 904 under the
Securities Act.
|_| Such Note is being transferred to an Institutional
"Accredited Investor" within the meaning of Subparagraph (a)(1),
(2), (3) or (7) of Rule 501 under the Securities Act.
|_| Such Note is being transferred in a transaction
meeting the requirements of Rule 144 under the Securities Act.
The Registrar and the Company are entitled to rely
upon this Certificate and are irrevocably authorized to produce
this Certificate or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
_________________________________
[INSERT NAME OF TRANSFEROR]
By:______________________________
Date:______________________________
___________________________________
* Please check applicable box.
=================================================================
TRANS WORLD AIRLINES, INC.
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Trustee
INDENTURE
Dated as of June 16, 1998
$14,500,000
10 1/4% Senior Secured Notes due 2003
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1.
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 Definitions............................... 1
Section 1.2 Rules of Construction..................... 1
ARTICLE 2.
THE SECURITIES
Section 2.1 Designation, Form and Dating.............. 1
Section 2.2 Execution, Amount, Authentication
and Delivery.............................. 2
Section 2.3 Registrar and Paying Agent................ 4
Section 2.4 Paying Agent to Hold Payments In Trust.... 4
Section 2.5 Securityholder Lists...................... 6
Section 2.6 Transfer and Exchange..................... 6
Section 2.7 Mutilated, Defaced, Destroyed, Lost
and Stolen Securities..................... 7
Section 2.8 Treasury Securities....................... 8
Section 2.9 Temporary Securities...................... 9
Section 2.10 Cancellation.............................. 9
Section 2.11 Defaulted Interest; Interest on
Defaulted Principal....................... 9
Section 2.12 CUSIP Numbers............................. 10
ARTICLE 3.
REDEMPTIONS
Section 3.1 No Optional Redemption.................... 10
Section 3.2 Mandatory Redemption...................... 10
Section 3.3 Selection of Securities to be Redeemed.... 12
Section 3.4 Notice of Redemption...................... 12
Section 3.5 Effect of Notice of Redemption............ 12
Section 3.6 Deposit of Redemption Price............... 13
Section 3.7 Securities Redeemed in Part............... 13
-i-
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
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ARTICLE 4.
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 4.1 Payment of Securities..................... 13
Section 4.2 Maintenance of Office or Agency........... 14
Section 4.3 Limitation on Dividends and Acquisition
of Common Stock........................... 14
Section 4.4 Corporate Existence....................... 15
Section 4.5 Payment of Taxes and Other Claims......... 15
Section 4.6 Notices................................... 16
Section 4.7 Maintenance of Properties and Insurance... 16
Section 4.8 Default Notices and Compliance
Certificates.............................. 17
Section 4.9 SEC Reports............................... 17
Section 4.10 Waiver of Stay, Extension or
Usury Laws................................ 18
Section 4.11 Amendment to Certain Agreements........... 19
Section 4.12 Title to Collateral and Limitation
on Liens; Sale of Aircraft; Total
Loss With Respect to Aircraft............. 19
Section 4.13 Books, Records, Access; Confidentiality... 21
Section 4.14 Security Interests........................ 22
Section 4.15 Repurchase of Securities Upon a
Change in Control......................... 22
Section 4.16 Restrictions on Becoming an Investment
Company................................... 22
Section 4.17 Listing................................... 22
ARTICLE 5.
SUCCESSOR CORPORATION
Section 5.1 Covenant Not to Consolidate, Merge,
Convey or Transfer Except Under
Certain Conditions........................ 23
Section 5.2 Successor Person Substituted.............. 24
Section 5.3 Limitation on Lease of Properties......... 24
-ii-
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
----
ARTICLE 6.
DEFAULT AND REMEDIES
Section 6.1 Events of Default......................... 24
Section 6.2 Acceleration.............................. 26
Section 6.3 Other Remedies............................ 27
Section 6.4 Waiver of Past Defaults................... 27
Section 6.5 Control by Majority....................... 28
Section 6.6 Limitation on Suits....................... 28
Section 6.7 Rights of Holders to Receive Payment...... 28
Section 6.8 Collection Suit by Trustee................ 29
Section 6.9 Trustee May File Proofs of Claim.......... 29
Section 6.10 Application of Proceeds................... 29
Section 6.11 Undertaking for Costs..................... 30
Section 6.12 Restoration of Rights on Abandonment
of Proceedings............................ 31
Section 6.13 Powers and Remedies Cumulative;
Delay or Omission Not Waiver
of Default................................ 31
ARTICLE 7.
TRUSTEE
Section 7.1 Duties of Trustee......................... 32
Section 7.2 Rights of Trustee......................... 33
Section 7.3 Individual Rights of Trustee.............. 33
Section 7.4 Trustee's Disclaimer...................... 33
Section 7.5 Notice of Defaults........................ 33
Section 7.6 Reports by Trustee to Holders............. 34
Section 7.7 Compensation and Indemnity................ 34
Section 7.8 Replacement of Trustee.................... 35
Section 7.9 Successor Trustee by Merger, etc.......... 36
Section 7.10 Eligibility; Disqualification............. 36
Section 7.11 Preferential Collection of Claims
Against Company........................... 36
-iii-
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
----
ARTICLE 8.
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligations...... 36
Section 8.2 Application of Trust Money................ 38
Section 8.3 Repayment to Company...................... 38
Section 8.4 Reinstatement............................. 38
ARTICLE 9.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Without Consent of Holders................ 39
Section 9.2 With Consent of Holders................... 39
Section 9.3 Compliance with Trust Indenture Act....... 40
Section 9.4 Revocation and Effect of Consents......... 41
Section 9.5 Notation on or Exchange of Securities..... 41
Section 9.6 Trustee to Sign Amendments, etc........... 41
Section 9.7 Effect of Supplement and/or Amendment..... 41
ARTICLE 10.
SECURITY
Section 10.1 Other Operative Documents................. 42
Section 10.2 Opinions, Certificates and Appraisals..... 42
Section 10.3 Authorization of Actions to be
Taken by the Trustee Under the
Operative Documents....................... 43
Section 10.4 Payment of Expenses....................... 43
Section 10.5 Authorization of Receipt of Funds
by the Trustee Under the Operative
Documents................................. 44
ARTICLE 11.
MISCELLANEOUS
Section 11.1 Conflict with Trust Indenture Act
of 1939................................... 44
Section 11.2 Notices; Waivers.......................... 44
-iv-
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
----
Section 11.3 Communications by Holders with Other
Holders................................... 45
Section 11.4 Certificate and Opinion as to
Conditions Precedent...................... 45
Section 11.5 Statements Required in Certificate or
Opinion................................... 45
Section 11.6 Rules by Trustee, Paying Agent,
Registrar................................. 47
Section 11.7 Holidays.................................. 47
Section 11.8 Governing Law; Waiver of Jury Trial....... 47
Section 11.9 No Adverse Interpretation of Other
Agreements................................ 47
Section 11.10 No Recourse Against Others................ 47
Section 11.11 Benefits of Indenture and the
Securities Restricted..................... 47
Section 11.12 Successors and Assigns.................... 48
Section 11.13 Counterpart Originals..................... 48
Section 11.14 Severability.............................. 48
Section 11.15 Effect of Headings........................ 48
ARTICLE 12.
RELEASE OF COLLATERAL
Section 12.1 Release of Collateral..................... 48
APPENDIX I Definitions Appendix
APPENDIX II Rule 144A/Regulation S Appendix (including
forms of 10 1/4% Senior Secured Note as
Exhibits 1 and 2 thereto)
EXHIBIT A Form of Aircraft Mortgage and Security Agreement
-v-
<PAGE>
INDENTURE dated as of June 16, 1998 between TRANS WORLD
AIRLINES, INC., a Delaware corporation (the "Company"), and FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the
Company's 10 1/4% Senior Secured Notes due 2003 (the "Initial
Securities") and, if and when issued pursuant to a registered
exchange for Initial Securities, the Company's 10 1/4% Senior
Secured Notes due 2003 (the "Exchange Securities") and, if and
when issued pursuant to a private exchange for Initial
Securities, the Company's 10 1/4% Senior Secured Notes due 2003
(the "Private Exchange Securities" and, together with the
Exchange Securities and the Initial Securities, the
"Securities").
ARTICLE 1.
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 Definitions.
Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in Section
1 of the Definitions Appendix attached hereto as Appendix I,
which shall be a part of this Indenture as if fully set forth in
this place.
Section 1.2 Rules of Construction.
The rules of construction for this Indenture are set forth
in Section 2 of the Definitions Appendix.
ARTICLE 2.
THE SECURITIES
Section 2.1 Designation, Form and Dating.
Provisions relating to the Initial Securities, the Private
Exchange Securities and the Exchange Securities are set forth in
the Rule 144A/Regulation S Appendix attached hereto as Appendix
II (the "Rule 144A Appendix") which is hereby incorporated in and
expressly made part of this Indenture. The Initial Securities and
the Trustee's certificate of authentication with respect to each
thereof shall be substantially in the form of Exhibit 1 to the
Rule 144A Appendix (with such appropriate insertions, omissions,
substitutions and other variations as are required by this
Indenture) and are hereby incorporated in and expressly made a
part of this Indenture. The Exchange Securities, the Private
Exchange Securities, and the Trustee's certificates of
authentication shall be substantially in the form of Exhibit 2 to
the Rule 144A Appendix (with such appropriate insertions,
omissions, substitutions and other variations as are required by
this Indenture) and are hereby incorporated in and expressly made
a part of this Indenture. The
<PAGE>
2
Securities may have imprinted or otherwise reproduced thereon
such notations, legends or endorsements, not inconsistent with
the provisions of this Indenture, as may be required to comply
with any law or with any rules or regulations pursuant thereto,
or with the rules of any securities market in which the
Securities are admitted to trading, or to conform to general
usage. The Company shall approve the form of the Securities and
any notation, legend or endorsement on them. Each Security shall
be dated the date of its authentication and shall bear interest
from the applicable date set forth herein or in the form of
Security and shall be payable, unless previously Tendered, on the
dates as specified herein or in the form of the Security.
The Person in whose name any Security is registered at the
close of business on any Record Date with respect to any Interest
Payment Date shall be entitled to receive the interest and
Special Interest, if any, payable on such Interest Payment Date
to the extent provided by such Security, except if and to the
extent the Company shall default in the payment of the interest
or Special Interest due on such Interest Payment Date, in which
case defaulted interest or Special Interest, as the case may be,
shall be paid to the Person in whose name the Outstanding
Security is registered at the close of business on the subsequent
record date (which shall be not less than five (5) Business Days
prior to the date of payment of such defaulted interest)
established by notice given by mail by or on behalf of the
Company to the Holders of Securities not less than fifteen (15)
days preceding such subsequent record date (a "Special Record
Date").
Section 2.2 Execution, Amount, Authentication and Delivery.
The Securities shall be signed for the Company by the manual
or facsimile signatures of an Officer and a Certifying Officer.
The Company's seal shall be affixed to or reproduced on the
Securities. Typographical or other errors or defects in any such
reproduction of the seal or any such signature shall not affect
the validity or enforceability of any Security which has been
duly authenticated and delivered by the Trustee.
If an officer whose signature is on a Security no longer
holds that office at the time the Trustee authenticates the
Security, the Security shall be valid nevertheless.
A Security shall not be valid until the Trustee manually
signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to
$14,500,000 except for Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu
of, other Securities pursuant to Sections 2.6, 2.7, 2.9, 4.15 or
9.5, or in conjunction with a Registered Exchange Offer or any
Private Exchange (as such terms are defined in the Rule 144A
Appendix).
The Securities shall be known and designated as the "10 1/4%
Senior Secured Notes due 2003" of the Company. Their Stated
Maturity shall be June 15, 2003, and, subject to the increases in
the rate of interest set forth in Section 4.12 hereof and in the
Securities, they shall bear interest at the rate of 10 1/4% per
annum, from June 16, 1998 or from the most recent Interest
Payment Date to which interest and Special Interest, if any, have
been paid or duly provided for,
<PAGE>
3
as the case may be, payable semi-annually in arrears on June 15
and December 15, commencing December 15, 1998, until the
principal thereof is paid or made available for payment.
Subject to the limits set forth in the second preceding
paragraph of this Indenture, the Trustee shall authenticate
Securities for original issue upon written order of the Company
signed by an Officer and by a Certifying Officer of the Company.
The order shall specify the amount of Securities to be
authenticated and the date on which the original issue of
Securities is to be authenticated, shall provide instructions
with respect to the delivery thereof and shall be accompanied by
the documents specified in Sections 10.2 and 11.4 and by the
following (provided, however, that the Trustee shall be
authorized conclusively to rely upon the documents specified in
Section 11.4):
(a) the grant to the Trustee, by assignment, pledge, or
otherwise pursuant to the Mortgage, of a security interest in the
Collateral;
(b) Officers' Certificates or other satisfactory
confirmation (i) with respect to the Mortgage and the Collateral,
that the Company is the legal and beneficial owner of the
Collateral, free and clear of all Liens except Permitted Liens;
and (ii) describing the actions taken to make, obtain and
accomplish all necessary filings, confirmations and
identifications referred to in Section 4.14 hereof;
(c) compliance with all applicable provisions of Sections
4.12 and 4.14 hereof;
(d) an Officers' Certificate confirming all representations
and warranties of the Company contained in this Indenture and the
other Operative Documents as of the date of authentication;
(e) an Officers' Certificate containing representations and
warranties of the type usual and customary to the issuance of the
Securities such as, but not limited to, representations regarding
due authorization of this Indenture; due authorization of the
issuance and delivery of the Securities; that the Securities,
when so issued and delivered against delivery of the Aircraft
under the Aircraft Sale Agreement will be duly and validly
issued, and constitute valid and binding obligations of the
Company, enforceable in accordance with their terms; that no
consent, approval or authorization of, or designation,
declaration, or filing with, any governmental authority or any
other person or entity is required of the Company in connection
with the execution and delivery of this Indenture or the issuance
and delivery of the Securities; and that the Securities have been
registered under the Securities Act or that registration is not
required in connection with the offer, issuance and delivery of
the Securities;
(f) an Opinion of Counsel to the effect that the Company has
the requisite corporate power and authority to execute, deliver
and perform its obligations under this Indenture and the other
Operative Documents; that the Securities have been duly
authorized and validly issued; and that the offer and issuance of
the Securities have been registered or will be exempt from the
registration requirements under the Securities Act; and
<PAGE>
4
(g) execution and delivery by the Company of the Securities
and by all parties thereto of this Indenture and all other
Operative Documents;
provided, however, that any Securities in fact authenticated by
the Trustee upon written order of the Company as set forth in the
first sentence of this paragraph shall be deemed to have been
duly authenticated hereunder and to constitute an enforceable
contractual obligation of the Company and shall be entitled to
all the benefits of this Indenture and the other Operative
Documents equally and proportionately with any and all other
Securities duly authenticated and delivered hereunder, in each
case, notwithstanding any failure of the Company to deliver any
of the documents specified in Sections 10.2 and 11.4 or above in
this sentence.
The Securities shall be issuable only in registered form,
without coupons, in denominations of $1,000 and any integral
multiple thereof, except that the Global Securities may be issued
in a different denomination.
The Trustee may appoint an authenticating agent acceptable
to the Company to authenticate Securities. An authenticating
agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent
has the same rights as an Agent to deal with the Company, any
guarantor or any Affiliate of the Company.
Section 2.3 Registrar and Paying Agent.
The Company shall maintain an office or agency where
Securities eligible for transfer or exchange may be presented for
registration of transfer or for exchange ("Registrar") and an
office or agency where Securities may be presented for payment or
repurchase ("Paying Agent"). The Registrar shall keep a register
of the Securities and of their transfer and exchange
("Register"). Such Register shall be in written form in the
English language or any other form capable of being converted
into such form within a reasonable time. At all reasonable times
such Register shall be open for inspection by the Trustee. The
Company may have one or more co-Registrars and one or more
additional paying agents. The term "Paying Agent" includes any
additional paying agent.
The Company may enter into an appropriate agency agreement
with any Agent not a party to this Indenture. Such agency
agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee of the
name and address of any such Agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as
such.
The Company initially appoints the Trustee as Registrar and
Paying Agent.
Section 2.4 Paying Agent to Hold Payments In Trust.
Each Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all Payments held by the Paying
Agent for the payment of principal of, repurchase or redemption
price, if any, of, interest on, and Special Interest, if any,
with respect to, the Securities (whether
<PAGE>
5
such Payment has been paid to it by the Company or any other
obligor on the Securities), and shall promptly notify the Trustee
of any default by the Company (or any other obligor on the
Securities) in making any such Payment. The Company at any time
may require a Paying Agent to Pay all Payments held by it to the
Trustee and account for any funds disbursed and the Trustee may
at any time during the continuance of any payment default, upon
written request to a Paying Agent, require such Paying Agent to
Pay all Payments held by it to the Trustee and to account for any
Payments distributed. Upon doing so the Paying Agent shall have
no further liability for the Payments.
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of,
repurchase or redemption price, if any, of, interest on, or
Special Interest, if any, with respect to, any of the Securities,
segregate and hold in trust for the benefit of the Persons
entitled thereto Payments sufficient to pay the principal,
repurchase or redemption price, if any, interest or Special
Interest, if any, so becoming due until such Payments shall be
Paid to such Persons or otherwise disposed of as herein provided,
and will promptly notify the Trustee of such action or any
failure so to act.
The Company will, on or before each due date for the payment
of the principal of, repurchase or redemption price, if any, of,
interest on, or Special Interest, if any, with respect to, any of
the Securities, deposit with a Paying Agent Payments (in same day
funds) sufficient to pay the principal, repurchase or redemption
price, if any, interest or Special Interest, if any, so becoming
due, such Payments to be held in trust for the benefit of the
Persons entitled to such principal, repurchase or redemption
price, if any, interest, or Special Interest, if any, and (unless
such Paying Agent is the Trustee) the Company will promptly
notify the Trustee of such action or any failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(a) hold all Payments received by it as such agent for the
payment of the principal of, repurchase or redemption price, if
any, of, interest on, or Special Interest, if any, with respect
to, the Securities (whether such Payments have been paid to it by
the Company or by any other obligor on the Securities) in trust
for the benefit of the Persons entitled thereto until such
Payments shall be paid to such Persons or otherwise disposed of
as herein provided;
(b) promptly give the Trustee notice of any failure by the
Company (or any other obligor upon the Securities) to make any
payment of the principal of, repurchase or redemption price, if
any, of, interest on, or Special Interest, if any, with respect
to, the Securities when the same shall be due and payable; and
(c) at any time during the continuance of any such failure,
upon the written request of the Trustee, forthwith pay to the
Trustee all Payments so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other
purpose, Pay, or direct any Paying Agent to Pay, to
<PAGE>
6
the Trustee all Payments held in trust by the Company or such
Paying Agent, such Payments to be held by the Trustee upon the
same trusts as those upon which such Payments were held by the
Company or such Paying Agent; and, upon such Payment by any
Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such Payments held by
it as Paying Agent.
Any Payments deposited with the Trustee or any Paying Agent,
or then held by the Company, in trust for the payment of the
principal of, redemption or repurchase price, if any, of,
interest on or Special Interest, if any, with respect to, any
Security and unclaimed for two (2) years after such principal,
redemption, repurchase price, interest or Special Interest has
become due and payable shall be paid to the Company on its
request, or (if then held by the Company) shall be discharged
from such trust, unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed
property law, and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Company for
payment thereof and all liability of the Trustee or such Paying
Agent with regard to such Payments, and all liability of the
Company as trustee thereof, shall thereupon cease.
Section 2.5 Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of Securityholders. If the Trustee is not
the Registrar, the Company shall furnish to the Trustee on or
before each Interest Payment Date and at such other times as the
Trustee may request in writing a list in such form and as of such
date as the Trustee may reasonably require of the names and
addresses of Securityholders.
Section 2.6 Transfer and Exchange.
When Securities are presented to the Registrar or a
co-Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Securities of
other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements
for such transactions are met. To permit registrations of
transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's request.
All Securities presented for registration of transfer, exchange,
redemption or payment shall (if so required by the Company or the
Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the
Company and the Trustee, duly executed by the Holder or his
attorney duly authorized in writing. The Company may require
payment of a sum sufficient to pay all taxes, assessments or
other governmental charges in connection with any registration of
transfer or exchange, but not for any exchange pursuant to
Sections 2.9, 3.7, 4.15 or 9.5 or any other Tender not involving
any transfer of Securities (other than to the Company). No
service charge shall be made for any such transaction.
In the case of any Security which is Tendered in part only,
upon such Tender the Company shall execute and the Trustee shall
authenticate and make available for delivery to the Holder
thereof, without service charge, a new Security or Securities of
any authorized denomination as requested by such Holder in
aggregate principal amount equal to the non-
<PAGE>
7
Tendered portion of the principal of such Security. No Securities
will be issued in denominations of less than $1,000 upon tender
of the Securities.
All Securities issued upon any transfer or exchange of
Securities shall be valid obligations of the Company, evidencing
the same debt of the same series and entitled to the same
benefits under this Indenture, as the Securities surrendered upon
such transfer or exchange.
Section 2.7 Mutilated, Defaced, Destroyed, Lost and Stolen
Securities.
In case any temporary or definitive Security shall become
mutilated, defaced or be apparently destroyed, lost or stolen,
subject to compliance with the following sentence and in the
absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company
shall execute, and the Trustee shall authenticate and deliver, a
new Security, bearing a number not contemporaneously outstanding,
in exchange and substitution for the mutilated or defaced
Security, or in lieu of and substitution for the Security so
apparently destroyed, lost or stolen. In every case the applicant
for a substitute Security shall furnish to the Company and to the
Trustee and any agent of the Company or the Trustee such security
or indemnity as may be reasonably required by them to indemnify
and defend and to save each of them harmless and, in every case
of destruction, loss or theft, evidence to their satisfaction of
the apparent destruction, loss or theft of such Security and of
the ownership thereof.
Upon the issuance of any substitute Security pursuant to the
preceding paragraph, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith. In
case any Security which has matured or is about to mature, or has
been tendered for repurchase pursuant to any of the provisions
hereof (as evidenced by an irrevocable written notice from the
Holder to the Company and the Trustee), shall become mutilated or
defaced or be apparently destroyed, lost or stolen, the Company
may, instead of issuing a substitute Security, pay or authorize
the payment of such Security (without surrender of such Security
except in the case of a mutilated or defaced Security), as
applicable, if the applicant for such payment shall furnish to
the Company and to the Trustee and any agent of the Company or
the Trustee such security or indemnity as any of them may
reasonably require to save each of them harmless from all risks,
however remote, and, in every case of apparent destruction, loss
or theft, the applicant shall also furnish to the Company and the
Trustee and any agent of the Company or the Trustee evidence to
their satisfaction of the apparent destruction, loss or theft of
such Security and of the ownership thereof.
Every substitute Security issued pursuant to the provisions
of this Section by virtue of the fact that any Security is
apparently destroyed, lost or stolen shall constitute an
additional contractual obligation of the Company, whether or not
the apparently destroyed, lost or stolen Security shall be at any
time enforceable by anyone and shall be entitled to all the
benefits of (but shall also be subject to all the limitations of
rights set forth in) this Indenture equally and proportionately
with any and all other Securities duly authenticated and
delivered hereunder. Every substitute Security issued pursuant to
the provisions of this Section by virtue of the fact that any
Security is mutilated or defaced shall constitute an additional
contractual obligation of
<PAGE>
8
the Company and shall be entitled to all the benefits of (but
shall also be subject to all the limitations of rights set forth
in) this Indenture equally and proportionately with any and all
other Securities of the same series duly authenticated and
delivered hereunder. All Securities shall be held and owned upon
the express condition that, to the extent permitted by law, the
foregoing provisions are exclusive with respect to the
replacement or payment of mutilated or defaced or apparently
destroyed, lost or stolen Securities and shall preclude any and
all other rights or remedies notwithstanding any law or statute
existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other
securities without their surrender.
Section 2.8 Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have given or concurred in any amendment,
request, demand, authorization, direction, notice, consent or
waiver under this Indenture or any other Operative Document,
Securities owned by the Company (including Securities Tendered),
an Affiliate of the Company, any other obligor upon the
Securities, any Affiliate of such obligor upon the Securities or
any Person who has given or concurred in any such amendment,
request, demand, authorization, direction, notice, consent or
waiver under the direction of, by agreement with, or as a
condition or in consideration of any exchange offer by or
transfer of such Person's Securities to the Company, an Affiliate
of the Company, any other obligor, any Affiliate of such obligor
or any such Person, shall be disregarded and deemed not to be
Outstanding for the purpose of any such determination, except
that, for the purposes of determining whether the Trustee shall
be protected in relying on any such amendment, request, demand,
authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee that neither the Company nor
any such other obligor, Affiliate or Person is affiliated with
the pledgee or any Affiliate of the pledgee and that the pledgee
has the present right (subject to no contrary obligation or
understanding) so to act with respect to the Securities on the
basis of its best interests as a Holder independently of any
direction by or interest of the Company. In case of a dispute as
to such right, the Trustee in good faith shall be entitled to
rely upon the advice of counsel, including counsel for the
Company. Upon request of the Trustee, the Company shall promptly
furnish to the Trustee a certificate of a Certifying Officer
listing and identifying all Securities, if any, known by the
Company to be owned or held by or for the account of any of the
above-described Persons; and subject to Sections 7.1 and 7.2
herein, the Trustee shall be entitled to accept such certificate
as conclusive evidence of the facts therein set forth and of the
fact that all Securities not listed therein are Outstanding for
the purpose of any such determination. The Company shall not,
directly or indirectly, pay or cause to be paid any remuneration,
whether by way of supplemental or additional interest, fee or
otherwise, or grant any additional security, to any Holder of
Securities as consideration for or as an inducement to giving or
concurring in any amendment, request, demand, authorization,
direction, notice, consent or waiver under this Indenture or any
other Operative Document unless such remuneration is concurrently
paid, or such security is concurrently granted, as the case may
be, on the same terms ratably to the Holders of all Securities
then Outstanding (regardless of whether any such Holder has given
or concurred in such amendment, request, demand,
<PAGE>
9
authorization, direction, notice, consent or waiver under this
Indenture or any other Operative Document).
For purposes of this Section and without limiting the
generality of the foregoing, Securities which are subject to a
binding contract or irrevocable tender offer (including an offer
which is in any way conditioned upon or simultaneous with, or
requires as a condition precedent (whether by contract or
otherwise) or which cannot be effected without, the agreement or
consent of the transferor to any amendment, request, demand,
authorization, direction, notice, consent or waiver hereunder)
pursuant to which ownership (direct or indirect) is to be
transferred (including for example, Securities tendered to the
Company or any other Person in an exchange transaction) shall be
deemed owned by such transferee, and therefore, any such
simultaneous agreement or consent by the transferor shall be
invalid.
Section 2.9 Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare, and, upon written order of the Company, the
Trustee shall authenticate, temporary Securities in any
authorized denominations. Temporary Securities shall be
substantially in the form of definitive Securities of the same
series but may have variations that the Company reasonably
considers appropriate and necessary for temporary Securities.
Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate and deliver definitive Securities in
exchange for temporary Securities. Until so exchanged, the
temporary Securities shall be entitled to the same benefits under
this Indenture as definitive Securities of the same series.
Section 2.10 Cancellation.
The Company may at any time deliver Securities to the
Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them
for transfer, exchange (including without limitation, Initial
Securities exchanged for Exchange Securities, Private Exchange
Securities or both), repurchase or payment. All Securities
purchased pursuant to any Offer to Purchase shall be canceled.
The Trustee and no one else shall cancel all Securities
surrendered for transfer, exchange, repurchase or cancellation.
The Company may not issue new Securities to replace Securities it
has paid (upon Tender or otherwise) or which have been delivered
to the Trustee for cancellation. The Trustee shall destroy all
canceled Securities and, if requested, deliver a certificate of
such destruction to the Company. If the Company shall acquire any
of the Securities, such acquisition shall not operate as a
satisfaction of the indebtedness represented by such Securities
unless and until the same are delivered to the Trustee for
cancellation.
Section 2.11 Defaulted Interest; Interest on Defaulted
Principal.
If the Company defaults in a payment of interest on, or
Special Interest, if any, with respect to, the Securities, it
shall pay the defaulted interest or Special Interest, as the case
may be, plus interest on such defaulted interest or Special
Interest, at the rate then borne by the Securities to the extent
permitted by law and the terms thereof, to the persons who are
Securityholders on a subsequent Special Record Date. The Company
shall fix the Special Record Date and payment
<PAGE>
10
date. At least fifteen (15) days before the Special Record Date,
the Company shall mail to each Securityholder a notice that
states the Special Record Date, the payment date and the amount
of defaulted interest or Special Interest, as the case may be, to
be paid. If the Company defaults in the payment of principal on
the Securities (whether on acceleration, at maturity, upon tender
for repurchase, or otherwise), it shall pay interest on such
defaulted principal at the rate then borne by the Securities to
the Trustee upon demand. The Trustee shall apply any such payment
in accordance with the provisions of Section 6.10.
Section 2.12 CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP"
numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption and may use such
numbers in other notices to Holders regarding the Securities, in
each case as a convenience to Holders; provided, however, that
any such notice may state that no representation is made as to
the correctness of such numbers either as printed on the
Securities or as contained in any such notice and that reliance
may be placed only on the other identification numbers printed on
the Securities, and any such redemption or other notice shall not
be affected by any defect in or omission of such numbers.
ARTICLE 3.
REDEMPTIONS
Section 3.1 No Optional Redemption.
The Securities Outstanding shall not at any time be subject
to redemption in whole or in part at the option of the Company.
Section 3.2 Mandatory Redemption.
Subject to the other provisions of this Section 3.2, the
Company shall, until all the Securities are paid or payment
thereof has been provided for, deposit in accordance with Section
3.6, at least one Business Day prior to June 15 in each year,
commencing June 15, 2001 (each such date being hereinafter
referred to as a "Mandatory Redemption Date"), an amount in cash
sufficient to redeem an aggregate principal amount of Securities
(the "Mandatory Redemption Amount") equal to $920,000 on each of
June 15, 2001 and June 15, 2002 (or, if the aggregate principal
amount of Securities Outstanding on any such Mandatory Redemption
Date is less than the principal amount required to so be
redeemed, then all the Outstanding Securities shall be redeemed
on such date), at a redemption price (expressed as a percentage
of principal amount of 100% plus accrued and unpaid interest and
Special Interest, if any, to the Mandatory Redemption Date
(subject to the right of holders of record on the relevant record
date to receive interest and Special Interest, if any, due on the
relevant Interest Payment Date). Each such deposit shall be
applied to the redemption of Securities on such Mandatory
Redemption Date as herein provided. The Trustee shall, on or
before the thirtieth day prior to such Mandatory Redemption Date
(but not sooner than 45 days before such date), select, in the
manner provided
<PAGE>
11
in Section 3.3, the Securities to be redeemed on the next
Mandatory Redemption Date and cause notice of the redemption
thereof to be given in the name and at the expense of the Company
in the manner provided in Section 3.4. Such notice having been
duly given, the redemption of such Securities shall be made upon
the terms and in the manner set forth in Sections 3.5 and 3.7.
At its option the Company may at any time reduce its
obligation to pay any Mandatory Redemption Amount in cash by
delivering to the Trustee at least 45 days before the related
Mandatory Redemption Date (i) Securities which have been acquired
by the Company in open market purchases (and, for avoidance of
doubt, not acquired by way of any redemption or Offer to Purchase
hereunder) and have not been called for redemption under any
provision of this Indenture, together with (ii) an Officers'
Certificate directing the Trustee to cancel the Securities and
stating the election of the Company to have credited against such
Mandatory Redemption Amount on such Mandatory Redemption Date a
specified principal amount of Securities so delivered. Each such
Officers' Certificate shall state that the Securities forming the
basis of such credit do not include any Securities theretofore
credited against any Mandatory Redemption Amount pursuant to this
Section 3.2. All Securities made the basis of a credit against a
Mandatory Redemption Amount shall be credited at 100% of their
principal amount. Although the Company may obtain credit against
any Mandatory Redemption Amount in advance of the related
Mandatory Redemption Date as provided herein, any such credit
shall be applied against such Mandatory Redemption Amounts in the
order in which they become due.
In case of the failure of the Company to deliver such
Officers' Certificate, the Mandatory Redemption Amount due on
such Mandatory Redemption Date shall be paid entirely in cash
without the option to reduce the Company's obligation to make
such payment as specified in this Section 3.2.
The obligations of the Company under this Section 3.2 shall
be automatically terminated in the event that the Aircraft is
sold in accordance with Section 4.12(c) or is the subject of a
Total Loss, provided, that in each case, the Company has complied
in full with the applicable provisions of Section 4.12 with
respect to such sale or Total Loss, as the case may be. The
effective date of any such termination shall be the Payment Date
with respect to the related Offer to Purchase (so long as the
Company does not default in the payment of the purchase price
with respect to such Offer to Purchase); provided, however, that
such termination shall not apply to any Mandatory Redemption
Amount for which a notice of redemption has been given under this
Section 3.2 on or prior to such effective date.
On or after any Mandatory Redemption Date and upon Request
(and so long as no Event of Default has occurred and is
continuing), the Trustee shall promptly return to the Company any
funds it is holding under this Section 3.2 in excess of the
Mandatory Redemption Amount (as reduced pursuant to the
provisions of this Section 3.2) related to such Mandatory
Redemption Date and shall promptly authenticate and mail to the
Company a new Security or Securities in an aggregate principal
amount equal to that portion (if any) of the Securities delivered
to the Trustee and not used by the Company as a credit under this
Section 3.2 (provided, however, that the Company has previously
delivered to the Trustee sufficient executed Securities to enable
the Trustee to so authenticate such Securities).
<PAGE>
12
Section 3.3 Selection of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the
Trustee shall select the Securities to be redeemed on either a
pro rata basis or by lot. The Trustee shall make the selection
from Securities outstanding not previously called for redemption.
The Trustee may select for redemption portions of the principal
of Securities that have denominations larger than $1,000.
Securities and portions of them it selects shall be in amounts of
$1,000 or whole multiples of $1,000. Provisions of this Indenture
that apply to Securities called for redemption also apply to
portions of Securities called for redemption.
Section 3.4 Notice of Redemption.
The notice of redemption shall be mailed by first-class mail
to each Holder whose Securities are to be redeemed.
The notice shall identify the Securities and the principal
amount thereof to be redeemed and shall state:
(a) the principal amount of each Security held by each
such Holder to be redeemed;
(b) the redemption date;
(c) the redemption price (including the amount of
accrued and unpaid interest and Special Interest, if any, to
be paid on the Securities called for redemption);
(d) if any Security is being redeemed in part, the
portion of the principal amount of such Security to be
redeemed and that, after the redemption date, upon surrender
of such Security, a new Security or Securities in principal
amount equal to the unredeemed portion will be issued;
(e) the name and address of the Paying Agent;
(f) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption
price;
(g) that, unless the Company defaults in making the
redemption payment, interest on the Securities to be
redeemed ceases to accrue on and after the redemption date
and the only remaining right of the Holders of such
Securities is to receive payment of the redemption price
upon surrender to the Paying Agent of the Securities.
The Trustee shall act as the Paying Agent for purposes of
this Article 3.
Section 3.5 Effect of Notice of Redemption.
Once a notice of redemption is mailed, Securities called for
redemption become due and payable on the redemption date at the
redemption price and, on and after such date (unless the
<PAGE>
13
Company shall default in the payment of the redemption price),
such Securities shall cease to bear interest. Upon surrender to
the Paying Agent, such Securities shall be paid at the redemption
price plus accrued interest and Special Interest, if any, to the
redemption date.
Section 3.6 Deposit of Redemption Price.
On or before 10:00 a.m., Eastern Time, on any redemption
date, the Company shall deposit with the Paying Agent money in
funds immediately available on such redemption date sufficient to
pay the redemption price of and accrued interest on and Special
Interest, if any, with respect to, all Securities to be redeemed
on that date.
Section 3.7 Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the
Trustee shall authenticate for the Holder a new Security equal in
principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE 4.
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 4.1 Payment of Securities.
The Company shall pay the principal of, interest on and
Special Interest, if any, with respect to, the Securities on the
dates and in the manner provided in this Indenture and in the
Securities.
The Company shall pay interest semi-annually in arrears on
each Interest Payment Date, commencing December 15, 1998.
Interest shall be paid on each Interest Payment Date in an amount
equal to the interest accrued for the period beginning from the
Issue Date, or from the most recent date to which interest and
Special Interest, if any, have been paid. All interest and
Special Interest, if any, due and payable on the Securities shall
be paid in cash, except that the Company may at its option, make
such Payments by check mailed to the address of the Person
entitled thereto as it appears in the Register; provided,
however, that such Payments on a certificated Security will be
made by wire transfer to a U.S. dollar account maintained by a
Holder with a bank in New York City if such Holder owns at least
$250,000 in aggregate principal amount of certificated Securities
and elects payment by wire transfer by giving written notice to
the Company and the Trustee to such effect designating such
account no later than 10 days immediately preceding the relevant
due date for payment (or such other date as the Company and the
Trustee may accept in their discretion).
An installment of principal, interest or Special Interest,
if any, shall be considered paid on the date due if the Trustee
or Paying Agent (other than the Company or any Affiliate thereof)
holds on that date Payments designated for and sufficient to pay
such installment and the Trustee
<PAGE>
14
or Paying Agent is not prohibited from Paying such Payments to
the Holders of the Securities pursuant to this Indenture.
The Company shall pay interest and Special Interest, if any,
at the rate set forth in this Indenture and the Securities, and
the Company shall pay interest on unpaid interest or Special
Interest, if any, at the same rate to the extent legally
permitted.
Section 4.2 Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The
City of New York, an office or agency where Securities may be
surrendered for registration of transfer or exchange or for
presentation for payment or repurchase and where notices and
demands to or upon the Company in respect of the Securities and
this Indenture may be served. At the request of the Company, said
office or agency may be the office of an agent appointed by the
Trustee for such purpose. The Company shall give prompt written
notice to the Trustee of the location, and any change in the
location, of such office or agency not designated or appointed by
the Trustee. If at any time the Company shall fail to maintain
any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust
Office.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented
or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough
of Manhattan, The City of New York, for such purposes. The
Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location
of any such other office or agency.
Section 4.3 Limitation on Dividends and Acquisition of
Common Stock.
The Company will not declare or pay any dividend or make any
distribution on its Common Stock, Employee Preferred Stock or
other Capital Stock of the Company (other than dividends or
distributions payable in the Company's Common Stock or Employee
Preferred Stock or options, warrants or other rights to acquire,
subscribe for or purchase the Company's Common Stock or Employee
Preferred Stock) and will not, and will not permit any of its
Subsidiaries to, purchase, redeem or otherwise acquire for value
any shares of its Common Stock, Employee Preferred Stock or other
Capital Stock of the Company, whether in cash or Property or in
obligations of the Company, if, at the time of such declaration,
payment, distribution, purchase, redemption or other acquisition
or, after giving effect thereto, a Default or Event of Default
shall have occurred and be continuing; provided, that
notwithstanding anything to the contrary written above, this
Section 4.3 shall not apply to: (a) any purchase or redemption of
Common Stock or Preferred Stock by the Company or an employee
stock ownership or benefit plan (i) from union employees or
former union employees, or their respective transferees, pursuant
to the terms of agreements with labor unions existing on the date
hereof; (ii) from recipients or their transferees of such stock
from employee stock ownership or benefit plans subject to ERISA;
(iii) from employee stock ownership or benefit plans subject to
ERISA in
<PAGE>
15
order to provide cash benefits to employees pursuant to the terms
of such plans; and (iv) as required by ERISA; (b) any purchase or
redemption of Common Stock or Preferred Stock by an employee
stock ownership or benefit plan subject to ERISA for an aggregate
consideration, without regard to purchases or redemptions
pursuant to clause (a) above, of up to $200,000,000; (c) the
payment of fixed or mandatory dividends on or scheduled
redemptions or exchanges of any of the Company's 8% Preferred
Stock and 9 1/4% Preferred Stock and the payment of any interest
on the securities issuable upon such exchange; (d) the payment of
any dividends on or the purchase, redemption or other acquisition
or retirement of the Common Stock or Preferred Stock of the
Company within sixty (60) days after the date of declaration of
such dividend or the commitment to make such purchase, redemption
or other acquisition or retirement, if at said date of
declaration or commitment such payment or commitment complied
with this Section 4.3; (e) the purchase, redemption, retirement
or other acquisition of any shares of the Company's Common Stock
or Preferred Stock in exchange for, or out of the proceeds of the
substantially concurrent sale of, Common Stock or Preferred Stock
of the Company; (f) any consolidation or merger with or into any
Person or conveyance or transfer of all or substantially all of
the Company's Property to one or more Persons substantially as an
entirety, not prohibited by the terms of Section 5.1; and (g) the
conversion of Employee Preferred Stock into Common Stock.
Section 4.4 Corporate Existence.
(a) Except as otherwise provided in Article 5, the Company
shall do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and the
corporate existence of each of its Subsidiaries engaged in
substantial business activity each in accordance with the
respective organizational documents of the Company and each such
Subsidiary and the rights (charter and statutory), licenses,
permits, approvals and governmental franchises of the Company and
each such Subsidiary necessary to the conduct of its respective
business; provided, however, that the Company shall not be
required to preserve any such right, license or franchise, or to
preserve the corporate existence of any such Subsidiary, if the
Board of Directors shall determine that the preservation thereof
is no longer in the interest of the Company and that termination
of the corporate existence is not disadvantageous to the Holders
in any material respect.
(b) The Company shall continue to be an air carrier
certificated under Section 604(b) of the Federal Aviation Act.
(c) The Company is and, to the extent required to operate
its business as presently conducted and to perform its
obligations under this Indenture and the Operative Documents,
shall remain a "citizen of the United States" as defined in
Section 101(16) of the Federal Aviation Act.
Section 4.5 Payment of Taxes and Other Claims.
The Company shall, and shall cause each of its Subsidiaries
to, pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company and each
Subsidiary or upon the income, profits or Property of the Company
and each Subsidiary or upon the Collateral and (b) all lawful
claims for labor, materials and supplies which, if unpaid, might
by law become a
<PAGE>
16
Lien upon the Collateral or the other Property of the Company or
a Subsidiary; provided, however, that the Company or a
Subsidiary, as the case may be, shall not be required to pay or
discharge or cause to be paid or discharged any such tax,
assessment, charge or claim (i) the amount, applicability or
validity of which is being contested in good faith by appropriate
proceedings as permitted by and in accordance with the provisions
of the Operative Documents, to the extent applicable, and for
which adequate reserves have been established in accordance with
GAAP, as in effect from time to time, or (ii) if the Company
delivers to the Trustee a Certificate of an Officer stating that
such non-payment and non-discharge is in the interest of the
Company and not prejudicial in any material respect to the
Holders.
Nothing contained herein or in the Securities shall be
deemed to impose on the Trustee or on the Company any obligation
to pay on behalf of the Holder of any Securities any tax,
assessment or governmental charge required by any present or
future law of the U.S. or of any state, county, municipality or
other taxing authority thereof to be paid on behalf of, or
withheld from the amount payable to, the Holder of any
Securities; rather any tax, assessment or governmental charge
shall, to the extent required by law, be withheld from the
amounts provided for herein.
Section 4.6 Notices.
The Company shall notify the Trustee in writing of any of
the following promptly (and in any event within five (5) Business
Days after an Officer learns of the occurrence thereof)
describing the same and, if applicable, the steps being taken by
the Person(s) affected with respect thereto:
(a) In the event that any Indebtedness of the Company or any
Significant Subsidiary of the Company in a principal amount in
excess of $10,000,000 (i) is declared due and payable before its
stated maturity because of the occurrence of any default (or any
event which, with notice or the lapse of time, or both, shall
constitute such default) under such Indebtedness or (ii) is not
paid at its stated maturity; or
(b) Any litigation, arbitration proceeding or governmental
proceeding involving damages or potential liability in excess of
$10,000,000 is instituted against the Company or any of its
Subsidiaries which, if adversely determined, would have a
material adverse effect on the business, operations or financial
condition of the Company and its Subsidiaries taken as a whole.
Section 4.7 Maintenance of Properties and Insurance.
Except as otherwise provided in this Indenture, the Company
shall, and shall cause each of its Subsidiaries to, cause all
Collateral and other Properties owned by or leased to it and used
or useful in the conduct of the business of the Company or any
such Subsidiary, as the case may be, to be maintained and kept in
good repair, working order and condition, except for reasonable
wear and use, and supplied with all necessary equipment and shall
cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of
the Company may be necessary, so that the business carried on in
connection therewith may be properly and advantageously conducted
at all times, except, in every case, as and to the extent
<PAGE>
17
that the Company or any such Subsidiary may be prevented by fire,
strikes, lockouts, acts of God, inability to obtain labor or
materials, governmental restrictions, enemy action, civil
commotion or unavoidable casualty or similar causes beyond the
control of the Company or such Subsidiary; provided, however,
that subject to all requirements of the Operative Documents,
nothing in this Section 4.7 shall prevent the Company or any such
Subsidiary from discontinuing the use, operation or maintenance
of any such Properties, or disposing of any of them, if such
discontinuance or disposal is, in the good faith judgment of an
Officer of the Company (or other agent employed by the Company)
having managerial responsibility for any such Property (or, in
the case of any materially important item, with respect to
operations or value, in the good faith judgment of the Company as
expressed in a resolution of the Board of Directors), desirable
in the conduct of the Company's business or that of its
Subsidiaries.
For so long as any Collateral or Property is deemed to be
useful to the conduct of the business of the Company or its
Subsidiaries, the Company shall, or shall cause such Subsidiaries
to, maintain appropriate insurance, in accordance with industry
practice, on such Collateral and Properties and as required under
the provisions of the applicable Operative Documents.
Notwithstanding the provisions of this Section 4.7, to the
extent there exists any inconsistency between the provisions
hereof and the provisions of the Mortgage relating to Property
which constitutes Collateral, the provisions of the Mortgage
shall prevail as to all Collateral.
Section 4.8 Default Notices and Compliance Certificates.
Contemporaneously with furnishing quarterly financial
reports to the Trustee under Section 4.9(a) or mailing quarterly
statements to the Trustee and Holders under Section 4.9(c), the
Company shall furnish to the Trustee a Certifying Officer's
Certificate to the effect that no Default or Event of Default has
occurred or is continuing, or, if there is any such Default or
Event of Default, describing it and the steps, if any, being
taken to cure it.
The Company shall deliver to the Trustee within one hundred
twenty (120) days after the end of each fiscal year in which any
of the Securities remain Outstanding a certificate of the
principal executive officer, principal financial officer or
principal accounting officer of the Company (which need not
comply with the provisions of Section 11.5) stating whether or
not, to the knowledge of the signer after due inquiry, the
Company is in compliance with all conditions and covenants under
this Indenture and the Operative Documents (determined without
regard to any period of grace or requirement of notice), and if
the Company is not in compliance with all such conditions and
covenants, describing each Default or Event of Default and its
status. The first certificate to be delivered by the Company
pursuant to this Section 4.8 shall be for the fiscal year ending
December 31, 1998.
Section 4.9 SEC Reports.
(a) The Company shall deliver to the Trustee as soon as
practicable after it files them with the SEC, copies of the
annual reports and of the information, documents, and other
reports (or copies of such portions of any of the foregoing as
the SEC may by rules and regulations
<PAGE>
18
prescribe) which the Company is required to file with the SEC
pursuant to Sections 13 or 15(d) of the Exchange Act. The Company
also shall comply with the other provisions of TIA ss. 314(a).
(b) So long as any of the Securities remain Outstanding, the
Company shall cause its annual report to stockholders and any
quarterly or other financial reports furnished by it to
stockholders generally, to be mailed to the Holders of such
Outstanding Securities at their addresses appearing in the
Register.
(c) At any time the Company does not have a class of
securities registered, or is not otherwise required to file
quarterly and other reports under the Exchange Act, the Company
will prepare or cause to be prepared, for each of the first three
(3) quarters of each fiscal year, an unaudited balance sheet of
the Company and its consolidated Subsidiaries as at the end of
such quarter and related unaudited consolidated statements of
income and retained earnings and cash flow of the Company and its
consolidated Subsidiaries for such quarter and the portion of the
fiscal year through such date, setting forth in each case in
comparative form the figures for the corresponding year-to-date
period in the previous year, certified by the principal financial
officer of the Company, and for each fiscal year, an audited
balance sheet of the Company and its consolidated Subsidiaries as
at the end of such year and related audited consolidated
statements of income and retained earnings and cash flow of the
Company and its consolidated Subsidiaries for such year, setting
forth in comparative form the figures for the previous year,
reported on without a qualification arising out of the scope of
the audit, by the Company's independent public accountants. All
financial statements will be prepared by a nationally recognized
auditing firm and will be prepared in accordance with generally
accepted accounting principles, as in effect from time to time,
consistently applied, except for changes with which the Company's
independent public accountants concur and except that quarterly
statements may be subject to year-end adjustments. The Company
will cause a copy of the respective financial statements to be
mailed to the Trustee and each of the Holders of the Securities
within forty-five (45) days after the close of each of the first
three (3) quarters of each fiscal year and within one hundred
twenty (120) days after the close of each fiscal year, to the
addresses set forth in Section 11.2 or, in the case of each of
the Holders, to such Holder's address as set forth in the
Register of the Securities.
Section 4.10 Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim, and will resist any and all efforts to
be compelled to take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit
or forgive the Company from paying all or any portion of the
principal of, interest on, or Special Interest, if any, with
respect to, the Securities as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture and the
Operative Documents; and (to the extent that it may lawfully do
so) the Company hereby expressly waives all benefit or advantage
of any such law, and covenants that it will not hinder, delay or
impede the execution of any power granted to the Trustee herein
and in the Operative Documents, but will suffer and permit the
execution of every such power as though no such law had been
enacted.
<PAGE>
19
Section 4.11 Amendment to Certain Agreements.
The Company shall not enter into or consent to any
amendment, supplement or other modification of the Operative
Documents except as permitted under Article 9 hereof.
Section 4.12 Title to Collateral and Limitation on Liens;
Sale of Aircraft; Total Loss With Respect to Aircraft.
(a) The Company represents and warrants that it has, and
covenants that it shall continue to have, full power and lawful
authority to grant, release, convey, assign, transfer, mortgage,
pledge, hypothecate and otherwise create the security interests
in the Collateral referred to in Article 10; the Company shall
warrant, preserve and defend the interest and title of the
Trustee to the Collateral, against the claims of all persons and
will maintain and preserve the security interests contemplated by
Article 10; and the Company shall not, and not permit any of its
Subsidiaries to, directly or indirectly, incur, assume or suffer
to exist any Lien of any nature whatsoever upon or with respect
to the Collateral, other than Permitted Liens. The Company shall
cause the Operative Documents, including all necessary financing
statements, notifications of secured transactions and other
assurances or instruments to be properly recorded, registered and
filed and to be kept, recorded, registered and filed in such
manner and in such places as may be required by law and shall
take all such other actions as may be required in order to make
effective the security interests intended to be created in
connection with this Indenture. The Company shall furnish to the
Trustee the Opinions of Counsel required by Section 10.2 to
confirm such action.
(b) The Company shall not, directly or indirectly,
consummate any sale, lease, transfer or other disposition of any
Collateral except as permitted in paragraph (c) of this Section
4.12 or in the other Operative Documents.
(c) (i) The Company may, at any time after the earlier to
occur of the conversion of the Equity Notes into Common Stock
or such other securities, cash or other Property, in each
case, as provided in and in accordance with Article 13 of the
Equity Notes Indenture or the payment in full of the Equity
Notes, sell the Aircraft upon compliance with the following
requirements:
(A) the Company shall (subject to the provisions of
Section 4.12(e)) have commenced an Offer to Purchase
Securities in an aggregate principal amount (the "Sale OTP
Amount") equal to the aggregate principal amount of the
Securities Outstanding on the date of the commencement of
such Offer to Purchase, at a purchase price (expressed as a
percentage of principal amount of Securities to be
purchased) equal to (1) 102%, if such Offer to Purchase is
commenced prior to the first anniversary of the Issue Date,
or (2) 101%, if such Offer to Purchase is commenced on or
after the first anniversary of the Issue Date, plus, in
either case, accrued and unpaid interest and Special
Interest, if any, on such Securities to and including the
Payment Date;
<PAGE>
20
(B) the Company shall have given the Trustee prior
notice of the pending sale of the Aircraft (which notice
shall be given by the Company at least 15 days prior to the
date of commencement of the Offer to Purchase);
(C) the Company shall have deposited with the Trustee
an amount in cash equal to the purchase price with respect
to the Offer to Purchase for the Aircraft on or prior to the
date of sale of the Aircraft (which cash amount shall remain
on deposit with the Trustee until the payment of the
purchase price on the applicable Payment Date with respect
to such Offer to Purchase); and
(D) no Event of Default shall have occurred and be
continuing or would result from the sale of the Aircraft.
(ii) Effective as of the day immediately following the
Payment Date with respect to the Offer to Purchase in
connection with a sale of the Aircraft, the interest rate
borne by the Securities then Outstanding shall be
automatically, without any further act or deed, increased by
1.50% per annum. Any such increase shall be in addition to
Special Interest, if any, then accruing with respect to such
Security which Special Interest shall continue to accrue in
accordance with the provisions of such Security.
(iii) Upon Request by the Company, payment by the Company of
the Trustee's costs (including reasonable legal fees and
disbursements) incurred in complying with such Request and
satisfaction of the requirements of Section 4.12(c)(i), the
Trustee shall release from the Lien of the Operative
Documents, all right, title and interest of the Trustee in and
to the Collateral and shall (so long as no Event of Default
then exists) promptly after the Payment Date with respect to
any Offer to Purchase made in connection with such sale,
return to the Company any cash held in excess of the purchase
price of the Securities tendered for purchase in connection
with such Offer to Purchase. The Trustee may enter into any
arrangements (including, without limitation, escrow
arrangements) as it shall deem necessary or desirable to
accomplish the intents and purposes of this Section 4.12(c).
(d) In the event that there shall occur a Total Loss with
respect to the Aircraft, the Company shall (subject to the
provisions of Section 4.12(e)) make an Offer to Purchase an
aggregate principal amount of Outstanding Securities (the
"Total Loss OTP Amount") equal to the aggregate principal
amount of the Securities Outstanding on the date such Offer to
Purchase is required to be commenced hereunder, at a purchase
price equal to 100% of the aggregate principal amount of
Securities to be purchased, plus accrued and unpaid interest
and Special Interest, if any, on such Securities, to and
including the Payment Date. The Company shall commence such
Offer to Purchase within thirty (30) days after the Total Loss
Date with respect to any such Total Loss. Upon Request by the
Company and payment by the Company of the purchase price with
respect to such Offer to Purchase and the Trustee's costs
(including reasonable legal fees and disbursements) incurred
in complying with such Request, the Trustee shall release from
the Lien of the Operative Documents, all right, title and
interest of the Trustee in and to the Collateral.
<PAGE>
21
(e) At its option the Company may reduce in whole or in part
its obligation to pay the Sale OTP Amount or Total Loss OTP
Amount in cash by delivering to the Trustee at least 15 days
before the date the related Offer to Purchase is or would be
required to be commenced under Section 4.12(c) or Section
4.12(d), as the case may be, (i) Securities which have been
acquired by the Company in open market purchases (and, for
avoidance of doubt, not acquired by way of any redemption or
Offer to Purchase hereunder) and have not been called for
redemption under any provision of this Indenture, together
with (ii) an Officers' Certificate directing the Trustee to
cancel such Securities and stating the election of the Company
to have credited against such Sale OTP Amount or Total Loss
OTP Amount, as the case may be, a specified principal amount
of Securities so delivered. All Securities made the basis of a
credit against a Sale OTP Amount or Total Loss OTP Amount
shall be credited at 100% of their principal amount. In case
of the failure of the Company to deliver such Officers'
Certificate, the Sale OTP Amount or Total Loss OTP Amount, as
the case may be, due on the Payment Date therefor shall be
paid entirely in cash without the option to reduce the
Company's obligation to make such payment as specified in this
Section 4.12(e). The Trustee shall promptly authenticate and
mail to the Company a new Security or Securities in an
aggregate principal amount equal to that portion (if any) of
the Securities delivered to the Trustee and not used by the
Company as a credit under this Section 4.12(e) (provided, that
the Company has previously delivered to the Trustee sufficient
executed Securities to enable the Trustee to so authenticate
such Securities).
Section 4.13 Books, Records, Access; Confidentiality.
(a) The Company shall, and shall cause each of its
Subsidiaries to, (i) maintain complete and accurate books and
records in which full and correct entries in conformity with GAAP
shall be made of all dealings and transactions in relation to its
respective business and activities, and (ii) permit authorized
representatives of the Trustee to visit and inspect the
Properties of the Company or its Subsidiaries, and any or all
books, records and documents in the possession of the Company
relating to the Collateral, including the records, logs and other
materials referred to in Section 2.1(c) of the Mortgage, and to
make copies and take extracts therefrom and to visit and inspect
the Collateral, all upon reasonable notice and at such reasonable
times during normal business hours and as often as may be
reasonably requested.
(b) The Trustee and its authorized representatives referred
to in clause (a) above agree not to use any information obtained
pursuant to this Section 4.13 for any purpose other than as
required in order to discharge their respective duties hereunder
and under the Operative Documents and except as otherwise
required for such purpose to keep confidential and not to
disclose any such information to any person except that (i) the
recipient of the information may disclose any information which
becomes publicly available other than as a result of disclosure
by such recipient, (ii) the recipient of the information may
disclose any information which its counsel reasonably concludes
is necessary to be disclosed by law or legal process, pursuant to
any court or administrative order or ruling or in any pending
legal or administrative proceeding or investigation after notice
to the Company adequate, subject to applicable laws, to allow the
Company to obtain a protective order or other appropriate remedy,
provided that the recipient of the information will (if not
otherwise required in order to discharge its duties as aforesaid)
<PAGE>
22
cooperate at the Company's expense with the Company's efforts to
obtain a protective order or other reliable assurance that
confidential treatment will be accorded any such information
required to be so disclosed, and (iii) the recipient of the
information may disclose any information necessary to be
disclosed pursuant to any provision of the TIA.
Section 4.14 Security Interests.
The Company and its Subsidiaries shall perform any and all
acts and execute any and all documents (including, without
limitation, the execution, amendment or supplementation of any
financing statement and continuation statement or other
statement) for filing under the provisions of the Federal
Aviation Act and the applicable Uniform Commercial Code and the
rules and regulations thereunder or any other statute, rule or
regulation of any applicable federal, state or local
jurisdiction, which are necessary or advisable, from time to
time, in order to grant and maintain in favor of the Trustee for
the benefit of the Holders a valid, perfected Lien on the
Collateral.
The Company and its Subsidiaries shall deliver or cause to
be delivered to the Trustee from time to time such other
documentation, consents, authorizations, approvals and orders in
form and substance satisfactory to the Trustee as it shall deem
reasonably necessary or advisable to perfect or maintain the
Liens for the benefit of the Holders.
Section 4.15 Repurchase of Securities Upon a Change in
Control.
(a) In the event that there shall occur a Change in Control,
the Company shall make an Offer to Purchase all of the
Outstanding Securities, at a purchase price equal to 101% of the
aggregate principal amount of the Securities Outstanding, plus
accrued and unpaid interest and Special Interest, if any, to and
including the repurchase date. The right to require such
repurchase of Securities shall not continue after a discharge of
the Company from its obligations with respect to the Securities
in accordance with Article 8.
(b) The Company shall commence such Offer to Purchase within
thirty (30) days after the occurrence of a Change in Control.
Section 4.16 Restrictions on Becoming an Investment Company.
The Company shall not become an investment company within
the meaning of the Investment Company Act of 1940 as such statute
and the regulations thereunder and any successor statute or
regulations thereto may from time to time be in effect.
Section 4.17 Listing.
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, in
either case, filed under (and as defined in) the Registration
Rights Agreement, the Company shall use its reasonable best
efforts to cause the Exchange Securities and the Private Exchange
Securities to be listed on the American Stock Exchange, or such
other stock exchange or market
<PAGE>
23
as the Common Stock of the Company is then principally traded,
provided, that such Securities meet the minimum requirements for
listing on any such exchange or market, and, if applicable, to
use its reasonable best efforts to maintain such listing for so
long as any of the Exchange Securities or Private Exchange
Securities are Outstanding.
ARTICLE 5.
SUCCESSOR CORPORATION
Section 5.1 Covenant Not to Consolidate, Merge, Convey or
Transfer Except Under Certain Conditions.
The Company shall not consolidate with, or merge with or
into, or convey or transfer (excluding by way of lease) all or
substantially all of its Properties (as determined at the time of
such transfer without regard to any prior conveyance or transfer
or series of conveyances or transfers made on unrelated
transactions) to any other Person, or permit any Person to
convey, lease or transfer all or substantially all of its
Properties to the Company, unless:
(a) The Company shall be the continuing Person or the Person
(if other than the Company) formed by such consolidation or into
which the Company is merged or to which all or substantially all
of the Properties of the Company are conveyed or transferred (the
"surviving Person"): (i) shall be a corporation organized and
existing under the laws of the United States of America or any
state thereof or the District of Columbia; (ii) shall expressly
assume prior to or simultaneously with the consummation of such
transaction, by an indenture and other agreements supplemental
hereto and to the Operative Documents, executed and delivered to
the Trustee in form reasonably satisfactory to the Trustee, the
due and punctual payment of the principal of, interest on and
Special Interest, if any, with respect to, all the Securities and
the observance and performance of every covenant, condition and
obligation of this Indenture, the Securities and the Operative
Documents on the part of the Company to be observed or performed;
(b) Immediately before and immediately after giving effect
to such transaction, no Default or Event of Default shall have
occurred and be continuing hereunder;
(c) In the case of any such conveyance or transfer, such
conveyance or transfer includes, without limitation, all of the
Collateral and in any event such consolidation, merger,
conveyance or transfer shall be on such terms as shall fully
preserve the Lien and security of each of the Operative
Documents, the priority thereof purported to be established
thereby and the rights and powers of the Trustee and the Holders
of the Securities under each of the Operative Documents; and
(d) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that (i) such
merger, consolidation, transfer, conveyance, or acquisition of
assets and such supplemental indenture (if any) comply with the
terms of this Indenture, (ii) this Indenture and the Securities
constitute the valid and legally binding obligations of the
<PAGE>
24
surviving Person, and (iii) this Indenture and the other
Operative Documents are enforceable against the surviving Person
in accordance with their terms.
Section 5.2 Successor Person Substituted.
Upon any consolidation or merger, or any conveyance or
transfer (excluding by way of lease) of all or substantially all
of the Properties of the Company in accordance with Section 5.1,
the surviving entity formed by such consolidation or into which
the Company is merged or the surviving entity to which such
conveyance or transfer is made shall succeed to, and be
substituted for, and be bound by and obligated to pay the
obligations of, and may exercise every right and power of, the
Company under this Indenture, the Securities and the Operative
Documents with the same effect as if such successor had been
named as the Company herein and therein, but the predecessor
Company in the event of any such conveyance or transfer shall not
be released from the obligation to pay the principal of, interest
on and Special Interest, if any, with respect to the Securities.
Such surviving entity may cause to be signed, and may issue
either in its own name or in the name of the Company prior to
such succession any or all of the Securities issuable hereunder
which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such surviving
entity, instead of the Company, and subject to all the terms,
conditions and limitations in this Indenture prescribed, the
Trustee shall authenticate and shall deliver any Securities which
previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication, and any
Securities which such surviving entity thereafter shall cause to
be signed and delivered to the Trustee for that purpose. All of
the Securities so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of
this Indenture as though all of such Securities had been issued
at the date of the execution hereof.
In case of any such consolidation, merger, sale, transfer or
conveyance such changes in phraseology and form (but not in
substance) may be made in the Securities thereafter to be issued
as may be appropriate.
Section 5.3 Limitation on Lease of Properties.
Without limitation of the prohibitions set forth in the
other Operative Documents, the Company shall not lease all or
substantially all of its Properties to any Person.
ARTICLE 6.
DEFAULT AND REMEDIES
Section 6.1 Events of Default.
An "Event of Default" occurs if:
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25
(a) the Company defaults in the payment of interest on, or
Special Interest, if any, with respect to, any Security when the
same becomes due and payable and the default continues for thirty
(30) days;
(b) the Company defaults in the payment of the principal
amount of any Securities when the same becomes due and payable at
maturity, upon acceleration, redemption, tender for repurchase or
otherwise;
(c) the Company fails to comply with the agreements or
covenants contained in Sections 3.2, 4.3 or 4.12 hereof, takes or
agrees to take any action prohibited by Section 5.1 hereof,
discontinues or agrees to discontinue substantially all of its
commercial airlines operations or fails to comply with the
covenants contained in Sections 3, 6.3, 6.5 or 6.8 of the
Mortgage within the time periods (if any) provided therein;
(d)(i) the Company fails in any material respect to comply
with any of its other agreements contained in the Securities,
this Indenture or the other Operative Documents or (ii) any
representation or warranty made by the Company in this Indenture,
the other Operative Documents or any Mortgage Supplement or in
any certificate of the Company delivered hereunder or under any
such document shall prove to have been untrue in any material
respect when made, and in any such case such default continues
for the period and after the notice specified below;
(e) there shall be a default or an event under or with
respect to any Indebtedness of the Company or any of its
Significant Subsidiaries in excess of $10,000,000 in principal
amount, whether such Indebtedness now exists or shall hereafter
be created, and the effect of any such default or event is to
cause the principal amount of any such Indebtedness to become
due, to have the date of payment thereof fixed prior to its
stated maturity or the date it would otherwise become due and
while any Securities are Outstanding, or to be unpaid at maturity
while any Securities are Outstanding;
(f) the Company or any of its Significant Subsidiaries
pursuant to or within the meaning of any Bankruptcy Law (as
hereinafter defined):
(i) commences a voluntary case or proceeding,
(ii) consents to the entry of an order for relief
against it in an involuntary case or proceeding,
(iii) consents to the appointment of a Custodian (as
hereinafter defined) of it or for all or substantially all
of its Property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is unable to pay its debts as the same
become due;
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26
(g) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Significant Subsidiaries in an involuntary case or
proceeding,
(ii) appoints a Custodian of the Company or any of its
Significant Subsidiaries for all or substantially all of its
properties, or
(iii) orders the liquidation of the Company or any of
its Significant Subsidiaries,
and in each case the order and decree remains unstayed and in
effect for sixty (60) consecutive days;
(h) final, non-appealable judgments for the payment of
money, which judgments, in the aggregate, exceed $10,000,000
shall be rendered against the Company or any of its Significant
Subsidiaries by a court of competent jurisdiction and remain
undischarged, unstayed and unsatisfied for the period and after
the notice specified below; or
(i) any of the Operative Documents ceases, without the
consent of the Trustee, to be in full force and effect.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
A Default under clause (d), (e) or (h) of this Section 6.1
is not an Event of Default until the Trustee notifies the
Company, or the Holders of at least twenty-five percent (25%) in
aggregate principal amount of the Securities Outstanding notify
the Company and the Trustee, of the Default and the Company does
not cure the Default within sixty (60) days with respect to
clauses (d) and (h), or within thirty (30) days with respect to
clause (e), after receipt of the notice; provided, however, that
the Company shall be permitted such longer period of time, if
any, as may be provided for under the other Operative Documents
in respect of any particular Default. The notice must specify the
Default, demand that it be remedied and state that the notice is
a "Notice of Default." When a Default is cured, it ceases.
Section 6.2 Acceleration.
If an Event of Default (other than an Event of Default
specified in Section 6.1(f) or (g)) occurs, and is continuing,
the Trustee may, by notice to the Company, or the Holders of at
least twenty-five percent (25%) in aggregate principal amount of
the Securities Outstanding may, by notice to the Company and the
Trustee, and the Trustee shall, upon the request of such Holders,
declare all unpaid principal of, accrued interest and Special
Interest, if any, to the date of acceleration on the Securities
Outstanding (if not then due and payable) to be due and payable
and upon any such declaration, the same shall become and be
immediately due and payable. If
<PAGE>
27
an Event of Default specified in Section 6.1(f) or (g) occurs,
all unpaid principal of, accrued interest on and Special
Interest, if any, with respect to, the Securities Outstanding
shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee
or any Securityholder. Upon payment of such principal amount,
interest, and Special Interest, if any, all of the Company's
obligations under the Securities and this Indenture, other than
obligations under Sections 7.7 and 8.4, shall terminate. The
Holders of a majority in principal amount of the Securities then
Outstanding by notice to the Trustee may rescind an acceleration
and its consequences if (a) all existing Events of Default, other
than the non-payment as to the Securities of the principal,
interest or Special Interest, if any, which has become due solely
by such declaration of acceleration, have been cured or waived,
(b) to the extent the payment of such interest is permitted by
law, interest on overdue installments of interest or Special
Interest and on overdue principal which has become due otherwise
than by such declaration of acceleration, has been paid, (c) the
rescission would not conflict with any judgment or decree of a
court of competent jurisdiction, and (d) all payments due to the
Trustee and any predecessor Trustee under Section 7.7 have been
made.
Section 6.3 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity
to collect the payment of principal of, interest on or Special
Interest, if any, with respect to the Securities or to enforce
the performance of any provision of the Securities or this
Indenture including, without limitation, instituting proceedings
and exercising and enforcing, or directing exercise and
enforcement of, all rights and remedies of the Trustee under the
other Operative Documents.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in
the proceeding. A delay or omission by the Trustee or any
Securityholder in exercising any right or remedy accruing upon an
Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default.
No remedy is exclusive of any other remedy. All available
remedies are cumulative.
Section 6.4 Waiver of Past Defaults.
Subject to Sections 6.7, 9.2 and 9.6, the Holders of a
majority in aggregate principal amount of the Securities
Outstanding by notice to the Trustee may authorize the Trustee to
waive an existing Default or Event of Default and its
consequences, except a Default (a) in the payment of principal
of, or interest on, or Special Interest with respect to, any
Security as specified in clauses (a) and (b) of Section 6.1 or
(b) in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of the Holder of each
Security affected. When a Default or Event of Default is waived,
it is cured and ceases, and the Company, the Holders and the
Trustee shall be restored to their former positions and rights
hereunder respectively; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any
right consequent thereon.
<PAGE>
28
Section 6.5 Control by Majority.
The Holders of a majority in aggregate principal amount of
the Securities Outstanding may direct the time, method and place
of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on it;
provided that the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction. The
Trustee may refuse to follow any direction hereunder or
authorization under Section 6.4 that legal counsel to the Trustee
determines in good faith conflicts with law or this Indenture,
that the Trustee reasonably determines may be unduly prejudicial
to the rights of another Securityholder, or that the Trustee
reasonably determines may subject the Trustee to personal
liability. However, the Trustee shall have no liability for any
actions or omissions to act which are in accordance with any such
direction or authorization.
Section 6.6 Limitation on Suits.
A Securityholder may not pursue any remedy with respect to
this Indenture or the Securities unless:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least twenty-five percent (25%) in
principal amount of the Securities Outstanding make a written
request to the Trustee to pursue the remedy;
(c) such Holder or Holders offer to the Trustee indemnity
reasonably satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within
sixty (60) days after receipt of the request and the offer of
indemnity; and
(e) during such 60-day period the Holders of a majority in
aggregate principal amount of the Securities Outstanding do not
give the Trustee a direction which, in the reasonable opinion of
the Trustee, is inconsistent with such request.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or
priority over such other Securityholder.
Section 6.7 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of principal
of, interest on, and Special Interest, if any, with respect to,
the Security in cash, on or after the respective due dates
expressed in the Security, or to bring suit for the enforcement
of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of the Holder.
It is hereby expressly understood, intended and agreed that
any and all actions which a Holder of the Securities may take to
enforce the provisions of this Indenture and/or collect Payments
due hereunder or under the Securities, except to the extent that
such action is
<PAGE>
29
determined to be on behalf of all Holders of the Securities,
shall be in addition to and shall not in any way change,
adversely affect or impair the rights and remedies of the Trustee
or any other Holder of the Securities thereunder or under this
Indenture and the other Operative Documents, including the right
to foreclose upon and sell the Collateral or any part thereof and
to apply any proceeds realized in accordance with the provisions
of this Indenture.
Section 6.8 Collection Suit by Trustee.
If an Event of Default in payment of interest or principal
specified in clause (a) or (b) of Section 6.1 occurs and is
continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company or any other
obligor on the Securities for the whole amount of principal,
accrued interest and Special Interest, if any, remaining unpaid,
together with interest on overdue principal and on overdue
installments of interest to the extent that payment of such
interest is permitted by law, in each case at the rate per annum
provided for by the Securities, and such further amount as shall
be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
Section 6.9 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and the Securityholders allowed
in any judicial proceedings relative to the Company (or any other
obligor upon the Securities), its creditors or its Property and
shall be entitled and empowered to collect and receive any moneys
or other Property payable or deliverable on any such claims and
to distribute the same, and any Custodian in any such judicial
proceedings is hereby authorized by each Securityholder to make
such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agent and counsel, and any other amounts due
the Trustee under Section 7.7, and unless prohibited by law or
applicable regulations to vote on behalf of the Holders of
Securities for the election of a trustee in bankruptcy or other
person performing similar functions. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent
to or accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding except, as aforesaid, for
the election of a trustee in bankruptcy or person performing
similar functions.
Section 6.10 Application of Proceeds.
Any moneys collected by the Trustee pursuant to this Article
shall be applied in the following order at the date or dates
fixed by the Trustee and, in case of the distribution of such
moneys on account of principal, interest, or Special Interest, if
any, upon presentation of the several Securities and stamping (or
otherwise noting) thereon the payment, or issuing Securities
<PAGE>
30
in reduced principal amounts in exchange for the presented
Securities if only partially paid, or upon surrender thereof if
fully paid:
FIRST: To the payment of reasonable costs and expenses
actually incurred, including reasonable compensation to the
Trustee, its predecessors, if any, and their respective
agents and attorneys (including amounts due and unpaid under
Section 7.7), and of all reasonable costs, fees, expenses
and liabilities incurred and all advances made by any and
all of the foregoing (including amounts due and unpaid under
Section 7.7), except as a result of negligence or bad faith;
SECOND: In case the entire principal of the Securities
shall not have become and be then due and payable, as to any
Securities (a) first to the payment of interest and Special
Interest, if any, in default in the order of the maturity of
the installments of such interest and Special Interest, if
any, with interest (to the extent that such interest has
been collected by the Trustee) upon the overdue installments
of interest or Special Interest, if any, at the rate of
interest specified in the Securities and (b) second to the
payment of principal of the Securities as the same shall
become due and payable, such payments to be made ratably to
the Persons entitled thereto, without discrimination or
preference;
THIRD: In case the entire principal of the Securities
shall have become and shall be then due and payable, as to
any Securities, to the payment of the whole amount then
owing and unpaid upon all the Securities for principal,
interest and Special Interest, with interest upon the
overdue principal, and (to the extent that such interest has
been collected by the Trustee) upon overdue installments of
interest or Special Interest, if any, at the same rate as
the rate of interest specified in this Indenture or in the
Securities; and in case such moneys shall be insufficient to
pay in full the whole amount so due and unpaid upon the
Securities, then to the payment of such principal, interest
and Special Interest, if any, without preference or priority
of any of principal, interest or Special Interest, if any,
over the other, or any installment of interest or Special
Interest, if any, over any other installment of interest or
Special Interest, if any, or of any Security over any other
Security, ratably to the aggregate of such principal, and
accrued and unpaid interest and Special Interest; and
FOURTH: To the payment of the remainder, if any, after
payment in full of the entire principal balance, if any, of
the Securities and all interest, Special Interest and other
amounts due upon or in respect of such Securities, to the
Company or any other Person lawfully entitled thereto.
The Trustee, upon prior written notice to the Company, may
fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10.
Section 6.11 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have
agreed, that any court of competent jurisdiction in its
discretion may require in any suit for the enforcement of any
right or remedy under this Indenture or in any
<PAGE>
31
suit against the Trustee for any action taken or omitted by it as
Trustee, the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.7,
or a suit by Holders of more than ten percent (10%) in principal
amount of the Securities Outstanding.
Section 6.12 Restoration of Rights on Abandonment of
Proceedings.
In case the Trustee shall have proceeded to enforce any
right under this Indenture and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been
determined adversely to the Trustee, then and in every such case
the Company, the Trustee and the Securityholders shall be
restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of the Company,
the Trustee and the Securityholders shall continue as though no
such proceedings had been taken.
Section 6.13 Powers and Remedies Cumulative; Delay or
Omission Not Waiver of Default.
No right or remedy herein conferred upon or reserved to the
Trustee or to the Securityholders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
No delay or omission of the Trustee or of any Holder of any
of the Securities to exercise any right or power accruing upon
any Event of Default occurring and continuing as aforesaid shall
impair any such right or power or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein;
and, subject to the other applicable provisions of this
Indenture, every power and remedy given by this Indenture or by
law to the Trustee or to the Securityholders may be exercised
from time to time, and as often as shall be deemed expedient, by
the Trustee or by the Securityholders.
Any right or remedy herein conferred upon or reserved to the
Trustee may be exercised by it in its capacity as Trustee, as it
may deem most efficacious, if it is then acting in such capacity.
<PAGE>
32
ARTICLE 7.
TRUSTEE
Section 7.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested
in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under
the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties as are
specifically set forth in this Indenture and the other
Operative Documents and no others.
(ii) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act, or its
own willful misconduct or bad faith, except that:
(i) This paragraph (c) does not limit the effect of
paragraph (b)
of this Section 7.1 or of Section 7.2.
(ii) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts.
(iii) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 6.5.
(d) The Trustee shall be under no obligation to exercise any
of the rights, trusts or powers vested in it by this Indenture at
the request, order or direction of any of the Holders pursuant to
this Indenture, unless such Holders shall have offered to the
Trustee security or indemnity reasonably satisfactory to the
Trustee against the costs, expenses and liabilities which might
be incurred by it in compliance with such request, order or
direction.
(e) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b), (c) and
(d) of this Section 7.1.
(f) Funds held in trust for the benefit of the Holders of
the Securities by the Trustee or any Paying Agent on deposit with
itself or elsewhere shall be held in distinct, identifiable
accounts, and other funds or investments of any nature or from
any source whatsoever may be
<PAGE>
33
held in such accounts, except, in each case, to the extent
required by law. The Trustee shall not be liable for interest on
any money received by it except as the Trustee may agree with the
Company.
Section 7.2 Rights of Trustee.
(a) The Trustee may rely on any document reasonably believed
by it to be genuine and to have been signed or presented by the
proper person. Subject to Section 7.1(b)(ii), the Trustee need
not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, which
shall conform to Section 11.5. The Trustee shall not be liable
for any action it takes or omits to take in good faith in
reliance on such certificate or opinion.
(c) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by
or through its attorneys and agents and the Trustee shall not be
responsible for the misconduct or negligence of any agent or
attorney appointed with due care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.
Section 7.3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal
with and collect obligations owed to it by the Company or
Affiliates of the Company with the same rights it would have if
it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee is subject to Sections 7.10 and 7.11.
Section 7.4 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the
Securities, and it shall not be responsible for any statement in
the Securities or in this Indenture other than its certificate of
authentication.
Section 7.5 Notice of Defaults.
If a Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to each Securityholder notice
of the Default within ninety (90) days after the occurrence
thereof except as otherwise permitted by the TIA. Except in the
case of a Default in payment of principal of, or interest on, or
Special Interest, if any, with respect to, any Security, the
Trustee may withhold the notice if and so long as it, in good
faith, determines that withholding the notice is in the interests
of the Securityholders.
<PAGE>
34
Section 7.6 Reports by Trustee to Holders.
If circumstances require any report to Holders under TIA ss.
313(a), it shall be mailed to Securityholders within sixty (60)
days after each May 15 (beginning with the May 15 following the
date of this Indenture) as of which such circumstances exist. The
Trustee also shall comply with the remainder of TIA ss. 313.
The Company shall promptly notify the Trustee if the
Securities become listed on or delisted from any stock exchange
or other recognized trading market.
The Trustee shall, upon the written request of any Holder of
Securities but subject to applicable laws and contractual
limitations, provide to such Holder copies of any reports,
certificates, opinions or other materials of any kind or nature
required to be delivered to the Trustee under this Indenture or
any of the other Operative Documents or otherwise delivered by or
on behalf of the Company to the Trustee.
Section 7.7 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
reasonable compensation, as agreed upon from time to time, for
its services hereunder and under the other Operative Documents.
The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it in
any such capacities. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents
and counsel and all agents and other persons not regularly in its
employ.
The Company shall indemnify the Trustee and each predecessor
Trustee for, and hold each of them harmless against, any loss or
liability incurred by each of them in connection with the
administration of this Indenture and its duties hereunder. In
connection with any defense of such a claim, the Trustee may have
separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not reimburse any
expense or indemnify against any loss or liability incurred by
the Trustee or any predecessor Trustee through the negligence or
bad faith of such Trustee or each such predecessor Trustee.
To secure the Company's payment obligations in this Section
7.7, the Trustee shall have a Lien (legal and equitable) prior to
the Securities on all money or Property held or collected by the
Trustee, in its capacity as Trustee, or otherwise distributable
to Securityholders, except money, securities or Property held in
trust to pay principal of or interest on particular Securities
(including, without limitation, pursuant to Section 8.1(b)
hereof).
When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 6.1(f) or (g) occurs,
the expenses and the compensation for the services are intended
to constitute expenses of administration under any Bankruptcy
Law.
<PAGE>
35
Section 7.8 Replacement of Trustee.
The Trustee may resign by so notifying the Company and the
Holders in writing. The Holders of a majority in aggregate
principal amount of the Securities Outstanding may remove the
Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee with the Company's consent, which consent shall
not be unreasonably refused or delayed. The Company may remove
the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of the
Trustee or its Property;
(d) the Trustee becomes incapable of acting; or
(e) no Default or Event of Default has occurred and is
continuing and the Company determines in good faith to remove the
Trustee.
If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason, the Company shall
promptly appoint a successor Trustee. Within one year after any
such successor Trustee takes office, the Holders of a majority in
aggregate principal amount of the Securities Outstanding may
appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company.
Immediately after that, the retiring Trustee shall transfer all
Property held by it as Trustee to the successor Trustee, subject
to the Lien provided in Section 7.7, the resignation or removal
of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Securityholder.
No resignation or removal of the Trustee and no appointment
of a successor Trustee, pursuant to this Article, shall become
effective until the acceptance of appointment by the successor
Trustee under this Section 7.8. If a successor Trustee does not
take office within sixty (60) days after the retiring Trustee
resigns or is removed, the retiring Trustee, the Company or the
Holders of at least ten percent (10%) in principal amount of the
Securities Outstanding may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder
of Securities may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor
Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's obligations under Section 7.7 shall
continue for the benefit of the retiring Trustee which shall
retain its claim pursuant to Section 7.7.
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36
Section 7.9 Successor Trustee by Merger, etc..
If the Trustee consolidates with, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the resulting, surviving or
transferee corporation without any further act shall be the
successor Trustee.
Section 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth
in its most recent, published annual report of condition. The
Trustee shall comply with TIA ss. 310(b); provided, however, that
there shall be excluded from the operation of TIA ss. 310(b)(1)
any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of
the Company are outstanding, if the requirements for such
exclusion set forth in TIA ss. 310(b)(1) are met.
Section 7.11 Preferential Collection of Claims Against
Company.
The Trustee shall comply with TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has
resigned or been removed shall be subject to TIA ss. 311(a) to
the extent indicated.
ARTICLE 8.
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligations.
(a) The Company may terminate its obligations under this
Indenture, except those obligations referred to in the last
paragraph of Section 8.1(b), if all Securities previously
authenticated and delivered (other than destroyed, lost or stolen
Securities which have been replaced or paid or Securities for
whose payment Payments have theretofore been held in trust and
thereafter repaid to the Company, as provided in Section 8.3)
have been delivered to the Trustee for cancellation and the
Company has paid all sums payable by it hereunder.
(b) The Company may terminate all its obligations under this
Indenture except those obligations referred to in the immediately
succeeding paragraph if
(i) the Company has irrevocably deposited or caused to
be irrevocably deposited with the Trustee or a Paying Agent,
under the terms of an irrevocable trust agreement in form
and substance satisfactory to the Trustee and any such
Paying Agent, as trust funds in trust solely for the benefit
of the Holders for that purpose, cash or U.S. Government
Obligations maturing as to principal and interest, in such
amounts and at such times as are sufficient without
consideration of any reinvestment of any such interest to
pay the then maximum possible principal of, and the then
maximum possible interest and Special Interest with respect
to, the Securities Outstanding to maturity, provided, that
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37
the Trustee or such Paying Agent shall have been irrevocably
instructed to apply such money or the proceeds of such U.S.
Government Obligations to the payment of said principal,
interest and Special Interest, if any, with respect to the
Securities.
(ii) No Default or Event of Default with respect to the
Securities shall have occurred and be continuing (A) on the
date of such deposit described in clause (i), or (B) insofar
as paragraph (f) of Section 6.1 is concerned, at any time
during the period ending on the 91st day after the date of
such deposit or, if longer, ending on the day following the
expiration of the longest preference period applicable to
the Company in respect of such deposit (it being understood
that the condition in this clause (B) is a condition
subsequent and shall not be deemed satisfied until the
expiration of such period);
(iii) Such termination and deposit described in clause
(i) shall not (A) cause the Trustee to have a conflicting
interest as defined in TIA Section 310(b) or otherwise for
purposes of the TIA with respect to any securities of the
Company, or (B) result in the trust arising from such
deposit to constitute, unless it is qualified as, a
regulated investment company under the Investment Company
Act of 1940, as amended;
(iv) Such termination and deposit described in clause
(i) shall not result in a breach or violation of or
constitute a default under, this Indenture or any other
material agreement or instrument to which the Company is a
party or by which it is bound;
(v) The Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the
Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such termination
and deposit described in clause (i) and will be subject to
federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such
termination and deposit had not occurred; and
(vi) The Company shall have delivered to the Trustee
and any Paying Agent an Officer's Certificate and an Opinion
of Counsel, each stating that all conditions precedent and
subsequent provided for above in this Section 8.1(b) have
been complied with.
Notwithstanding the foregoing paragraph, the Company's
obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 4.1, 4.2, 4.8,
4.17, 7.7, 7.8, 8.2, 8.3, 8.4 and 10.4 shall survive until the
Securities are no longer Outstanding. Thereafter, the Company's
obligations in Sections 7.7 and 8.3 shall survive.
(c) After the effectiveness of any termination of its
obligations (except, in the case of Section 8.1(b), as set forth
in the last paragraph thereof), under this Indenture in
accordance with Section 8.1(a) or (b) above (such effective date,
the "Indenture Discharge Date") and payment of all obligations of
the Company accrued under Section 7.7, the Trustee upon Request
shall acknowledge in writing the discharge of the Company's
obligations under this Indenture except for those surviving
obligations specified above.
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38
Section 8.2 Application of Trust Money.
The Trustee or Paying Agent shall hold in trust money or
U.S. Government Obligations deposited with it pursuant to Section
8.1, and shall apply the deposited money and the money from U.S.
Government Obligations in accordance with this Indenture to the
payment of principal of, and interest and Special Interest, if
any, on, the Securities. The obligations of the Trustee and
Paying Agent under this Section 8.2 shall survive,
notwithstanding any termination or discharge of the Company's
obligations pursuant to Section 8.1, until all Securities are
paid in full.
The Company shall pay and indemnify the Trustee or Paying
Agent, as the case may be, against any tax, fee or other charge
imposed on or assessed against the money or U.S. Government
Obligations deposited pursuant to Section 8.1(b)(i) or the
principal and interest received in respect thereof.
Section 8.3 Repayment to Company.
Anything in Section 8.1(b) to the contrary notwithstanding,
the Trustee or Paying Agent, as the case may be, shall deliver or
pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations (or other Property and any
proceeds therefrom) held by it as provided in Section 8.1(b)
which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee and to the Paying
Agent, if applicable, are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent
termination under said Section 8.1(b). The Trustee and the Paying
Agent shall Pay to the Company any Payments held by them for the
payment of principal, interest and Special Interest, if any, that
remains unclaimed for two (2) years after the Stated Maturity of
such payment of principal, interest or Special Interest, as the
case may be; provided, however, that the Trustee or such Paying
Agent before making any Payment shall at the expense of the
Company cause to be published once in the national edition of The
New York Times or The Wall Street Journal or, if such newspapers
are not then in circulation, in a newspaper of general
circulation in the City of New York and mail to each Holder
entitled to such money, notice that such Payments remain
unclaimed and that, after a date specified therein which shall be
at least thirty (30) days from the date of such publication or
mailing, any unclaimed balance of such Payments then remaining
will be repaid to the Company. After payment to the Company,
Securityholders entitled to Payments must look to the Company for
payment as general creditors unless an applicable abandoned
property law designates another person.
Section 8.4 Reinstatement.
Anything herein to the contrary notwithstanding, (i) if the
Trustee or Paying Agent, as the case may be, is unable to apply
any money or U.S. Government Obligations in accordance with
Section 8.1 by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application,
or (ii) the deposited money or U.S. Government Obligations (or
the proceeds thereof) are, for any reason (including any
repayment to the Company under Section 8.3), insufficient in
amount, then the Company's obligations under this Indenture shall
be revived and reinstated as though no
<PAGE>
39
deposit had occurred pursuant to Section 8.1 until such time as
the Trustee, or Paying Agent, as the case may be, is permitted to
apply all such money or U.S. Government Obligations and the
proceeds of the investment thereof in accordance with Section
8.1, or the deficiency is cured in the manner set forth in
Section 8.1(b), as the case may be. In such event, the Trustee
will invest all such money or the proceeds from U.S. Government
Obligations at the Company's request in other U.S. Government
Obligations and, upon written notice from the Company, so long as
there exists no Event of Default, to the extent and only to the
extent provided in the first sentence of Section 8.3 return to
the Company any money or U.S. Government Obligations deposited
with the Trustee pursuant to Section 8.1. If the Company has made
any payment of interest on, principal of, or Special Interest, if
any, with respect to any Securities because of an event described
in clause (i) of the first sentence of this Section 8.4, the
Company shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent, as
the case may be.
ARTICLE 9.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Without Consent of Holders.
The Company and the Trustee, as the case may be, may amend
or supplement this Indenture, the Securities or the other
Operative Documents without notice to or consent of any
Securityholder:
(a) to provide for uncertificated Securities in addition to
or in place of certificated Securities;
(b) to provide for the assumption of the Company's
obligations to the Holders of the Securities in the case of a
merger or consolidation or transfer of all or substantially all
of the assets of the Company or otherwise to comply with Article
5;
(c) to comply with any requirements of the SEC in connection
with the qualification of this Indenture under the TIA; or
(d) to cure any ambiguity, defect or inconsistency or to
make any other change, in each case, provided that such action
does not materially adversely affect the interests of any
Securityholder.
Section 9.2 With Consent of Holders.
Subject to Section 6.7, the Company (by resolution of its
Board of Directors if required) and the Trustee may amend or
supplement this Indenture, the Securities or the other Operative
Documents without notice to any Securityholder but with the
written consent of the Required Holders. Subject to Sections 6.4,
6.5 and 6.7, the Required Holders may authorize the Trustee to,
and the Trustee, subject to Section 9.6, upon such authorization
shall, waive compliance by the
<PAGE>
40
Company with any provision of this Indenture, the Securities or
the other Operative Documents. However, an amendment, supplement
or waiver, including a waiver pursuant to any provision of
Section 6.4, may not without the consent of each Securityholder
affected:
(a) reduce the amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the rate or extend the time for payment of
interest on, or Special Interest, if any, with respect to, any
Security;
(c) reduce the principal of, or the amount of Special
Interest, if any, with respect to (in each case, whether on
redemption, repurchase or otherwise), or change the fixed
maturity of any Security;
(d) change the place of payment where, or the coin or
currency in which, any Security (or the repurchase or redemption
price thereof), interest thereon, or Special Interest, if any,
with respect thereto is payable;
(e) waive a default in the payment of the principal of, or
interest on, or Special Interest with respect to any Security;
(f) make any changes in Sections 2.8, 6.4, 6.7 or 6.10 or
the third sentence of this Section 9.2 or change the time at
which any Security may or must be redeemed hereunder; or
(g) reduce any amount payable upon exercise of any
repurchase rights thereof or otherwise change any repurchase
right provision or impair the right of any Holder to institute
suit for the enforcement of any such payment on any Security when
due or adversely effect any repurchase rights hereunder.
It shall not be necessary for the consent of the Holders
under this Section to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if
such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section
9.2 becomes effective, the Company shall mail to the Holders
affected thereby a brief notice describing such amendment,
supplement or waiver. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such amendment, supplement
or waiver.
Section 9.3 Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
<PAGE>
41
Section 9.4 Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security, even
if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to
his Security or portion of a Security. Such revocation shall be
effective only if the Trustee receives the notice of revocation
before the date the amendment, supplement or waiver becomes
effective.
After an amendment, supplement or waiver becomes effective,
it shall bind every Securityholder, unless it makes a change
described in any of clauses (a) through (g) of Section 9.2. In
that case the amendment, supplement or waiver shall bind each
Holder of a Security who has consented to it and every subsequent
Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security; provided, however,
that no amendment, supplement or waiver relating to any
impairment of the right to receive principal, interest and
Special Interest, if any, when due and payable consented to by a
Holder shall be binding upon any subsequent Holder of a Security
or a portion of a Security that evidences the same debt as the
consenting Holder's Security unless notation with regard thereto
is made upon such Security or the Security representing such
portion.
Section 9.5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to
deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue
and the Trustee shall authenticate a new Security that reflects
the changed terms.
Section 9.6 Trustee to Sign Amendments, etc.
The Trustee shall be entitled to receive and rely upon an
Officers' Certificate and an Opinion of Counsel stating that the
execution of any amendment, supplement or waiver authorized
pursuant to this Article 9 has been duly authorized by the
Company and is authorized or permitted by this Indenture and the
other applicable Operative Documents. The Trustee may, but shall
not be obligated to, execute any such amendment, supplement or
waiver which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 9.7 Effect of Supplement and/or Amendment.
Upon the execution of any supplemental indenture and/or any
such amendment or supplement to the other Operative Documents
pursuant to the provisions of this Article 9, this Indenture and
such Operative Documents shall be and be deemed to be modified
and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties and immunities under
this Indenture and the other Operative Documents of the Trustee,
the Company
<PAGE>
42
and the Holders of Securities shall thereafter be determined,
exercised and enforced hereunder and thereunder subject in all
respects to such modifications and amendments, and all terms and
conditions of any such supplemental indenture and/or any such
amendment or supplement to the other Operative Documents shall be
and be deemed to be part of the terms and conditions of this
Indenture and the other Operative Documents for any and all
purposes.
ARTICLE 10.
SECURITY
Section 10.1 Other Operative Documents.
To secure the due and punctual payment, performance and
observance of the Obligations, the Company has simultaneously
with the execution of this Indenture entered into or caused to be
assigned to the Trustee the other Operative Documents and has
made an assignment and pledge of or otherwise transferred or
caused to be transferred its right, title and interest in and to
the Collateral to the Trustee pursuant to the other Operative
Documents and in the manner and to the extent therein provided.
Each Securityholder, by accepting a Security, agrees to all of
the terms and provisions of each Operative Document (including,
without limitation, the provisions providing for the release of
Collateral), as the same may be in effect or may be amended from
time to time pursuant to its terms and the terms hereof. The
Company will execute, acknowledge and deliver to the Trustee such
further assignments, transfers, assurances or other instruments
as the Trustee may reasonably require or request, and will do or
cause to be done all such acts and things as may be necessary or
proper, or as may be reasonably required by the Trustee to assure
and confirm to the Trustee the security interest in the
Collateral contemplated hereby and by the other Operative
Documents or any part thereof, as from time to time constituted,
so as to render the same available for the security and benefit
of this Indenture and of the Securities secured hereby, according
to the intent and purposes herein expressed.
Section 10.2 Opinions, Certificates and Appraisals.
(a) The Company shall furnish to the Trustee promptly after
the execution and delivery of this Indenture but prior to
authentication of any Securities, Opinions of Counsel covering
such jurisdictions as the Trustee may reasonably request either
(i) stating that in the opinion of such Counsel the actions
necessary to be taken under the Federal Aviation Act, the Uniform
Commercial Code of all applicable jurisdictions, or otherwise
with respect to the recording, registering and filing of this
Indenture, the other Operative Documents, financing statements or
other instruments to make effective and to perfect the Liens
intended to be created by the Mortgage have been taken and
reciting with respect to the security interests in the
Collateral, the details of such actions, or (ii) stating that, in
the opinion of such Counsel, no such action is necessary to make
such Liens effective and perfected.
(b) The Company shall furnish to the Trustee within one
hundred and twenty (120) days after January 1 in each year
beginning with January 1, 1999, an Opinion of Counsel, dated as
of such date, either (i)(A) stating that, in the opinion of such
Counsel, action has been taken
<PAGE>
43
with respect to the recording, registering, filing, rerecording,
re-registering and refiling (in this section, "recordation") of
all supplemental indentures, financing statements, continuation
statements or other instruments of further assurance as is
necessary to maintain the Lien intended to be created by the
Mortgage (if not then terminated pursuant to its terms) and the
perfection thereof and reciting with respect to the security
interests in the Collateral the details of such action or
referring to prior Opinions of Counsel in which such details are
given, and (B) stating that all financing statements and
continuation statements have been executed and filed that are
necessary as of such date and during the succeeding seventeen
(17) months fully to maintain the Lien of the Securityholders and
the Trustee intended to be created hereunder and under the
Mortgage with respect to the security interest in the Collateral
and the perfection thereof, or (ii) stating that, in the opinion
of such Counsel, no such action is necessary to maintain such
Lien and the perfection thereof.
(c) The release of any Collateral from the terms of the
Mortgage will not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to the
extent the Collateral is released pursuant to the Mortgage or
this Indenture, as applicable. To the extent applicable, the
Company shall cause TIA ss. 314(d) relating to the release of
Property or securities from the Lien of the Mortgage and relating
to the substitution therefor of any Property or securities to be
subjected to the Lien of the Mortgage, to be complied with. Any
certificate or opinion required by TIA ss. 314(d) may be made by
an Officer of the Company, except in cases where TIA ss. 314(d)
requires that such certificate or opinion be made by an
independent person.
Section 10.3 Authorization of Actions to be Taken by the
Trustee Under the Operative Documents.
The Trustee may, in its sole discretion and without the
consent of the Securityholders, take all actions it deems
necessary or appropriate to (a) enforce any of the terms of the
Operative Documents and (b) collect and receive any and all
amounts payable in respect of the obligations of the Company
hereunder and thereunder. Subject to the provisions of this
Indenture and the other Operative Documents, the Trustee shall
have power to institute and to maintain such suits and
proceedings as it may deem expedient to prevent any impairment of
the Collateral by any acts which may be unlawful or in violation
of the other Operative Documents or this Indenture, and such
suits and proceedings as it may deem expedient to preserve or
protect its interest and the interests of the Securityholders in
the Collateral (including power to institute and maintain suits
or proceedings to restrain the enforcement of or compliance with
any legislative or other governmental enactment, rule or order
that may be unconstitutional or otherwise invalid if the
enforcement of, or compliance with, such enactment, rule or order
would impair the security interest hereunder or be prejudicial to
the interests of the Securityholders or of the Trustee).
Section 10.4 Payment of Expenses.
On demand of the Trustee, the Company forthwith shall pay or
satisfactorily provide for all reasonable expenditures incurred
by the Trustee under this Article 10, and all such sums shall be
a Lien upon the Collateral and shall be secured thereby.
<PAGE>
44
Section 10.5 Authorization of Receipt of Funds by the
Trustee Under the Operative Documents.
The Trustee is authorized to receive any funds for the
benefit of Securityholders distributed under the Operative
Documents, and to make further distributions of such funds to the
Holders according to the provisions of this Indenture and the
other Operative Documents.
ARTICLE 11.
MISCELLANEOUS
Section 11.1 Conflict with Trust Indenture Act of 1939.
If and to the extent that any provision of this Indenture
limits, qualifies, or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the TIA, such imposed duties
shall control.
Section 11.2 Notices; Waivers.
Any request, demand, authorization, direction, notice,
consent, waiver or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with
(a) the Company shall be sufficient for every purpose
hereunder if in writing (including telecopied communications) and
made, given, furnished or filed by personal delivery or mailed by
registered or certified mail or by nationally recognized
overnight courier, postage or courier charges, as the case may
be, prepaid, to or with the Company at:
Trans World Airlines, Inc.
One City Centre
515 N. 6th Street
St. Louis, Missouri 63101
Attention: Senior Vice President & General Counsel
Telecopier No.: (314) 589-3267
(b) the Trustee shall be sufficient for every purpose
hereunder if in writing (including telecopied communications) and
made, given, furnished or filed by personal delivery or mailed by
registered or certified mail or by nationally recognized
overnight courier, postage or courier charges, as the case may
be, prepaid, to or with the Trustee at:
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Services
Telecopier No.: (801) 246-5053
<PAGE>
45
or to any of the above parties at any other address or telecopier
number subsequently furnished in writing by it to each of the
other parties listed above. An affidavit by any person
representing or acting on behalf of the Company or the Trustee as
to such mailing, having any registry receipt required by this
Section attached, shall be conclusive evidence of the giving of
such demand, notice or communication.
Any notice or communication mailed to a Holder shall be
mailed to such holder by first-class mail or by nationally
recognized overnight courier, postage or courier charges, as the
case may be, prepaid, at such holder's address as it appears on
the Register and shall be sufficiently given to such holder if so
mailed within the time prescribed.
Failure to mail a notice or send a communication to a Holder
or any defect in it shall not affect its sufficiency with respect
to other Holders. Notices to the Trustee or to the Company are
deemed given only when received. Where this Indenture provides
for notice in any manner, such notice may be waived in writing by
the Person entitled to receive such notice, either before or
after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by the Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.
Section 11.3 Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b)
with other Securityholders with respect to their rights under
this Indenture or the Securities. The Company, the Trustee, the
Registrar and any other person shall have the protection of TIA
ss. 312(c).
Section 11.4 Certificate and Opinion as to Conditions
Precedent.
Upon any Request or application by the Company to the
Trustee to take any action under this Indenture or the other
Operative Documents, the Company shall furnish to the Trustee:
(a) an Officers' Certificate, and (b) an Opinion of Counsel, each
stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, provided, that in the
case of any such application or Request as to which the
furnishing of an Officers' Certificate or Opinion of Counsel is
specifically required by any provision of this Indenture or the
other Operative Documents relating to such particular application
or Request, no additional certificate or opinion, as the case may
be, need be furnished.
Section 11.5 Statements Required in Certificate or Opinion.
Each certificate or opinion provided for and delivered to
the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture or the other Operative
Documents shall include: (a) a statement that the Person signing
such certificate or opinion has read such condition or covenant
and the definitions herein or therein relating thereto; (b) a
brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in
such certificate or opinion are based; (c) a statement that, in
the opinion of such Person, he has made such examination or
investigation as is necessary to
<PAGE>
46
enable him to express an informed opinion as to whether or not
such condition or covenant has been complied with; and (d) a
statement as to whether or not in the opinion of such Person,
such condition or covenant has been complied with.
Any certificate or opinion of an Officer or an engineer,
insurance broker, accountant or other expert may be based,
insofar as it relates to legal matters, upon a certificate or
opinion of or upon representations by counsel, unless such
officer, engineer, insurance broker, accountant or other expert
knows that the certificate or opinion or representations with
respect to the matters upon which his opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care
should have known that the same were erroneous.
Any certificate or Opinion of Counsel may be based, insofar
as it relates to factual matters, upon the certificate or opinion
of or representations by an officer or officers of the Company
stating that the information with respect to such factual matters
is in possession of the Company, unless such counsel knows that
the certificate or opinion or representations with respect to the
matters upon which his opinion may be based as aforesaid are
erroneous and insofar as it relates to legal matters in a
jurisdiction or area of law beyond the expertise of such counsel,
such counsel may rely upon the opinion of counsel qualified in
such other jurisdiction or area of law.
Wherever in this Indenture or the other Operative Documents
in connection with any application, certificate or report to the
Trustee it is provided that the Company shall deliver any
document as a condition of the granting of such application or as
evidence of the Company's compliance with any term hereof, it is
intended that the truth and accuracy at the time of the granting
of such application or at the effective date of such certificate
or report, as the case may be, of the facts and opinions stated
in such document shall in each such case be a condition precedent
to the right of the Company to have such application granted or
to the sufficiency of such certificate or report. Nevertheless,
in the case of any such application, certificate or report, any
document required by any provision of this Indenture or the other
Operative Documents to be delivered to the Trustee as a condition
of the granting of such application or as evidence of such
compliance may be received by the Trustee as conclusive evidence
of any statement therein contained and shall be full warrant,
authority and protection to the Trustee acting on the faith
thereof.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Whenever any Person is required to make, give or execute two
or more applications, requests, consents, certificates,
statements or opinions or other instruments under this Indenture
or any other Operative Document such Person may, but need not,
consolidate such instruments into one.
<PAGE>
47
Section 11.6 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Registrar or Paying Agent may
make reasonable rules for their respective functions.
Section 11.7 Holidays.
In the event that any date for the payment of any amount due
hereunder shall not be a Business Day, then (notwithstanding any
other provision of this Indenture) such payment need not be made
on such date, but may be made on the next succeeding Business Day
with the same force and effect as if made on the due date, and no
interest or Special Interest, if any, shall accrue from such due
date to and including the next succeeding Business Day.
Section 11.8 Governing Law; Waiver of Jury Trial.
(a) The laws of the State of New York shall govern this
Indenture and the Securities without regard to principles of
conflict of laws.
(b) The Company and the Trustee each waive any right to have
a jury participate in resolving any dispute, whether sounding in
contract, tort, or otherwise arising out of, connected with,
related to or incidental to the relationship established between
them in connection with this Indenture. Instead, any disputes
resolved in court will be resolved in a bench trial without a
jury.
Section 11.9 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any agreement of
the Company or any of its Subsidiaries which is unrelated to this
Indenture, the Securities or the other Operative Documents. Any
such agreement may not be used to interpret this Indenture.
Section 11.10 No Recourse Against Others.
A director, officer, employee or stockholder, as such, of
the Company shall not have any liability for any obligations of
the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or
their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
Section 11.11 Benefits of Indenture and the Securities
Restricted.
Subject to the provisions of Section 11.12 hereof, nothing
in this Indenture or the Securities, express or implied, shall
give or be construed to give to any Person, firm or corporation,
other than the parties hereto and the Holders, any legal or
equitable right, remedy or claim under or in respect of this
Indenture or under any covenant, condition, or provision herein
contained, all such covenants, conditions and provisions, subject
to Section 11.12 hereof, being for the sole benefit of the
parties hereto and of the Holders.
<PAGE>
48
Section 11.12 Successors and Assigns.
This Indenture and all obligations of the Company hereunder
shall be binding upon the successors and permitted assigns of the
Company, and shall, together with the rights and remedies of the
Trustee hereunder, inure to the benefit of the Trustee, the
Holders, and their respective successors and assigns. Any
assignment in violation hereof shall be null and void ab initio.
Section 11.13 Counterpart Originals.
This Indenture may be signed in two or more counterparts,
each of which shall be deemed an original, but all of which shall
together constitute one and the same agreement.
Section 11.14 Severability.
The provisions of this Indenture are severable, and if any
clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect in that jurisdiction
only such clause or provision, or part thereof, and shall not in
any manner affect such clause or provision in any other
jurisdiction or any other clause or provision of this Indenture
in any jurisdiction, and a Holder shall have no claim therefor
against any party hereto.
Section 11.15 Effect of Headings.
The Article and Section headings and the Table of Contents
contained in this Indenture have been inserted for convenience of
reference only, and are and shall be without substantive meaning
or content of any kind whatsoever and are not a part of this
Indenture.
ARTICLE 12.
RELEASE OF COLLATERAL
Section 12.1 Release of Collateral.
The Collateral securing the obligations evidenced by the
Securities shall be subject to release from the Lien of this
Indenture and the other Operative Documents from and to the
extent provided by this Indenture and the other Operative
Documents.
<PAGE>
49
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written
above.
TRANS WORLD AIRLINES, INC.
By: /s/ Michael J. Lichty
...............................
Name:.............................
Title:............................
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Trustee
By: /s/ Arge Pavlos
...............................
Name:.............................
Title:............................
<PAGE>
DEFINITIONS APPENDIX
Appendix I
To the Indenture between
Trans World Airlines, Inc.
and
First Security Bank, National Association, as Trustee
dated as of June 16, 1998
for the Company's 10 1/4% Senior Secured Notes due 2003
and the Aircraft Mortgage and Security Agreement
dated as of an even date therewith
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Definitions.................................. 1
Act......................................... 1
Affiliate................................... 1
Agent....................................... 1
Aircraft.................................... 1
Aircraft Sale Agreement..................... 1
Airframe.................................... 1
Applicable Percentage....................... 1
Bankruptcy Law.............................. 1
Bills of Sale............................... 2
Board of Directors.......................... 2
Business Day................................ 2
Capital Stock............................... 2
Capitalized Lease Obligation................ 2
Certificated Air Carrier.................... 2
Certifying Officer.......................... 2
Change in Control........................... 2
Code........................................ 3
Collateral.................................. 3
Common Stock................................ 3
Company..................................... 3
Corporate Trust Office...................... 3
Custodian................................... 3
Default..................................... 3
Definitions Appendix........................ 3
8% Preferred Stock.......................... 3
Employee Preferred Stock.................... 3
Engine...................................... 4
Equity Notes................................ 4
Equity Notes Indenture...................... 4
Equity Notes Trustee........................ 4
ERISA....................................... 4
Event of Default............................ 4
Exchange Act................................ 4
FAA......................................... 4
FAA Bill of Sale............................ 4
Federal Aviation Act........................ 4
GAAP........................................ 4
Global Security............................. 5
Holder or Holder of Securities.............. 5
Indebtedness................................ 5
Indenture................................... 5
(i)
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
Indenture Discharge Date.................... 5
Indenture Trustee........................... 5
Interest Payment Date....................... 5
Issue Date.................................. 5
Lazard...................................... 6
Legal Holiday............................... 6
Lien........................................ 6
Mandatory Redemption Amount................. 6
Mandatory Redemption Date................... 6
Mortgage.................................... 6
Mortgage Supplement......................... 6
9 1/4% Preferred Stock...................... 6
Obligations................................. 6
Offer to Purchase........................... 6
Officer..................................... 8
Officers' Certificate....................... 8
Operative Documents......................... 8
Opinion of Counsel.......................... 8
Outstanding or outstanding.................. 8
Owner Trustee............................... 9
Parts....................................... 9
Paying Agent................................ 9
Payment Date................................ 9
Payments.................................... 9
Permitted Liens............................. 9
Person...................................... 10
Preferred Stock............................. 10
principal................................... 10
Property.................................... 10
Record Date................................. 10
Register.................................... 10
Registrar................................... 11
Registration Rights Agreement............... 11
Replacement Engine.......................... 11
Request..................................... 11
Required Holders............................ 11
Sale OTP Amount............................. 11
SEC......................................... 11
Second Mortgage............................. 11
Securities.................................. 11
Securities Act.............................. 11
Securityholder.............................. 11
Seven Leasing............................... 11
(ii)
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
Significant Subsidiary...................... 12
Special Interest............................ 12
Special Record Date......................... 12
Stated Maturity............................. 12
Subsidiary.................................. 12
Taxes....................................... 12
Tender...................................... 12
TIA......................................... 12
Total Loss and Total Loss Date.............. 12
Total Loss OTP Amount....................... 12
Trust Agreement............................. 12
Trust Officer............................... 13
Trustee..................................... 13
TWA......................................... 13
U.S. or United States....................... 13
U.S. Government Obligations................. 13
Warranty Bill of Sale....................... 13
Section 2. Rules of Construction........................ 13
(iii)
<PAGE>
DEFINITIONS APPENDIX
Section 1. Definitions. Unless the context otherwise requires,
each of the terms included in this Section 1 shall have the
respective meanings given in this Section 1 for all purposes of
the Indenture and the other Operative Documents (including this
appendix and any other appendices, exhibits or schedules to any
thereof) and of such other agreements as may incorporate this
appendix by reference except as otherwise specifically provided
herein or therein.
"Act" means the Federal Aviation Act.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under
direct or indirect common control with such specified Person. For
the purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-Registrar
or co-Paying Agent.
"Aircraft" means the Airframe together with the two
associated Engines identified by manufacturer's serial number in
the Mortgage Supplement for the Airframe executed and delivered
on the Issue Date, whether or not any of such Engines may at any
time be installed on the Airframe or installed on any other
airframe.
"Aircraft Sale Agreement" means the Aircraft Sale and Note
Purchase Agreement, made and entered into as of the 16th day of
June, 1998, among the Company, the Owner Trustee, Seven Leasing
and Lazard.
"Airframe" means the Boeing Model 767-231 ETOPS airframe
(excluding any Engines and any other engines, but including any
and all Parts which may from time to time be incorporated or
installed in, or attached to such airframe, and including any and
all Parts removed therefrom so long as the removed Parts remain
subject to the Lien of the Mortgage under the terms thereof)
purchased by the Company under the Aircraft Sale Agreement and
identified by the FAA registration number and manufacturer's
serial number in the Mortgage Supplement executed and delivered
on the Issue Date.
"Applicable Percentage" means (i) with respect to any
amendment, supplement or waiver of the Indenture or any other
Operative Document that would (A) terminate the Lien of the
Mortgage with respect to any Collateral or permit the release of
any Collateral (other than releases permitted by the applicable
Operative Document, which releases shall not require any consent
of the Holders) or permit the creation of any Lien on any
Collateral (other than Permitted Liens), (B) increase the
aggregate principal amount of Securities that may be issued under
the Indenture or (C) modify this definition, 66 2/3%, and (ii)
otherwise, a majority.
"Bankruptcy Law" has the meaning provided in Section 6.1 of
the Indenture.
<PAGE>
2
"Bills of Sale" means the FAA Bill of Sale and the Warranty
Bill of Sale.
"Board of Directors" means the Board of Directors of the
Company or any committee of such board duly authorized to act in
respect of any particular matter.
"Business Day" means each day which is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations
or other equivalents of or interests in (however designated)
equity of such Person, including any Preferred Stock, but
excluding any debt securities convertible into such equity.
"Capitalized Lease Obligation" means, as applied to any
Person for any period, an obligation of such Person to pay rent
or other amounts under a lease that is required to be capitalized
for financial reporting purposes in accordance with GAAP, and the
amount of such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP.
"Certificated Air Carrier" means a United States "air
carrier" within the meaning of the Act, holding an air carrier
operating certificate issued pursuant to chapter 447 of the Act
and of the type referred to in 11 U.S.C. ss. 1110, or if such
certification shall cease to be available, a carrier of
comparable status under the laws of the United States then in
force.
"Certifying Officer" means an Officer or an assistant
secretary of the Company.
"Change in Control" means the occurrence of any of the
following events: (i) any person (including any entity or group
deemed to be a "person" under Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) is or becomes the direct or
indirect beneficial owner (as determined in accordance with Rule
13d-3 under the Exchange Act) of shares of the Company's Capital
Stock representing greater than 50% of the total voting power of
all shares of Capital Stock of the Company entitled to vote in
the election of directors of the Company under ordinary
circumstances or to elect a majority of the Board of Directors of
the Company, (ii) the Person then constituting the "Company"
under the Indenture sells, transfers or otherwise disposes of all
or substantially all of its assets (regardless of whether such
Person thereupon ceases to constitute the "Company" under the
Indenture pursuant to Section 5.2 thereof), (iii) when, during
any period of 12 consecutive months after the date of original
issuance of the Securities, individuals who at the beginning of
any such 12-month period constituted the Board of Directors
(together with any new directors whose election by such Board or
whose nomination for election by the stockholders of the Company
was approved by a vote of majority of the directors still in
office entitled to vote with respect to such nomination who were
either directors at the beginning of such period or whose
election or nomination for election was previously so approved,
but excluding any of the individuals who at the beginning of such
12-month period constituted such Board but who ceased to be a
member of the Board pursuant to the Company's mandatory
retirement policy as in effect as of the Issue Date), cease for
any reason to constitute a majority of the Board of Directors
then in office or (iv) the date of the consummation of the merger
or consolidation of the Person then constituting the "Company"
under the Indenture with another
<PAGE>
3
corporation where the stockholders of such Person, immediately
prior to the merger or consolidation, would not beneficially own,
immediately after the merger or consolidation, shares entitling
such stockholders to 50% or more of all votes (without
consideration of the rights of any class of stock to elect
directors by a separate class vote) to which all stockholders of
the corporation issuing cash or securities in the merger or
consolidation would be entitled in the election of directors or
where members of the Board of Directors of the Person then
constituting the "Company" under the Indenture, immediately prior
to the merger or consolidation, would not, immediately after the
merger or consolidation, constitute a majority of the board of
directors of the corporation issuing cash or securities in the
merger or consolidation.
"Code" means the United States Internal Revenue Code of
1986, as amended from time to time, or any similar legislation of
the United States enacted to supersede, amend or supplement such
Code, and any reference to a provision or provisions of the Code
shall also mean and refer to any successor provision or
provisions, however designated or distributed.
"Collateral" has the meaning specified in Section 2.1 of
the Mortgage.
"Common Stock" includes any stock of any class of the
Company which has no preference in respect to 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; initially it refers
to the common stock, $0.01 par value, of the Company.
"Company" means the party named as such in the Indenture or
any obligor on the Securities until a successor replaces it
pursuant to the Indenture and thereafter means the successor.
"Corporate Trust Office" when used with respect to the
Trustee means the office of the Trustee at which at any
particular time its corporate trust business is administered and
which, at the Issue Date, is located at First Security Bank,
National Association, as Trustee, 79 South Main Street, Salt Lake
City, Utah 84111, Attention: Corporate Trust Services.
"Custodian" has the meaning provided in Section 6.1 of the
Indenture.
"Default" means any event which is, or after notice or
passage of time, or both, would be, an Event of Default.
"Definitions Appendix" means this Definitions Appendix
attached as Appendix I to the Indenture and the Mortgage and
constituting a part of the Indenture and each other Operative
Document.
"8% Preferred Stock" means the 8% Cumulative Convertible
Exchangeable Preferred Stock of the Company.
"Employee Preferred Stock" means the IFFA Preferred Stock,
the ALPA Preferred Stock and the IAM Preferred Stock of the
Company.
<PAGE>
4
"Engine" means (i) each of the Pratt & Whitney Model
JT9D-7R4D aircraft engines identified by manufacturer's serial
number in the Mortgage Supplement executed and delivered on the
Issue Date, so long as a Replacement Engine shall not have been
substituted therefor pursuant to the Mortgage, and (ii) each
Replacement Engine, so long as another Replacement Engine shall
not have been substituted therefor pursuant to the Mortgage,
whether or not such engine or Replacement Engine, as the case may
be, is from time to time installed on the Airframe or installed
on another airframe, and including, in each case all Parts
incorporated or installed in or attached thereto and any and all
Parts removed therefrom so long as such Parts remain subject to
the Lien of the Mortgage under the terms thereof.
"Equity Notes" means the 10 1/4% Mandatory Conversion
Equity Notes due 1999 of the Company issued concurrently with the
Securities.
"Equity Notes Indenture" means the Indenture dated as of
the Issue Date between the Company and First Security Bank,
National Association, as trustee, pursuant to which the Company
is issuing the Equity Notes.
"Equity Notes Trustee" means First Security Bank, National
Association, as trustee under the Equity Notes Indenture, and its
successors and assigns in such capacity.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Event of Default" has the meaning provided in Section 6.1
of the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time.
"FAA" means the Federal Aviation Administration or similar
regulatory authority established to replace it.
"FAA Bill of Sale" means the bill of sale for the Aircraft
on AC Form 8050-2 or such other form as may be acceptable to the
FAA for recordation with it, executed by the Owner Trustee in
favor of the Company.
"Federal Aviation Act" means Title 49 of the United States
Code, "Transportation," as amended from time to time, or any
similar legislation of the United States enacted in substitution
or replacement thereof. In the event there is enacted any
legislation replacing, modifying or repealing, in whole or in
part, the Federal Aviation Act, then the term "certificated,"
when used with reference to the Federal Aviation Act or any
particular provision thereof, shall mean authorized to provide,
or not prohibited from providing, air transportation services.
"GAAP" means generally accepted accounting principles in
the United States of America as in effect as of the Issue Date,
including those set forth in (i) the opinions and pronouncements
of the Accounting Principles Board of the American Institute of
Certified Public Accountants, (ii) statements and pronouncements
of the Financial Accounting Standards Board, (iii) such other
<PAGE>
5
statements by such other entity as approved by a significant
segment of the accounting profession and (iv) the rules and
regulations of the SEC governing the inclusion of financial
statements (including pro forma financial statements) in periodic
reports required to be filed pursuant to Section 13 of the
Exchange Act, including opinions and pronouncements in staff
accounting bulletins and similar written statements from the
accounting staff of the SEC.
"Global Security" means a Security that evidences all or
part of the Securities of any series and bears the legend set
forth in Exhibit 1 to the Rule 144A/Regulation S Appendix to the
Indenture.
"Holder" or "Holder of Securities" means the Person in
whose name a Security is registered on the Registrar's books.
"Indebtedness" means, with respect to any Person at any
date, without duplication, (a) all indebtedness, obligations and
other liabilities (contingent or otherwise) of such Person for
borrowed money (whether or not the recourse of the lender is to
the whole of the assets of such Person or only to a portion
thereof), (b) all obligations and other liabilities (contingent
or otherwise) of such Person evidenced by bonds, notes or other
similar instruments, (c) all obligations and other liabilities
(contingent or otherwise) of such Person in respect of letters of
credit or other similar instruments (and reimbursement
obligations with respect thereto), (d) all obligations and other
liabilities (contingent or otherwise) of such Person to pay the
deferred and unpaid purchase price of property or services (other
than any such obligations that represent trade payables or
accrued expenses incurred in the ordinary course of business),
(e) all Capitalized Lease Obligations of such Person, (f) all
Indebtedness of others secured by a Lien on any asset or assets
of such Person, whether or not such Indebtedness is assumed by
such Person (and, if not assumed, such Indebtedness shall be
limited to the fair market value of such asset or assets as
determined on the date such Indebtedness was incurred), and (g)
all Indebtedness of others guaranteed by such Person to the
extent of such guarantee. The amount of Indebtedness of any
Person at any date shall be the outstanding balance at such date
of all unconditional obligations as described above and the
maximum liability of such Person for any such contingent
obligations at such date. A change in GAAP that results in an
obligation of the Company existing at the time of such change
becoming Indebtedness shall not be deemed an incurrence of such
Indebtedness.
"Indenture" means the Indenture dated as of the Issue Date
between the Company and the Trustee, under which the Securities
are issued, as amended or supplemented from time to time.
"Indenture Discharge Date" means the date of the
effectiveness of the termination of the Company's obligations
under the Indenture pursuant to Section 8.1(a) or (b) thereof.
"Indenture Trustee" means the Trustee.
"Interest Payment Date" means June 15 and December 15 of
each year during which any Security is Outstanding (commencing
December 15, 1998) and the date on which the Securities mature,
if different.
"Issue Date" means June 16, 1998 (the date on which the
Securities are originally issued).
<PAGE>
6
"Lazard" means Lazard Freres & Co. LLC, a New York limited
liability company.
"Legal Holiday" means a Saturday, Sunday or any other day
on which banks located in New York City or the city and state of
the Trustee's Corporate Trust Office as of the Issue Date are
authorized or obligated by law to remain closed.
"Lien" means any conveyance in trust, assignment, mortgage,
pledge, security interest, encumbrance, lien or charge of any
kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Mandatory Redemption Amount" has the meaning provided in
Section 3.2 of the Indenture.
"Mandatory Redemption Date" has the meaning provided in
Section 3.2 of the Indenture.
"Mortgage" means the Aircraft Mortgage and Security
Agreement, dated as of the Issue Date, between the Company and
the Trustee in substantially the form attached to the Indenture
as Exhibit A.
"Mortgage Supplement" means (i) the Mortgage and Security
Agreement Supplement executed and delivered on the Issue Date for
the Aircraft, in substantially the form attached to the Mortgage
as Exhibit A, which describes with particularity the Airframe and
Engines associated with the Aircraft, (ii) each other Mortgage
and Security Agreement Supplement from time to time executed and
delivered, in substantially the form attached to the Mortgage as
Exhibit A, which shall describe with particularity any
Replacement Engine and (iii) any other supplement to the Mortgage
from time to time executed and delivered in accordance with the
provisions of the Mortgage or any other Operative Document.
"9 1/4% Preferred Stock" means the 9 1/4% Cumulative
Convertible Exchangeable Preferred Stock of the Company.
"Obligations" has the meaning provided in Section 2.1 of
the Mortgage.
"Offer to Purchase" means an offer to purchase all or a
portion, as the case may be, of the Securities by the Company
from the Holders commenced by the mailing (by first class mail,
postage prepaid) by the Company (or, if requested by the Company
on at least five Business Days' prior notice to the Trustee and
at the Company's expense, by the Trustee) of a notice to each
Holder (and, if mailed by the Company, to the Trustee) at such
Holder's address appearing in the Register, stating: (i) the
covenant pursuant to which the offer is being made and that all
Securities validly tendered will be accepted for payment; (ii)
the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed) (the "Payment Date"); (iii) that
any Security not tendered will continue to accrue interest and
Special Interest (if any) pursuant to its terms (including, if
such Offer to Purchase is being made pursuant to Section
4.12(c)(i)(A) of the Indenture, a statement that the rate of
interest on such Security is subject to increase in accordance
with the provisions of such Section); (iv) that, unless the
Company defaults in the payment of the purchase price on
<PAGE>
7
the Payment Date, any Security accepted for payment pursuant to
the Offer to Purchase shall cease to accrue interest or Special
Interest (if any) on and after the Payment Date; (v) that
Holders electing to have a Security purchased pursuant to the
Offer to Purchase will be required to surrender the Security,
together with the form entitled "Option of the Holder to Elect
Purchase" attached to or on the reverse side of the Security
completed, to the Paying Agent at the address specified in the
notice at any time beginning with the date of such notice but
prior to the close of business on the Business Day immediately
preceding the Payment Date, and such Holder shall be entitled to
receive from the Paying Agent a non-transferable receipt of
deposit evidencing such deposit; (vi) that, unless the Company
defaults in making the payment of the purchase price or shall
otherwise, in its sole discretion, consent thereto, Holders will
be entitled to withdraw their election only if the Trustee
receives, not later than the close of business on the fifth
Business Day immediately preceding the Payment Date, a telegram,
facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Securities delivered for purchase
and a statement that such Holder is withdrawing his election to
have such Securities purchased; and (vii) that Holders whose
Securities are being purchased only in part will be promptly
issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered (which new
Securities, if such Offer to Purchase is being made pursuant to
Section 4.12(c)(i)(A) or 4.12(d) of the Indenture, will cease to
be secured by the Collateral); provided that each Security
purchased and each new Security issued shall be in a principal
amount of $1,000 or integral multiples thereof. The Company shall
place such notice in the national edition of The New York Times
or The Wall Street Journal or, if such newspapers are not then in
circulation, in a financial newspaper of general circulation in
New York City. No failure of the Company to give the foregoing
notice shall limit any Holder's right to exercise a repurchase
right. On the Payment Date, the Company shall (i) accept for
payment Securities or portions thereof tendered pursuant to an
Offer to Purchase; (ii) deposit with the Trustee money sufficient
to pay the purchase price of all Securities or portions thereof
so accepted; and (iii) deliver, or cause to be delivered, to the
Trustee all Securities or portions thereof so accepted together
with an Officers' Certificate specifying the Securities or
portions thereof accepted for payment by the Company. The Trustee
shall promptly mail to the Holders of Securities so accepted
payment in an amount equal to the purchase price, and the Trustee
shall promptly authenticate, and the Company shall promptly
execute and mail (or cause to be mailed) to such Holders a new
Security equal in principal amount to any unpurchased portion of
the Securities surrendered; provided that each Security purchased
and each new Security issued shall be in a principal amount of
$1,000 or integral multiples thereof; provided, further, that if
the Payment Date is between a regular Record Date and the next
succeeding Interest Payment Date, Securities to be repurchased
must be accompanied by payment of an amount equal to the interest
and Special Interest, if any, payable on such succeeding Interest
Payment Date on the principal amount to be repurchased, and the
interest on the principal amount of the Security being
repurchased, and Special Interest, if any, with respect thereto,
will be paid on such next succeeding Interest Payment Date to the
registered holder of such Security on the immediately preceding
Record Date. A Security repurchased on an Interest Payment Date
need not be accompanied by any such payment, and the interest on
the principal amount of the Security being repurchased and
Special Interest, if any, with respect thereto, will be paid on
such Interest Payment Date to the registered holder of such
Security on the corresponding Record Date. The Company will
publicly announce the results of an Offer to Purchase as soon as
practicable after
<PAGE>
8
the Payment Date. The Trustee shall act as the Paying Agent for
an Offer to Purchase. The Company will comply with Rule 14e-l
under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations
are applicable, in the event that the Company is required to
repurchase Securities pursuant to an Offer to Purchase. Both the
notice of the Company and the notice of the Holder having been
given as specified above, the Securities so to be repurchased
shall, on the Payment Date become due and payable at the purchase
price applicable thereto and from and after such date (unless the
Company shall default in the payment of such purchase price) such
Securities shall cease to bear interest or Special Interest (if
any). If any Security shall not be paid upon surrender thereof
for repurchase, the principal shall, until paid, bear interest
and Special Interest (if any) from the Payment Date at the rate
and in accordance with the provisions set forth in such Security
and the Indenture. Any Security which is to be submitted for
repurchase only in part shall be delivered pursuant to the above
provisions with (if the Company or Trustee so requires) due
endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in
writing.
"Officer" means the Chairman of the Board, the President,
any Vice President of any grade, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Secretary or the
Controller of the Company.
"Officers' Certificate" means a certificate signed by an
Officer and by a Certifying Officer satisfying the requirements
of Sections 11.4 and 11.5 of the Indenture.
"Operative Documents" means the Indenture, the Mortgage and
the Mortgage Supplements.
"Opinion of Counsel" means a written opinion from the
General Counsel of the Company, legal counsel to the Company or
another legal counsel who is reasonably acceptable to the
Trustee, which Opinion of Counsel shall comply with Sections 11.4
and 11.5 of the Indenture. The counsel may be an employee of the
Company. The acceptance by the Trustee (without written objection
to the Company during the fifteen (15) Business Days following
receipt) of, or its action on, an opinion of counsel not
specifically referred to above shall be sufficient evidence that
such counsel is acceptable to the Trustee.
"Outstanding" or "outstanding" when used with respect to
Securities or a Security, means all Securities theretofore
authenticated and delivered under the Indenture, except:
(a) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities for which payment has been deposited with
the Trustee or any Paying Agent in trust other than deposits
pursuant to Section 8.1 of the Indenture; and
(c) Securities which have been paid, or for which other
Securities shall have been authenticated and delivered in lieu
thereof or in substitution therefor pursuant to the terms of
<PAGE>
9
Section 2.7 of the Indenture, unless proof satisfactory to the
Trustee is presented that any such Securities are held by holders
in due course.
A Security does not cease to be Outstanding because the
Company or one of its Affiliates holds the Security; provided,
however, that in determining whether the Holders of the requisite
aggregate principal amount of Securities Outstanding have given
any request, demand, authorization, direction, notice, consent or
waiver under the Indenture, Section 2.8 of the Indenture shall be
applicable.
"Owner Trustee" means First Security Bank, National
Association (f/k/a First Security Bank of Utah, National
Association), not in its individual capacity (except as otherwise
expressly set forth) but as trustee under the Trust Agreement.
"Parts" means any and all appliances, parts, spare parts,
instruments, appurtenances, accessories, furnishings, seats and
other equipment of whatever nature (other than Engines or
engines) which may from time to time be incorporated or installed
in or attached to the Airframe or any Engine, or which have been
removed therefrom but which remain subject to the Lien of the
Mortgage in accordance with the terms thereof, exclusive of any
items (i) permitted by the Mortgage to be leased by the Company
in the ordinary course of business from third parties (and
installed without discrimination with respect to other Boeing
Model 767-231 ETOPS aircraft (or improved models) owned or
operated by the Company) and (ii) not required in the navigation
of the Aircraft. The terms "spare parts" and "appliances" (as
used in this definition) shall include, but not be limited to,
the definitions assigned to those terms by Section 40102 of Title
49 of the United States Code as amended from time to time or any
recodification thereof or any regulation of the FAA.
"Paying Agent" has the meaning provided in Section 2.3 of
the Indenture, except that for the purposes of Article 8 of the
Indenture and any Offer to Purchase, the Paying Agent shall not
be the Company.
"Payment Date" with respect to any Offer to Purchase, has
the meaning specified in the definition herein of Offer to
Purchase.
"Payments" means such monies as the Company shall cause to
be delivered to the Trustee or any Paying Agent for the purpose
of paying principal, purchase price or redemption price of, or
interest on, or Special Interest with respect to, the Securities
on any Interest Payment Date, Payment Date, redemption date or
acceleration; and "Pay" means paying such monies.
"Permitted Liens" shall mean any of the following Liens:
(a) Liens in favor of the Trustee arising by reason of the
Mortgage or any other Operative Document and Liens in favor of
the Equity Notes Trustee arising by reason of the Second Mortgage
or any other Operative Document (as defined in the Equity Notes
Indenture);
(b) Liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter
payable without penalty or being contested by the Company in good
<PAGE>
10
faith by appropriate proceedings and for which adequate reserves
have been established if required in accordance with GAAP, and
which Lien presents no material risk of sale, forfeiture or loss
of any Collateral;
(c) Liens of carriers, warehousemen, mechanics, materialmen
and landlords incurred in the Company's ordinary course of
business for sums not overdue or being contested by the Company
in good faith by appropriate proceedings and for which adequate
reserves have been established if required in accordance with
GAAP, and which Lien presents no material risk of sale,
forfeiture or loss of any Collateral;
(d) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or
other forms of governmental insurance or benefits, or to secure
performance of tenders and statutory obligations entered into in
the ordinary course of business or to secure obligations on
surety or appeal bonds;
(e) judgment Liens (so long as the related judgments do
not, individually or in the aggregate, constitute an Event of
Default) in existence less than sixty (60) days after the entry
thereof or with respect to which execution has been stayed or the
payment of which is covered in full by insurance;
(f) Liens on the Aircraft in favor of a permitted lessee of
the Aircraft which result solely from the lease (so long as it is
a permitted lease under the Mortgage) on the Aircraft; and
(g) Liens on the Aircraft which are "Permitted Liens"
arising under, and defined by definitions substantially similar
to above subparagraphs (b) and (c) in, the lease (if any) for the
Aircraft; provided, however, that such lease is permitted under
the Mortgage.
"Person" means any individual, corporation, partnership,
limited liability issuer, joint venture, association, joint-stock
issuer, trust, unincorporated organization, government or any
agency or political subdivision thereof or any other entity.
"Preferred Stock" as applied to the Capital Stock of any
Person means Capital Stock of any class or classes (however
designated) which is preferred as to the payment of dividends or
distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such
Person.
"principal" of a Security means the principal of the
Security plus the premium, if any, payable on the Security which
is due or overdue or is to become due at the relevant time.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, present or future, or
tangible or intangible.
"Record Date" means the fifteenth (15th) day preceding any
Interest Payment Date, whether or not a Business Day.
"Register" has the meaning provided in Section 2.3 of the
Indenture.
<PAGE>
11
"Registrar" has the meaning provided in Section 2.3 of the
Indenture.
"Registration Rights Agreement" means the Registration
Rights Agreement, made and entered into as of the Issue Date, by
and among the Company, the Owner Trustee and Lazard, relating to
the Securities.
"Replacement Engine" means a Pratt & Whitney Model
JT9D-7R4D aircraft engine (or engine of the same or another
manufacturer of a comparable or an improved model and suitable
for installation and use on the Airframe) (i) which has a value,
utility and remaining useful life at least equal to the Engine
which it is replacing, assuming such Engine was of the value and
utility required by the terms of the Mortgage; provided that any
such engine shall be of the same make and model as the other
engine then installed on the Airframe, shall be an engine model
then being utilized by the Company on other Boeing Model 767-231
ETOPS aircraft operated by the Company and, for so long as such
engine has been operated by the Company, shall have been
maintained, serviced, repaired and overhauled in substantially
the same manner as the Company maintains, services, repairs and
overhauls similar engines utilized by the Company, and (ii) which
shall have been made subject to the Lien of the Mortgage pursuant
to Section 2 and Section 3.3 of the Mortgage.
"Request" means a written request for the action therein
specified signed on behalf of the Company by any Officer and
delivered to the Trustee. Each Request shall be accompanied by an
Officers' Certificate if and to the extent required by Section
11.4 of the Indenture.
"Required Holders" means from time to time the Holders of
the Applicable Percentage in principal amount of the Securities
then Outstanding.
"Sale OTP Amount" has the meaning provided in Section 4.12
of the Indenture.
"SEC" means the Securities and Exchange Commission and any
government agency succeeding to its functions.
"Second Mortgage" means the Aircraft Second Mortgage and
Security Agreement, dated as of the Issue Date, between the
Company and the Equity Notes Trustee, securing, among other
things, the obligations of the Company under the Equity Notes
Indenture.
"Securities" means the "Securities" (as defined in the
preamble to the Indenture and includes the Company's 10 1/4%
Senior Secured Notes due 2003), as amended or supplemented from
time to time, that are issued under the Indenture.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Seven Leasing" means 767 Leasing HY, LLC, a Delaware
limited liability company.
<PAGE>
12
"Significant Subsidiary" means any Subsidiary which is a
Significant Subsidiary within the meaning of Article I of
Regulation S-X under the Exchange Act.
"Special Interest" has the meaning assigned to such term in
the Registration Rights Agreement.
"Special Record Date" has the meaning provided in Section
2.1 of the Indenture.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the
final payment of principal of such security is due and payable,
including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening
of any contingency unless such contingency has occurred).
"Subsidiary" means, in respect of any Person, any
corporation, association, partnership or other business entity of
which more than 50% of the total voting power of shares of
Capital Stock or other interests (including membership or
partnership interests) entitled (without regard to the occurrence
of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by (i) such Person, (ii) such Person and
one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.
"Taxes" means any and all fees (including, without
limitation, license, documentation and registration fees), taxes
(including, without limitation, income, gross receipts, sales,
rental, use, turnover, value-added, property (tangible and
intangible), excise and stamp taxes), levies, imposts, duties,
recording charges or fees, charges, assessments or withholdings
of any nature whatsoever, together with any and all assessments,
penalties, additions to tax, fines or interest thereon.
"Tender" means, with respect to any Security, the effective
tender of such Security (in whole or in part) for repurchase in
accordance with the provisions of the Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture;
provided, however, that in the event the Trust Indenture Act of
1939 is amended after such date, "Trust Indenture Act" means, to
the extent required by any such amendment, the Trust Indenture
Act of 1939 as so amended.
"Total Loss" and "Total Loss Date" have the meanings
provided in Section 1.1 of the Mortgage.
"Total Loss OTP Amount" has the meaning provided in Section
4.12 of the Indenture.
"Trust Agreement" means the Trust Agreement N607TW, dated
as of March 28, 1995, between Seven Leasing, as assignee of ING
Lease Delaware, Inc. (f/k/a Internationale Nederlanden Aviation
Lease Delaware, Inc.), and First Security Bank, National
Association
<PAGE>
13
(f/k/a First Security Bank of Utah, National Association), not in
its individual capacity, except as expressly stated therein, but
solely as trustee thereunder.
"Trust Officer" means any officer in the corporate trust
department of the Trustee, or any other officer or assistant
officer of the Trustee assigned by the Trustee to administer its
corporate trust matters.
"Trustee" means the party named as such in the Indenture
until a successor replaces it in accordance with the provisions
of the Indenture and thereafter means the successor.
"TWA" means the Company.
"U.S." or "United States" means the United States of America.
"U.S. Government Obligations" means securities which are
(i) direct obligations of the United State government or (ii)
obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States government, are
full faith and credit obligations of the United States government
and are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a
bank or trust Company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or
principal of any such U.S. Government Obligation held by such
custodian for the account of the holder of a depository receipt,
provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the
specific payment of interest on or principal of the U.S.
Government Obligation evidenced by such depository receipt.
"Warranty Bill of Sale" means the warranty (as to title)
bill of sale covering the Aircraft executed by the Owner Trustee
in favor of the Company.
Section 2. Rules of Construction. Unless the context otherwise
requires, the following rules of construction shall apply to all
purposes of the Indenture and the other Operative Documents
(including this appendix) and of such agreements as may
incorporate this appendix by reference.
(a) a term has the meaning assigned to it;
(b) whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and
neuter forms;
(c) the words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without
limitation";
(d) all terms used in Article 9 of the Uniform
Commercial Code as in effect in the State of New York that
are used but not defined herein shall have the meaning
assigned to such terms therein;
<PAGE>
14
(e) references to a specific Person shall include the
Person and (except as limited by any agreement by which
such Person is bound) the successors and assigns of such
Person;
(f) references to "applicable laws" shall include
statutes, ordinances, rules, regulations, court and
administrative decisions and conditions, restrictions and
limitations in licenses, permits, approvals and
authorizations issued or granted by federal, state or local
United States or foreign governmental bodies and agencies;
(g) unless otherwise specified in the computation of a
period of time from a specified date to a later specified
date, the word "from" means "from and including", and the
words "to" and "until" each mean "to but excluding";
(h) words in the singular include the plural, and
words in the plural include the singular;
(i) provisions apply to successive events and
transactions;
(j) "herein", "hereto" and other words of similar
import in any agreement refer to that agreement as a whole
and not to any particular Article, Section or other
subsection of that agreement;
(k) unless otherwise specified, all references in any
Operative Document to Sections, Articles, Exhibits,
Appendices and Schedules are to Sections of, Articles of,
Exhibits to, Appendices to and Schedules to such Operative
Document;
(l) all accounting terms used herein and not expressly
defined shall have the meanings given to them in accordance
with GAAP; and
(m) unless otherwise specified, references in this
Definitions Appendix to any instrument, contract, agreement
or other document shall be deemed to be references to such
instrument, agreement or other document as it may be
amended, restated, supplemented or otherwise modified from
time to time pursuant to and as permitted by the terms
thereof, whether or not so stated in any particular
definition.
<PAGE>
RULE 144A/REGULATION S APPENDIX
Appendix II
To the Indenture between
Trans World Airlines, Inc.
and
First Security Bank, National Association, as Trustee
dated as of June 16, 1998
for the Company's 10 1/4% Senior Secured Notes due 2003
<PAGE>
RULE 144A/REGULATION S APPENDIX
FOR INITIAL ISSUANCE AND FOR
SUBSEQUENT OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT TO
RULE 144A, INSTITUTIONAL "ACCREDITED INVESTORS" (AS DEFINED
IN RULE 501(A)(1), (2), (3) or (7)) AND TO CERTAIN PERSONS
IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S
PROVISIONS RELATING TO INITIAL SECURITIES,
------------------------------------------
PRIVATE EXCHANGE SECURITIES
---------------------------
AND EXCHANGE SECURITIES
-----------------------
1. Definitions
1.1 Definitions
For the purposes of this Appendix the following terms shall
have the meanings indicated below:
"Definitive Security" means a certificated Security bearing
the restricted securities legend set forth in Section 2.3(d) and
which is held by an IAI.
"Depository" means The Depository Trust Company, its
nominees and their respective successors.
"Exchange Securities" means the 10 1/4% Senior Secured
Notes due 2003 to be issued pursuant to the Indenture in
connection with a Registered Exchange Offer pursuant to the
Registration Rights Agreement.
"IAI" means an institutional "accredited investor" as
described in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act.
"Initial Purchaser" means Lazard.
"Initial Securities" means the 10 1/4% Senior Secured Notes
due 2003, issued under the Indenture on or about the date of the
Indenture.
"Lazard" means Lazard Freres & Co. LLC.
"Owner Trustee" means First Security Bank, National
Association (f/k/a First Security Bank of Utah, National
Association), not in its individual capacity (except as otherwise
expressly set forth) but as trustee under the Trust Agreement
N607TW, dated as of March 28, 1995, between 767 Leasing HY, LLC,
as assignee of ING Lease Delaware, Inc. (f/k/a Internationale
Nederlanden Aviation Lease Delaware, Inc.) and First Security
Bank, National Association (f/k/a First Security Bank of Utah,
National Association), not in its individual capacity, except as
expressly stated therein, but solely as trustee thereunder.
<PAGE>
2
"Private Exchange" means the offer by the Company, pursuant to
the Registration Rights Agreement, to Lazard to issue and deliver
to Lazard, in exchange for the Initial Securities held by Lazard
as part of its initial distribution, a like aggregate principal
amount of Private Exchange Securities.
"Private Exchange Securities" means the 10 1/4% Senior
Secured Notes due 2003 to be issued pursuant to the Indenture to
Lazard in a Private Exchange.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A under the Securities Act.
"Registered Exchange Offer" means the offer by the Company,
pursuant to the Registration Rights Agreement, to certain Holders
of Initial Securities to issue and deliver to such Holders, in
exchange for the Initial Securities, a like aggregate principal
amount of Exchange Securities registered under the Securities
Act.
"Registration Rights Agreement" means the Registration
Rights Agreement, made and entered into as of June 16, 1998,
among the Company, the Owner Trustee and Lazard relating to the
Registered Exchange Offer.
"Sale Agreement" means the Aircraft Sale and Note Purchase
Agreement, made and entered into as of the 16th day of June,
1998, among the Company, the Owner Trustee, 767 Leasing HY, LLC
and Lazard.
"Securities" means the Initial Securities, the Exchange
Securities and the Private Exchange Securities, treated as a
single class.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to
a Global Security (as appointed by the Depository), or any
successor person thereto and shall initially be the Trustee.
"Shelf Registration Statement" means the registration
statement of the Company, in connection with the offer and sale
of Initial Securities or Private Exchange Securities, pursuant to
the Registration Rights Agreement.
"Transfer Restricted Securities" means Definitive
Securities and Securities that bear or are required to bear the
legend set forth in Section 2.3(d) hereto.
<PAGE>
3
1.2 Other Definitions
Defined in this Rule 144A/Regulation S
--------------------------------------
Term Appendix in the Section indicated below
- ---- ---------------------------------------
"Agent Members"..............................................2.1(b)
"Global Security"............................................2.1(b)
"Indenture".....................................................2.2
"Regulation S"...............................................2.1(a)
"Rule 144A"..................................................2.1(a)
Unless otherwise indicated, all Section numbers referenced
herein are to Sections of this Rule 144A/Regulation S Appendix.
2. The Securities.
2.1 Form and Dating.
The Initial Securities are being offered and sold by the
Company pursuant to the Sale Agreement.
(a) Global Securities. Initial Securities offered and
sold to a QIB in reliance on Rule 144A under the Securities Act
("Rule 144A") as provided in the Sale Agreement, shall be issued
initially in the form of one permanent global Security in
definitive, fully registered form without interest coupons with
the global securities legend and restricted securities legend set
forth in Exhibit 1 hereto (the "144A Global Security"), which
shall be deposited on behalf of the purchasers of the Initial
Securities represented thereby with the Trustee, at its New York
office, as custodian for the Depository (or with such other
custodian as the Depository may direct), and registered in the
name of the Depository or a nominee of the Depository, duly
executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the 144A
Global Security may from time to time be increased or decreased
by adjustments made on the records of the Trustee and the
Depository or its nominee as hereinafter provided.
Initial Securities offered and sold in reliance on
Regulation S under the Securities Act ("Regulation S"), as
provided in the Sale Agreement, shall be issued initially in the
form of one permanent global Security in definitive, fully
registered form without interest coupons with the global
securities legend and restricted securities legend set forth in
Exhibit 1 hereto (the "Regulation S Global Security"), which
shall be deposited on behalf of the purchasers of the Initial
Securities represented thereby with the Trustee, as custodian for
the Depository (or with such other custodian as the Depository
may direct), and registered in the name of the Depository or the
nominee of the Depository duly executed by the Company and
authenticated by the Trustee as hereinafter provided. On or prior
to the 40th day after the later of the commencement of the
offering and the Closing Date (as defined in the Sale Agreement),
beneficial interests in the Regulation S Global Security may only
be held for the accounts of designated agents holding on behalf
of Morgan Guaranty Trust Company of New York, Brussels office, as
operator of the
<PAGE>
4
Euroclear System ("Euroclear") or Cedel Bank, societe anonyme
("Cedel"). Following such 40 day period, beneficial interests in
the Regulation S Global Security may be held through Euroclear,
Cedel or other participants having accounts at the Depository.
The aggregate principal amount of the Regulation S Global
Security may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depository
or its nominee, as the case may be, as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall
apply only to the 144A Global Security and the Regulation S
Global Security (each a "Global Security") deposited with or on
behalf of the Depository.
The Company shall execute and the Trustee shall, in
accordance with this Section 2.1(b), authenticate and deliver
initially one Global Security in respect of Initial Securities
issued pursuant to Rule 144A and one Global Security in respect
of Initial Securities issued pursuant to Regulation S that (a)
shall each be registered in the name of the Depository for such
Global Security or the nominee of such Depository and (b) shall
each be delivered by the Trustee to such Depository or pursuant
to such Depository's instructions or held by the Trustee as
custodian for the Depository.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under the Indenture with respect
to any Global Security held on their behalf by the Depository or
by the Trustee as the custodian of the Depository or under any
Global Security, and the Depository may be treated by the
Company, the Trustee and any agent of the Company or the Trustee
as the absolute owner of any Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or
the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depository or
impair, as between the Depository and its Agent Members, the
operation of customary practices of such Depository governing the
exercise of the rights of a holder of a beneficial interest in
any Global Security.
(c) Certificated Securities. Except as provided in
this Section 2.1 or Section 2.3 or 2.4, owners of beneficial
interests in any Global Security will not be entitled to receive
physical delivery of certificated Securities. Purchasers of
Initial Securities who are IAIs and are neither QIBs nor non-U.S.
persons within the meaning of Regulation S will receive
Definitive Securities; provided, however, that upon transfer of
such Definitive Securities to a QIB in reliance on Rule 144A or a
non-U.S. person in reliance on Regulation S, such Definitive
Securities will, unless the applicable Global Security has
previously been exchanged for Definitive Securities, be exchanged
for an interest in the applicable Global Security pursuant to the
provisions of Section 2.3.
2.2 Authentication. The Trustee shall authenticate and
deliver: (1) Initial Securities for original issue on the Issue
Date in an aggregate principal amount of $14,500,000 and (2)
Exchange Securities or Private Exchange Securities for issue only
in a Registered Exchange Offer or a Private Exchange,
respectively, pursuant to the Registration Rights Agreement, for
a like principal amount of Initial Securities, in each case, upon
a written order of the Company
<PAGE>
5
signed by two Officers or by an Officer and either an
Assistant Treasurer or an Assistant Secretary of the Company.
Such order shall specify the amount of the Securities to be
authenticated and the date on which the original issue of
Securities is to be authenticated and whether the Securities are
to be Initial Securities, Exchange Securities or Private Exchange
Securities. The aggregate principal amount of Securities
Outstanding at any time may not exceed $14,500,000 except as
provided in Section 2.7 of the Indenture of which this Rule
144A/Regulation S Appendix forms a part (as it may be amended,
restated, supplemented or otherwise modified from time to time,
the "Indenture").
2.3 Transfer and Exchange. (a) Transfer and Exchange of
Definitive Securities. When Definitive Securities are presented to the
Registrar or a co-Registrar with a request:
(i) to register the transfer of such Definitive Securities; or
(ii) to exchange such Definitive Securities for an
equal principal amount of Definitive Securities of other
authorized denominations,
the Registrar or co-Registrar shall register the transfer or make
the exchange as requested if its reasonable requirements for such
transaction are met; provided, however, that the Definitive
Securities surrendered for transfer or exchange shall be
accompanied by a duly executed Assignment Form in the form
attached to Exhibit 1 hereto.
(b) Restrictions on Transfer of a Definitive Security
for a Beneficial Interest in a Global Security. A Definitive
Security may not be exchanged for a beneficial interest in a
Global Security except upon satisfaction of the requirements set
forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Trustee, together with:
(i) certification that such Definitive Security is
being transferred (x) to a QIB in accordance with Rule 144A
or (y) to a non-U.S. person in accordance with the
provisions of Regulation S; and
(ii) written instructions directing the Trustee to
make, or to direct the Securities Custodian to make, an
adjustment on its books and records with respect to the
applicable Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by
such Global Security, such instructions to contain
information regarding the Depository account to be credited
with such increase,
then the Trustee shall cancel such Definitive Security and cause,
or direct the Securities Custodian to cause, in accordance with
the standing instructions and procedures existing between the
Depository and the Securities Custodian, the aggregate principal
amount of Securities represented by the applicable Global
Security to be increased by the aggregate principal amount of the
Definitive Security to be exchanged and shall credit or cause to
be credited to the account of the Person specified in such
instructions a beneficial interest in the applicable Global
Security equal to the principal amount of the Definitive Security
so canceled. If no Global Security is then outstanding, the
Company shall issue and the Trustee shall authenticate, upon
written order
<PAGE>
6
of the Company in the form of an Officers' Certificate, a new Global
Security in the appropriate principal amount.
(c) Transfer and Exchange of a Global Security.
(i) The transfer and exchange of a Global Security or
beneficial interests therein shall be effected through the
Depository, in accordance with the Indenture (including
applicable restrictions on transfer set forth herein, if
any) and the procedures of the Depository therefor. A
transferor of a beneficial interest in a Global Security
shall deliver to the Registrar a written order given in
accordance with the Depository's procedures containing
information regarding the participant account of the
Depository to be credited with a beneficial interest in the
applicable Global Security. The Registrar shall, in
accordance with such instructions, instruct the Depository
to credit to the account of the Person specified in such
instructions a beneficial interest in the applicable Global
Security and to debit the account of the Person making the
transfer the beneficial interest in the applicable Global
Security being transferred.
(ii) Notwithstanding any other provisions of this Rule
144A/Regulation S Appendix (other than the provision set
forth in Section 2.4 hereof), a Global Security may not be
transferred as a whole except by the Depository to a
nominee of the Depository or by a nominee of the Depository
to the Depository or another nominee of the Depository or
by the Depository or any such nominee to a successor
Depository or a nominee of such successor Depository.
(iii) In the event that a Global Security is exchanged
for Securities in definitive registered form pursuant to
Section 2.4 hereof or Section 2.9 of the Indenture prior to
the consummation of a Registered Exchange Offer or the
effectiveness of a Shelf Registration Statement with
respect to such Securities, such Securities may be
exchanged only in accordance with such procedures as are
substantially consistent with the provisions of this
Section 2.3 (including the certification requirements
intended to ensure that such transfers comply with Rule
144A or Regulation S, as the case may be) and such other
procedures as may from time to time be adopted by the
Company.
(d) Legends.
(i) Except as permitted by the following paragraphs
(ii), (iii) and (iv), each Security certificate evidencing
the Global Securities and the Definitive Securities (and
all Securities issued in exchange therefor or in
substitution thereof) shall bear a legend in substantially
the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT, OR ANY STATE SECURITIES LAWS. NEITHER
THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
<PAGE>
7
FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THESE SECURITIES BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL, OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE RESALE RESTRICTION TERMINATION DATE WHICH IS
THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE DATE OF
ORIGINAL ISSUANCE OF THESE SECURITIES AND THE LAST DATE ON
WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE
OWNER OF THESE SECURITIES (OR ANY PREDECESSOR OF THESE
SECURITIES) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A UNDER THE SECURITIES ACT, (D)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION
S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES
ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED
INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO,
OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE, OR TRANSFER (i) PURSUANT TO CLAUSES (D), (E) OR (F)
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE
THAT A CERTIFICATE OF TRANSFER IN THE FORM ATTACHED TO OR
ON THE REVERSE SIDE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND
WILL BE REMOVED
<PAGE>
8
UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE."
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER
TO THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS
THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."
Each Regulation S Global Security will also bear the following
additional legend:
ON OR PRIOR TO THE 40TH DAY AFTER THE LATER OF THE
COMMENCEMENT OF THE OFFERING AND THE CLOSING DATE,
TRANSFERS OF INTERESTS IN THE REGULATION S GLOBAL SECURITY
TO U.S. PERSONS SHALL BE LIMITED TO TRANSFERS TO QUALIFIED
INSTITUTIONAL BUYERS PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT.
(ii) Upon any sale or transfer of a Transfer
Restricted Security (including any Transfer Restricted
Security represented by a Global Security) pursuant to Rule
144 under the Securities Act:
(A) in the case of any Transfer Restricted
Security that is a Definitive Security, the Registrar
shall permit the Holder thereof to exchange such
Transfer Restricted Security for a certificated
Security that does not bear the legend set forth above
and rescind any restriction on the transfer of such
Transfer Restricted Security; and
(B) in the case of any Transfer Restricted
Security that is represented by a Global Security, the
Registrar shall permit the Holder thereof to exchange
such Transfer Restricted Security for a certificated
Security that does not bear the legend set forth above
and rescind any restriction on the transfer of such
Transfer Restricted Security, if the Holder certifies
in writing to the Registrar that its request for such
exchange was made in reliance on such Rule 144.
(iii) After a transfer of any Initial Securities or
Private Exchange Securities during the period of the
effectiveness of a Shelf Registration Statement with
respect to such Initial Securities or Private Exchange
Securities, as the case may be, all requirements pertaining
to legends on such Initial Security or such Private
Exchange Security will cease to apply, the requirements
requiring any such Initial Security or such Private
Exchange Security issued to certain Holders to be issued in
global form will cease to apply, and a certificated Initial
Security or Private Exchange Security without legends will
be available to the transferee of the Holder of such
Initial Securities or Private Exchange Securities upon
exchange of such transferring Holder's certificated Initial
Security or Private Exchange Security or directions to
transfer such Holder's interest in the relevant Global
Security, as applicable.
<PAGE>
9
(iv) Upon the consummation of a Registered Exchange Offer
with respect to the Initial Securities pursuant to which
Holders of such Initial Securities are offered Exchange
Securities in exchange for their Initial Securities all
requirements pertaining to such Initial Securities that
Initial Securities issued to certain Holders be issued in
global form will cease to apply and certificated Initial
Securities with the Restricted Securities Legend set forth
in Exhibit 1 hereto will be available to Holders of such
Initial Securities that do not exchange their Initial
Securities, and Exchange Securities in certificated or
global form will be available to Holders that exchange such
Initial Securities in such Registered Exchange Offer.
(v) Upon consummation of a Private Exchange with
respect to the Initial Securities pursuant to which Holders
of such Initial Securities are offered Private Exchange
Securities in exchange for their Initial Securities, all
requirements pertaining to such Initial Securities that
Initial Securities issued to certain Holders be issued in
global form will still apply, and Private Exchange
Securities in definitive form with the Restricted
Securities Legend set forth in Exhibit 1 hereto will be
available to Holders that exchange such Initial Securities
in such Private Exchange.
(e) Cancellation or Adjustment of a Global Security.
At such time as all beneficial interests in a Global Security
have either been exchanged for certificated or Definitive
Securities, redeemed, repurchased or canceled, such Global
Security shall be returned to the Depository for cancellation or
retained and canceled by the Trustee. At any time prior to such
cancellation, if any beneficial interest in a Global Security is
exchanged for certificated or Definitive Securities, redeemed,
repurchased or canceled, the principal amount of Securities
represented by such Global Security shall be reduced and an
adjustment shall be made on the books and records of the Trustee
(if it is then the Securities Custodian for such Global Security)
with respect to the Custodian, to reflect such reduction.
(f) Obligations with Respect to Transfers and
Exchanges of Securities.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall
authenticate certificated Securities, Definitive Securities
and any Global Security at the Registrar's or
co-Registrar's request.
(ii) No service charge shall be made for any
registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer
tax, assessments or similar governmental charge payable in
connection therewith (other than any such transfer taxes,
assessment or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.9, 3.7, 4.15 or
9.5 of the Indenture).
(iii) The Registrar or co-Registrar shall not be
required to register the transfer or exchange of any
certificated or Definitive Security tendered for repurchase
in whole or in part pursuant to an Offer to Purchase (as
defined in Appendix I to the Indenture), except the
unredeemed portion of any certificated or Definitive
Security being repurchased in part and except to the
Company.
<PAGE>
10
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the
Paying Agent, the Registrar or any co-Registrar may deem
and treat the person in whose name a Security is registered
as the absolute owner of such Security for the purpose of
receiving payment of principal of, premium, if any, or,
interest on, or Special Interest, if any, with respect to,
such Security and for all other purposes whatsoever,
whether or not such Security is overdue and none of the
Company, the Trustee, the Paying Agent, the Register or any
co-Registrar shall be affected by notice to the contrary.
(v) All Securities issued upon any transfer or
exchange pursuant to the terms of the Indenture shall
evidence the same debt and shall be entitled to the same
benefits under the Indenture as the Securities surrendered
upon such transfer or exchange.
(g) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or
obligation to any beneficial owner of any Global Security,
a member of or a participant in the Depository or other
Person with respect to the accuracy of the records of the
Depository or its nominee or of any participant or member
thereof with respect to any ownership interest in the
Securities or with respect to the delivery to any
participant, member, beneficial owner or other Person
(other than the Depository) of any notice (including any
notice of redemption) or the payment of any amount under or
with respect to such Securities. All notices and
communications to be given to the Holders and all payments
to be made to Holders under the Securities shall be given
or made only to or upon the order of the registered Holders
(which shall be the Depository or its nominee in the case
of each Global Security). The rights of beneficial owners
in each Global Security shall be exercised only through the
Depository subject to the applicable rules and procedures
of the Depository. The Trustee may rely and shall be fully
protected in relying upon information furnished by the
Depository with respect to its members, participants and
any beneficial owners.
(ii) The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under the Indenture or
under applicable law with respect to any transfer of any
interest in any Security (including any transfers between
or among Depository participants, members or beneficial
owners in a Global Security) other than to require delivery
of such certificates and other documentation or evidence as
are expressly required by, and to do so if and when
expressly required by, the terms of the Indenture, and to
examine the same to determine substantial compliance as to
form with the express requirements hereof.
2.4 Certificated Securities.
(a) All or any portion of any Global Security
deposited with the Depository or with the Trustee as custodian
for the Depository pursuant to Section 2.1 shall be transferable
to the beneficial owners thereof in the form of certificated
Securities in an aggregate principal amount equal to the
principal amount of such certificated security, in exchange for
such interest in the applicable Global Security, only if such
transfer complies with Section 2.3 and (i) the
<PAGE>
11
Depository notifies the Company that it is unwilling or unable to
continue as Depository for such Global Security or if at any time
such Depository ceases to be a "clearing agency" registered under
the Exchange Act, or (ii) an Event of Default (as defined in the
Indenture) has occurred and is continuing or (iii) the Company,
in its sole discretion, notifies the Trustee in writing such
Global Security or Global Securities shall be exchangeable.
(b) Any Global Security that is transferable to the
beneficial owners thereof pursuant to this Section shall be
surrendered by the Depository to the Trustee located in the
Borough of Manhattan, The City of New York, to be so transferred,
in whole or from time to time in part, without charge, and the
Trustee shall authenticate and deliver, upon such transfer of
each portion of such Global Security, an equal aggregate
principal amount of certificated Initial Securities of authorized
denominations. Any portion of a Global Security transferred
pursuant to this Section shall be executed, authenticated and
delivered only in denominations of $1,000 principal amount and
any integral multiple thereof (except that any Global Security
may be issued in a different denomination) and registered in such
names as the Depository shall direct. Any certificated Initial
Security delivered in exchange for an interest in a Global
Security shall, except as otherwise provided by Section 2.3, bear
the legend set forth in Section 2.3(d).
(c) Subject to the provision of Section 2.4(b), the
registered Holder of a Global Security may grant proxies and
otherwise authorize any Person, including Agent Members and
Persons that may hold interests through Agent Members, to take
any action which a Holder is entitled to take under the Indenture
or the Securities.
(d) In the event of the occurrence of any of the
events specified in Section 2.4(a), the Company will promptly
make available to the Trustee a reasonable supply of certificated
Securities in definitive, fully registered form without interest
coupons.
<PAGE>
EXHIBIT 1
to
RULE 144A/REGULATION S APPENDIX
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC)
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT, OR ANY STATE SECURITIES LAWS. NEITHER THESE
SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. EACH PURCHASER
OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THESE SECURITIES BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL, OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE RESALE RESTRICTION TERMINATION DATE WHICH
IS THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE DATE OF
ORIGINAL ISSUANCE OF THESE
<PAGE>
2
SECURITIES AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THESE SECURITIES (OR
ANY PREDECESSOR OF THESE SECURITIES) ONLY (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A UNDER THE SECURITIES ACT, (D) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (a)(1), (2) (3), OR (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED
INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE, OR TRANSFER (i) PURSUANT TO CLAUSES (D),
(E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM ATTACHED TO OR ON THE REVERSE
SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL
DELIVER TO THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS
THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.
[Regulation S Global Security Legend]
ON OR PRIOR TO THE 40TH DAY AFTER THE LATER OF THE
COMMENCEMENT OF THE OFFERING AND THE CLOSING DATE, TRANSFERS OF
INTERESTS IN THE REGULATION S GLOBAL SECURITY TO U.S. PERSONS
SHALL BE LIMITED TO TRANSFERS TO QUALIFIED INSTITUTIONAL BUYERS
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT.
<PAGE>
No. CUSIP No.
$
10 1/4% Senior Secured Note due 2003
TRANS WORLD AIRLINES, INC., a Delaware corporation
promises to pay to __________, or registered assigns, the
principal sum of __________ Dollars on June 15, 2003.
Interest Payment Dates: June 15 and December 15.
Record Dates: June 1 and December 1.
Additional provisions of this Security are set forth
on the other side of this Security.
Dated:
TRANS WORLD AIRLINES, INC.
By:____________________________
Name:
Title:
Attest:
____________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
First Security Bank, National
Association, as Trustee, certifies
that this is one of the Securities
referred to in the Indenture.
By:_____________________________
Authorized Signatory
<PAGE>
2
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
10 1/4% Senior Secured Note due 2003
This Security is one of a duly authorized issue of
securities of the Company designated as its 10 1/4% Senior
Secured Notes due 2003 (hereinafter called the "Securities"),
limited in aggregate principal amount Outstanding to $14,500,000,
issued or to be issued pursuant to an Indenture, dated as of June
16, 1998 (hereinafter called the "Indenture") between the Company
and First Security Bank, National Association, as Trustee (herein
called the "Trustee", which term includes any successor trustee
under the Indenture).
1. Interest; Special Interest. The Company promises to pay
interest on the principal amount of this Security at the rate of
ten and one-quarter percent (10 1/4%) per annum, subject to
increase as provided in paragraph 8 below; provided, however,
that if a Registration Default (as defined in and subject to the
provisions of the Registration Rights Agreement) occurs (each
period during which a Registration Default has occurred and is
continuing referred to herein as a "Registration Default
Period"), additional interest will accrue on this Security at a
per annum rate of 0.50% for the first 90 days of the Registration
Default Period, at a per annum rate of 1.0% for the second 90
days of the Registration Default Period, at a per annum rate of
1.5% for the third 90 days of the Registration Default Period and
at a per annum rate of 1.5% thereafter for the remaining portion
of the Registration Default Period (such additional interest is
referred to herein as "Special Interest"). The Company will pay
interest and Special Interest, if any, semi-annually on the
Interest Payment Dates set forth on the face of this Security,
commencing December 15, 1998. Interest on the Securities will
accrue from June 16, 1998 or the most recent Interest Payment
Date to which interest and Special Interest, if any, have been
paid. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment. The Company will pay interest on and
Special Interest, if any, with respect to, the Securities (except
defaulted interest and interest on defaulted principal) to the
persons who are registered Holders of Securities at the close of
business on the Record Date set forth on the face of this
Security next preceding the applicable Interest Payment Date.
Defaulted interest and interest on defaulted principal will be
paid by the Company in accordance with the applicable provisions
of the Indenture. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay
principal, interest and Special Interest, if any, at the office
or agency of the Company maintained for that purpose in the
Borough of Manhattan, The City of New York and at any other
office or agency maintained by the Company for such purpose in
money of the United States that at the time of payment is legal
tender for payment of public and private debts; provided,
however, that at the option of the Company, payment of interest
on and Special Interest, if any, with respect to, the Securities
may be by check payable in such money and mailed to a Holder's
registered address; provided further, however, that payments on a
certificated Security will be made by wire transfer to a U.S.
dollar account maintained by a Holder with a bank in New York
City if such Holder owns at least $250,000 in aggregate principal
amount of certificated Securities and elects payment by wire
transfer by giving written notice to the Company and the Trustee
to such effect designating
<PAGE>
3
such account no later than 10 days immediately preceding the
relevant due date for payment (or such other date as the Company
and the Trustee may accept in their discretion). If a payment
date is a legal holiday at a place of payment, payment may be
made at that place on the next succeeding Business Day, and no
interest shall accrue for the intervening period.
3. Registrar, Paying Agent and Tender Agent. Initially,
the Trustee will act as Registrar and Paying Agent. The Company
may change any Paying Agent or Registrar or co- registrar without
prior notice to any Securityholder. The Company may act in any
such capacity, except in certain circumstances.
4. Indenture. The Company issued the Securities under the
Indenture. The terms of the Securities include those stated in
the Indenture and those made applicable to the Indenture by the
TIA. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and such Act for a
statement of such terms. Subject to paragraph 7 hereof, the
Securities are senior secured obligations of the Company limited
to $14,500,000 aggregate principal amount, except as otherwise
provided in the Indenture. Terms used in this Security and not
defined in this Security shall have the meaning set forth in
Section 1 of the Definitions Appendix attached as Appendix I to
the Indenture, which shall be a part of this Security as if fully
set forth in this place. The rules of construction for this
Security are set forth in Section 2 of the Definitions Appendix.
5. Mandatory Redemption. The Securities may not be redeemed
at any time at the option of the Company. Subject to the
provisions of the Indenture, the Company shall, until all the
Securities are paid or payment thereof provided for, deposit in
accordance with Section 3.6 of the Indenture, at least one
Business Day prior to June 15 in each year, commencing June 15,
2001 (each such date being hereinafter referred to as a
"Mandatory Redemption Date"), an amount in cash sufficient to
redeem an aggregate principal amount of Securities (the
"Mandatory Redemption Amount") equal to $920,000 on each of June
15, 2001 and June 15, 2002 (or, if the aggregate principal amount
of Securities Outstanding on any such Mandatory Redemption Date
is less than the principal amount required to so be redeemed,
then all the Outstanding Securities shall be redeemed on such
date), at a redemption price (expressed as a percentage of the
principal amount) of 100% plus accrued and unpaid interest and
Special Interest, if any, to the Mandatory Redemption Date
(subject to the right of holders of record on the relevant record
date to receive interest and Special Interest, if any, due on the
relevant Interest Payment Date). Each such deposit shall be
applied to the redemption of Securities on such Mandatory
Redemption Date as provided in the Indenture. The Company may at
its option receive credit against any or all of the cash portion
of the Mandatory Redemption Amount for open market purchases of
Securities, and the obligation of the Company to make such
mandatory redemptions is subject to automatic termination in
connection with any permitted sale of or Total Loss with respect
to the Aircraft, all as provided in the Indenture.
6. Notice of Redemption. Notice of any redemption will
be mailed at least 30 days but not sooner than 45 days before the
redemption date to each Holder of Securities to be redeemed at
his registered address. Securities in denominations larger than
$1,000 may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the
<PAGE>
4
redemption price of and accrued interest on, and Special
Interest, if any, with respect to, all Securities (or portions
thereof) to be redeemed on the redemption date is deposited with
the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof)
called for redemption.
7. Security. The Securities are secured by Liens on
certain Properties of the Company pursuant to the Mortgage and
the other Operative Documents described in the Indenture and such
Liens are subject to release as provided herein and in the
Mortgage and the other Operative Documents.
8. Offers to Purchase. In the event that there shall occur
a Change in Control, the Company shall make an Offer to Purchase
all of the Outstanding Securities, at a purchase price equal to
101% of the aggregate principal amount of the Securities
Outstanding, plus accrued and unpaid interest and Special
Interest, if any, to and including the repurchase date. The right
to require such repurchase of Securities shall not continue after
a discharge of the Company from its obligations with respect to
the Securities in accordance with Article 8 of the Indenture. The
Company shall commence such Offer to Purchase within thirty (30)
days after the occurrence of a Change in Control.
In the event that the Company desires to sell the Aircraft
as and when permitted in Section 4.12 of the Indenture, the
Company shall (subject to the provisions of such Section 4.12)
have commenced an Offer to Purchase Securities in an aggregate
principal amount (the "Sale OTP Amount") equal to the aggregate
principal amount of the Securities Outstanding on the date of the
commencement of such Offer to Purchase at a purchase price
(expressed as a percentage of principal amount of Securities to
be purchased) equal to (a) 102%, if such Offer to Purchase is
commenced prior to the first anniversary of the Issue Date, or
(b) 101%, if such Offer to Purchase is commenced on or after the
first anniversary of the Issue Date, plus in either case, accrued
and unpaid interest and Special Interest, if any, on such
Securities to and including the Payment Date. Effective as of the
day immediately following the Payment Date with respect to the
Offer to Purchase in connection with a sale of the Aircraft, the
interest rate borne by the Securities then Outstanding shall be
subject to automatic increase as set forth in Section 4.12 of the
Indenture, and the Aircraft shall be released from the Lien of
the Operative Documents in accordance with the provisions
thereof. The Company may receive credit against any or all of the
Sale OTP Amount for open market purchases of Securities as
provided in the Indenture.
In the event that there shall occur a Total Loss with
respect to the Aircraft, the Company shall (subject to the
provisions of Section 4.12 of the Indenture) make an Offer to
Purchase an aggregate principal amount of Outstanding Securities
(the "Total Loss OTP Amount") equal to the aggregate principal
amount of the Securities Outstanding on the date such Offer to
Purchase is required to be commenced under the Indenture at a
purchase price equal to 100% of the aggregate principal amount of
Securities to be purchased, plus accrued and unpaid interest and
Special Interest, if any, on such Securities, to and including
the Payment Date, and the Aircraft shall be released from the
Lien of the Operative Documents in accordance with the provisions
thereof. The Company shall commence such Offer to Purchase within
thirty (30) days after the
<PAGE>
5
Total Loss Date with respect to any such Total Loss. The Company
may receive credit against any or all of the Total Loss OTP
Amount for open market purchases of Securities as provided in the
Indenture.
"Offer to Purchase" means an offer to purchase all or a
portion, as the case may be, of the Securities by the Company
from the Holders commenced by the mailing (by first class mail,
postage prepaid) by the Company (or, if requested by the Company
on at least five Business Days' prior notice to the Trustee and
at the Company's expense, by the Trustee) of a notice to each
Holder (and, if mailed by the Company, to the Trustee) at such
Holder's address appearing in the Register, stating: (i) the
covenant pursuant to which the offer is being made and that all
Securities validly tendered will be accepted for payment; (ii)
the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed) (the "Payment Date"); (iii) that
any Security not tendered will continue to accrue interest and
Special Interest (if any) pursuant to its terms (including, if
such Offer to Purchase is being made pursuant to Section
4.12(c)(i)(A) of the Indenture, a statement that the rate of
interest on such Security is subject to increase in accordance
with the provisions of such Section); (iv) that, unless the
Company defaults in the payment of the purchase price on the
Payment Date, any Security accepted for payment pursuant to the
Offer to Purchase shall cease to accrue interest or Special
Interest (if any) on and after the Payment Date; (v) that Holders
electing to have a Security purchased pursuant to the Offer to
Purchase will be required to surrender the Security, together
with the form entitled "Option of the Holder to Elect Purchase"
attached to or on the reverse side of the Security completed, to
the Paying Agent at the address specified in the notice at any
time beginning with the date of such notice but prior to the
close of business on the Business Day immediately preceding the
Payment Date, and such Holder shall be entitled to receive from
the Paying Agent a non-transferable receipt of deposit evidencing
such deposit; (vi) that, unless the Company defaults in making
the payment of the purchase price or shall otherwise, in its sole
discretion, consent thereto, Holders will be entitled to withdraw
their election only if the Trustee receives, not later than the
close of business on the fifth Business Day immediately preceding
the Payment Date, a telegram, facsimile transmission or letter
setting forth the name of such Holder, the principal amount of
Securities delivered for purchase and a statement that such
Holder is withdrawing his election to have such Securities
purchased; and (vii) that Holders whose Securities are being
purchased only in part will be promptly issued new Securities
equal in principal amount to the unpurchased portion of the
Securities surrendered (which new Securities, if such Offer to
Purchase is being made pursuant to Section 4.12(c)(i)(A) or
4.12(d) of the Indenture, will cease to be secured by the
Collateral); provided that each Security purchased and each new
Security issued shall be in a principal amount of $1,000 or
integral multiples thereof. The Company shall place such notice
in the national edition of The New York Times or The Wall Street
Journal or, if such newspapers are not then in circulation, in a
financial newspaper of general circulation in New York City. No
failure of the Company to give the foregoing notice shall limit
any Holder's right to exercise a repurchase right. On the Payment
Date, the Company shall (i) accept for payment Securities or
portions thereof tendered pursuant to an Offer to Purchase; (ii)
deposit with the Trustee money sufficient to pay the purchase
price of all Securities or portions thereof so accepted; and
(iii) deliver, or cause to be delivered, to the Trustee all
Securities or portions thereof so accepted together with an
Officers' Certificate specifying the Securities or portions
thereof accepted for
<PAGE>
6
payment by the Company. The Trustee shall promptly mail to the
Holders of Securities so accepted payment in an amount equal to
the purchase price, and the Trustee shall promptly authenticate,
and the Company shall promptly execute and mail (or cause to be
mailed) to such Holders a new Security equal in principal amount
to any unpurchased portion of the Securities surrendered;
provided that each Security purchased and each new Security
issued shall be in a principal amount of $1,000 or integral
multiples thereof; provided, further, that if the Payment Date is
between a regular Record Date and the next succeeding Interest
Payment Date, Securities to be repurchased must be accompanied by
payment of an amount equal to the interest and Special Interest,
if any, payable on such succeeding Interest Payment Date on the
principal amount to be repurchased, and the interest on the
principal amount of the Security being repurchased, and Special
Interest, if any, with respect thereto, will be paid on such next
succeeding Interest Payment Date to the registered holder of such
Security on the immediately preceding Record Date. A Security
repurchased on an Interest Payment Date need not be accompanied
by any such payment, and the interest on the principal amount of
the Security being repurchased and Special Interest, if any, with
respect thereto, will be paid on such Interest Payment Date to
the registered holder of such Security on the corresponding
Record Date. The Company will publicly announce the results of an
Offer to Purchase as soon as practicable after the Payment Date.
The Trustee shall act as the Paying Agent for an Offer to
Purchase. The Company will comply with Rule 14e-l under the
Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are
applicable, in the event that the Company is required to
repurchase Securities pursuant to an Offer to Purchase. Both the
notice of the Company and the notice of the Holder having been
given as specified above, the Securities so to be repurchased
shall, on the Payment Date become due and payable at the purchase
price applicable thereto and from and after such date (unless the
Company shall default in the payment of such purchase price) such
Securities shall cease to bear interest or Special Interest (if
any). If any Security shall not be paid upon surrender thereof
for repurchase, the principal shall, until paid, bear interest
and Special Interest (if any) from the Payment Date at the rate
and in accordance with the provisions set forth in this Security
and the Indenture. Any Security which is to be submitted for
repurchase only in part shall be delivered pursuant to the above
provisions with (if the Company or Trustee so requires) due
endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in
writing.
9. Denominations, Transfer, Exchange. The Securities shall
be issuable only in registered form without coupons and in
denominations of $1,000 and integral multiples thereof. The
transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes required by law or
permitted by the Indenture.
10. Persons Deemed Owners. The Company, the Trustee and
any agent of the Company or the Trustee may treat the person in
whose name this Security is registered with the Registrar as the
owner for all purposes.
<PAGE>
7
11. Discharge. Subject to certain conditions set forth
in Article 8 of the Indenture, the Company may terminate its
obligations under the Securities and the Indenture, except those
obligations referred to in Section 8.1(b) of the Indenture, if
the Company deposits with the Trustee or a Paying Agent cash or
U.S. Government Obligations for the payment of principal of,
interest on, and Special Interest, if any, with respect to, the
Securities to Stated Maturity.
12. Amendments and Waivers. Subject to certain exceptions,
the Indenture, the Securities, or the other Operative Documents
may be amended with the consent of the Holders of at least a
majority in principal amount of the then Outstanding Securities,
and any existing Default, Event of Default or acceleration may be
waived with the consent of the Holders of a majority in principal
amount of the then Securities Outstanding. Without the consent of
any Holder, the Indenture, the Securities or any of the Operative
Documents may be amended to, among other things, cure any
ambiguity, defect or inconsistency.
13. Defaults and Remedies. Events of Default under the
Indenture include the following: default for the period specified
in the Indenture in payment of interest on, or Special Interest,
if any, with respect to the Securities; default in payment of the
principal amount of any Securities when the same becomes due and
payable (at maturity, upon acceleration, redemption, tender for
repurchase or otherwise); failure by the Company to comply with
specific covenants of the Indenture or of the Mortgage within the
time periods provided therein, discontinuing substantially all of
its commercial airlines operations, or failure to pay over
amounts required under the Mortgage; failure to comply in any
material respect with any of its other agreements contained in
the Indenture, the other Operative Documents or the Securities
within the time periods (if any) and after the notice (if any)
provided in any thereof; a representation or warranty of the
Company in the Indenture, the other Operative Documents or any
Mortgage Supplement or in any certificate of the Company
delivered under any such document proves to be untrue in any
material respect when made, and the failure to cure such default
within the time periods and after the notice specified in the
Indenture; the occurrence of certain defaults under any
Indebtedness of the Company or any of its Significant
Subsidiaries in excess of $10,000,000 in principal amount; the
rendering of final judgments by a court of competent jurisdiction
against the Company or any of its Significant Subsidiaries in an
aggregate amount of $10,000,000 or more which remain undischarged
for a period (during which execution is not stayed) of sixty (60)
days after the date on which the right to appeal has expired;
cessation of effectiveness of the Operative Documents without the
consent of the Trustee; and certain events of bankruptcy,
insolvency or reorganization. Subject to certain limitations in
the Indenture, if an Event of Default occurs and is continuing,
the Trustee or the Holders of twenty-five percent (25%) in
principal amount of the Securities Outstanding may declare all
the Securities to be due and payable immediately, except that in
the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all Securities Outstanding become due
and payable immediately without further action or notice.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or
the Securities. Subject to certain limitations, Holders of a
majority in principal amount of the then Outstanding Securities
may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any
continuing default (except a default in payment of principal or
interest) if it determines that withholding notice is in
<PAGE>
8
their interests. The Company must furnish compliance certificates
to the Trustee. The above description of Events of Default and
remedies is qualified by reference, and subject in its entirety
to the more complete description thereof contained in the
Indenture.
14. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with
and collect obligations owed to it by the Company or Affiliates
of the Company with the same rights it would have if it were not
Trustee.
15. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have
any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. Each
Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the
consideration for the issue of the Securities.
16. Authentication. This Security shall not be valid
until authenticated by the manual signature of the Trustee or an
authenticating agent.
17. Unclaimed Money. If money for the payment of principal
of, interest on, or Special Interest, with respect to, or the
purchase price for the Securities remains unclaimed for two (2)
years, the Trustee or Paying Agent will pay the money back to the
Company at its request. After such payment, Holders entitled to
any portion of such money must look to the Company for payment
unless an applicable law designates another person.
18. Abbreviations. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants
in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
19. CUSIP Numbers. The Company in issuing this Security may
use a "CUSIP" number (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a
convenience to Holders; provided, however, that any such notice
may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any
defect in or omission of such numbers.
20. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Security, by acceptance hereof, acknowledges and
agrees to the provisions of the Registration Rights Agreement,
including, without limitation, the obligations of the Holders
with respect to a registration and the indemnification of the
Company to the extent provided therein.
21. Governing Law. THIS SECURITY SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF
LAWS.
<PAGE>
9
The Company will furnish to any Holder of this
Security, upon written request and without charge, a copy of the
Indenture. Request may be made to: Trans World Airlines, Inc.,
One City Centre, 515 N. 6th Street, St. Louis, Missouri 63101,
Attention: Corporate Secretary.
<PAGE>
10
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to:
(Insert Assignee's Soc. Sec. or Tax I.D. No.)
(Print or type assignee's name, address and zip
code)
and irrevocably appoint ______________ agent
to transfer this Security on the books of the
Company. The agent may substitute another to
act for him.
Date:____________________________ Signature(s):__________________________
__________________________
(Sign exactly as your name(s) appear(s)
on the other side of this Security)
Signature(s) guaranteed by:
________________________________________
(All signatures must be guaranteed by
a member of a national securities
exchange or of the National Association
of Securities Dealers, Inc. or by a
commercial bank or trust company located
in the United States)
<PAGE>
11
OPTION OF THE HOLDER TO ELECT PURCHASE
If you want to elect to have this Security repurchased by
the Company pursuant to any Offer to Purchase under the
Indenture, check the box:
|_|
If you want to elect to have only part of this Security
repurchased by the Company pursuant to any Offer to Purchase
under the Indenture, state the principal amount to be
repurchased:
$__________________________________
(in an integral multiple of $1,000)
Date:____________________________ Signature(s):__________________________
__________________________
(Sign exactly as your name(s) appear(s)
on the other side of this Security)
Signature(s) guaranteed by:
________________________________________
(All signatures must be guaranteed by
a member of a national securities
exchange or of the National Association
of Securities Dealers, Inc. or by a
commercial bank or trust company located
in the United States)
<PAGE>
12
CERTIFICATE OF TRANSFER
Re: 10 1/4% Senior Secured Notes due 2003 (the "Notes") of Trans World
Airlines, Inc. (the "Company")
This Certificate relates to Notes held in definitive
form by ___________ (the "Transferor").
The Transferor has requested the Registrar by written
order to exchange or register the transfer of a Note or Notes. In
connection with such request and in respect of each such Note,
the Transferor does hereby certify that the Transferor is
familiar with the Indenture relating to the above captioned Notes
and that the transfer of this Note does not require registration
under the Securities Act of 1933 (the "Securities Act"),
because:*
|_| Such Note is being transferred to the Company.
|_| Such Note is being transferred pursuant to an
effective Registration Statement under the Securities Act.
|_| Such Note is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the Securities
Act) in reliance on Rule 144A.
|_| Such Note is being transferred pursuant to an
offshore transaction in accordance with Rule 904 under the
Securities Act.
|_| Such Note is being transferred to an Institutional
"Accredited Investor" within the meaning of Subparagraph (a)(1),
(2), (3) or (7) of Rule 501 under the Securities Act.
|_| Such Note is being transferred in a transaction
meeting the requirements of Rule 144 under the Securities Act.
The Registrar and the Company are entitled to rely
upon this Certificate and are irrevocably authorized to produce
this Certificate or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
___________________________
[INSERT NAME OF TRANSFEROR]
By:_______________________
Date:_____________________________
__________________________________
* Please check applicable box.
<PAGE>
EXHIBIT 2
to
RULE 144A/REGULATION S APPENDIX
[FORM OF FACE OF EXCHANGE SECURITY OR PRIVATE EXCHANGE SECURITY]
[*/]
[**/]
No. CUSIP No.
$
10 1/4% Senior Secured Note due 2003
TRANS WORLD AIRLINES, INC., a Delaware corporation
promises to pay to __________, or registered assigns, the
principal sum of __________ Dollars on June 15, 2003.
Interest Payment Dates: June 15 and December 15.
Record Dates: June 1 and December 1.
Additional provisions of this Security are set forth
on the other side of this Security.
<PAGE>
2
Dated:
TRANS WORLD AIRLINES, INC.
By:____________________________
Name:
Title:
Attest:
___________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
First Security Bank, National
Association, as Trustee, certifies
that this is one of the Securities
referred to in the Indenture.
By:___________________________
Authorized Signatory
________________________
*/ If the Security is to be issued in global form add the Global
Securities Legend from Exhibit 1 to the Rule 144A/Regulation S
Appendix.
**/ If the Security is a Private Exchange Security issued in a
Private Exchange to the Placement Agent with respect to
Securities acquired in other than market making or trading
activities, add the Restricted Securities Legend from Exhibit 1
to the Rule 144A/Regulation S Appendix and add the Certificate of
Transfer from such Exhibit to the end of this Exhibit 2.
<PAGE>
3
[FORM OF REVERSE SIDE OF EXCHANGE OR PRIVATE EXCHANGE SECURITY]
10 1/4% Senior Secured Note due 2003
This Security is one of a duly authorized issue of
securities of the Company designated as its 10 1/4% Senior
Secured Notes due 2003 (hereinafter called the "Securities"),
limited in aggregate principal amount Outstanding to $14,500,000,
issued or to be issued pursuant to an Indenture, dated as of June
16, 1998 (hereinafter called the "Indenture") between the Company
and First Security Bank, National Association, as Trustee (herein
called the "Trustee", which term includes any successor trustee
under the Indenture).
1. Interest; Special Interest. The Company promises to pay
interest on the principal amount of this Security at the rate of
ten and one-quarter percent (10 1/4%) per annum, subject to
increase as provided in paragraph 8 below; provided, however,
that if a Registration Default (as defined in and subject to the
provisions of the Registration Rights Agreement) occurs (each
period during which a Registration Default has occurred and is
continuing referred to herein as a "Registration Default
Period"), additional interest will accrue on this Security at a
per annum rate of 0.50% for the first 90 days of the Registration
Default Period, at a per annum rate of 1.0% for the second 90
days of the Registration Default Period, at a per annum rate of
1.5% for the third 90 days of the Registration Default Period and
at a per annum rate of 1.5% thereafter for the remaining portion
of the Registration Default Period (such additional interest is
referred to herein as "Special Interest"). The Company will pay
interest and Special Interest, if any, semi-annually on the
Interest Payment Dates set forth on the face of this Security,
commencing December 15, 1998. Interest on the Securities will
accrue from June 16, 1998 or the most recent Interest Payment
Date to which interest and Special Interest, if any, have been
paid. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment. The Company will pay interest on and
Special Interest, if any, with respect to, the Securities (except
defaulted interest and interest on defaulted principal) to the
persons who are registered Holders of Securities at the close of
business on the Record Date set forth on the face of this
Security next preceding the applicable Interest Payment Date.
Defaulted interest and interest on defaulted principal will be
paid by the Company in accordance with the applicable provisions
of the Indenture. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay
principal, interest and Special Interest, if any, at the office
or agency of the Company maintained for that purpose in the
Borough of Manhattan, The City of New York and at any other
office or agency maintained by the Company for such purpose in
money of the United States that at the time of payment is legal
tender for payment of public and private debts; provided,
however, that at the option of the Company, payment of interest
on and Special Interest, if any, with respect to, the Securities
may be by check payable in such money and mailed to a Holder's
registered address; provided further, however, that payments on a
certificated Security will be made by wire transfer to a U.S.
dollar account maintained by a Holder with a bank in New York
City if such Holder owns at least $250,000 in aggregate principal
amount of certificated Securities and elects payment by wire
transfer by giving written notice to the Company and the Trustee
to such effect designating
<PAGE>
4
such account no later than 10 days immediately preceding the
relevant due date for payment (or such other date as the Company
and the Trustee may accept in their discretion). If a payment
date is a legal holiday at a place of payment, payment may be
made at that place on the next succeeding Business Day, and no
interest shall accrue for the intervening period.
3. Registrar, Paying Agent and Tender Agent. Initially,
the Trustee will act as Registrar and Paying Agent. The Company
may change any Paying Agent or Registrar or co- registrar without
prior notice to any Securityholder. The Company may act in any
such capacity, except in certain circumstances.
4. Indenture. The Company issued the Securities under the
Indenture. The terms of the Securities include those stated in
the Indenture and those made applicable to the Indenture by the
TIA. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and such Act for a
statement of such terms. Subject to paragraph 7 hereof, the
Securities are senior secured obligations of the Company limited
to $14,500,000 aggregate principal amount, except as otherwise
provided in the Indenture. Terms used in this Security and not
defined in this Security shall have the meaning set forth in
Section 1 of the Definitions Appendix attached as Appendix I to
the Indenture, which shall be a part of this Security as if fully
set forth in this place. The rules of construction for this
Security are set forth in Section 2 of the Definitions Appendix.
5. Mandatory Redemption. The Securities may not be redeemed
at any time at the option of the Company. Subject to the
provisions of the Indenture, the Company shall, until all the
Securities are paid or payment thereof provided for, deposit in
accordance with Section 3.6 of the Indenture, at least one
Business Day prior to June 15 in each year, commencing June 15,
2001 (each such date being hereinafter referred to as a
"Mandatory Redemption Date"), an amount in cash sufficient to
redeem an aggregate principal amount of Securities (the
"Mandatory Redemption Amount") equal to $920,000 on each of June
15, 2001 and June 15, 2002 (or, if the aggregate principal amount
of Securities Outstanding on any such Mandatory Redemption Date
is less than the principal amount required to so be redeemed,
then all the Outstanding Securities shall be redeemed on such
date), at a redemption price (expressed as a percentage of
principal amount) of 100% plus accrued and unpaid interest and
Special Interest, if any, to the Mandatory Redemption Date
(subject to the right of holders of record on the relevant record
date to receive interest and Special Interest, if any, due on the
relevant Interest Payment Date). Each such deposit shall be
applied to the redemption of Securities on such Mandatory
Redemption Date as provided in the Indenture. The Company may at
its option receive credit against any or all of the cash portion
of the Mandatory Redemption Amount for open market purchases of
Securities, and the obligation of the Company to make such
mandatory redemptions is subject to automatic termination in
connection with any permitted sale of or Total Loss with respect
to the Aircraft, all as provided in the Indenture.
6. Notice of Redemption. Notice of any redemption will
be mailed at least 30 days but not sooner than 45 days before the
redemption date to each Holder of Securities to be redeemed at
his registered address. Securities in denominations larger than
$1,000 may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the
<PAGE>
5
redemption price of and accrued interest on, and Special
Interest, if any, with respect to, all Securities (or portions
thereof) to be redeemed on the redemption date is deposited with
the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof)
called for redemption.
7. Security. The Securities are secured by Liens on
certain Properties of the Company pursuant to the Mortgage and
the other Operative Documents described in the Indenture and such
Liens are subject to release as provided herein and in the
Mortgage and the other Operative Documents.
8. Offers to Purchase. In the event that there shall occur
a Change in Control, the Company shall make an Offer to Purchase
all of the Outstanding Securities, at a purchase price equal to
101% of the aggregate principal amount of the Securities
Outstanding, plus accrued and unpaid interest and Special
Interest, if any, to and including the repurchase date. The right
to require such repurchase of Securities shall not continue after
a discharge of the Company from its obligations with respect to
the Securities in accordance with Article 8 of the Indenture. The
Company shall commence such Offer to Purchase within thirty (30)
days after the occurrence of a Change in Control.
In the event that the Company desires to sell the Aircraft
as and when permitted in Section 4.12 of the Indenture, the
Company shall (subject to the provisions of such Section 4.12)
have commenced an Offer to Purchase Securities in an aggregate
principal amount (the "Sale OTP Amount") equal to the aggregate
principal amount of the Securities Outstanding on the date of the
commencement of such Offer to Purchase at a purchase price
(expressed as a percentage of principal amount of Securities to
be purchased) equal to (a) 102%, if such Offer to Purchase is
commenced prior to the first anniversary of the Issue Date, or
(b) 101%, if such Offer to Purchase is commenced on or after the
first anniversary of the Issue Date, plus in either case, accrued
and unpaid interest and Special Interest, if any, on such
Securities to and including the Payment Date. Effective as of the
day immediately following the Payment Date with respect to the
Offer to Purchase in connection with a sale of the Aircraft, the
interest rate borne by the Securities then Outstanding shall be
subject to automatic increase as set forth in Section 4.12 of the
Indenture, and the Aircraft shall be released from the Lien of
the Operative Documents in accordance with the provisions
thereof. The Company may receive credit against any or all of the
Sale OTP Amount for open market purchases of Securities as
provided in the Indenture.
In the event that there shall occur a Total Loss with
respect to the Aircraft, the Company shall (subject to the
provisions of Section 4.12 of the Indenture) make an Offer to
Purchase an aggregate principal amount of Outstanding Securities
(the "Total Loss OTP Amount") equal to the aggregate principal
amount of the Securities Outstanding on the date such Offer to
Purchase is required to be commenced under the Indenture at a
purchase price equal to 100% of the aggregate principal amount of
Securities to be purchased, plus accrued and unpaid interest and
Special Interest, if any, on such Securities, to and including
the Payment Date, and the Aircraft shall be released from the
Lien of the Operative Documents in accordance with the provisions
thereof. The Company shall commence such Offer to Purchase within
thirty (30) days after the
<PAGE>
6
Total Loss Date with respect to any such Total Loss. The Company
may receive credit against any or all of the Total Loss OTP
Amount for open market purchases of Securities as provided in the
Indenture.
"Offer to Purchase" means an offer to purchase all or a
portion, as the case may be, of the Securities by the Company
from the Holders commenced by the mailing (by first class mail,
postage prepaid) by the Company (or, if requested by the Company
on at least five Business Days' prior notice to the Trustee and
at the Company's expense, by the Trustee) of a notice to each
Holder (and, if mailed by the Company, to the Trustee) at such
Holder's address appearing in the Register, stating: (i) the
covenant pursuant to which the offer is being made and that all
Securities validly tendered will be accepted for payment; (ii)
the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed) (the "Payment Date"); (iii) that
any Security not tendered will continue to accrue interest and
Special Interest (if any) pursuant to its terms (including, if
such Offer to Purchase is being made pursuant to Section
4.12(c)(i)(A) of the Indenture, a statement that the rate of
interest on such Security is subject to increase in accordance
with the provisions of such Section); (iv) that, unless the
Company defaults in the payment of the purchase price on the
Payment Date, any Security accepted for payment pursuant to the
Offer to Purchase shall cease to accrue interest or Special
Interest (if any) on and after the Payment Date; (v) that Holders
electing to have a Security purchased pursuant to the Offer to
Purchase will be required to surrender the Security, together
with the form entitled "Option of the Holder to Elect Purchase"
attached to or on the reverse side of the Security completed, to
the Paying Agent at the address specified in the notice at any
time beginning with the date of such notice but prior to the
close of business on the Business Day immediately preceding the
Payment Date, and such Holder shall be entitled to receive from
the Paying Agent a non-transferable receipt of deposit evidencing
such deposit; (vi) that, unless the Company defaults in making
the payment of the purchase price or shall otherwise, in its sole
discretion, consent thereto, Holders will be entitled to withdraw
their election only if the Trustee receives, not later than the
close of business on the fifth Business Day immediately preceding
the Payment Date, a telegram, facsimile transmission or letter
setting forth the name of such Holder, the principal amount of
Securities delivered for purchase and a statement that such
Holder is withdrawing his election to have such Securities
purchased; and (vii) that Holders whose Securities are being
purchased only in part will be promptly issued new Securities
equal in principal amount to the unpurchased portion of the
Securities surrendered (which new Securities, if such Offer to
Purchase is being made pursuant to Section 4.12(c)(i)(A) or
4.12(d) of the Indenture, will cease to be secured by the
Collateral); provided that each Security purchased and each new
Security issued shall be in a principal amount of $1,000 or
integral multiples thereof. The Company shall place such notice
in the national edition of The New York Times or The Wall Street
Journal or, if such newspapers are not then in circulation, in a
financial newspaper of general circulation in New York City. No
failure of the Company to give the foregoing notice shall limit
any Holder's right to exercise a repurchase right. On the Payment
Date, the Company shall (i) accept for payment Securities or
portions thereof tendered pursuant to an Offer to Purchase; (ii)
deposit with the Trustee money sufficient to pay the purchase
price of all Securities or portions thereof so accepted; and
(iii) deliver, or cause to be delivered, to the Trustee all
Securities or portions thereof so accepted together with an
Officers' Certificate specifying the Securities or portions
thereof accepted for
<PAGE>
7
payment by the Company. The Trustee shall promptly mail to the
Holders of Securities so accepted payment in an amount equal to
the purchase price, and the Trustee shall promptly authenticate,
and the Company shall promptly execute and mail (or cause to be
mailed) to such Holders a new Security equal in principal amount
to any unpurchased portion of the Securities surrendered;
provided that each Security purchased and each new Security
issued shall be in a principal amount of $1,000 or integral
multiples thereof; provided, further, that if the Payment Date is
between a regular Record Date and the next succeeding Interest
Payment Date, Securities to be repurchased must be accompanied by
payment of an amount equal to the interest and Special Interest,
if any, payable on such succeeding Interest Payment Date on the
principal amount to be repurchased, and the interest on the
principal amount of the Security being repurchased, and Special
Interest, if any, with respect thereto, will be paid on such next
succeeding Interest Payment Date to the registered holder of such
Security on the immediately preceding Record Date. A Security
repurchased on an Interest Payment Date need not be accompanied
by any such payment, and the interest on the principal amount of
the Security being repurchased and Special Interest, if any, with
respect thereto, will be paid on such Interest Payment Date to
the registered holder of such Security on the corresponding
Record Date. The Company will publicly announce the results of an
Offer to Purchase as soon as practicable after the Payment Date.
The Trustee shall act as the Paying Agent for an Offer to
Purchase. The Company will comply with Rule 14e-l under the
Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are
applicable, in the event that the Company is required to
repurchase Securities pursuant to an Offer to Purchase. Both the
notice of the Company and the notice of the Holder having been
given as specified above, the Securities so to be repurchased
shall, on the Payment Date become due and payable at the purchase
price applicable thereto and from and after such date (unless the
Company shall default in the payment of such purchase price) such
Securities shall cease to bear interest or Special Interest (if
any). If any Security shall not be paid upon surrender thereof
for repurchase, the principal shall, until paid, bear interest
and Special Interest (if any) from the Payment Date at the rate
and in accordance with the provisions set forth in this Security
and the Indenture. Any Security which is to be submitted for
repurchase only in part shall be delivered pursuant to the above
provisions with (if the Company or Trustee so requires) due
endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in
writing.
9. Denominations, Transfer, Exchange. The Securities shall
be issuable only in registered form without coupons and in
denominations of $1,000 and integral multiples thereof. The
transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes required by law or
permitted by the Indenture.
10. Persons Deemed Owners. The Company, the Trustee and
any agent of the Company or the Trustee may treat the person in
whose name this Security is registered with the Registrar as the
owner for all purposes.
<PAGE>
8
11. Discharge. Subject to certain conditions set forth in Article
8 of the Indenture, the Company may terminate its obligations
under the Securities and the Indenture, except those obligations
referred to in Section 8.1(b) of the Indenture, if the Company
deposits with the Trustee or a Paying Agent cash or U.S.
Government Obligations for the payment of principal of, interest
on, and Special Interest, if any, with respect to, the Securities
to Stated Maturity.
12. Amendments and Waivers. Subject to certain exceptions,
the Indenture, the Securities, or the other Operative Documents
may be amended with the consent of the Holders of at least a
majority in principal amount of the then Outstanding Securities,
and any existing Default, Event of Default or acceleration may be
waived with the consent of the Holders of a majority in principal
amount of the then Securities Outstanding. Without the consent of
any Holder, the Indenture, the Securities or any of the Operative
Documents may be amended to, among other things, cure any
ambiguity, defect or inconsistency.
13. Defaults and Remedies. Events of Default under the
Indenture include the following: default for the period specified
in the Indenture in payment of interest on, or Special Interest,
if any, with respect to the Securities; default in payment of the
principal amount of any Securities when the same becomes due and
payable (at maturity, upon acceleration, redemption, tender for
repurchase or otherwise); failure by the Company to comply with
specific covenants of the Indenture or of the Mortgage within the
time periods provided therein, discontinuing substantially all of
its commercial airlines operations, or failure to pay over
amounts required under the Mortgage; failure to comply in any
material respect with any of its other agreements contained in
the Indenture, the other Operative Documents or the Securities
within the time periods (if any) and after the notice (if any)
provided in any thereof; a representation or warranty of the
Company in the Indenture, the other Operative Documents or any
Mortgage Supplement or in any certificate of the Company
delivered under any such document proves to be untrue in any
material respect when made, and the failure to cure such default
within the time periods and after the notice specified in the
Indenture; the occurrence of certain defaults under any
Indebtedness of the Company or any of its Significant
Subsidiaries in excess of $10,000,000 in principal amount; the
rendering of final judgments by a court of competent jurisdiction
against the Company or any of its Significant Subsidiaries in an
aggregate amount of $10,000,000 or more which remain undischarged
for a period (during which execution is not stayed) of sixty (60)
days after the date on which the right to appeal has expired;
cessation of effectiveness of the Operative Documents without the
consent of the Trustee; and certain events of bankruptcy,
insolvency or reorganization. Subject to certain limitations in
the Indenture, if an Event of Default occurs and is continuing,
the Trustee or the Holders of twenty-five percent (25%) in
principal amount of the Securities Outstanding may declare all
the Securities to be due and payable immediately, except that in
the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all Securities Outstanding become due
and payable immediately without further action or notice.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or
the Securities. Subject to certain limitations, Holders of a
majority in principal amount of the then Outstanding Securities
may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any
continuing default (except a default in payment of principal or
interest) if it determines that withholding notice is in
<PAGE>
9
their interests. The Company must furnish compliance certificates
to the Trustee. The above description of Events of Default and
remedies is qualified by reference, and subject in its entirety
to the more complete description thereof contained in the
Indenture.
14. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with
and collect obligations owed to it by the Company or Affiliates
of the Company with the same rights it would have if it were not
Trustee.
15. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have
any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. Each
Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the
consideration for the issue of the Securities.
16. Authentication. This Security shall not be valid
until authenticated by the manual signature of the Trustee or an
authenticating agent.
17. Unclaimed Money. If money for the payment of principal
of, interest on, or Special Interest, with respect to, or the
purchase price for the Securities remains unclaimed for two (2)
years, the Trustee or Paying Agent will pay the money back to the
Company at its request. After such payment, Holders entitled to
any portion of such money must look to the Company for payment
unless an applicable law designates another person.
18. Abbreviations. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants
in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
19. CUSIP Numbers. The Company in issuing this Security may
use a "CUSIP" number (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a
convenience to Holders; provided, however, that any such notice
may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any
defect in or omission of such numbers.
20. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Security, by acceptance hereof, acknowledges and
agrees to the provisions of the Registration Rights Agreement,
including, without limitation, the obligations of the Holders
with respect to a registration and the indemnification of the
Company to the extent provided therein.
21. Governing Law. THIS SECURITY SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF
LAWS.
<PAGE>
10
The Company will furnish to any Holder of this
Security, upon written request and without charge, a copy of the
Indenture. Request may be made to: Trans World Airlines, Inc.,
One City Centre, 515 N. 6th Street, St. Louis, Missouri 63101,
Attention: Corporate Secretary.
<PAGE>
11
ASSIGNMENT FORM
To assign this Security, fill in the form below: I or we assign
and transfer this Security to:
(Insert Assignee's Soc. Sec. or Tax I.D. No.)
(Print or type assignee's name, address and zip
code)
and irrevocably appoint ______________
agent to transfer this Security on the books of
the Company. The agent may substitute
another to act for him.
Date:______________________________ Signature(s):__________________________
__________________________
(Sign exactly as your name(s) appear(s)
on the other side of this Security)
Signature(s) guaranteed by:
_________________________________________
(All signatures must be guaranteed by
a member of a national securities
exchange or of the National Association
of Securities Dealers, Inc. or by a
commercial bank or trust company located
in the United States)
<PAGE>
12
OPTION OF THE HOLDER TO ELECT PURCHASE
If you want to elect to have this Security repurchased by
the Company pursuant to any Offer to Purchase under the
Indenture, check the box:
|_|
If you want to elect to have only part of this Security
repurchased by the Company pursuant to any Offer to Purchase
under the Indenture, state the principal amount to be
repurchased:
$__________________________________
(in an integral multiple of $1,000)
Date:______________________________ Signature(s):__________________________
__________________________
(Sign exactly as your name(s) appear(s)
on the other side of this Security)
Signature(s) guaranteed by:
_________________________________________
(All signatures must be guaranteed by
a member of a national securities
exchange or of the National Association
of Securities Dealers, Inc. or by a
commercial bank or trust company located
in the United States)
<PAGE>
EXHIBIT A
=================================================================
AIRCRAFT MORTGAGE AND SECURITY AGREEMENT
Dated as of June 16, 1998
Between
TRANS WORLD AIRLINES, INC.,
as Mortgagor
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Trustee,
as Mortgagee
=================================================================
Covering Boeing Model 767-231 ETOPS Aircraft
<PAGE>
TABLE OF CONTENTS
Page
1. DEFINITIONS ............................................ 1
1.1 Definitions ....................................... 1
1.2 Rules of Construction ............................. 3
2. SECURITY INTEREST ...................................... 3
2.1 Granting of Security Interest ..................... 3
2.2 Certain Releases of Lien .......................... 5
2.3 Liability of Mortgagor ............................ 7
2.4 No Segregation of Moneys; No Interest ............. 7
3. OPERATION, REPLACEMENT OF PARTS AND POSSESSION
OF AIRCRAFT ............................................ 7
3.1 Operation ......................................... 7
3.2 Transfer of Possession ............................ 8
3.3 Total Loss of Engine and not Airframe; Total
Loss of Airframe .................................. 8
3.4 Replacement of Parts .............................. 9
3.5 Installation of Video Equipment and
Telephone Systems owned by Third Parties
on the Aircraft ................................... 9
3.6 Interchange and Pooling Agreements ................ 10
4. EVENTS OF DEFAULT; DISPOSITION OF COLLATERAL
AND APPLICATION OF PROCEEDS ............................ 10
4.1 Judicial Proceedings, etc., Following
Event of Default .................................. 10
4.2 Delivery of Collateral, Power of Sale, etc ........ 11
4.3 Right to Possession, etc .......................... 12
4.4 Application of Proceeds ........................... 13
4.5 Matters Involving Manner of Sale .................. 14
(i)
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
5. REPRESENTATIONS AND WARRANTIES ......................... 16
5.1 Corporate Status .................................. 16
5.2 Governmental Approvals ............................ 16
5.3 Binding ........................................... 17
5.4 No Breach ......................................... 17
5.5 Filings ........................................... 17
5.6 Licenses .......................................... 17
5.7 No Suits .......................................... 17
5.8 Taxes ............................................. 17
5.9 No Event of Default or Total Loss ................. 18
5.10 Aircraft Certification ............................ 18
5.11 Investment Company Act ............................ 18
5.12 Condition of Aircraft ............................. 18
5.13 Title ............................................. 18
5.14 No Default ........................................ 18
5.15 Mortgage Liens .................................... 18
5.16 Engines ........................................... 18
5.17 FAA Aircraft Registry ............................. 18
5.18 Insurances ........................................ 19
6. COVENANTS .............................................. 19
6.1 This Agreement .................................... 19
6.2 Certain Rights .................................... 19
6.3 Insurance ......................................... 19
(ii)
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
6.4 Compliance with Laws .............................. 21
6.5 Subleasing or Leasing ............................. 21
6.6 Further Assurances ................................ 23
6.7 Maintenance ....................................... 23
6.8 Registration ...................................... 24
6.9 Insignia .......................................... 24
6.10 Inspection ........................................ 25
6.11 Alterations, Modifications and Additions .......... 25
6.12 Notice of Change of Mortgagor's Chief
Executive Office .................................. 26
7. CONDEMNATION ........................................... 26
7.1 Dedication to CRAF ................................ 26
7.2 Notice to Mortgagee ............................... 27
7.3 Requisition of Engine ............................. 27
7.4 Government Indemnification ........................ 27
7.5 No Geographic Limits .............................. 27
7.6 Notice of Default ................................. 27
7.7 Receipts of Payments .............................. 27
8. GENERAL INDEMNIFICATION ................................ 28
8.1 General Indemnification and Waiver of
Certain Claims .................................... 28
8.2 Tax Indemnification ............................... 31
8.3 Survival of Indemnities ........................... 35
9. MISCELLANEOUS .......................................... 35
9.1 Performance by Mortgagee .......................... 35
(iii)
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
9.2 Power of Attorney ................................. 36
9.3 Waiver, etc., by Mortgagor ........................ 36
9.4 Amendment, etc .................................... 37
9.5 [Intentionally Omitted.] .......................... 37
9.6 Successors and Assigns ............................ 37
9.7 Severability ...................................... 37
9.8 Governing Law; Waiver of Jury Trial ............... 38
9.9 Notices; Waivers .................................. 38
9.10 No Adverse Interpretation of Other Agreements ..... 38
9.11 Benefits of Agreement Restricted .................. 38
9.12 Counterpart Originals ............................. 38
9.13 Effect of Headings ................................ 38
9.14 Section 1110 of the Bankruptcy Code ............... 38
EXHIBIT A Form of Mortgage Supplement
EXHIBIT B Insurance
EXHIBIT C Pre-Approved List
(iv)
<PAGE>
AIRCRAFT MORTGAGE AND SECURITY AGREEMENT
THIS AIRCRAFT MORTGAGE AND SECURITY AGREEMENT (this
"Agreement"), dated as of June 16, 1998, is entered into between
TRANS WORLD AIRLINES, INC., a Delaware corporation (together with
its successors and permitted assigns, "Mortgagor"), and FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, as Trustee under the Indenture hereinafter referred
to (together with its successors and assigns, "Mortgagee") for
the benefit of Mortgagee and the Holders (as defined in such
Indenture), in light of the following facts:
RECITALS
WHEREAS, Mortgagor and First Security Bank, National
Association (f/k/a First Security Bank of Utah, National
Association), not in its individual capacity, except as expressly
stated therein, but solely as Owner Trustee ("Owner Trustee")
under the Trust Agreement N607TW dated as of March 28, 1995
between 767 Leasing HY, LLC ("Beneficiary") as assignee of ING
Lease Delaware, Inc. (f/k/a Internationale Nederlanden Aviation
Lease Delaware, Inc.) and Owner Trustee, have entered into that
certain Aircraft Sale and Note Purchase Agreement, made and
entered into as of the 16th day of June, 1998 among Mortgagor,
Owner Trustee, Beneficiary and Lazard Freres & Co. LLC (the
"Aircraft Sale Agreement"), pursuant to which Mortgagor agreed to
purchase, and Owner Trustee agreed to sell, the Aircraft (as
hereinafter defined);
WHEREAS, Mortgagor and Mortgagee are contemporaneously
herewith entering into that certain Indenture, dated as of even
date herewith (the "Indenture"), pursuant to which Mortgagor will
issue its 10 1/4% Senior Secured Notes due 2003 (the
"Securities") to a certain holder or holders (the "Holders"), as
payment of part of the purchase price of the Aircraft under the
Aircraft Sale Agreement; and
WHEREAS, it is a condition precedent to Mortgagee's
authentication of the Securities that Mortgagor grant to
Mortgagee a first priority security interest in the Aircraft in
order to secure, among other things, (a) Mortgagor's obligations
to the Holders and Mortgagee under the Indenture and (b)
Mortgagor's obligation to the Holders and Mortgagee hereunder.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS
1.1 Definitions. Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to such
terms in Section 1 of the Definitions Appendix attached hereto as
Appendix I, which shall be a part of this Agreement as if fully
set forth in this place. In addition, the following terms shall
have the respective meanings set forth below:
<PAGE>
2
"CRAF" means the Civil Reserve Air Fleet Program authorized
under 10 U.S.C. ss. 9511 et seq. or any substantially similar
program.
"Government Entity" means any (a) national, state or local
government, (b) board, commission, department, division,
instrumentality, court, agency or political subdivision thereof
and (c) association, organization or institution of which any
thereof is a member or in whose activities any thereof is a
participant.
"Law" means any (a) statute, decree, constitution,
regulation, order or any directive of any Government Entity, (b)
treaty, pact, compact or other agreement to which any Government
Entity is a signatory or party and (c) judicial or administrative
interpretation or application of any of the foregoing.
"Total Loss" means any of the following in relation to the
Aircraft, Airframe or any Engine and "Total Loss Date" means the
date set forth in parentheses after each Total Loss:
(i) Destruction, damage beyond repair or being
rendered permanently unfit for normal use for any
reason whatsoever (the date such event occurs or, if
not known, the date on which the Aircraft, Airframe or
Engine was last heard of).
(ii) Actual, constructive, compromised, arranged
or agreed total loss (the earlier of the date on which
the loss is agreed or compromised by the insurers or
thirty (30) days after the date of notice to
Mortgagor's brokers or insurers claiming such total
loss).
(iii) Requisition of title, confiscation,
forfeiture or any compulsory acquisition whatsoever,
except for an acquisition of the Aircraft, Airframe or
Engines by the Air Mobility Command pursuant to CRAF
(the date on which the same takes effect).
(iv) Sequestration, detention or seizure for more
than thirty (30) consecutive days (the earlier of the
date on which insurers make payment on the basis of a
total loss or the date of expiration of such period).
(v) Requisition for use for more than one hundred
eighty (180) consecutive days (the earlier of the date
on which the insurers make payment on the basis of a
total loss or the date of expiration of such period).
(vi) Loss or loss of use due to theft or
disappearance for a period greater than sixty (60)
consecutive days (the date of expiration of such
period).
(vii) Any other occurrence which deprives
Mortgagor of use or possession for a period of one
hundred eighty (180) consecutive days or longer (the
one hundred eightieth (180th) day of such period).
<PAGE>
3
A Total Loss with respect to the Aircraft shall be deemed
to have occurred if a Total Loss has occurred with respect to the
Airframe constituting part of the Aircraft.
1.2 Rules of Construction. The rules of construction for
this Agreement are set forth in Section 2 of the Definitions
Appendix.
2. SECURITY INTEREST
2.1 Granting of Security Interest. Mortgagor does hereby
transfer, convey, mortgage, hypothecate, assign and grant to
Mortgagee a purchase-money security interest in, and mortgage
lien on (subject to no prior interests of any Person whatsoever),
all right, title, interest, claims and demands of Mortgagor in
and to the Properties, rights, interests and privileges described
in clauses (a) through (h) below, whether now or hereafter
acquired (which Properties, rights, interests and privileges
described in clauses (a) through (h) below, including all such
Properties, rights, interests and privileges hereafter subjected
to the Lien of this Agreement by any Mortgage Supplement, are
included in and defined as the "Collateral"), to wit:
(a) the Airframe and Engines, each of which Engines is
of 750 or more rated takeoff horsepower or the equivalent of such
horsepower, and in the case of each such Engine, whether or not
such Engine shall be installed in or attached to the Airframe or
any other airframe, and the Parts, together with all accessories,
equipment, parts and appurtenances appertaining or attached to
the Airframe or an Engine, whether now owned or hereafter
acquired, and all substitutions, renewals and replacements of and
additions, alterations, modifications, improvements, accessions
and accumulations to the Airframe, any Engine or any Part;
(b) all proceeds from the sale or other disposition
of, all proceeds of insurance due to Mortgagor on, and all
proceeds of any condemnation or requisition of title or use due
to Mortgagor with respect to, any of the Properties described in
clause (a) above;
(c) all logs, books, records (including, without
limitation, all inspection, modification, maintenance and
overhaul records), data, manuals and other documents, in each
case, maintained in respect of the Airframe or any Engine,
including, without limitation, all such logs, books, records,
data, manuals and other documents maintained pursuant to
requirements of the FAA;
(d) the Aircraft Sale Agreement and the Bills of Sale
to the extent the same relate to continuing rights of Mortgagor
in respect of any warranty, indemnity or agreement, express or
implied, as to title, materials, workmanship, design or patent
infringement matters with respect to the Airframe or any Engine
(reserving to Mortgagor, however, all of Mortgagor's other rights
and interest in and to the Aircraft Sale Agreement) together with
all rights, powers, privileges, options and other benefits of
Mortgagor thereunder (subject to such reservation) with respect
to the Airframe or the Engines, including, without limitation,
the right to make all waivers and agreements, to give and receive
all notices and other instruments or communications, to take such
action upon the occurrence of a default thereunder, including the
commencement, conduct and consummation of legal, administrative
or other proceedings, as shall be permitted thereby or by law,
and to do any and all other things which Mortgagor is or
<PAGE>
4
may be entitled to do thereunder (subject to such reservation,
and all warranties and any other rights of Mortgagor against any
manufacturer relating to the Airframe, any Engine or any Part);
(e) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with
Mortgagee by or for the account of Mortgagor pursuant to any term
hereof or held or required to be held by Mortgagee hereunder;
(f) all other items of equipment and furnishings,
wherever located, appertaining to the Aircraft, including without
limitation, the auxiliary power unit bearing Manufacturer's
Serial No. P40261 delivered with the Aircraft on the Issue Date,
and all substitutions, renewals and replacements thereof and
additions, modifications and accessories thereto;
(g) all rents, issues, profits, revenues and other
income of the Property intended, subjected or required to be
subjected to the Lien of this Agreement hereby, by the other
Operative Documents or by any Mortgage Supplement; and
(h) all proceeds, howsoever arising, of any of the
foregoing;
TO HAVE AND TO HOLD the Collateral unto Mortgagee, for the
benefit of the Holders and Mortgagee and their respective
successors and assigns, as security for
(i) the due and punctual indefeasible payment in
full of (A) all sums, together with interest, Special
Interest, or premium, if any, thereon, owing or
outstanding under the Securities or that may be or
become due and payable to Mortgagee, any of the
Holders, or their respective successors and assigns,
by Mortgagor under or in connection with the
Securities, the Indenture, this Agreement or the other
Operative Documents, (B) the reasonable costs and
expenses of collection and foreclosure with respect to
the indebtedness and obligations secured hereby,
whether now existing or hereafter arising, including
without limitation reasonable attorneys' fees and
other costs and expenses expended or incurred by
Mortgagee under or pursuant to this Agreement, the
Securities, the Indenture or any other Operative
Document or otherwise in connection with discovering,
locating, satisfying Liens and charges on, protecting
and taking possession of the Collateral or any part
thereof, the returning of the Collateral or any part
thereof to any place in the continental United States
designated by Mortgagee (including, without
limitation, costs of repairing, rehabilitating and
storing the Collateral or any part thereof), and the
enforcement of, or collection of amounts owing or
outstanding or due and payable under or in connection
with the Securities, the Indenture, and the other
agreements and instruments referred to in this clause
(i) and (C) interest (to the extent permitted by
applicable Law) on all costs and expenses described in
this clause (i), at a rate of interest per annum equal
to the highest rate that may, under any circumstance
(whether or not such circumstance has or could
actually occur), be applicable to the Securities
thereunder or under the Indenture, computed on the
basis of a 360-day year and the actual number of days
elapsed; and
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5
(ii) the timely and faithful performance and
observance by Mortgagor of all agreements, promises
and covenants undertaken by it hereunder, in the
Indenture and the other instruments, agreements and
obligations referred to in clause (i) above (the
foregoing, together with all the sums, interest,
Special Interest, premium, expenses, costs and other
amounts referred to in clause (i) above, being
hereinafter referred to collectively as the
"Obligations"); provided, however, that, and these
presents are subject to the condition that, if
Mortgagor shall have paid or caused to be paid in
full, and Mortgagor shall have well and faithfully
performed and observed, all the Obligations at the
time and in the manner specified therefor, and any
other indebtedness, obligation or account whatsoever
(whether presently existing or subsequently arising)
secured hereby, or made provision therefor pursuant to
Article 8 of the Indenture then, upon the request of
Mortgagor, delivered to Mortgagee, Mortgagee shall, at
the cost and expense of Mortgagor, execute and deliver
to Mortgagor, such instruments of satisfaction and
discharge as may be appropriate (without, however,
being under any duty to cause such instruments to be
filed or recorded in the public records wherein this
Agreement shall have been filed and/or recorded), and
otherwise the same shall be and remain in full force
and effect.
2.2 Certain Releases of Lien. (a) At any time and from time
to time prior to or upon the release of the Lien of this
Agreement pursuant to this Section 2.2, upon the Total Loss of an
Engine in accordance with the express terms of this Agreement, or
the replacement of any Part of the Aircraft in accordance with
the express terms of this Agreement, Mortgagee shall, upon the
Request of and at the cost and expense of Mortgagor and provided,
that no Default or Event of Default shall have occurred and be
continuing, release such Engine or such Part, as the case may be,
from the Lien of this Agreement so long as the Replacement Engine
and Part complies with the terms and conditions of this Agreement
on Replacement Engines and Parts. In connection with the release
of the Lien on any Engine, Mortgagee shall execute and deliver
such instrument as aforesaid upon a Request from Mortgagor,
requesting such release and describing the Property so to be
released only upon receipt by or deposit with Mortgagee of the
following:
(i) An Officers' Certificate stating the
following:
(A) a description of the Engine to be
released, which shall be identified by
manufacturer's serial number;
(B) a description of the Replacement Engine
to be received as consideration for the Engine to
be released pursuant to the provisions of this
Agreement;
(C) that no Default or Event of Default has
occurred that has not been remedied or waived and
that Mortgagor will not be in default, by the
making and granting of the request for release,
in the performance of any of the terms and
covenants of any Operative Document; and
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6
(D) that the release of the Engine so to be
released will not be inconsistent with any of the
provisions of this Agreement, the Indenture or
any other Operative Document.
(ii) The appropriate instruments transferring
title to the Replacement Engine to be received as
consideration for the Engine to be released to
Mortgagor, subjecting such Replacement Engine to the
Lien of this Agreement including, without limitation,
any Mortgage Supplement if so required by Mortgagee.
(iii) Upon the request of Mortgagee, an Opinion
of Counsel (and, as to matters relating to title and
perfection under the Federal Aviation Act, an opinion
of special FAA counsel) satisfactory to Mortgagee:
(A) stating that the certificates, opinions
and other instruments and/or Property that have
been or are therewith delivered to and deposited
with Mortgagee conform to the requirements of
this Agreement and that, upon the basis of such
application, the Property so sold or disposed of
may be released from the Lien of this Agreement
in accordance with the provisions of this
Agreement, and that all conditions precedent
herein provided for relating to such release have
been complied with; and
(B) stating that Mortgagor has good title to
the Replacement Engine to be received as
consideration for the Engine to be released, free
of any Liens or encumbrances whatsoever, except
the Lien hereof and Permitted Liens, that such
Replacement Engine has been validly subjected to
the Lien of this Agreement, that the instruments
subjecting such Replacement Engine to the Lien of
this Agreement have been duly filed for
recordation pursuant to the Federal Aviation Act
and that no further action or filing or recording
of any document is necessary or advisable in
order to establish and perfect the title of
Mortgagor to, and the Lien of this Agreement on,
such Replacement Engine.
(iv) Uniform Commercial Code financing statements
covering the security interests created by this
Agreement as are deemed necessary or desirable by
Mortgagee to protect the security interests of
Mortgagee in the Replacement Engine.
(v) to the extent assignable, an assignment to
Mortgagee as security under this Agreement of all
representations, warranties, agreements and
indemnities given to Mortgagor by the manufacturer or
vendor of such Replacement Engine.
(vi) an appraisal from a nationally recognized
firm of independent aircraft appraisers reasonably
acceptable to Mortgagee as to the fair market value of
the Replacement Engine (which shall not be less than
the fair market value of the Engine it replaces,
assuming such replaced Engine had been maintained in
the
<PAGE>
7
condition and repair required hereunder) and of the
Aircraft after giving effect to such replacement
(which shall not be less than the fair market value of
the Aircraft prior to such replacement, assuming the
Aircraft had been maintained in the condition required
hereunder).
(b) In the event of the substitution of a Replacement
Engine, all provisions of this Agreement relating to the Airframe
or Engine being replaced shall be applicable to such Replacement
Engine with the same force and effect as if such Replacement
Engine were the same engine, as the case may be, as the Engine
being replaced but for the Total Loss with respect to the Engine
being replaced.
2.3 Liability of Mortgagor. Mortgagor shall be personally
liable hereunder for any and all amounts from time to time due
and payable hereunder. Mortgagor hereby agrees that Mortgagee may
proceed directly against it in connection with its liability
hereunder without first proceeding to enforce its rights or
remedies against Mortgagor or in the Collateral. Mortgagor hereby
authorizes Mortgagee to exercise in any order any right or remedy
it might have, including, without limitation, any right of
judicial foreclosure or power of sale of the Collateral, with
respect to the Obligations. All rights, powers and remedies of
Mortgagee hereunder and under the other Operative Documents are
cumulative and not alternative and are in addition to all rights,
power and remedies given to Mortgagee by applicable Law.
2.4 No Segregation of Moneys; No Interest. Moneys received
by Mortgagee hereunder need not be segregated in any manner
except to the extent required by applicable Law or any Operative
Document, and may be deposited under such general conditions as
may be prescribed by applicable Law, and Mortgagee shall not be
liable for any interest thereon, provided that, to the extent
such information is or was available to Mortgagee, any payments
received or applied hereunder by Mortgagee shall be accounted for
by Mortgagee so that any portion thereof paid or applied pursuant
hereto shall be identifiable as to the source thereof.
3. OPERATION, REPLACEMENT OF PARTS AND
POSSESSION OF AIRCRAFT
3.1 Operation. Mortgagor agrees that it will not use or
operate, or permit any permitted lessee or sublessee (if any) of
the Aircraft or any other Person to use or operate the Aircraft
in violation of any law or any rule, regulation or order
(including, without limitation, concerning alcoholic beverages or
prohibited substances) of any Government Entity having
jurisdiction (domestic or foreign) or in violation of any
airworthiness certificate, license or registration relating to
the Aircraft or any Engine issued by any such authority, except
to the extent the validity or application of any such law, rule,
regulation or order is being contested in good faith and by
appropriate proceedings and for the payment of which adequate
reserves have been provided and are being maintained on the books
of Mortgagor (but only so long as Mortgagee has been given notice
of such proceedings and such proceedings do not, in Mortgagee's
reasonable opinion, involve any danger of the attachment, sale,
forfeiture or loss of the Aircraft, any Engine, or any Part
thereof or otherwise materially adversely affect the Lien of this
Agreement or subject Mortgagee or any Holder to any risk of civil
or criminal penalty). In
<PAGE>
8
the event that any such law, rule, regulation or order requires
alteration of the Aircraft, any Engine, or any Part thereof,
unless the validity thereof is being contested in good faith and
by appropriate proceedings and for the payment of which adequate
reserves have been provided and are being maintained on the books
of Mortgagor (but only so long as Mortgagee has been given notice
of such proceedings and such proceedings do not, in Mortgagee's
reasonable opinion, involve any danger of the attachment, sale,
forfeiture or loss of any item of the Aircraft, any Engine, or
any Part thereof or otherwise materially adversely affect the
Lien of this Agreement or subject Mortgagee or any Holder to any
risk of civil or criminal penalty), Mortgagor will conform
thereto or obtain conformance therewith at no expense to
Mortgagee and will maintain the Aircraft in proper operating
condition under such laws, rules, regulations and orders.
Mortgagor agrees that it will not permit the Aircraft or any
Engine to be operated, used or located (a) in any area excluded
from coverage by the insurance required by the terms of Section
6.3, except in the case of a requisition by the United States of
America where Mortgagor obtains indemnity from the United States
of America against substantially the same risks and for at least
the amounts of the insurance required by Section 6.3 covering
such area, or (b) outside the United States or Canada in any
recognized or, in the Mortgagor's reasonable judgment, threatened
area of hostilities unless, notwithstanding the provisions of
Section 6.3, covered by war risk and allied perils insurance, or
in either case unless the Aircraft is operated or used under
contract with the government of the United States or any agency
or instrumentality thereof (backed by the full faith and credit
of the United States Government) under which contract such
government assumes liability for substantially the same risks in
at least the same amounts as would be covered by such insurance.
3.2 Transfer of Possession. Except as expressly set forth
herein or in the Indenture, Mortgagor will not, without the prior
written consent of Mortgagee, lease, sublease or otherwise in any
manner deliver, transfer or relinquish possession of the Aircraft
or any Engine, except that Mortgagor may install an Engine on
another aircraft in Mortgagor's fleet to the extent consistent
with Section 6.2 below.
3.3 Total Loss of Engine and not Airframe; Total Loss of
Airframe.
(a) Upon a Total Loss of any Engine not installed on
the Aircraft or a Total Loss of an Engine installed on the
Airframe not involving a Total Loss of the Airframe, Mortgagor
will give Mortgagee prompt (but in any event, within five
Business Days after the Total Loss Date) written notice thereof.
Mortgagor will, as soon as reasonably possible and in any event
within 120 days of the Total Loss Date with respect to such Total
Loss, and on at least five days' written notice to Mortgagee,
replace such Engine by duly obtaining title to a Replacement
Engine free of all liens and encumbrances other than Permitted
Liens and such Replacement Engine will have a value and utility
at least equal to, and of the same model, service bulletin, and
modification status and in at least as good operating condition
as, the Engine which sustained such Total Loss. Such Replacement
Engine will be an Engine as defined herein.
(b) Mortgagor agrees at its own expense to take such
action as Mortgagee may reasonably request in order that any such
Replacement Engine becomes the Property of Mortgagor and is
subject to the Lien provided by this Agreement.
<PAGE>
9
(c) Upon a Total Loss of the Airframe, Mortgagor will
give Mortgagee prompt (but in any event, within five Business
Days after the Total Loss Date) written notice thereof and will
comply with the provisions of Section 4.12 (d) of the Indenture.
3.4 Replacement of Parts. Mortgagor, at its own cost and
expense, will promptly replace or cause the replacement of all
Parts that may from time to time become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever,
with Parts of at least equivalent model, operating condition and
modification status as the replaced Part if the replaced Part had
been maintained in accordance with the provisions hereof.
Mortgagor may substitute for any Part a Part that does not meet
the foregoing requirements if a complying Part could not be
procured or installed within the available ground time of the
Aircraft and as soon as practicable the noncomplying part is
removed and replaced by a complying Part. All Parts at any time
removed from the Aircraft or any Engine shall remain part of the
Aircraft or any Engine no matter where located, until such time
as such Parts shall be replaced by Parts which have been
incorporated in the Aircraft or any Engine and which meet the
requirements for replacement Parts specified above. Immediately
upon any replacement Part becoming incorporated or installed in
or attached to the Aircraft or any Engine as above provided,
without further act, (i) such replacement Part shall be deemed
part of the Aircraft or Engine, as applicable, for all purposes
hereof to the same extent as the Parts originally incorporated in
the Aircraft or Engine, as applicable, and (ii) the replaced Part
shall no longer be deemed a Part hereunder.
3.5 Installation of Video Equipment and Telephone Systems
owned by Third Parties on the Aircraft. Mortgagor may lease or
purchase subject to a security lien equipment for the Aircraft
(including video systems and telephone systems) from third
parties and install such equipment on the Aircraft. The
installation of such equipment on the Aircraft is considered a
modification to the Aircraft and Mortgagor must comply (or, with
respect to such equipment existing and already installed on the
Issue Date, have complied) with the requirements of Section 6.11
prior to the installation of such equipment on the Aircraft. Such
equipment will remain the Property of its owner, unless such
equipment has not been removed from the Aircraft prior to the
repossession of the Aircraft by Mortgagee or the owner or holder
of the security interest in such equipment shall not have
requested in writing that the same be removed in accordance with
this Section (at which time title will pass to Mortgagee). Prior
to repossession of the Aircraft by Mortgagee, Mortgagor or the
holder of the security interest may remove any such equipment
from the Aircraft, so long as Mortgagor restores and repairs any
of the alterations made to the Aircraft in connection with the
installation of such equipment on the Aircraft to the same
condition that the Aircraft was in prior to the installation of
such equipment on the Aircraft. In the event that the Aircraft is
repossessed by Mortgagee in any manner permitted by this
Agreement which does not allow the removal of the equipment prior
to such repossession, upon written notice to Mortgagee by any
such lessor or holder of a security interest within ten days of
such termination requesting removal of the equipment, Mortgagee
shall remove or cause to be removed such equipment, restore and
repair the Aircraft to the condition that such Aircraft was in
prior to the installation of such equipment on the Aircraft and
return such equipment to the lessor or holder of the security
interest, all of which will be at the cost and expense of the
lessor or security holder of such security interest. As a
condition precedent to removal and return, the
<PAGE>
10
owner or security holder must provide Mortgagee with the security
requested by Mortgagee to cover the costs of such removal,
restoration and return and the associated downtime.
3.6 Interchange and Pooling Agreements. Mortgagor may
subject the Engines and Parts to normal interchange or pooling
agreements with responsible international scheduled commercial
air carriers customary in the airline industry and entered into
by Mortgagor in the ordinary course of its business with respect
to its entire Boeing 767-200 fleet so long as (i) in the case of
pooling of an Engine, such Engine is returned to Mortgagor within
one (1) month, (ii) no reregistration of the Engine occurs, (iii)
all other terms of this Agreement continue to be observed with
respect to the Engines or Parts, and (iv) Mortgagor continues to
be fully responsible to Mortgagee for the performance of all of
its obligations hereunder.
4. EVENTS OF DEFAULT; DISPOSITION OF
COLLATERAL AND APPLICATION OF PROCEEDS
4.1 Judicial Proceedings, etc., Following Event of Default.
If any Event of Default shall occur and be continuing, then, and
in any such event, Mortgagee may, forthwith upon notice to
Mortgagor (it being understood and agreed that such provision of
notice to Mortgagor shall not be deemed to limit or otherwise
restrict Mortgagee's rights and remedies hereunder or under any
other Operative Document or agreement): (a) apply to a court of
competent jurisdiction to obtain specific performance or
observance by Mortgagor of any covenant, agreement or undertaking
on the part of Mortgagor hereunder that Mortgagor shall have
failed to observe or perform or to obtain aid in the execution of
any power granted herein; and/or (b) proceed to foreclose against
the Collateral or any part thereof pursuant to this Agreement,
and according to the applicable Law of the jurisdiction or
jurisdictions in which such Collateral or part thereof shall at
the time be located, by doing any one or more or all of the acts
described in Sections 2.1 or 4.2 and/or the following acts, as
Mortgagee, in its sole and complete discretion (acting in good
faith), may then elect to:
(i) exercise all the rights and remedies, in
foreclosure and otherwise, available to it as a
mortgagee and secured party under the provisions of
applicable Law, including, in any event, all of the
rights, powers and remedies under the Uniform
Commercial Code of the State of New York;
(ii) institute legal proceedings to obtain a
judgment conferring on Mortgagee the right to
immediate possession or requiring Mortgagor to deliver
immediate possession of all or part of the Collateral
to Mortgagee;
(iii) institute legal proceedings to foreclose
upon and against the security interest granted in and
by this Agreement, to recover judgment for all
Obligations then due and owing, and to collect the
same out of any of the Collateral or the proceeds of
any sale thereof;
(iv) institute legal proceedings for the sale,
under the judgment or decree of any court of competent
jurisdiction, of any or all of the Collateral;
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11
(v) without regard to the adequacy of the
security for the Indenture or any other Operative
Document or agreement between Mortgagee and Mortgagor,
Mortgagor and its Affiliates, by virtue of this
Agreement or otherwise, or any other collateral or
other security or to the solvency of Mortgagor,
institute legal proceedings for the appointment of a
receiver or receivers pending foreclosure hereunder or
for the sale of any of the Collateral under the order
of a court of competent jurisdiction or under other
legal process; or
(vi) personally, or by agents or attorneys, enter
upon any premises where the Collateral or any part
thereof may then be located, and take possession of
and remove all or any part thereof or render it
unusable; and without being responsible for loss or
damage to such Collateral, hold, store and keep idle,
or lease, operate or otherwise use or permit the use
of, the same or any part thereof, for such time and
upon such terms as Mortgagee may in its sole and
complete discretion deem to be in its own best
interests, and demand, collect and retain all hire,
earnings and other sums due and to become due in
respect of the same from any party whomsoever,
accounting for net earnings, if any, arising from such
use and charging against all receipts from the use of
the same or from the sale thereof, by court
proceedings or pursuant to Section 4.2, all other
costs, expenses, charges, damages and other losses
resulting from such use in good faith.
All expenses of obtaining any such judgment, bringing any such
legal proceeding or of pursuing, searching for and taking such
Property shall, until paid, be secured by the Lien of this
Agreement.
4.2 Delivery of Collateral, Power of Sale, etc. If
Mortgagee should elect to foreclose upon and against the security
interest created in and by this Agreement, Mortgagor shall, upon
demand of Mortgagee, deliver to Mortgagee all or any part of the
Collateral at such time or times and to such airport within the
continental United States of America as Mortgagee may specify;
and Mortgagee is hereby authorized and empowered, in accordance
with applicable Law and without being responsible for loss or
damage to such Collateral incurred other than solely by reason of
Mortgagee's willful misconduct, to enter upon any premises where
the Collateral or any part thereof may be located and take
possession of and remove the same. Mortgagee may thereafter sell
and dispose of, or cause to be sold and disposed of, all or any
part of the Collateral at one or more public or private sales, at
such places and times and on such terms and conditions as
Mortgagee may deem fit in good faith, with or without any
previous demand to Mortgagor or any other person, or
advertisement of any such sale or other disposal upon notice to
Mortgagor (it being understood and agreed that such provision of
notice to Mortgagor shall not be deemed to limit or otherwise
restrict Mortgagee's rights and remedies hereunder or under any
other Operative Document or agreement); and for the aforesaid
purpose, any other notice of sale, any advertisement and other
notice or demand, any right of equity of redemption and any
obligation of a prospective purchaser to inquire as to the power
and authority of Mortgagee to sell or the application by
Mortgagee of the proceeds of sale or otherwise that would
otherwise be required by, or available to Mortgagor under,
applicable Law are hereby expressly waived by Mortgagor to the
fullest extent permitted by such Law. In the event that any
mandatory requirement of
<PAGE>
12
applicable Law shall obligate Mortgagee to give different,
additional or prior notice to Mortgagor of any of the foregoing
acts, Mortgagor hereby agrees that, to the extent permitted by
applicable Law, a written notice sent to it by mail or by
telecopy, so as reasonably to be expected to be delivered to
Mortgagor at least ten (10) Business Days before the date of any
such act shall be deemed to be reasonable notice of such act and,
specifically, reasonable notification of the time after which any
private sale or other disposition intended to be made hereunder
is to be made.
4.3 Right to Possession, etc.
(a) To the fullest extent Mortgagor may lawfully
agree, the right of Mortgagee to take possession of and sell any
of the Collateral in compliance with the provisions of this
Section 4 shall not be affected by the provisions of any
applicable reorganization or other similar law or any
jurisdiction; and Mortgagor shall not take advantage of any such
law or agree to allow any agent, assignee or other party to take
advantage of such law in its place, to which end Mortgagor, for
itself and all who may claim through it, as far as it or they now
or hereafter lawfully may do so, hereby waives, to the fullest
extent permitted under applicable Law, any rights or defenses
arising under any such law, and all rights to have the Collateral
marshaled upon any foreclosure hereof, and hereby agrees that any
court having jurisdiction to foreclose upon and against the
security interest created in this Agreement may order the sale of
the Collateral subject to such jurisdiction as an entirety or
severally.
(b) Mortgagee shall not have any duty or obligation to
use, operate, store, lease, control, manage, sell, dispose of or
otherwise deal with the Aircraft or any other part of the
Collateral, or otherwise to take or refrain from taking any
action under, or in connection with, this Agreement. If an Event
of Default shall occur and be continuing and Mortgagee shall have
obtained possession of or title to the Aircraft or any Engines,
Mortgagee shall not be obligated to use or operate the Aircraft
or Engines or cause the Aircraft or Engines to be used or
operated directly or indirectly by itself or through agents or
other representatives or to lease, license or otherwise permit or
provide for the use or operation of the Aircraft or Engines by
any other Person, provided, however, that if Mortgagee in its
sole discretion elects to so use or operate the Aircraft or
Engines, Mortgagee may obtain insurance in kinds, at rates and in
amounts satisfactory to it in its reasonable opinion to protect
the Collateral and Mortgagee and the Holders against any and all
liability for loss or damage to the Aircraft or Engines and for
public liability and Property damage resulting from the use or
operation of the Aircraft or Engines by application of any funds
available in the Collateral to pay for all such insurance or, in
lieu of such insurance, Mortgagee is furnished with
indemnification from any other Person upon terms and in amounts
satisfactory to Mortgagee in its sole discretion to protect the
Collateral and Mortgagee, both as Mortgagee and individually, and
the Holders, against any and all such liabilities. Upon every
taking of possession of any Collateral under this Section 4,
Mortgagee may (but shall not be obligated to), from time to time,
at the expense of the Collateral, make all such expenditures for
maintenance, storage, insurance, leasing, control, management,
disposition, repairs, replacements, alterations, additions and
improvements to and of the Collateral, as it may deem proper. In
each such case, Mortgagee shall have the right to maintain,
store, insure, lease, control, modify, alter, sell, transfer,
convey or otherwise dispose of or manage the Collateral and to
exercise all rights and powers of Mortgagor relating to the
Collateral in connection therewith,
<PAGE>
13
as Mortgagee shall deem appropriate, including the right to enter
into any and all such agreements with respect to the maintenance,
insurance, storage, leasing, control, management, disposition,
modification or alteration of the Collateral or any part thereof
as Mortgagee may determine, all as may be reasonably necessary or
desirable for the general upkeep of the Collateral or to prepare
any Collateral for sale or other disposition hereunder; and
Mortgagee shall be entitled to collect and receive directly all
tolls, rents, revenues, issues, income, products and profits of
the Collateral and every part thereof, without prejudice,
however, to the right of Mortgagee under any provision of this
Agreement to collect and receive all cash held by, or required to
be deposited with, Mortgagee hereunder.
(c) Mortgagor does hereby irrevocably constitute and
appoint Mortgagee the true and lawful attorney of Mortgagor
(which appointment is coupled with an interest) with full power
(in the name of Mortgagor or otherwise) to ask, require, demand
and receive any and all moneys and claims for moneys (in each
case including insurance and requisition proceeds) due and to
become due under or arising out of or which now or hereafter
constitute part of the Collateral, to endorse any checks or other
instruments or orders in connection therewith and to file any
claims or to take any action or to institute any proceeding which
Mortgagee may deem to be necessary or advisable in the premises;
provided, Mortgagee shall not exercise any such rights except
upon the occurrence and during the continuance of an Event of
Default.
4.4 Application of Proceeds.
(a) All payments or proceeds received by Mortgagee
under or pursuant to this Agreement the application of which is
not otherwise provided for herein shall be applied or in the
absolute discretion of Mortgagee (exercised in good faith)
retained for application in the manner set forth in Section 6.10
of the Indenture.
(b) All payments and proceeds received and amounts
realized by Mortgagee after an Event of Default has occurred and
is continuing which funds would, but for the provisions of this
paragraph (b), be distributed to Mortgagor, shall be held by
Mortgagee as collateral security (and part of the Collateral) for
the Obligations, may be applied by the Mortgagee in the manner
set forth in Section 6.10 of the Indenture, and at such time as
no Event of Default shall be continuing, any such funds remaining
shall be distributed to Mortgagor to the extent so distributable
hereunder or under the Indenture.
(c) All payments received by Mortgagee with respect to
a Total Loss of any Aircraft shall be held as part of the
Collateral until Mortgagor has complied with Section 4.12(d) of
the Indenture. On the Payment Date with respect to the Offer to
Purchase required under such Section, Mortgagee shall, upon
Request, release such payments with respect to such Total Loss to
Mortgagor for payment to the Holders of all or any part of the
purchase price with respect to such Offer to Purchase.
(d) All payments received by Mortgagee with respect to
a Total Loss of any Engine not installed on the Aircraft or a
Total Loss of an Engine installed on the Airframe not involving a
Total Loss of the Airframe, shall be held as part of the
Collateral until Mortgagor
<PAGE>
14
shall comply with Sections 2.2 and 3.3 with respect to such
Engine and shall promptly thereafter be turned over to Mortgagor.
(e) All payments received by Mortgagee with respect to
loss or damage to the Aircraft not involving a Total Loss shall
be held as part of the Collateral and paid over to Mortgagor upon
Request therefor and upon receipt by Mortgagee of an Officers'
Certificate and such other documents or instruments as Mortgagee
may reasonably request to evidence compliance by Mortgagor with
its repair or replacement obligations hereunder.
(f) All amounts from time to time distributable under
this Section 4.4 by Mortgagee to Mortgagor shall be paid by
Mortgagee to Mortgagor at its address set forth in Section 11.2
of the Indenture and, to the extent so timely received, in funds
of the same type as received.
If the payments or proceeds received by Mortgagee under this
Agreement or any other Operative Document shall be insufficient
to indefeasibly pay in full the Obligations then due and payable
to Mortgagee and as set forth above in this Section 4.4,
Mortgagor shall forthwith pay any balance of such amounts
remaining unpaid to Mortgagee or as Mortgagee directs, and any
deficiencies remaining thereafter may be entered as a judgment
against Mortgagor in any court of competent jurisdiction.
4.5 Matters Involving Manner of Sale.
(a) At any sale pursuant to this Section 4, whether by
virtue of judicial proceedings contemplated in Section 4.1 or
under the power of sale granted in Section 4.2, it shall not be
necessary for Mortgagee or a public officer under order of a
court to have present physical or constructive possession of the
Collateral to be sold. The recitals contained in any conveyances
and receipts made and given by Mortgagee in good faith or such
public officer to any purchaser at any sale made pursuant to this
Agreement shall, to the extent permitted by applicable Law,
conclusively establish the truth and accuracy of the matters
therein stated (including, without limiting the generality of the
foregoing, the amounts due and payable under the Indenture and
any other indebtedness secured hereby, the accrual and nonpayment
thereof and advertisement and conduct of such sale in the manner
provided herein and by applicable Law); and all prerequisites to
such sale shall be presumed to have been satisfied and performed.
(b) At any sale or sales made pursuant to this Section
4, Mortgagee, any Holder or their respective agents may bid for
or purchase, free from any right or equity of redemption in favor
of Mortgagor and any Person claiming by, through or under
Mortgagor (all such rights being in this Section 4 waived and
released), any part of or all of the Collateral offered for sale,
and may make payment on account thereof by using any claim for
moneys then due and payable to Mortgagee by Mortgagor as a credit
against the purchase price; and Mortgagee, upon compliance with
the terms of sale, may hold, retain and dispose of such
Collateral without further accountability therefor to Mortgagor
or any third party, except as expressly required by applicable
Law. In any such sale Mortgagee shall not be obligated to make
any representations or warranties with respect to the Collateral
or any part thereof, and Mortgagee shall not be chargeable with
any of the obligations or liabilities of Mortgagor with
<PAGE>
15
respect thereto. Mortgagor hereby agrees (i) that it will
indemnify and hold Mortgagee harmless from and against any and
all claims with respect to the Collateral asserted before the
taking of actual possession or control thereof by Mortgagee or
its agents pursuant to this Section 4, or arising out of any act
of, or omission to act on the part of, any party other than
Mortgagee or any of its agents prior to such taking of actual
possession or control by Mortgagee, or arising out of any act of,
or omission to act on the part of, Mortgagor or any Person
claiming by, through or under Mortgagor or any of its Affiliates
or agents before or after the commencement of such actual
possession or control by Mortgagee or any of its agents; and (ii)
that Mortgagee shall have no liability or obligation arising out
of any such claim; except, however, in each of clause (i) and
(ii) with respect to claims arising from the willful misconduct
of Mortgagee.
(c) Nothing herein contained shall be deemed to impair
in any manner the absolute right of Mortgagee to sell and convey
title to the Collateral to the purchaser(s) at such public or
private sale(s) or to grant options with respect to or otherwise
to realize upon all or such portion of the Collateral, at such
time, and in such order as it may elect in its sole and complete
discretion in good faith, or to enforce any one or more remedies
relative hereto either successively or concurrently; and
Mortgagor hereby agrees that the security interest, options and
other rights hereby given to Mortgagee shall remain unimpaired
and unprejudiced until all the Collateral shall have been sold or
this Agreement shall otherwise have ceased to be of any force or
effect according to its terms, and that the enforcement of any
right or remedy shall not operate to bar or estop Mortgagee from
exercising any other right or remedy available hereunder or under
any other Operative Document or agreement between Mortgagee and
any of its Affiliates, on the one hand, and Mortgagor or any
Person claiming by, through or under Mortgagor and its Affiliates
on the other hand, or otherwise, available at law, in equity or
otherwise.
(d) Upon the completion of any sale under this Section
4, Mortgagor shall deliver, in accordance with the instructions
of Mortgagee (including flying the Aircraft or any Engine or
causing the same to be flown to such airports in the continental
United States as Mortgagee may specify) such Collateral so sold.
Mortgagee may execute and deliver to the accepted purchaser or
purchasers a good and sufficient instrument or instruments of
conveyance, sale and transfer of all of the Property sold; and
Mortgagee is hereby irrevocably appointed the true and lawful
attorney of Mortgagor, with full power of substitution, in its
name and stead, to make all necessary conveyances of the Property
thus sold. Nevertheless, if so requested by Mortgagee or by any
purchaser, Mortgagor shall confirm any such sale or transfer by
executing and delivering to Mortgagee or to such purchaser all
proper instruments of conveyance and transfer and releases as may
be designated in any such request.
5. REPRESENTATIONS AND WARRANTIES
Mortgagor makes the following representations and
warranties which shall be true and correct in all material
respects as of the Issue Date and such representations and
warranties shall survive the execution and delivery of this
Agreement and the issuance of the Securities:
5.1 Corporate Status. Mortgagor is a corporation duly
incorporated, validly existing and in good standing under the
Laws of the State of Delaware, is an "air carrier" within the
<PAGE>
16
meaning of the Federal Aviation Act operating under a certificate
of public convenience and necessity issued pursuant to Section
41102 thereof, holds an "air carrier operating certificate"
issued pursuant to chapter 447 of the Act and of the type
referred to in 11 U.S.C. ss. 1110, is a "citizen of the United
States" as defined in Section 40102(a)(15) of the Act, and has
the corporate power and authority to own or hold under lease its
Properties and to enter into and perform its obligations under
the Operative Documents. It is duly qualified to do business as a
foreign corporation in the state of Missouri and in each other
state of the United States in which failure to so qualify would
have a material adverse effect on its financial condition or on
its ability to perform its Obligations. It holds all material
licenses, certificates, permits and franchises from the
appropriate United States or other governmental agencies
necessary to authorize it to engage in air transport and to
conduct scheduled passenger service as presently conducted. Its
chief executive office (as such term is used in sections 9-103
and 9-401 of the Uniform Commercial Code as in effect in New York
and Missouri) is located at One City Centre, 515 North Sixth
Street, St. Louis, Missouri 63101. Its correct U.S. tax
identification number is 43-1145889.
5.2 Governmental Approvals. No authorization, approval,
consent, license or order of, or registration with, or the giving
of notice to the FAA or any other Government Entity is required
for the valid authorization, execution, delivery and performance
by Mortgagor of this Agreement, the Securities, the Indenture or
any other Operative Document except as will have been duly
effected as of the date of purchase of the Aircraft.
5.3 Binding. The execution, delivery and performance by
Mortgagor of the Securities and the other Operative Documents and
the consummation or performance by Mortgagor of the transactions
contemplated thereby have been duly authorized by all necessary
corporate action and do not require any stockholder approval or
the approval or consent of or notice to any trustee or holder of
any indebtedness or obligations of Mortgagor. This Agreement, the
Securities, the Indenture and the other Operative Documents have
been duly executed and delivered by Mortgagor and represent the
valid, enforceable and binding obligations of Mortgagor except as
enforceability may be limited by bankruptcy, insolvency,
reorganization or other Laws of general application affecting the
enforcement of creditors' rights.
5.4 No Breach. The execution and delivery of this
Agreement, the Securities, the Indenture and the other Operative
Documents, the consummation by Mortgagor of the transactions
contemplated herein and therein and compliance by Mortgagor with
the terms and provisions hereof and thereof do not and will not
contravene any Law applicable to Mortgagor, or result in any
breach of or constitute any default under or result in the
creation of any Lien (except the Liens in favor of the Trustee
created hereby or thereby) upon any Property of Mortgagor,
pursuant to any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, bank loan or credit agreement,
corporate charter, by-law or other agreement or instrument to
which Mortgagor is a party or by which Mortgagor or its
Properties or assets may be bound or affected.
5.5 Filings. Except for filing this Agreement and the
Mortgage Supplements with the FAA and filing Uniform Commercial
Code financing statements in the offices of the Secretary of
<PAGE>
17
State of Missouri and the offices of the Clerks of St. Louis City
and Platte Counties, Missouri (all of which filings have been
duly made), no filing or recording of any instrument or document
is necessary under the Laws of the U.S. in order for this
Agreement to create a valid and first priority perfected security
interest of record relating to the Aircraft and the other
Collateral.
5.6 Licenses. Mortgagor holds all licenses, certificates
and permits from applicable Government Entities in the U.S. for
the conduct of its business as a certificated air carrier and
performance of its obligations under this Agreement, the
Securities, the Indenture and the other Operative Documents.
5.7 No Suits. There are no suits, arbitrations,
investigations or other proceedings pending or threatened against
Mortgagor before any court or administrative agency against or
affecting Mortgagor with respect to this Agreement, the
Collateral, the Securities, the Indenture or the other Operative
Documents or the transactions contemplated thereby.
5.8 Taxes. Mortgagor has filed or caused to be filed all
material tax returns which are required to be filed by it and has
paid or caused to be paid all Taxes which have been shown to be
due and payable by such returns or (except to the extent being
contested in good faith and for the payment of which adequate
reserves have been provided) tax assessments received by
Mortgagor to the extent that such Taxes have become due and
payable.
5.9 No Event of Default or Total Loss. There has not
occurred any event which constitutes a Default, an Event of
Default, a Total Loss or an event which, but for the passage of
time or the giving of notice, or both, would constitute a Total
Loss, and no such Default, Event of Default, Total Loss or event
will result from Mortgagor's purchasing and mortgaging the
Collateral as contemplated hereby.
5.10 Aircraft Certification. The Aircraft has been duly
certified by the FAA as to type and airworthiness, has a
currently valid Standard Certificate of Airworthiness issued by
the FAA, has been insured by Mortgagor in accordance with the
terms of this Agreement and is in the condition and state of
repair required under the terms of this Agreement.
5.11 Investment Company Act. Neither Mortgagor nor any
subsidiary thereof is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
5.12 Condition of Aircraft. The Aircraft is fully equipped
to operate in United States commercial service and complies with
all material governmental requirements governing such service.
5.13 Title. Mortgagor has good and marketable title to the
Aircraft, free and clear of all Liens other than Permitted Liens.
5.14 No Default. Mortgagor is not in default in the
performance of any term or condition of the Aircraft Sale
Agreement.
<PAGE>
18
5.15 Mortgage Liens. Mortgagor has and will have at all
times full power and authority to grant a Lien on and security
interest in the Collateral in the manner set forth in this
Agreement, and this Agreement constitutes a valid first priority
mortgage Lien on and security interest in the Collateral, duly
securing the Obligations.
5.16 Engines. Each Engine is of 750 or more rated takeoff
horsepower.
5.17 FAA Aircraft Registry. As of the Issue Date, the
Aircraft is duly registered in the name of Mortgagor, the
Aircraft is not registered under the laws of any country other
than the United States, this Agreement and the Mortgage
Supplement covering the Aircraft being purchased by Mortgagor on
the Issue Date pursuant to the Aircraft Sale Agreement are in due
form for recording with the FAA Aircraft Registry and this
Agreement and the Mortgage Supplement has been duly filed for
recording with the FAA Aircraft Registry in favor of Mortgagee in
accordance with applicable law.
5.18 Insurances. As of the Issue Date, all insurance
policies required pursuant to this Agreement are in full force
and effect.
6. COVENANTS
6.1 This Agreement. So long as this Agreement remains in
effect Mortgagor shall duly observe and perform its obligations
under the Securities and the Operative Documents to which it is a
party and pay to Mortgagee all amounts due and owing hereunder
and under the Securities and the other Operative Documents. All
such covenants are specifically incorporated herein and made a
part hereof.
6.2 Certain Rights. Mortgagor and Mortgagee agree each for
itself and for the benefit of any lessor, seller or secured party
of any engines leased, operated or purchased by Mortgagor that
neither Mortgagee nor its successors and assigns will acquire or
claim, as against such lessor, seller or secured party, any
right, title or interest in any such engine as the result of such
engine being installed on the Airframe at any time while such
engine is subject to such lease, conditional sale or other
security agreement and owned by such lessor or seller or subject
to a security interest in favor of such secured party; provided,
that such agreement of Mortgagor and Mortgagee shall not be for
the benefit of any lessor, seller or secured party of any such
engines unless such lessor, seller or secured party has agreed to
substantially the same extent as provided above (which agreement
may be contained in such lease, conditional sale or other
security agreement) that neither it nor its successors or assigns
will acquire, as against Mortgagor or Mortgagee, any right, title
or interest in any Engine as a result of such Engine being
installed on any airframe owned by, leased to or held under any
security agreement by such lessor, seller or secured party.
6.3 Insurance.
(a) Categories of Insurance. From the date of purchase
of the Aircraft by Mortgagor through the date which is two (2)
years after the Stated Maturity of the Securities, Mortgagor
will, at its own expense, effect and maintain in full force and
effect the insurance
<PAGE>
19
described in this Section 6.3 and in Exhibit B through such
brokers and with such insurers which are internationally
recognized and have a good reputation.
(b) Insurance for Indemnities. The insurance referred
to in Section 6.3(a) will in each case include and insure (to the
extent of the risks covered by the policies) the indemnity
provisions of Section 8.1 and Mortgagor will maintain such
insurance of the indemnities for a minimum of two (2) years
following the Stated Maturity of the Securities.
(c) Renewal. Mortgagor will use its best reasonable
efforts to try and provide to Mortgagee at least five (5)
Business Days prior to the date of termination or expiration of
any insurance, telex or fax confirmation from Mortgagor's
insurance brokers that renewed certificates of insurance
evidencing the renewal or replacement will be issued on the
termination date of the prior certificate. But in any event, not
less than one (1) Business Day before the expiration or
termination date of any insurance required hereunder, Mortgagor
will provide Mortgagee with telex or fax confirmation from
Mortgagor's insurance brokers that renewed certificates of
insurance evidencing the renewal or replacement of such insurance
and complying with this Section 6.3 and Exhibit B will be issued
on the termination date of the prior certificate. Within seven
(7) days after such renewal, Mortgagor will furnish its brokers'
certificates of insurance to Mortgagee.
(d) Assignment of Rights by Mortgagee. If Mortgagee
assigns all or any of its rights under this Agreement as
permitted by this Agreement or the Indenture or otherwise
disposes of any interest in the Aircraft to any other Person as
permitted by this Agreement or the Indenture, Mortgagor will,
upon request, procure that such Person hereunder be added as loss
payee and/or additional assured in the policies effected
hereunder and enjoy the same rights and insurance enjoyed by
Mortgagee under such policies. Mortgagee will nevertheless
continue to be covered by such policies.
(e) [Intentionally omitted.]
(f) Other Insurance. Mortgagee may from time to time
by notice to Mortgagor require Mortgagor at Mortgagor's expense
to effect such other insurance or such variations to the terms of
the existing insurance as may then be customary in the airline
industry for aircraft of the same type as the Aircraft and at the
time commonly available in the insurance market.
(g) Information. Mortgagor will provide Mortgagee with
any information reasonably requested by Mortgagee from time to
time concerning the insurance maintained with respect to the
Aircraft or in connection with any claim being made or proposed
to be made thereunder.
(h) Currency. All proceeds of insurance pursuant to
this Agreement will be payable in Dollars except as may be
otherwise agreed by Mortgagee.
(i) Grounding of Aircraft. If at any time any of the
insurance required pursuant to this Agreement will cease to be in
full force and effect, Mortgagor will forthwith
<PAGE>
20
ground the Aircraft and keep the Aircraft grounded until such
time as such insurance is in full force and effect again. Nothing
contained in this paragraph (i) shall be deemed to release
Mortgagor from its obligation to maintain insurance as required
herein.
(j) Failure to Insure. If at any time Mortgagor fails
to maintain insurance in compliance with this Section 6.3,
Mortgagee will be entitled but not bound to do any of the
following (without prejudice to any other rights which it may
have under this Agreement by reason of such failure):
(i) To effect or maintain insurance satisfactory
to Mortgagee or otherwise remedy such failure in such
manner as Mortgagee considers appropriate (and
Mortgagor will upon demand reimburse Mortgagee in full
for any amount so expended in that connection).
(ii) At any time while such failure is
continuing, to require the Aircraft to remain at any
airport or (as the case may be), proceed to and remain
at any airport designated by Mortgagee, until such
failure is remedied to Mortgagee's satisfaction.
(k) Reinsurance. If in the future any reinsurance
placed by Mortgagor or a permitted lessee or sublessee (if any)
of Mortgagor is maintained on the Aircraft, then such
reinsurance will be maintained with reinsurers and brokers
approved by Mortgagee. Such reinsurance will contain each of the
following terms and will in all other respects (including amount)
be satisfactory to Mortgagee:
(i) The same terms as the original insurance.
(ii) A cut-through and assignment clause
satisfactory to Mortgagee.
(iii) Payment will be made notwithstanding (A)
any bankruptcy, insolvency, liquidation or dissolution
of any of the original insurers and/or (B) that the
original insurers have made no payment under the
original insurance policies.
6.4 Compliance with Laws. Mortgagor shall exercise all due
diligence in order to comply with the requirements of all
applicable laws, rules, regulations and orders of any
governmental authority, noncompliance with which would have a
material adverse effect on Mortgagor.
6.5 Subleasing or Leasing.
(a) No Sublease or Lease without Consent. Except as
permitted under the Indenture or as set forth below in this
Section 6.5, MORTGAGOR WILL NOT SUBLEASE, LEASE OR PART WITH
POSSESSION OF THE AIRCRAFT OR ANY ENGINE (EXCEPT FOR MAINTENANCE
AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF THE
REQUIRED HOLDERS (THE GRANT OR REFUSAL OF WHICH WILL
<PAGE>
21
BE IN THE DISCRETION OF SUCH HOLDERS) AND IN ACCORDANCE WITH SUCH
REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING
BETWEEN THE REQUIRED HOLDERS AND MORTGAGOR. The wet leasing of
the Aircraft in the ordinary course of Mortgagor's business (in
which Mortgagor and its crews retain operational control of the
Aircraft) will not be considered a sublease of the Aircraft and
shall be permitted hereunder so long as no Default or Event of
Default then exists.
(b) Pre-Approved Subleasing or Leasing. Attached
hereto as Exhibit C is a list (the "Pre-Approved List") of
airlines to whom the Holders hereby agree Mortgagor may, subject
to paragraph (c) below, sublease or lease the Aircraft, without
requiring the consent of the Holders. Mortgagor shall have the
right to provide Mortgagee and the Holders with a new list (the
"New Pre-Approved List") from time to time which the Required
Holders shall approve, disapprove or disapprove in part and
approve in part within fifteen (15) days of receipt, provided
that any such approval will not be unreasonably withheld. In the
event that the Required Holders fail to respond within such
fifteen (15) day period, Mortgagor will once again deliver the
New Pre-Approved List to Mortgagee and the Holders and if the
Required Holders then fail to respond within five (5) Business
Days of receipt of the New Pre-Approved List (the second time it
is sent), the Required Holders shall be deemed not to have
consented to the New Pre-Approved List. The New Pre-Approved
List, as approved by the Required Holders, shall constitute the
Pre-Approved List from the date of such approval. Notwithstanding
the foregoing, Mortgagor shall not lease or sublease (including
renewals thereof) the Aircraft to any Person otherwise permitted
hereunder if at the time such lease or sublease would be entered
into or renewed such Person is subject to any bankruptcy,
insolvency, liquidation reorganization, dissolution or similar
proceeding, is seeking any reorganization or any readjustment of
its debts, has substantially all of its Property in the
possession of any liquidator, trustee, receiver or similar
Person, or is not generally paying its debts as and when they are
due.
(c) Any Approved Sublease or Lease. Any sublease or
lease (hereinafter in this paragraph (c), a "Sublease") of the
Aircraft or any Engine will be fully subject to fulfillment of
the following conditions:
(i) The Mortgagor shall provide at least ten (10)
Business Days' prior notice to Mortgagee of any
proposed Sublease, setting forth the identity of the
sublessee, the Property to be subject to such Sublease
and the term of such Sublease, and such Sublease shall
contain an express agreement by the sublessee to the
effect that: (A) such Sublease is fully subject and
subordinate in all respects to this Agreement and to
Mortgagee's rights, powers and remedies hereunder, (B)
such Sublease shall prohibit any assignment or further
sublease of the Property subject thereto, and (C) upon
notice of the occurrence of an Event of Default given
by Mortgagee to such sublessee, Mortgagee may avoid
such Sublease, and the sublessee shall forthwith
deliver the Aircraft or Engine to Mortgagee;
(ii) All necessary action shall have been taken
which is required to continue the perfection of
Mortgagee's security interest in the Aircraft and
Engine
<PAGE>
22
and the Mortgagee's rights under this Agreement and
the Sublease and all other necessary documents shall
have been filed, registered or recorded in such public
offices as may be required to fully preserve the
priority of the interest of Mortgagee in the Aircraft
and Engine under all applicable Laws;
(iii) Mortgagor shall deliver to Mortgagee,
promptly after execution thereof, a duly executed copy
of such Sublease;
(iv) Each Sublease shall be assigned by Mortgagor
to Mortgagee as security for Mortgagor's obligations
hereunder, and the sublessee shall be required upon
the occurrence and during the continuance of an Event
of Default to make all payments under such Sublease
directly to Mortgagee; provided that if such Event of
Default shall cease or shall be waived pursuant to the
provisions of the Indenture, Mortgagee shall
immediately pay to Mortgagor all funds so received and
not yet applied in accordance with the provisions
hereof or of the Indenture;
(v) Any such Sublease shall include provisions
for the maintenance, operation, possession, inspection
or insurance of the Property subject thereto that are
the same in all material respects as the applicable
provisions of this Agreement;
(vi) Mortgagor shall furnish to Mortgagee
evidence reasonably satisfactory to Mortgagee that the
insurance required by Section 6.3 remains in effect;
(vii) Mortgagor shall pay or reimburse Mortgagee
for all reasonable out-of-pocket fees and expenses,
including, without limitation, reasonable fees and
disbursements of counsel, incurred by Mortgagee in
connection with any such Sublease;
(viii) For all purposes of this Section 6.5, the
term "Sublease" shall be deemed to include interchange
agreements with respect to the Aircraft or Airframe;
and
(ix) Mortgagor shall remain primarily liable
hereunder for the performance of all the terms of this
Agreement to the same extent as if such Sublease had
not occurred, and no transfer of possession of the
Aircraft, the Airframe, any Engine or any Part shall
in any way discharge or diminish any of Mortgagor's
obligations hereunder or under any other Operative
Document.
In its sole discretion, Mortgagee may require an
Opinion of Counsel in connection with such Sublease, including
Mortgagee's rights to repossess the Aircraft in the event of an
Event of Default hereunder or under the Sublease. Mortgagor will
not amend the terms of any approved Sublease without the prior
written consent of the Mortgagee, which will not be unreasonably
withheld.
<PAGE>
23
6.6 Further Assurances. At any time or from time to time
upon the reasonable request of Mortgagee, Mortgagor shall cause
the appropriate Person to execute, acknowledge, deliver, and
cause to be recorded or registered (if so requested) all such
additional instruments and documents and further assurances of
title and shall do or cause to be done all such further acts and
things as may reasonably be necessary or desirable to effectuate
fully the intent and purposes of this Agreement, the Securities,
the Operative Documents, and any other agreement entered into in
connection therewith.
6.7 Maintenance. So long as the Lien of this Agreement
shall not have been discharged, Mortgagor, at its own cost and
expense, shall service, repair, maintain, overhaul and test the
Airframe and Engines (and each engine and part which is not an
Engine or Part, respectively, but is installed on the Airframe)
or cause the same to be done in accordance with a maintenance
program approved by the FAA (and in compliance with all
airworthiness directives thereof), and shall keep or cause to be
kept the Airframe and Engines (and each such other engine or
part) (i) in such operating condition as may be necessary to
enable the airworthiness certification of the Aircraft to be
maintained in good standing at all times under the applicable
rules and regulations of the FAA and the FAA-approved maintenance
program of Mortgagor and (ii) in good operating condition in
accordance with all mandatory service bulletins and
airworthiness directives of the United States Government and in
substantially the same manner as Mortgagor services, repairs,
maintains, overhauls and tests similar aircraft operated by
Mortgagor in similar circumstances and in accordance with
Mortgagor's maintenance program approved by the FAA and without
discriminating against the Aircraft with respect to its
maintenance, repair, condition or overhaul status based upon the
existence of this Agreement. Notwithstanding the foregoing, when
aircraft of the same type, model or series as the Airframe
(powered by engines of the same type as those with which the
Airframe shall be equipped at the time of grounding) have been
grounded by the FAA, Mortgagor shall not be required to maintain
such certification of airworthiness so long as it continues to
comply with all the other provisions of this Agreement with
respect to the Aircraft. Nothing herein shall be deemed to
prevent Mortgagor from taking the Aircraft out of service for
maintenance or modifications permitted hereunder or storage in
accordance with applicable FAA requirements, as appropriate and
sound practice for such storage. Mortgagor shall maintain or
cause to be maintained in the English language all records, logs
and other documents required by the FAA to be maintained in
respect of the Aircraft.
6.8 Registration. Except as otherwise permitted by this
Agreement or as otherwise required by the Federal Aviation Act or
rules, regulations, or orders promulgated thereunder, so long as
the Lien of this Agreement shall not have been discharged, the
Aircraft shall be duly registered in the name of Mortgagor under
such Act at all times. Mortgagee shall, at Mortgagor's expense,
execute and deliver all such documents as Mortgagor may
reasonably request for the purpose of effecting or continuing
such registration.
6.9 Insignia. Mortgagor shall for so long as the Aircraft
shall be subject to the Lien of this Agreement maintain or cause
to be maintained in the cockpit of the Airframe in a location
reasonably adjacent to the airworthiness certificate and on each
Engine, a metal nameplate identifying the security interest of
Mortgagee in the Aircraft, as follows:
<PAGE>
24
"Subject to a security interest in favor
of [Name of current Mortgagee], as Trustee"
Mortgagor will not allow the name of any Person other than
Mortgagee, or its successors or assigns, to be placed on the
Airframe or any Engine as a designation that might be interpreted
as a claim of ownership or of any security interest therein,
except that Mortgagor or any permitted lessee may operate the
Airframe and Engines in its livery, including its name and logo
and except that so long as the Second Mortgage is in effect,
Mortgagor may comply with Section 6.9 of the Second Mortgage.
6.10 Inspection. At all reasonable times so long as the
Aircraft is subject to the Lien of this Agreement, Mortgagee or
its authorized representatives may at its own expense (unless an
Event of Default shall have occurred and be continuing, or unless
such inspection discloses any material failure by Mortgagor to
comply with the provisions of this Agreement in which case, at
Mortgagor's expense) and risk conduct a visual walk-around
inspection of the Aircraft and any Engine (including, without
limitation, a visual walk-around inspection of the Aircraft
during any "C" check or other heavy maintenance) and may inspect
the books, logs and records of Mortgagor (and make copies of such
books, logs and records) relating to the operation and
maintenance thereof; provided that (a) any such inspection shall
be subject to the safety, security and workplace rules applicable
at the location where such inspection is conducted and any
applicable governmental rules or regulations and (b) in the case
of an inspection during a maintenance visit, such inspection
shall not interfere with the normal conduct of such maintenance
visit or extend the time required for such maintenance visit or,
in any event, at any time interfere with the use or operation of
the Airframe or any Engine or with the normal conduct of
Mortgagor's business. All information obtained in connection with
any such inspection shall be held confidential by Mortgagee and
the Holders and shall not be furnished or disclosed by them to
anyone other than each other, their bank examiners, regulators,
auditors, accountants, agents and legal counsel and any Person
with whom any Holder is in good faith conducting negotiations
relating to the possible transfer and sale of such Holder's
interest in any Security, if such Person shall have entered into
an agreement similar to that contained in this Section 6.10
whereby such Person agrees to hold such information confidential,
and except as may be required by an order of any court or
administrative agency or by any statute, rule, regulation or
order of any governmental authority or as may be necessary to
enforce the terms of this Agreement. Neither Mortgagee nor any
Holder shall have any duty to make any such inspection or incur
any liability or obligation by reason of not making any such
inspection. No inspection under this Section 6.10 shall relieve
Mortgagor of any of its obligations under this Agreement.
If requested by Mortgagee, Mortgagor shall give reasonable
prior written notice to Mortgagee of the date on which the
Aircraft, Airframe or any Engine undergoes its next scheduled
maintenance visit and next major check, and with respect to any
Engine the next off-the-wing maintenance, and shall advise
Mortgagee of the name and location of the relevant maintenance
provider and shall, at least five days prior to commencement of
such major check or maintenance, make available for inspection by
Mortgagee all relevant records, logs and documents relating to
the Aircraft.
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25
6.11 Alterations, Modifications and Additions. Mortgagor,
at its own expense, shall make alterations and modifications in
and additions to the Airframe and each Engine as may be required
to be made from time to time to comply with the applicable rules
and regulations of the FAA, to maintain the Standard Certificate
of Airworthiness for the Aircraft and as otherwise required by
applicable Law regardless of upon whom such requirements are, by
their terms, nominally imposed; provided that Mortgagor may, in
good faith, contest the validity or application of any such
standard in any reasonable manner which does not materially
adversely affect the Lien of this Agreement or subject Mortgagee
or any Holder to any risk of civil or criminal penalty. In
addition, Mortgagor, at its own expense, may from time to time
make or cause to be made such alterations and modifications in
and additions to the Airframe and any Engine as Mortgagor may
deem desirable in the proper conduct of its business (including,
without limitation, removal of Parts), provided further that no
such alteration, modification or addition diminishes, in
Mortgagee's reasonable judgment, the value, utility, condition,
airworthiness or remaining useful life of the Airframe or Engine
below the value, utility, condition, airworthiness or remaining
useful life thereof immediately prior to such alteration,
modification or addition, assuming the Airframe or Engine was
then in the condition required to be maintained by the terms of
this Agreement, except that the value (but not the utility,
condition, airworthiness or remaining useful life) of the
Aircraft may be reduced by the value of Parts which Mortgagor
deems obsolete or no longer suitable or appropriate for use in
the Airframe or Engine which shall have been removed and not
replaced, if the aggregate value of all such obsolete or
unsuitable Parts removed from the Aircraft and not replaced shall
not exceed $500,000. All Parts incorporated or installed in or
attached or added to the Airframe or any Engine as the result of
any alteration modification or addition effected by Mortgagor
shall be free and clear of any Liens except Permitted Liens and,
without further act, become subject to the Lien of this
Agreement; provided that Mortgagor may remove any such Part from
the Airframe or Engine if (i) such Part is in addition to, and
not in replacement of or in substitution for, any Part originally
incorporated or installed in or attached to the Airframe or
Engine at the time of delivery thereof hereunder or any Part in
replacement of, or in substitution for, any such original Part,
(ii) such Part is not required to be incorporated or installed in
or attached or added to the Airframe or Engine pursuant to the
terms hereof and (iii) such Part can be removed from the Airframe
or Engine without diminishing or impairing the value, condition,
utility, airworthiness or remaining useful life which the
Airframe or Engine would have had at the time of removal had such
alteration, modification or addition not been effected by
Mortgagor assuming the Aircraft was otherwise maintained in the
condition required by this Agreement. Upon the removal by
Mortgagor of any such Part as above provided, title thereto
shall, without further act, be free and clear of all rights of
Mortgagee and such Part shall no longer be deemed a Part
hereunder. Any such Part not so removed shall, so long as the
Lien of this Agreement shall not have been discharged, remain
subject to such Lien.
6.12 Notice of Change of Mortgagor's Chief Executive
Office. So long as the Lien of this Agreement shall not have been
discharged, Mortgagor shall notify Mortgagee at least 30 days
prior to any change in the location of the chief executive office
of Mortgagor.
<PAGE>
26
7. CONDEMNATION
7.1 Dedication to CRAF. Mortgagor may transfer possession
of the Airframe or any Engine to the United States of America or
any instrumentality or agency thereof as part of the Civil
Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 et
seq. (or any substantially similar program) ("CRAF Program") for
a period which includes (collectively, the "CRAF Program
Requisition Period") (a) the entire period of requisition under
the CRAF Program and (b) an additional six (6) months after the
expiration of the requisition under the CRAF Program.
7.2 Notice to Mortgagee. Mortgagor will promptly notify
Mortgagee in writing in the event of the requisition for use of
the Aircraft under CRAF activation by the U.S. Government. All of
Mortgagor's obligations under this Agreement will continue to the
same extent as if such requisition had not occurred.
7.3 Requisition of Engine. If there is a requisition for
use of any Engine (but not the Airframe) by the U.S. Government
in connection with the CRAF Program, Mortgagor will replace such
Engine by complying with the terms of Section 3.3 to the same
extent as if a Total Loss had occurred with respect to such
Engine.
7.4 Government Indemnification. Any provisions of this
Agreement to the contrary notwithstanding, if there is a
requisition for use of the Aircraft pursuant to the CRAF Program
and/or CRAF activation, Mortgagee agrees that Mortgagor's
insurances described in Section 6.3 and in Exhibit B hereof may
be supplemented by insurances provided under Title XIII of the
Federal Aviation Act of 1958, as amended, and/or U.S. Government
indemnification (which Title XIII insurances and indemnification
will be, as to the Aircraft, in an amount not less than the
Agreed Value (as defined in Exhibit B) and, as to all other
insurances, in amounts not less than those established in Exhibit
B hereof); provided, however, that Mortgagor will remain
responsible for full compliance with all the provisions of this
Agreement, to the extent Title XIII and/or the U.S. Government
indemnification do not satisfy Mortgagor's obligations under this
Agreement and the Indenture.
7.5 No Geographic Limits. If there is a requisition for use
of the Aircraft pursuant to the CRAF Program and/or CRAF
activation, there will be no limitation on the geographic area in
which the Aircraft may be operated so long as, taken as a whole,
Mortgagor's insurance, the Title XIII insurance and/or the
indemnification provided by the U.S. Government fully cover
(without any geographic exclusions) Mortgagor's Section 6.3 and
Exhibit B insurance requirements.
7.6 Notice of Default. If an Event of Default occurs under
this Agreement during a CRAF Program Requisition Period with
respect to the Airframe and Mortgagee elects to pursue its
remedies under Section 4 to terminate this Agreement and
repossess the Airframe, Mortgagee will so notify the U.S.
Government by sending a written communication as follows:
Headquarters Air Mobility Command
AMC Contracting Office -- XOKA
Scott Air Force Base, Illinois 62225-5007
<PAGE>
27
7.7 Receipts of Payments. So long as no Event of Default
has occurred and is continuing, all payments received by
Mortgagee or Mortgagor from such Government Entity in connection
with the requisition of the Aircraft under the CRAF Program will
be paid over to or retained by Mortgagor. If an Event of Default
has occurred and is continuing, all payments received by
Mortgagor or Mortgagee from such Government Entity in connection
with the requisition of the Aircraft under the CRAF Program may
be used by Mortgagee to satisfy any Obligations owing by
Mortgagor in the order provided in Section 6.10 of the Indenture.
8. GENERAL INDEMNIFICATION
8.1 General Indemnification and Waiver of Certain Claims.
(a) Claims Defined. For the purposes of this Section
8.1, "Claims" shall mean any and all costs, liabilities
(including strict or absolute liability without fault in tort or
otherwise), losses, damages, penalties, actions or suits or
claims which may be imposed on, incurred by, suffered by, or
asserted against an Indemnified Person, as defined herein, and,
except as otherwise expressly provided in this Section 8.1, shall
include all reasonable out-of-pocket costs, disbursements and
expenses (including legal fees and expenses) paid or incurred by
an Indemnified Person in connection therewith.
(b) Indemnified Person Defined. For the purposes of
this Section 8.1, "Indemnified Person" means Mortgagee and each
Holder, and each of their respective successors, transferees or
assigns permitted under the terms of the Securities or the
Operative Documents, and all directors, officers, employees,
agents, servants and Affiliates of any such Person; provided
that, as a condition precedent to any performance by Mortgagor in
connection with such indemnity with respect to any Person which
is not a signatory to this Agreement, such Person shall adhere to
and expressly agree in writing to be bound by all the terms of
this Section 8.1.
(c) Claims Indemnified. Subject to the exclusions
stated in subsection (d) below, Mortgagor hereby indemnifies and
agrees to indemnify, defend and hold harmless, on an after-tax
basis as defined in Section 8.2(d), each Indemnified Person
against Claims arising out of or resulting from:
(i) the operation, possession, use, nonuse,
purchase, airworthiness, control, return, transfer,
maintenance, overhaul, testing, registration, title,
lease, reregistration, storage, modification,
replacement, repair, substitution, pooling or
interchange of the Aircraft, the Airframe, any Engine
or any Part, or any engine used in connection with the
Airframe, or any part thereof, or any other Property
used in connection therewith, or any other Collateral,
by Mortgagor, any lessee or any other Person
whatsoever, whether or not such operation, possession,
use, nonuse, title, lease, purchase, airworthiness,
control, return, transfer, maintenance, overhaul,
testing, registration, reregistration, storage,
modification, replacement, repair, substitution,
pooling or interchange is in compliance with the terms
of this Agreement or any other Operative Document,
including, without limitation, claims for death,
personal injury or Property damage or other loss or
harm to any
<PAGE>
28
Person whatsoever and Claims relating to any laws,
rules or regulations pertaining to such operations,
possession, use, nonuse, title, lease, purchase,
airworthiness, control, return, transfer maintenance,
overhaul, testing, registration, reregistration,
storage, modification, replacement, repair,
substitution, pooling or interchange, including
environmental control, noise and pollution laws, rules
or regulations;
(ii) the manufacture, design, purchase,
acceptance, rejection, delivery, nondelivery,
condition or ownership of the Aircraft, any Engine or
any Part, or any engine used in connection with the
Airframe, or any part thereof, or any other
Collateral, including, without limitation, latent and
other defects, whether or not discoverable, and
patent, trademark or copyright infringement; and
(iii) any breach of or failure to perform or
observe, or any other noncompliance with, any covenant
or agreement to be performed by, or other obligation
of Mortgagor under, the Securities or any of the
Operative Documents, or the falsity, inaccuracy or
breach of any representation or warranty of Mortgagor
in any of the Operative Documents.
(d) Claims Excluded. The following are excluded from
Mortgagor's agreement to indemnify under this Section 8.1:
(i) Claims attributable to acts or events
occurring after the repayment in full of the
Securities and the payment and performance of all
other Obligations;
(ii) Claims which are attributable to Taxes
(other than the obligations to "gross up" set forth in
Section 8.1(c)), whether or not Mortgagor is required
to indemnify therefor under Section 8.2; or
(iii) With respect to any particular Indemnified
Person, Claims to the extent attributable to the gross
negligence or willful misconduct (other than gross
negligence or willful misconduct imputed to such
Indemnified Person solely by reason of its interest in
the Aircraft) of, or to the breach of any contractual
obligation by, or the falsity or inaccuracy or breach
of any representation or warranty of, such Indemnified
Person (unless such breach or falsity or inaccuracy is
a result of Mortgagor's failure to comply with the
terms of any Operative Document or any representation
or warranty therein).
(e) Insured Claims. In the case of any Claim
indemnified by Mortgagor hereunder which is covered by a policy
of insurance maintained by Mortgagor pursuant to Section 6.3 or
otherwise, Mortgagor shall not be obligated to indemnify such
Indemnified Person with respect to such Claim to the extent of
any loss of benefits of such insurance resulting from the failure
of such Indemnified Person to cooperate with the insurers in the
exercise of their rights to investigate, defend or compromise
such Claim as may be required to retain the benefits of such
insurance with respect to such Claim.
<PAGE>
29
(f) Claims Procedure. An Indemnified Person shall
promptly notify Mortgagor of any Claim as to which
indemnification is sought, provided that failure of an
Indemnified Person to provide such notice shall not release
Mortgagor from any of its obligations to indemnify hereunder to
the extent such failure does not impair the rights of Mortgagor
with respect to the availability or extent of coverage of
insurance or otherwise result in any material adverse
consequences to Mortgagor. Subject to the rights of insurers
under policies of insurance maintained by Mortgagor, Mortgagor
shall have the right to investigate, and the right to defend or
compromise, employing counsel reasonably acceptable to such
Indemnified Person (except as may otherwise be required by any
applicable policy of insurance), any Claim for which
indemnification is sought under this Section 8.1; provided that,
Mortgagor shall not be entitled to defend or compromise any such
Claim if an Event of Default shall have occurred and be
continuing or if such proceedings involve a material risk of the
sale, forfeiture, or loss of, or the creation of any Lien (other
than a Permitted Lien) on, the Aircraft or other Collateral,
unless Mortgagor shall have posted a bond or other security
satisfactory to the relevant Indemnified Persons with respect to
such risk. The Indemnified Person shall cooperate with all
reasonable requests of Mortgagor in connection with any of the
foregoing. Where Mortgagor or the insurers under a policy of
insurance maintained by Mortgagor undertake the defense of an
Indemnified Person with respect to a Claim, no additional legal
fees or expenses of such Indemnified Person in connection with
the defense of such Claim shall be indemnified hereunder unless
such fees or expenses were incurred at the written request of
Mortgagor or such insurers; provided, however, that if (i) in the
written opinion of counsel to such Indemnified Person an actual
or potential material conflict of interest exists where it is
advisable for such Indemnified Person to be represented by
separate counsel or (ii) such Indemnified Person has been
indicted or otherwise charged in a criminal complaint and such
Indemnified Person informs Mortgagor that such Indemnified Person
desires to be represented by separate counsel, the reasonable
fees and expenses of any such separate counsel shall be borne by
Mortgagor. Subject to the requirements of any policy of insurance
applicable to a Claim, an Indemnified Person may participate at
its own cost and expense in any judicial proceeding controlled by
Mortgagor or its insurers pursuant to the preceding provisions,
provided that such party's participation does not, in the opinion
of the independent counsel appointed by Mortgagor or its insurers
to conduct such proceedings, unduly interfere with such control;
and such participation shall not constitute a waiver of the
indemnification provided in this Section 8.1. Nothing contained
in this Section 8.1(f) shall be deemed to require an Indemnified
Person to contest any Claim or to assume responsibility for or
control of any judicial proceeding with respect thereto. Payments
required to be made pursuant to this Section 8.1 to each
Indemnified Person shall be made directly to such Indemnified
Person in immediately available funds within 30 days after
written demand upon Mortgagor by such Indemnified Person. To the
extent permitted by applicable Law, interest at the highest rate
that may, under any circumstance (whether or not such
circumstance has or could actually occur), be applicable to the
Securities thereunder or under the terms of the Indenture shall
be paid, on demand, on any amount or indemnity not paid when due
pursuant to this Section 8.1 until the same shall be paid.
(g) Subrogation. To the extent that a Claim
indemnified by or on behalf of Mortgagor under this Section 8.1
is in fact paid in full by or on behalf of Mortgagor and/or an
insurer under a policy of insurance maintained by or on behalf of
Mortgagor, Mortgagor and/or
<PAGE>
30
such insurer, as the case may be, shall be subrogated to the
extent of such payment to the rights and remedies of the
Indemnified Person on whose behalf such Claim was paid with
respect to the transaction or event giving rise to such Claim.
Should an Indemnified Person receive any refund, in whole or in
part, with respect to any Claim paid by Mortgagor hereunder
(other than a refund pursuant to a separate insurance policy
maintained by an Indemnified Person, it shall (so long as no
Default or Event of Default has occurred and is continuing)
promptly pay over the amount refunded, together with any interest
received with respect to such amount for the period between the
indemnification payment and the receipt of such refund, to
Mortgagor.
(h) Waiver of Certain Claims. Mortgagor hereby waives
and releases any claim now or hereafter existing against any
Indemnified Person arising out of death or personal injury to
personnel of Mortgagor, loss or damage to Property of Mortgagor,
or the loss of use of any Property of Mortgagor, which results
from or arises out of the condition, use or operation of the
Aircraft prior to the payment in full of the Securities and all
other Obligations, including, without limitation, any latent or
patent defect whether or not discoverable, except as otherwise
provided in the Aircraft Sale Agreement.
(i) Certain Limitations. The general indemnification
provisions of this Section 8.1 are not intended to waive or
supersede any specific provisions of, or any rights or remedies
Mortgagor or Mortgagee may have under or with respect to, the
Aircraft Sale Agreement, the Indenture or any other Operative
Document to the extent such provisions, rights or remedies apply
to any Claim.
(j) Effect of Other Indemnities. The indemnification
obligations of Mortgagor under this Section 8.1 shall be those of
a primary obligor whether or not an Indemnified Person shall also
be indemnified with respect to the same matter under the terms of
any other instrument, and the Indemnified Person seeking
indemnification from Mortgagor pursuant to this Section 8 may
proceed directly against Mortgagor without first seeking to
enforce any other right of indemnification.
8.2 Tax Indemnification.
(a) Indemnitee Defined. For purposes of this Section
8.2, "Indemnitee" means Mortgagee, the Holders and their
respective Affiliates, successors and permitted transferees and
assigns.
(b) Taxes Indemnified. Subject to the exclusions
stated in Section 8.2(c), Mortgagor shall indemnify, pay, defend,
protect and hold harmless each Indemnitee against all Taxes,
howsoever imposed (whether imposed upon any Indemnitee,
Mortgagor, all or any part of the Aircraft, any other Collateral
or otherwise), by any federal, state or local government,
political subdivision, or taxing authority in the United States,
by any government or taxing authority of or in a foreign country
or of or in a territory or possession of the United States, or by
any international authority, upon or with respect to or in
connection with, based upon or measured by, in whole or in part:
<PAGE>
31
(i) the Aircraft, the Airframe, the Engines, the
Parts, or any other Collateral or any part of any of
the foregoing or interest therein;
(ii) the manufacture, purchase, financing,
ownership, delivery, registration or reregistration,
redelivery, leasing, charter, possession, use,
location, operation, return, storage, transfer of
title, sale, acceptance, rejection or other
disposition of or action or event with respect to the
Aircraft, the Airframe, the Engines, the Parts, or any
other Collateral or any part of any of the foregoing
or interest therein;
(iii) the rentals, receipts, income or earnings
arising from the purchase, financing, ownership,
delivery, redelivery, leasing, possession, use,
operation, return, storage, transfer of title, sale or
other disposition of the Aircraft, the Airframe, the
Engines, the Parts, or any other Collateral or any
part of any of the foregoing or interest therein;
(iv) the Securities, their issuance or
acquisition, or the payments of any amounts
thereunder;
(v) the Property, or other proceeds received with
respect to the Property, held by Mortgagee hereunder;
or
(vi) the Operative Documents or amendments or
supplements thereto, their execution or the
transactions contemplated thereby.
(c) Taxes Excluded. The indemnity provided for in
Section 8.2(b) shall not extend to any of the following:
(i) Taxes on, based on, or measured by income
(including gross income), receipts, capital,
franchises, excess profits or conduct of business of
an Indemnitee, except to the extent Taxes of such type
would not have been imposed on such Indemnitee but for
the location of the Aircraft, activities or place of
incorporation or principal place of business of
Mortgagor or any other user of the Aircraft or any
Affiliate of any of the foregoing, registration of the
Aircraft, or payment of amounts due under any Security
or other Operative Document from, the jurisdiction of
the taxing authority imposing such Taxes;
(ii) Taxes imposed against a transferee of an
Indemnitee to the extent of the excess of such Taxes
over the amount of such Taxes which would have been
imposed had there not been a transfer by an Indemnitee
other than Mortgagee or its Affiliates of any interest
of such Indemnitee in the Aircraft, any Security, or
any Operative Document;
(iii) in the case of any Indemnitee, Taxes which
arise out of or are caused by (a) the willful
misconduct or gross negligence of such Indemnitee or a
Related Party (as defined below) with respect to such
Indemnitee or (b) such
<PAGE>
32
Indemnitee's making a representation under any
Operative Document which proves to be untrue;
(iv) in the case of any Indemnitee, Taxes upon
(x) any voluntary transfer by such Indemnitee or a
Related Party with respect to such Indemnitee of all
or any portion of its interest in the Aircraft or any
part thereof, any Operative Document or any Security
(other than transfers which occur or result from the
exercise of any rights under Section 4) or (y) any
involuntary transfer of the Aircraft or any interest
therein or any Security, any Operative Document, or
shares of stock by an Indemnitee resulting from any
bankruptcy, foreclosure or similar proceedings in
which any Indemnitee is the debtor;
(v) United States withholding taxes imposed on
payments to a foreign Person;
(vi) Taxes imposed with respect to any fees
received by Mortgagee; or
(vii) Taxes imposed by Section 4795 of the Code
or any successor provision thereto.
For purposes of this Section 8.2, each transferee or
assignee of Mortgagee or a Holder shall be a "Related Party" with
respect to each other.
(d) Calculation of Indemnities. The amount Mortgagor
shall be required to pay with respect to any Tax indemnified
against under this Section 8.2 or with respect to any claim under
Section 8.1 shall be an amount that after taking into account any
Taxes, fees and other charges imposed upon the receipt of an
indemnity under this Section 8.2 or under Section 8.1 and any Tax
benefits recognized upon payment of such Taxes, equals the amount
otherwise due under Section 8.1. All computations for the
purposes hereof shall be based on the assumption that the
Indemnitee is taxable on all of its income at the highest
marginal rate in effect on the date payment pursuant to this
Section 8 is made.
(e) Procedures. Any amount payable to an Indemnitee
pursuant to this Section 8.2 shall be paid within 60 days after
receipt of a written demand therefor from such Indemnitee
accompanied by a written statement describing in reasonable
detail the basis for such indemnity and the computation of the
amount so payable; provided that such amount need not be paid
prior to the earlier of (i) the time such Taxes are paid or (ii)
in the case of amounts which are being contested by Mortgagor in
good faith or by the Indemnitee pursuant to this Section 8.2, the
time such contest is finally resolved. Within 30 days following
Mortgagor's receipt of the computation of the amount of the
indemnity, Mortgagor may request that an accounting firm to be
jointly selected by Mortgagor and such Indemnitee (but not
including the accounting firm that regularly prepares the
certified financial statements of Mortgagor or such Indemnitee)
determine whether such computations of the Indemnitee are
correct. The computations of such accounting firm shall be final,
binding and conclusive upon the parties, and Mortgagor shall have
no right to inspect the books, records or tax returns of the
Indemnitee to verify such computation. All fees and expenses
payable under this Section 8.2 in connection with such
verification shall be borne
<PAGE>
33
by Mortgagor, unless such verification discloses an error adverse
to Mortgagor of 5% or more of the amount calculated by the
Indemnitee, in which case such fees shall be paid by the
Indemnitee.
(f) Contest. If a written claim is made against an
Indemnitee for Taxes with respect to which Mortgagor is liable
for payment or indemnity hereunder, such Indemnitee shall give
Mortgagor prompt notice in writing of such claim and shall
furnish Mortgagor with copies of any requests for information
from any taxing authority relating to such Taxes with respect to
which Mortgagor may be required to indemnify hereunder, but a
failure to give such notice or to furnish such requests shall not
diminish Mortgagor's obligations hereunder except to the extent
such failure precludes Mortgagor from exercising its contest
rights hereunder. The Indemnitee shall in good faith, and at
Mortgagor's expense, if timely requested in writing by Mortgagor,
contest in the name of the Indemnitee the validity, applicability
or amount of such Taxes by:
(i) resisting payment thereof if practical;
(ii) not paying the same except under protest if
protest is necessary and proper;
(iii) if the payment be made, using reasonable
efforts to obtain a refund thereof in appropriate
administrative and judicial proceedings; or
(iv) taking such other action as is reasonably
requested by Mortgagor from time to time.
Notwithstanding the foregoing provisions of this Section
8.2(f), such Indemnitee shall not be required to take, and shall
not be required to permit Mortgagor to take, any administrative
or judicial action to contest any such Tax unless (A) Mortgagor
shall have agreed to pay such Indemnitee on demand and shall pay
all reasonable out-of-pocket costs and expenses which such
Indemnitee may incur in connection with contesting such Taxes,
(B) no payment Event of Default shall have occurred and be
continuing unless Mortgagor shall have posted a satisfactory bond
with respect to such claim or provided other security therefor
reasonably satisfactory to such Indemnitee, (C) in the event of a
contest by or in the name of an Indemnitee or in the event of a
judicial contest, upon written request of the Indemnitee
Mortgagor shall provide to such Indemnitee within 30 days after
such request an Officers' Certificate to the effect that a
reasonable basis exists for contesting such claim, (D) prior to
commencing any judicial action, Mortgagor acknowledges its
liability hereunder on the contested amount, and (E) it shall
have been reasonably determined that the action to be taken will
not (i) result in the material danger of a sale, forfeiture or
loss of the Aircraft or Airframe (except if Mortgagor shall have
adequately bonded any Lien that results in such material danger
or otherwise made adequate provision reasonably satisfactory to
such Indemnitee to protect the interest of such Indemnitee) or
(ii) subject such Indemnitee to any material risk of criminal
prosecution. To the extent not inconsistent with the provisions
contained elsewhere in this Section 8.2(f), the Indemnitee shall
have control over the conduct of a contest of a claim hereunder
(except to the extent that a contest is being conducted by
Mortgagor in accordance with the provisions hereof).
Notwithstanding the foregoing, if any Indemnitee shall release,
waive, compromise or settle any
<PAGE>
34
claim which may be indemnifiable by Mortgagor pursuant to the
foregoing provisions of this Section 8.2 without the express
written permission of Mortgagor, Mortgagor's obligation to
indemnify such Indemnitee with respect to such claim shall
terminate to that extent. Nothing contained in this Section 8.2
shall require any Indemnitee to contest, or require any
Indemnitee to permit Mortgagor to contest, a claim which such
Indemnitee would otherwise be required to contest pursuant to
this Section 8.2(f), if such Indemnitee shall waive its rights to
any indemnity payment by Mortgagor which would otherwise be
payable by Mortgagor pursuant to this Section 8.2 in respect of
such claim.
(g) Refund. Upon receipt by an Indemnitee of a refund
or credit of all or part of any Taxes which Mortgagor shall have
paid for such Indemnitee or for which Mortgagor shall have
reimbursed, advanced funds to or indemnified such Indemnitee,
such Indemnitee shall pay or repay to Mortgagor an amount which,
after the subtraction of the amount of any further net tax
savings realized by such Indemnitee as a result of the payment
under this Section 8.2(g), and the addition of any net tax
detriment realized by such Indemnitee as a result of the receipt
or accrual of such refund and any interest received or accrued by
such Indemnitee in such refund, is equal to the amount of such
refund and any interest received or accrued by such Indemnitee on
such refund; provided, that such amount shall be reduced by the
amount of any payment or indemnity then due from Mortgagor to or
on behalf of such Indemnitee pursuant to the Securities or the
Operative Documents and not made (and any amount so withheld
shall not be payable before such time and to such extent as
Mortgagor shall have made such payments or indemnities). Any
subsequent loss of such refund and interest as an erroneous
refund shall be indemnifiable in accordance with the provisions
of this Section 8.2 (disregarding Section 8.2(c)).
(h) Return. So long as the Aircraft is subject to the
Lien of this Agreement Mortgagor will prepare and file all
property tax returns with respect to the Aircraft, except with
respect to any such return that Mortgagor is not permitted to
file under applicable Law.
8.3 Survival of Indemnities. The agreement and indemnities
contained in Sections 8.1 and 8.2 shall survive the discharge of
this Agreement (but only with respect to any Person who was
entitled to the benefit of such agreements and indemnities at or
prior to the time of such termination) but only to the extent
relating to claims, obligations and other liabilities arising out
of acts or events occurring, or otherwise attributable to the
period, prior to the payment in full of the Securities and all
other Obligations.
9. MISCELLANEOUS
9.1 Performance by Mortgagee. If Mortgagor shall fail to
maintain, or cause to be maintained, any insurance required to be
carried pursuant to this Agreement, Mortgagee may obtain the same
for the account of Mortgagor; and Mortgagor shall pay to
Mortgagee interest (to the extent permitted by applicable Law) at
the highest rate that may, under any circumstance (whether or not
such circumstance has or could actually occur), be applicable to
the Securities thereunder or under the Indenture, computed on the
basis of a 360-day year and the actual number of days elapsed, on
the amount of any such payment from the date made until the date
reimbursed by Mortgagor pursuant hereto. If Mortgagor shall fail
in a timely and effective
<PAGE>
35
manner to take and complete any other action that it has herein
undertaken to perform, strictly in accordance with the provisions
hereof, Mortgagee may do or cause the same to be done; and there
shall be added to the indebtedness secured hereby any loss, cost
or expense incurred by or on behalf of Mortgagee incurring such
default or failure, or caused to be suffered by Mortgagee through
the incorrectness or breach of any of the covenants, agreements,
representations or warranties of Mortgagor herein or by any other
default of Mortgagor hereunder; and all sums so lost or expended
shall be payable on demand and shall bear interest as provided in
the first sentence of this Section 9.1, and Mortgagee shall be
subrogated to all of the rights against Mortgagor of any Person
to whom it shall have made any payment or payments under the
foregoing authority.
9.2 Power of Attorney. Mortgagor hereby irrevocably
appoints Mortgagee, and its successors and assigns, the true and
lawful attorney of Mortgagor (with the full power of
substitution), in the name and place and at the expense of
Mortgagor, (i) to give any necessary receipts or acquittance for
amounts collected or received pursuant to Section 4 hereof, (ii)
at any time after the occurrence of an Event of Default and so
long as the same shall be continuing, to make all necessary
transfers of all or any part of the Collateral in connection with
any sale or other disposition thereof made pursuant to such
Section 4, (iii) at any time after the occurrence of any such
Event of Default and so long as the same shall be continuing, to
execute and deliver for value all necessary instruments of
negotiation, assignment and transfer, (iv) at any time after the
occurrence of any such Event of Default and so long as the same
shall be continuing, to employ legal counsel and to appear in its
name in any court in any jurisdiction to commit and compromise
and discharge any alleged Lien, charge or other encumbrance
asserted against any of the Collateral, in any manner and by any
means that shall to it or them, in its or their sole and complete
discretion, seem proper; provided, however, that any such
undertaking on the part of Mortgagee shall not qualify in any
manner or to any extent or degree the obligation of Mortgagor so
to defend its title to, and the security interest of Mortgagee
in, the Collateral and every part thereof and (v) to file and
record such copies or memoranda hereof and financing statements,
continuation statements and other instruments or documents with
respect to the security interest created hereby as Mortgagee may
deem desirable fully to protect its interest hereunder, and for
such purpose Mortgagor hereby authorizes Mortgagee to effect any
such filings or recordings without the signature of Mortgagor to
the extent permitted by applicable Law, Mortgagor hereby
ratifying and confirming all that its said attorney shall
lawfully do hereunder and pursuant hereto and acknowledging that
its said attorney shall have no duty, by virtue of this Section
9.2 or at the risk of otherwise waiving or qualifying the
obligation of Mortgagor to do so, to do any of the above acts.
9.3 Waiver, etc., by Mortgagor. To the fullest extent that
it may now and hereafter lawfully so agree, Mortgagor hereby
agrees that it shall not at any time plead, claim or take the
benefit of any appraisal, valuation, extension, moratorium,
redemption or other law now or hereafter in effect in any
jurisdiction in order to prevent or delay the enforcement of any
provision of this Agreement or the indebtedness or agreements
secured hereby, or the absolute sale of any portion of or all the
Collateral to any purchaser at any sale under Section 4 hereof;
and Mortgagor, for itself and all who may claim through it, to
the fullest extent that it or they now and hereafter may lawfully
so agree, hereby waives the benefit of all such laws. Any sale
<PAGE>
36
of, grant of options to purchase or other realization against all
or any part of the Collateral shall operate to divest all right,
title and interest, at law, in equity and otherwise, of Mortgagor
in and to the Collateral so sold, optioned or realized upon, and
shall be a perpetual bar, at law, in equity and otherwise,
against Mortgagor and against any and all persons claiming or
attempting to claim the Collateral so sold, optioned or realized
upon, or any part thereof, from, through or under Mortgagor. No
delay on the part of Mortgagee in exercising any power of sale,
Lien or option, or any other right or remedy hereunder, or
otherwise, and no notice or demand that may be given to or made
upon Mortgagor with respect to any such power, right or remedy,
shall constitute a waiver thereof or limit or impair the right of
Mortgagee to take any other or similar action or to exercise any
power of sale, Lien or option, or any other right or remedy
granted in this Agreement or in any other agreement secured
hereby or otherwise available to Mortgagee; nor shall any single
or partial exercise of any such power, right or remedy preclude
any other or further exercise thereof, or the exercise of any
power, right or remedy granted in this Agreement or otherwise
available to Mortgagee, or prejudice its rights against Mortgagor
in any respect. Each and every remedy of Mortgagee shall, to the
extent permitted by applicable Law, be cumulative and in addition
to any other remedy granted hereunder or now or hereafter
available to it at law, in equity or otherwise.
9.4 Amendment, etc. Neither this Agreement nor any
provision hereof may be amended, modified, waived or discharged
orally, but only by an instrument in writing in accordance with
Article 9 of the Indenture. No waiver by Mortgagee of any breach
or default of or by Mortgagor under this Agreement, any other
agreement or indebtedness secured hereby, or otherwise, shall be
deemed a waiver of any other or similar, previous or subsequent
breach or default.
9.5 [Intentionally Omitted.]
9.6 Successors and Assigns. This Agreement and all
obligations of Mortgagor hereunder shall be binding upon the
successors and assigns of Mortgagor permitted under the
Indenture, and shall, together with the rights and remedies of
Mortgagee hereunder, inure to the benefit of Mortgagee, the
Holders, and their respective successors and assigns. Any
assignment in violation hereof shall be null and void ab initio.
9.7 Severability. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid,
illegal or unenforceable in whole or in part in any jurisdiction,
then such invalidity or unenforceability shall affect in that
jurisdiction only such clause or provision, or part thereof, and
shall not in any manner affect such clause or provision in any
other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction. Any impairment or invalidity,
under the laws of any jurisdiction, of this Agreement, in its
aspect as security for any portion of the Obligations, hereunder
or under the Securities, the Indenture or the other Operative
Documents, for any portion of any other indebtedness or
obligation secured hereby, shall not impair or invalidate this
Agreement as security for any other portion thereof.
<PAGE>
37
9.8 Governing Law; Waiver of Jury Trial.
(a) The laws of the State of New York shall govern
this Agreement without regard to principles of conflict of laws.
(b) Mortgagee and Mortgagor each waive any right to
have a jury participate in resolving any dispute, whether
sounding in contract, tort, or otherwise arising out of,
connected with, related to or incidental to the relationship
established between them in connection with this Agreement.
Instead, any disputes resolved in court will be resolved in a
bench trial without a jury.
9.9 Notices; Waivers. Any request, demand, authorization,
direction, notice, consent, waiver or other document provided or
permitted by this Agreement to be made upon, given or furnished
to, or filed with the parties hereto and/or the Holders, as the
case may be, shall be made, given, furnished or filed in the
manner and subject to the provisions of Section 11.2 of the
Indenture.
9.10 No Adverse Interpretation of Other Agreements. This
Agreement may not be used to interpret any agreement of Mortgagor
or any of its Subsidiaries which is unrelated to this Agreement
or the other Operative Documents. Any such agreement may not be
used to interpret this Agreement.
9.11 Benefits of Agreement Restricted. Subject to the
provisions of Section 9.6 hereof, nothing in this Agreement,
express or implied, shall give or be construed to give to any
Person, firm or corporation, other than the parties hereto and
the Holders, any legal or equitable right, remedy or claim under
or in respect of this Agreement or under any covenant, condition,
or provision herein contained, all such covenants, conditions and
provisions, subject to Section 9.6 hereof, being for the sole
benefit of the parties hereto and of the Holders.
9.12 Counterpart Originals. This Agreement may be signed in
two or more counterparts, each of which shall be deemed an
original, but all of which shall together constitute one and the
same agreement.
9.13 Effect of Headings. The Section headings and the Table
of Contents contained in this Agreement have been inserted for
convenience of reference only, and are and shall be without
substantive meaning or content of any kind whatsoever and are not
a part of this Agreement.
9.14 Section 1110 of the Bankruptcy Code. It is the
intention of the parties that the security interest created by
this Agreement shall be a security interest within the meaning of
Section 1110 of the Bankruptcy Code (11 U.S.C. ss. 1110) which
shall entitle Mortgagee to all of the benefits of such Section or
any similar successor provision with respect to the right to
repossess the Airframe, Engines and Parts as provided herein; and
in any circumstances where more than one construction of the
terms and conditions of this Agreement is possible, a
construction which would preserve such benefits shall control
over any construction which would not preserve such benefits or
would render them doubtful. In that regard, the parties
<PAGE>
38
acknowledge and agree that the security interest created by this
Agreement is intended to be a purchase-money security interest
retained and taken by Mortgagee for the benefit of the holders of
the Securities as seller of the Collateral to Mortgagor to secure
the purchase price of the Collateral as evidenced by the
Operative Documents. To the extent consistent with the provisions
of such Section 1110 or any analogous Section of the Federal
bankruptcy laws, as amended from time to time, it is hereby
expressly agreed and provided that, notwithstanding any other
provisions of the Federal bankruptcy laws, as amended from time
to time, any right of Mortgagee to take possession of the
Aircraft in compliance with the provisions of this Agreement
shall not be affected by the provisions of 11 U.S.C. ss. 362 or
ss. 363, as amended from time to time, or any analogous
provisions of any superseding statute or any power of the
bankruptcy court to enjoin such taking of possession. It is the
intention of the parties that the entitlement to such benefits
shall not be adversely affected by any sale or other transfer of
any Security to a subsequent Holder or by any modification of the
terms hereof, of the Securities or of the other Operative
Documents.
<PAGE>
39
IN WITNESS WHEREOF, the parties hereto have, by their indicated
officers thereunto duly authorized, caused this Aircraft Mortgage
and Security Agreement to be executed as of the day and year
first above written.
Mortgagor,
TRANS WORLD AIRLINES, INC.
By:__________________________
Name:
Title:
Mortgagee,
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Trustee
By:__________________________
Name:
Title:
<PAGE>
EXHIBIT A
MORTGAGE AND
SECURITY AGREEMENT SUPPLEMENT NO. __
Mortgage and Security Agreement Supplement No. __,
dated _______, ("Mortgage Supplement"), of TRANS WORLD AIRLINES,
INC. (the "Company") under the Agreement (as hereinafter
defined).
W I T N E S S E T H:
WHEREAS, the Aircraft Mortgage and Security Agreement
dated as of June __, 1998 (the "Agreement"), between the Company
and First Security Bank, National Association, as Trustee under
the Indenture referred to in the Agreement (the "Mortgagee"),
provides for the execution and delivery of one or more
supplements thereto substantially in the form hereof which shall
particularly describe the [Aircraft] [Engine(s)]** (such term and
other defined terms in the Agreement being used herein with the
same meanings) being delivered on [the date thereof]* [insert
applicable date]**, and shall specifically grant an equipment
security interest in the Company's interest in such [Aircraft]*
[Engine(s)]** to the Mortgagee; and
[WHEREAS, it is intended that an executed counterpart
of the Agreement be duly recorded pursuant to the Federal
Aviation Act concurrently with the recording pursuant to such Act
of an executed counterpart of this Mortgage Supplement and,
accordingly, such executed counterpart of this Mortgage
Supplement shall be attached to and constitute a part of the
Agreement for all purposes and shall be recorded together with
such Agreement pursuant to such Act; and]*
[WHEREAS, the Agreement was duly recorded pursuant to
the Federal Aviation Act on June __, 1998 and has been assigned
Conveyance No. __________; and]**
WHEREAS, the Company hereby acknowledges that the
[Aircraft]* [Engine(s)]** referred to in Annex A attached hereto
and made a part hereof has been delivered to the Company, and is
included in the Property of the Company covered by the terms and
conditions of the Agreement, subject to the equipment security
interest created thereunder;
NOW, THEREFORE, in order to secure all Obligations for
the benefit of Mortgagee and the Holders, subject to the terms
and conditions of the Agreement, and in consideration of the
premises and of the covenants contained in the Agreement, and of
other good and valuable consideration, the receipt whereof is
hereby acknowledged, the Company has transferred, assigned,
granted, bargained, sold, conveyed, mortgaged, hypothecated,
pledged, set over and confirmed and does hereby transfer, assign,
grant, bargain, sell, convey, mortgage, hypothecate, pledge, set
over and confirm, a first priority equipment security interest in
and a
- --------
* For Mortgage Supplement executed and delivered on the Issue
Date.
** For Mortgage Supplement executed and delivered after the Issue
Date for any Replacement Engine(s).
<PAGE>
2
mortgage lien on, the Property comprising all its right, title
and interest in and to [each of the Airframe and Engines]* [the
Engine(s)]** described in Annex A attached hereto whether or not
any such Engine(s) shall be installed in or attached to the
Airframe or any other aircraft, to the Mortgagee, its successors
and assigns;
To have and to hold all and singular the aforesaid
Property unto the Mortgagee, its successors, transferees and
assigns, for the uses and purposes and subject to the terms and
provisions set forth in the Agreement.
This Mortgage Supplement shall be construed as
supplemental to the Agreement and shall form a part thereof, and
the Agreement is hereby incorporated by reference herein and is
hereby ratified, approved and confirmed and terms not otherwise
defined herein shall have the meanings provided in the Agreement.
This Mortgage Supplement is being delivered in the
State of New York and shall be in all respects, including all
matters of construction, validity and performance, be governed by
the laws of the State of New York without regard to principles of
conflict of laws.
* * *
- --------
* For Mortgage Supplement executed and delivered on the Issue
Date.
** For Mortgage Supplement executed and delivered after the Issue
Date for any Replacement Engine(s).
<PAGE>
3
IN WITNESS WHEREOF, the Company has caused this
Mortgage Supplement to be duly executed by one of its duly
authorized officers, as of the day and year first above written.
TRANS WORLD AIRLINES, INC.
By:__________________________
Name:________________________
Title:_______________________
<PAGE>
Annex A to
Mortgage and Security
Agreement Supplement
No. ___
DESCRIPTION OF AIRFRAME AND ENGINES
AIRFRAME
FAA Regis- Manufacturer's
Manufacturer Model tration No. Serial No.
The Boeing _______ _______ _________
Company
ENGINES
Manufacturer Model Manufacturer's Serial Nos.
Pratt & Whitney __________ __________
Pratt & Whitney __________ __________
Each Engine is of 750 or more "rated take-off horsepower"
or the equivalent of such horsepower.
<PAGE>
EXHIBIT B
INSURANCE
[Refer to the Aircraft Mortgage and Security Agreement
dated as of June 16, 1998 between Mortgagor and Mortgagee (the
"Agreement"). Capitalized terms used in this Exhibit and not
otherwise defined herein or in the insurance policies referred to
herein shall have the meanings ascribed to such terms in Section
1 of the Definitions Appendix attached to the Agreement as
Appendix I. If applicable, insurance certificates from the
insurers will be provided.]
To: First Security Bank, National Association, as Trustee
("Mortgagee")
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Services
TRANS WORLD AIRLINES, INC.
Boeing 767-231 ETOPS
Manufacturer's Serial No.: 22570
FAA Registration Mark: N607TW (the "Aircraft")
The following underwriters have subscribed to the insurance
policies:
[LIST COMPANIES & PERCENTAGES]
THIS IS TO CERTIFY THAT, as insurance brokers, we have
effected fleet insurance in respect of aircraft owned or operated
by Mortgagor (including the Aircraft) as specified below.
AIRCRAFT HULL ALL RISKS
COVERING:
All risks of physical loss or damage to the Aircraft from
any cause (subject only to the exclusions as specified
below), for an agreed value of the Aircraft in an amount
equal to $27,500,000 (the "Agreed Value").
DEDUCTIBLES:
US$ 1,000,000 each and every loss. Not applicable to Total
Loss/Constructive Total Loss or Arranged Total Loss.
GEOGRAPHICAL COVERAGE:
Worldwide
<PAGE>
2
AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY
COVERING:
Aircraft Third Party, Passenger, Baggage, Cargo and Mail
Liability and Airline General Third Party Liability
(including but not limited to Premises, Hangarkeepers,
Contractual and Products Liability) for combined single
limit of not less than US$ 600,000,000 (or such higher
amount as Mortgagor may carry on any other aircraft in its
fleet) any one accident/occurrence (but in the aggregate in
relation to Products Liability), extended to cover
Mortgagor's liability under the Agreement to the extent of
the risks covered by the policy; including war and allied
perils under Extended Coverage Endorsement as per AVN 52;
subject only to exclusions as specified below.
GEOGRAPHICAL LIMITS:
Worldwide
HULL WAR AND ALLIED PERILS
COVERING:
Hull War Risks as per RJM Airline One, but including (i)
confiscation or requisition (including by State of
Registration), (ii) hijacking or other unlawful seizure or
wrongful exercise of control of the Aircraft or crew in
flight (including any attempt at such seizure or control)
and including "All Risks" Continuation Clause and Extortion
Risks (including expenses) and covering claims excluded
from Hull All Risks Policy while Aircraft outside Assured's
control by reason of perils insured under this policy, for
the Agreed Value.
DEDUCTIBLE:
US$ 1,000,000
GEOGRAPHICAL LIMITS:
Worldwide
AIRCRAFT SPARES ALL RISKS INSURANCE
COVERING:
All risks of physical loss or damage to Aircraft Parts or
spares or Engines at all times when removed from the
Aircraft from whatever cause, subject only to the
exclusions specified below, including the risks set down in
AVN 48B other than paragraphs (a) and (b) thereof (but
including paragraph (a) in respect of transit risks) for
limits of:
<PAGE>
3
US$ 18,000,000
and covering replacement cost.
DEDUCTIBLE:
US$ 250,000 each and every loss
GEOGRAPHICAL COVERAGE:
Worldwide
CONTRACTUAL INDEMNITY
Mortgagor has insurance coverage for the indemnities agreed
to by Mortgagor pursuant to Section 6.3 of the Agreement
but only to the extent of the risks covered by the
policies.
PERIOD OF COVERAGE (ALL POLICIES)
From Issue Date to [EXPIRATION DATE]
It is further certified that Mortgagee has an interest in
respect of the Aircraft under the Agreement. Accordingly,
with respect to losses occurring during the period from the
Issue Date until the expiry of the Insurance or until the
expiry or agreed termination of the Agreement or until the
obligations under the Agreement are terminated by any
action of Mortgagor or Mortgagee and it is confirmed that
the Insurance afforded by the Policy is in full force and
effect and it is further agreed that the following
provisions are specifically endorsed to the Policy.
1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS)
AND AIRCRAFT SPARES INSURANCES
[MORTGAGEE ONLY-NO OTHER CONTRACT PARTIES] In respect of
any claim on the Aircraft that becomes payable on the basis of a
total loss, settlement shall be made to, or to the order of
Mortgagee and Equity Notes Trustee, as their interests may
appear, and no other loss payee, up to the Agreed Value. With
respect to repairable damage to the Aircraft or any Engine,
Mortgagee will receive all insurance proceeds in excess of
US$ 500,000; provided that upon receipt by the insurance broker
of written notice of a Default on the part of Mortgagor, all
insurance proceeds which otherwise would be payable to Mortgagor
will be made directly to Mortgagee. In respect of any other
claim, settlement (net of any relevant policy deductible) shall
be made with such party(ies) as may be necessary to repair the
Aircraft unless otherwise agreed after consultation between the
Insurers and the insured and, where necessary under the terms of
the Agreement with Mortgagee. Such payments shall only be made
provided they are in compliance with all applicable laws and
regulations.
Insurers agree 50/50 settlement in terms of AVS 103.
<PAGE>
4
Insurers have no right to replace the Aircraft on a Total
Loss (arranged, constructive or otherwise).
Insurers recognize that Mortgagor and Mortgagee have agreed
that a Total Loss of the Airframe will constitute a Total Loss of
the Aircraft.
"Constructive Total Loss" means any physical damage loss
for which the cost to repair equals or exceeds one-half of the
Agreed Value of the Aircraft. As part of a constructive total
loss of the Aircraft, the insured will abandon the Aircraft to
the underwriter.
In the event of Total Loss of the Aircraft, Insurers agree
to pay Mortgagee all amounts up to the Agreed Value based solely
upon Mortgagee's (not Mortgagor's) execution of the appropriate
form of release/discharge document; Mortgagee may sign any
required release in lieu of the Insured in the event of a Total
Loss, Constructive Total Loss or Arranged Total Loss.
"Cut-through clause": The Reinsurers and the Insurers
confirm and agree that in the event of any claim arising under
the hull reinsurances where such claim is to be paid to the
person named as sole loss payee under the primary insurances, the
Reinsurers shall in lieu of payment to the Insurers, their
successors in interest and assigns, pay to the person named as
sole loss payee under the primary insurances that portion of any
loss due for which the Reinsurers would otherwise be liable to
pay the Insurers (subject to proof of loss), it being understood
and agreed that any such payment by any Reinsurers shall (to the
extent of such payment) fully discharge and release such
Reinsurer from any and all further liability in connection
therewith and provide for payment to be made notwithstanding (a)
any bankruptcy, insolvency, liquidation or dissolution of the
Insurers; and (b) that the Insurers have made no payment under
the original insurance policies.
Insurers confirm that if the Airframe and not the Engines
suffers a Total Loss, Constructive Total Loss or Arranged Total
Loss that Mortgagee will receive the entire Agreed Value
regardless of any claim by any third party to the insurance
proceeds on account of their engines being installed on the
airframe at the time of the Total Loss, Constructive Total Loss
or Arranged Total Loss.
2. UNDER THE LEGAL LIABILITY INSURANCE
Subject to the provisions of this Endorsement, the
Insurance shall operate in all respects as if a separate Policy
had been issued covering each party insured hereunder, but this
provision shall not operate to include any claim howsoever
arising in respect of loss or damage to the Aircraft insured
under the Hull or Spares Insurance of the Insured.
Notwithstanding the foregoing the total liability of Insurers in
respect of any and all Insureds shall not exceed the limits of
liability stated in the Policy.
The Insurance provided hereunder shall be primary and
without right of contribution from any other insurance which may
be available to Mortgagee.
<PAGE>
5
This Endorsement does not provide coverage for Mortgagee
with respect to claims arising out of its legal liability as
manufacturer, repairer, or servicing agent of the Aircraft.
3. UNDER ALL INSURANCES
Mortgagee, its successors and assigns, and (with respect to
Aviation and Airline General Third Party Liability only) its
directors, officers and employees for their respective rights and
interests, are included as Additional Insured.
The cover afforded to Mortgagee by the Policy in accordance
with this Endorsement shall not be invalidated by any act or
omission (including misrepresentation and non-disclosure) of any
other person or party which results in a breach of any term,
condition or warranty of the Policy.
Additional Insureds shall have no responsibility for
premium and insurers shall waive any right of set-off or
counterclaim against Additional Insureds.
Upon payment of any loss or claim to or on behalf of
Mortgagee, Insurers will not have, and shall waive all rights
with respect to, subrogation against, any Additional Insured.
Except in respect of any provision for Cancellation or
Automatic Termination specified in the Policy or any endorsement
thereof, cover provided by this Endorsement may only be canceled
or materially altered in a manner adverse to Mortgagee by the
giving of not less than thirty (30) days notice in writing to the
appointed broker except with respect to nonpayment of premium, in
which event the Insurers will provide Mortgagee with not less
than ten (10) days prior written notice of the cancellation.
Notice shall be deemed to commence from the date such notice is
given by the Insurers. Such notice will NOT, however, be given at
normal expiry date of the Policy or any endorsement.
The insurance policy is being delivered in the United
States and will in all respects be governed by and construed in
accordance with the Laws of the United States or any applicable
State thereof. The underwriter consents to the non-exclusive
jurisdiction of the federal courts of the United States.
4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF
THE ENDORSEMENT:
MORTGAGOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS,
CONDITIONS, LIMITATIONS, WARRANTIES, EXCLUSIONS AND CANCELLATION
PROVISIONS THEREOF.
THE POLICY SHALL NOT BE VARIED BY ANY PROVISIONS CONTAINED
IN THE AGREEMENT WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR
AMENDMENT TO THE POLICY.
<PAGE>
6
SUBJECT (save as specifically stated in this Certificate)
to policy terms, conditions, limitations and exclusions.
<PAGE>
EXHIBIT C
PRE-APPROVED LIST
America West Airlines, Inc.
American Airlines, Inc.
Air Canada
British Airways Plc.
Delta Air Lines, Inc.
United Airlines, Inc.
TRANS WORLD AIRLINES, INC.
10 1/4% Senior Secured Notes Due 2003
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement")
is made and entered into as of June 16, 1998, by and among Trans
World Airlines, Inc., a Delaware corporation (the "Company"),
First Security Bank, National Association, as Owner Trustee (the
"Owner Trustee") under the Trust Agreement N607TW dated as of
March 28, 1995 between the Owner Trustee and Internationale
Nederlanden Aviation Lease Delaware, Inc. (currently known as ING
Lease Delaware, Inc.) (the "Original Beneficiary") and Lazard
Freres & Co. LLC ("Lazard"). (The Original Beneficiary has
assigned its beneficial rights in the trust created by such Trust
Agreement to 767 Leasing HY, LLC ("767 Leasing").) Subject to the
terms and conditions stated in the Aircraft Sale and Note
Purchase Agreement made and entered into as of the 16th day of
June, 1998 among the Company, the Owner Trustee, 767 Leasing and
Lazard (the "Sale Agreement"), the Owner Trustee will sell to the
Company one Boeing 767-231 ETOPS aircraft and its associated
engines for $27,500,000, payable by the issuance by the Company
of (i) $14,500,000 aggregate principal amount of the Company's
10 1/4% Senior Secured Notes due 2003 (the "Notes") and (ii)
$13,000,000 aggregate principal amount of the Company's 10 1/4%
Mandatory Conversion Equity Notes due 1999 (the "Equity Notes").
The Notes will be issued pursuant to an indenture dated as of
June 16, 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.
In order to fulfill its obligations to Owner Trustee under the
Sale Agreement, the Company hereby agrees with the Owner Trustee
and Lazard for the benefit of the holders of the Notes, 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
<PAGE>
2
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
<PAGE>
3
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 the Notes that
it acquired pursuant to the Sale 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
<PAGE>
4
(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, 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, 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, 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 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
<PAGE>
5
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
tradable 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 (as
hereinafter defined) 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.
<PAGE>
6
(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
<PAGE>
7
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 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).
<PAGE>
8
(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 or
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
<PAGE>
9
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 or 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.
<PAGE>
10
(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
<PAGE>
11
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 canceled 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 use its reasonable
best efforts to list the Exchange Notes or 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 Exchange Notes or
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 Exchange Notes or Notes are
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
<PAGE>
12
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,
<PAGE>
13
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
<PAGE>
14
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) In order to provide for just and equitable
contribution in circumstances in which the indemnification
provided for in the foregoing paragraphs of this Section 5 is
applicable in accordance with its terms but for any reason is
held to be unavailable or insufficient, then each indemnifying
party will contribute to the total losses, claims, liabilities,
expenses and damages (including any investigative, legal and
other expenses reasonably incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or
any claim asserted, but after deducting any contribution received
by the indemnifying party from persons other than the party to be
indemnified), to which the indemnifying party and the party to be
indemnified may be subject in such proportion as shall be
appropriate to reflect the relative fault of the indemnifying
party, on the one hand, and the party to be indemnified, on the
other, with respect to the statements or omissions which resulted
in such loss, claim, liability, expense or damage, or action in
respect thereof, as well as any other relevant equitable
considerations with respect to such offering. Such relative fault
shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or
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 the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The parties hereto agree that it would not
be just and equitable if contributions pursuant to this Section
5(d) were to be determined by pro rata allocation or by any other
method of allocation which does not take into account the
equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the losses,
claims, liabilities, expenses or damages, or actions in respect
thereof, referred to above in this Section 5(d) shall be deemed
to include, for purpose of this Section 5(d), 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 the
provisions of this Section 5(d), the Holders of the Securities
shall not be required to contribute any amount in
<PAGE>
15
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 found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will
be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section
5(d), any person who controls a party to this Agreement within
the meaning of the Securities Act or the Exchange Act will have
the same rights to contribution as that party, subject in each
case to the provisions hereof. Any party entitled to
contribution, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim for
contribution may be made under this Section 5(d), will notify any
such party or parties from whom contribution may be sought, but
the omission so to notify will not relieve the party or parties
from whom contribution may be sought from any other obligation it
or they may have under this Section 5(d). Except for a settlement
entered into pursuant to the penultimate sentence of Section 5(c)
hereof, no party will be liable for contribution with respect to
any action or claim settled without its written consent (which
consent will not be unreasonably withheld or delayed).
(e) 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 August 15, 1998, neither the Exchange
Offer Registration Statement nor a Shelf Registration
Statement has been filed with the Commission;
(ii) if by November 13, 1998, neither the Exchange
Offer Registration Statement nor the Shelf Registration
Statement is declared effective;
(iii) if by December 13, 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) August 15, 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
<PAGE>
16
(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 rate of 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
<PAGE>
17
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 salable 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
<PAGE>
18
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, 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.
<PAGE>
19
(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, or if to
the Owner Trustee or Lazard, 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 on a
business day (or otherwise on the first business day following
such answer back); when receipt acknowledged, if telecopied on a
business day (or otherwise on the first business day following
such acknowledgment); 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.
<PAGE>
20
(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 and the Sale 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.]
<PAGE>
21
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 Counsel
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual
capacity but as Owner Trustee
By: /s/ Arge Pavlos
----------------------
Name: Arge Pavlos
Title: Assistant Trust Officer
LAZARD FRERES & CO. LLC
By: /s/ Michael S. Liss
----------------------
Name: Michael S. Liss
Title: Managing Director
<PAGE>
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."
<PAGE>
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."
<PAGE>
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 Notes where such 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.*
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.
- -----------
* 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.
<PAGE>
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:
--------------------------------------------------------------
--------------------------------------------------------------
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.
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Trustee
INDENTURE
Dated as of June 16, 1998
$13,000,000
10 1/4% Mandatory Conversion Equity Notes due 1999
=================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1.
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 Definitions........................................ 1
Section 1.2 Rules of Construction.............................. 1
ARTICLE 2.
THE SECURITIES
Section 2.1 Designation, Form and Dating...................... 1
Section 2.2 Execution, Amount, Authentication and Delivery.... 2
Section 2.3 Registrar and Paying Agent........................ 4
Section 2.4 Paying Agent to Hold Payments In Trust............ 4
Section 2.5 Securityholder Lists.............................. 6
Section 2.6 Transfer and Exchange............................. 6
Section 2.7 Mutilated, Defaced, Destroyed, Lost and
Stolen Securities................................. 7
Section 2.8 Treasury Securities............................... 8
Section 2.9 Temporary Securities.............................. 9
Section 2.10 Cancellation...................................... 9
Section 2.11 Defaulted Interest; Interest on Defaulted
Principal......................................... 9
Section 2.12 CUSIP Numbers..................................... 10
ARTICLE 3.
REDEMPTIONS........................... 10
ARTICLE 4.
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 4.1 Payment of Securities............................. 10
Section 4.2 Maintenance of Office or Agency................... 11
i
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
----
Section 4.3 Limitation on Dividends and Acquisition of
Common Stock...................................... 11
Section 4.4 Corporate Existence............................... 12
Section 4.5 Payment of Taxes and Other Claims................. 12
Section 4.6 Notices........................................... 13
Section 4.7 Maintenance of Properties and Insurance........... 13
Section 4.8 Default Notices and Compliance Certificates....... 14
Section 4.9 SEC Reports....................................... 14
Section 4.10 Waiver of Stay, Extension or Usury Laws........... 15
Section 4.11 Amendment to Certain Agreements .................. 16
Section 4.12 Title to Collateral and Limitation on Liens;
Sale of Aircraft; Total Loss With Respect to
Aircraft.......................................... 16
Section 4.13 Books, Records, Access; Confidentiality........... 17
Section 4.14 Security Interests................................ 18
Section 4.15 Repurchase of Securities Upon a Change in
Control........................................... 18
Section 4.16 Restrictions on Becoming an Investment
Company........................................... 18
ARTICLE 5.
SUCCESSOR CORPORATION
Section 5.1 Covenant Not to Consolidate, Merge,
Convey or Transfer Except Under Certain
Conditions........................................ 18
Section 5.2 Successor Person Substituted...................... 19
Section 5.3 Limitation on Lease of Properties................. 20
ARTICLE 6.
DEFAULT AND REMEDIES
Section 6.1 Events of Default................................. 20
Section 6.2 Acceleration...................................... 22
Section 6.3 Other Remedies.................................... 22
Section 6.4 Waiver of Past Defaults........................... 23
Section 6.5 Control by Majority............................... 23
Section 6.6 Limitation on Suits............................... 23
ii
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
----
Section 6.7 Rights of Holders to Receive Payment.............. 24
Section 6.8 Collection Suit by Trustee........................ 24
Section 6.9 Trustee May File Proofs of Claim.................. 24
Section 6.10 Application of Proceeds........................... 25
Section 6.11 Undertaking for Costs............................. 26
Section 6.12 Restoration of Rights on Abandonment of
Proceedings....................................... 26
Section 6.13 Powers and Remedies Cumulative; Delay or
Omission Not Waiver of Default.................... 27
ARTICLE 7.
TRUSTEE
Section 7.1 Duties of Trustee................................. 27
Section 7.2 Rights of Trustee................................. 28
Section 7.3 Individual Rights of Trustee...................... 29
Section 7.4 Trustee's Disclaimer.............................. 29
Section 7.5 Notice of Defaults................................ 29
Section 7.6 Reports by Trustee to Holders..................... 29
Section 7.7 Compensation and Indemnity........................ 29
Section 7.8 Replacement of Trustee............................ 30
Section 7.9 Successor Trustee by Merger, etc.................. 31
Section 7.10 Eligibility; Disqualification..................... 31
Section 7.11 Preferential Collection of Claims Against
Company........................................... 31
ARTICLE 8.
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligations.............. 32
Section 8.2 Application of Trust Money........................ 33
Section 8.3 Repayment to Company.............................. 33
Section 8.4 Reinstatement..................................... 34
iii
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
----
ARTICLE 9.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Without Consent of Holders........................ 35
Section 9.2 With Consent of Holders........................... 35
Section 9.3 Compliance with Trust Indenture Act............... 36
Section 9.4 Revocation and Effect of Consents................. 36
Section 9.5 Notation on or Exchange of Securities............. 37
Section 9.6 Trustee to Sign Amendments, etc................... 37
Section 9.7 Effect of Supplement and/or Amendment............. 37
ARTICLE 10.
SECURITY
Section 10.1 Other Operative Documents......................... 37
Section 10.2 Opinions, Certificates and Appraisals............. 38
Section 10.3 Authorization of Actions to be Taken by the
Trustee Under the Operative Documents............. 38
Section 10.4 Payment of Expenses............................... 39
Section 10.5 Authorization of Receipt of Funds by the
Trustee Under the Operative Documents............. 39
ARTICLE 11.
MISCELLANEOUS
Section 11.1 Conflict with Trust Indenture Act of 1939......... 39
Section 11.2 Notices; Waivers.................................. 39
Section 11.3 Communications by Holders with Other
Holders........................................... 40
Section 11.4 Certificate and Opinion as to Conditions
Precedent......................................... 41
Section 11.5 Statements Required in Certificate or
Opinion........................................... 41
Section 11.6 Rules by Trustee, Paying Agent, Registrar......... 42
Section 11.7 Holidays.......................................... 42
Section 11.8 Governing Law; Waiver of Jury Trial............... 42
Section 11.9 No Adverse Interpretation of Other...............
Agreements........................................ 43
iv
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
----
Section 11.10 No Recourse Against Others........................ 43
Section 11.11 Benefits of Indenture and the Securities
Restricted........................................ 43
Section 11.12 Successors and Assigns............................ 43
Section 11.13 Counterpart Originals............................. 43
Section 11.14 Severability...................................... 43
Section 11.15 Effect of Headings................................ 44
ARTICLE 12.
RELEASE OF COLLATERAL
Section 12.1 Release of Collateral............................. 44
ARTICLE 13.
MANDATORY CONVERSION OF SECURITIES
Section 13.1 Mandatory Conversion and Conversion
Price............................................. 44
Section 13.2 Effect of Consolidation, Merger or
Conveyance on Conversion.......................... 45
Section 13.3 Costs of Conversion............................... 47
Section 13.4 No Liability to Trustee........................... 47
Section 13.5 Applicable Laws................................... 48
Section 13.6 Other Funds....................................... 48
Section 13.7 Release of Collateral Upon Conversion............. 48
Section 13.8 Company to Provide Stock.......................... 48
APPENDIX I Definitions Appendix
EXHIBIT A Form of 10 1/4% Mandatory Conversion Equity Note
EXHIBIT B Form of Aircraft Second Mortgage and Security Agreement
v
<PAGE>
INDENTURE dated as of June 16, 1998 between TRANS WORLD
AIRLINES, INC., a Delaware corporation (the "Company"), and FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the
Company's 10 1/4% Mandatory Conversion Equity Notes due 1999
(the "Securities").
ARTICLE 1.
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 Definitions.
-----------
Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in Section
1 of the Definitions Appendix attached hereto as Appendix I,
which shall be a part of this Indenture as if fully set forth in
this place.
Section 1.2 Rules of Construction.
---------------------
The rules of construction for this Indenture are set forth
in Section 2 of the Definitions Appendix.
ARTICLE 2.
THE SECURITIES
Section 2.1 Designation, Form and Dating.
----------------------------
The Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A
hereto (with such appropriate insertions, omissions,
substitutions and other variations as are required by this
Indenture) and is hereby incorporated in and expressly made a
part of this Indenture. The Securities may have imprinted or
otherwise reproduced thereon such notations, legends or
endorsements, not inconsistent with the provisions of this
Indenture, as may be required to comply with any law or with any
rules or regulations pursuant thereto, or with the rules of any
securities market in which the Securities are admitted to
trading, or to conform to general usage. The Company shall
approve the form of the Securities and any notation, legend or
endorsement on them. Each Security shall be dated the date of its
authentication and shall bear interest from the applicable date
set forth herein or in the form of Security and shall be payable,
unless previously Tendered, on the dates as specified herein or
in the form of the Security.
The Person in whose name any Security is registered at the
close of business on any Record Date with respect to any Interest
Payment Date shall be entitled to receive the interest and
Special Interest, if any, payable on such Interest Payment Date
to the extent provided by
<PAGE>
2
such Security, except if and to the extent the Company shall
default in the payment of the interest or Special Interest due on
such Interest Payment Date, in which case defaulted interest or
Special Interest, as the case may be, shall be paid to the Person
in whose name the Outstanding Security is registered at the close
of business on the subsequent record date (which shall be not
less than five (5) Business Days prior to the date of payment of
such defaulted interest) established by notice given by mail by
or on behalf of the Company to the Holders of Securities not less
than fifteen (15) days preceding such subsequent record date (a
"Special Record Date").
Section 2.2 Execution, Amount, Authentication and Delivery.
----------------------------------------------
The Securities shall be signed for the Company by the
manual or facsimile signatures of an Officer and a Certifying
Officer. The Company's seal shall be affixed to or reproduced on
the Securities. Typographical or other errors or defects in any
such reproduction of the seal or any such signature shall not
affect the validity or enforceability of any Security which has
been duly authenticated and delivered by the Trustee.
If an officer whose signature is on a Security no longer
holds that office at the time the Trustee authenticates the
Security, the Security shall be valid nevertheless.
A Security shall not be valid until the Trustee manually
signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to
$13,000,000 except for Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu
of, other Securities pursuant to Sections 2.6, 2.7, 2.9, 4.15 or
9.5.
The Securities shall be known and designated as the
"10 1/4% Mandatory Conversion Equity Notes due 1999" of the
Company. Their Stated Maturity shall be June 15, 1999, and,
subject to the increases in the rate of interest set forth in the
Securities, they shall bear interest at the rate of 10 1/4% per
annum, from June 16, 1998 or from the most recent Interest
Payment Date to which interest and Special Interest, if any, have
been paid or duly provided for, as the case may be, payable in
arrears on each Interest Payment Date, until the principal
thereof is paid or made available for payment. In the event a
Registration Default shall occur and be continuing and the
Company shall have failed to use its reasonable best efforts to
avoid or cure such Registration Default, Holders shall be
entitled to make a claim for damages incurred as a result of such
Registration Default which damages shall not necessarily be
limited to the increases in the interest rate set forth in the
Securities; provided, however, that any amount of interest paid
pursuant to such increases shall be credited against any amount
of damages to be paid by the Company in connection with such
claim.
Subject to the limits set forth in the second preceding
paragraph of this Indenture, the Trustee shall authenticate
Securities for original issue upon written order of the Company
signed by an Officer and by a Certifying Officer of the Company.
The order shall specify the amount of Securities to be
authenticated and the date on which the original issue of
Securities is to be
<PAGE>
3
authenticated, shall provide instructions with respect to the
delivery thereof and shall be accompanied by the documents
specified in Sections 10.2 and 11.4 and by the following
(provided, however, that the Trustee shall be authorized
conclusively to rely upon the documents specified in Section
11.4):
(a) the grant to the Trustee, by assignment, pledge, or
otherwise pursuant to the Mortgage, of a security interest in the
Collateral;
(b) Officers' Certificates or other satisfactory
confirmation (i) with respect to the Mortgage and the Collateral,
that the Company is the legal and beneficial owner of the
Collateral, free and clear of all Liens except Permitted Liens;
and (ii) describing the actions taken to make, obtain and
accomplish all necessary filings, confirmations and
identifications referred to in Section 4.14 hereof;
(c) compliance with all applicable provisions of
Sections 4.12 and 4.14 hereof;
(d) an Officers' Certificate confirming all representations
and warranties of the Company contained in this Indenture and the
other Operative Documents as of the date of authentication;
(e) an Officers' Certificate containing representations and
warranties of the type usual and customary to the issuance of the
Securities such as, but not limited to, representations regarding
due authorization of this Indenture; due authorization of the
issuance and delivery of the Securities; that the Securities,
when so issued and delivered against delivery of the Aircraft
under the Aircraft Sale Agreement will be duly and validly
issued, and constitute valid and binding obligations of the
Company, enforceable in accordance with their terms; that the
Common Stock issuable upon conversion of the Securities has been
duly authorized and reserved for issuance and, when issued and
delivered by the Company upon conversion of the Securities, will
be duly and validly issued, fully paid and non-assessable and
free of preemptive rights; that no consent, approval or
authorization of, or designation, declaration, or filing with,
any governmental authority or any other person or entity is
required of the Company in connection with the execution and
delivery of this Indenture or the issuance and delivery of the
Securities; and that the Securities have been registered under
the Securities Act or that registration is not required in
connection with the offer, issuance and delivery of the
Securities, nor does the Securities Act require registration of
the conversion of the Securities into shares of Common Stock as
provided in Article 13;
(f) an Opinion of Counsel to the effect that the Company
has the requisite corporate power and authority to execute,
deliver and perform its obligations under this Indenture and the
other Operative Documents; that the Securities have been duly
authorized and validly issued; and that the offer and issuance of
the Securities have been registered or will be exempt from the
registration requirements under the Securities Act and that the
Securities Act does not require registration of the conversion of
the Securities into shares of Common Stock as provided in Article
13; and
<PAGE>
4
(g) execution and delivery by the Company of the Securities and
by all parties thereto of this Indenture and all other Operative
Documents;
provided, however, that any Securities in fact authenticated by
the Trustee upon written order of the Company as set forth in the
first sentence of this paragraph shall be deemed to have been
duly authenticated hereunder and to constitute an enforceable
contractual obligation of the Company and shall be entitled to
all the benefits of this Indenture and the other Operative
Documents equally and proportionately with any and all other
Securities duly authenticated and delivered hereunder, in each
case, notwithstanding any failure of the Company to deliver any
of the documents specified in Sections 10.2 and 11.4 or above in
this sentence.
The Securities shall be issuable only in registered form,
without coupons, in denominations of $1,000 and any integral
multiple thereof.
The Trustee may appoint an authenticating agent acceptable
to the Company to authenticate Securities. An authenticating
agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent
has the same rights as an Agent to deal with the Company, any
guarantor or any Affiliate of the Company.
Section 2.3 Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency where
Securities eligible for transfer or exchange may be presented for
registration of transfer or for exchange ("Registrar") and an
office or agency where Securities may be presented for payment or
repurchase ("Paying Agent"). The Registrar shall keep a register
of the Securities and of their transfer and exchange
("Register"). Such Register shall be in written form in the
English language or any other form capable of being converted
into such form within a reasonable time. At all reasonable times
such Register shall be open for inspection by the Trustee. The
Company may have one or more co-Registrars and one or more
additional paying agents. The term "Paying Agent" includes any
additional paying agent.
The Company may enter into an appropriate agency agreement
with any Agent not a party to this Indenture. Such agency
agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee of the
name and address of any such Agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as
such.
The Company initially appoints the Trustee as Registrar
and Paying Agent.
Section 2.4 Paying Agent to Hold Payments In Trust.
--------------------------------------
Each Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all Payments held by the Paying
Agent for the payment of principal of, repurchase price, if any,
of, interest on, and Special Interest, if any, with respect to,
the Securities (whether such Payment has been paid to it by the
Company or any other obligor on the Securities), and shall
promptly notify
<PAGE>
5
the Trustee of any default by the Company (or any other obligor
on the Securities) in making any such Payment. The Company at any
time may require a Paying Agent to Pay all Payments held by it to
the Trustee and account for any funds disbursed and the Trustee
may at any time during the continuance of any payment default,
upon written request to a Paying Agent, require such Paying Agent
to Pay all Payments held by it to the Trustee and to account for
any Payments distributed. Upon doing so the Paying Agent shall
have no further liability for the Payments.
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of,
repurchase price, if any, of, interest on, or Special Interest,
if any, with respect to, any of the Securities, segregate and
hold in trust for the benefit of the Persons entitled thereto
Payments sufficient to pay the principal, repurchase price, if
any, interest or Special Interest, if any, so becoming due until
such Payments shall be Paid to such Persons or otherwise disposed
of as herein provided, and will promptly notify the Trustee of
such action or any failure so to act.
The Company will, on or before each due date for the
payment of the principal of, repurchase price, if any, of,
interest on, or Special Interst, if any, with respect to, any of
the Securities, deposit with a Paying Agent Payments (in same day
funds) sufficient to pay the principal, repurchase price, if any,
interest or Special Interest, if any, so becoming due, such
Payments to be held in trust for the benefit of the Persons
entitled to such principal, repurchase price, if any, interest or
Special Interest, if any, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of such
action or any failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(a) hold all Payments received by it as such agent for the
payment of the principal of, repurchase price, if any, of,
interest on, or Special Interest, if any, with respect to, the
Securities (whether such Payments have been paid to it by the
Company or by any other obligor on the Securities) in trust for
the benefit of the Persons entitled thereto until such Payments
shall be paid to such Persons or otherwise disposed of as herein
provided;
(b) promptly give the Trustee notice of any failure by the
Company (or any other obligor upon the Securities) to make any
payment of the principal of, repurchase price, if any, of, or
interest, if any, on, the Securities when the same shall be due
and payable; and
(c) at any time during the continuance of any such failure,
upon the written request of the Trustee, forthwith pay to the
Trustee all Payments so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other
purpose, Pay, or direct any Paying Agent to Pay, to the Trustee
all Payments held in trust by the Company or such Paying Agent,
such Payments to be held by the Trustee upon the same trusts as
those upon which such Payments were held by the Company or such
Paying Agent; and, upon such Payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further
liability with respect to such Payments held
<PAGE>
6
by it as Paying Agent.
Any Payments deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of
the principal of, repurchase price, if any, of, interest on or
Special Interest, if any, with respect to, any Security and
unclaimed for two (2) years after such principal, repurchase
price, interest or Special Interest has become due and payable
shall be paid to the Company on its request, or (if then held by
the Company) shall be discharged from such trust, unless
otherwise required by mandatory provisions of applicable escheat
or abandoned or unclaimed property law, and the Holder of such
Security shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof and all liability of the
Trustee or such Paying Agent with regard to such Payments, and
all liability of the Company as trustee thereof, shall thereupon
cease.
Section 2.5 Securityholder Lists.
--------------------
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of Securityholders. If the Trustee is not
the Registrar, the Company shall furnish to the Trustee on or
before each Interest Payment Date and at such other times as the
Trustee may request in writing a list in such form and as of such
date as the Trustee may reasonably require of the names and
addresses of Securityholders.
Section 2.6 Transfer and Exchange.
---------------------
When Securities are presented to the Registrar or a
co-Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Securities of
other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements
for such transactions are met. To permit registrations of
transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's request.
All Securities presented for registration of transfer, exchange
or payment shall (if so required by the Company or the Trustee)
be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company and
the Trustee, duly executed by the Holder or his attorney duly
authorized in writing. The Company may require payment of a sum
sufficient to pay all taxes, assessments or other governmental
charges in connection with any registration of transfer or
exchange, but not for any exchange pursuant to Sections 2.9, 4.15
or 9.5 or any other Tender not involving any transfer of
Securities (other than to the Company). No service charge shall
be made for any such transaction.
In the case of any Security which is Tendered in part only,
upon such Tender the Company shall execute and the Trustee shall
authenticate and make available for delivery to the Holder
thereof, without service charge, a new Security or Securities of
any authorized denomination as requested by such Holder in
aggregate principal amount equal to the non- Tendered portion of
the principal of such Security. No Securities will be issued in
denominations of less than $1,000 upon tender of the Securities.
<PAGE>
7
All Securities issued upon any transfer or exchange of Securities
shall be valid obligations of the Company, evidencing the same
debt of the same series and entitled to the same benefits under
this Indenture, as the Securities surrendered upon such transfer
or exchange.
Section 2.7 Mutilated, Defaced, Destroyed, Lost and
---------------------------------------
Stolen Securities.
- -----------------
In case any temporary or definitive Security shall become
mutilated, defaced or be apparently destroyed, lost or stolen,
subject to compliance with the following sentence and in the
absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company
shall execute, and the Trustee shall authenticate and deliver, a
new Security, bearing a number not contemporaneously outstanding,
in exchange and substitution for the mutilated or defaced
Security, or in lieu of and substitution for the Security so
apparently destroyed, lost or stolen. In every case the applicant
for a substitute Security shall furnish to the Company and to the
Trustee and any agent of the Company or the Trustee such security
or indemnity as may reasonably be required by them to indemnify
and defend and to save each of them harmless and, in every case
of destruction, loss or theft, evidence to their satisfaction of
the apparent destruction, loss or theft of such Security and of
the ownership thereof.
Upon the issuance of any substitute Security pursuant to
the preceding paragraph, the Company may require the payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected
therewith. In case any Security which has matured or is about to
mature, or has been tendered for repurchase pursuant to any of
the provisions hereof (as evidenced by an irrevocable written
notice from the Holder to the Company and the Trustee), shall
become mutilated or defaced or be apparently destroyed, lost or
stolen, the Company may, instead of issuing a substitute
Security, pay or authorize the payment of such Security (without
surrender of such Security except in the case of a mutilated or
defaced Security), as applicable, if the applicant for such
payment shall furnish to the Company and to the Trustee and any
agent of the Company or the Trustee such security or indemnity as
any of them may reasonably require to save each of them harmless
from all risks, however remote, and, in every case of apparent
destruction, loss or theft, the applicant shall also furnish to
the Company and the Trustee and any agent of the Company or the
Trustee evidence to their satisfaction of the apparent
destruction, loss or theft of such Security and of the ownership
thereof.
Every substitute Security issued pursuant to the provisions
of this Section by virtue of the fact that any Security is
apparently destroyed, lost or stolen shall constitute an
additional contractual obligation of the Company, whether or not
the apparently destroyed, lost or stolen Security shall be at any
time enforceable by anyone and shall be entitled to all the
benefits of (but shall also be subject to all the limitations of
rights set forth in) this Indenture equally and proportionately
with any and all other Securities duly authenticated and
delivered hereunder. Every substitute Security issued pursuant to
the provisions of this Section by virtue of the fact that any
Security is mutilated or defaced shall constitute an additional
contractual obligation of the Company and shall be entitled to
all the benefits of (but shall also be subject to all the
limitations of rights set forth in) this Indenture equally and
proportionately with any and all other Securities of the same
series duly authenticated and delivered hereunder. All Securities
shall be
<PAGE>
8
held and owned upon the express condition that, to the extent
permitted by law, the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated or defaced or
apparently destroyed, lost or stolen Securities and shall
preclude any and all other rights or remedies notwithstanding any
law or statute existing or hereafter enacted to the contrary with
respect to the replacement or payment of negotiable instruments
or other securities without their surrender.
Section 2.8 Treasury Securities.
-------------------
In determining whether the Holders of the required
principal amount of Securities have given or concurred in any
amendment, request, demand, authorization, direction, notice,
consent or waiver under this Indenture or any other Operative
Document, Securities owned by the Company (including Securities
Tendered), an Affiliate of the Company, any other obligor upon
the Securities, any Affiliate of such obligor upon the Securities
or any Person who has given or concurred in any such amendment,
request, demand, authorization, direction, notice, consent or
waiver under the direction of, by agreement with, or as a
condition or in consideration of any exchange offer by or
transfer of such Person's Securities to the Company, an Affiliate
of the Company, any other obligor, any Affiliate of such obligor
or any such Person, shall be disregarded and deemed not to be
Outstanding for the purpose of any such determination, except
that, for the purposes of determining whether the Trustee shall
be protected in relying on any such amendment, request, demand,
authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee that neither the Company nor
any such other obligor, Affiliate or Person is affiliated with
the pledgee or any Affiliate of the pledgee and that the pledgee
has the present right (subject to no contrary obligation or
understanding) so to act with respect to the Securities on the
basis of its best interests as a Holder independently of any
direction by or interest of the Company. In case of a dispute as
to such right, the Trustee in good faith shall be entitled to
rely upon the advice of counsel, including counsel for the
Company. Upon request of the Trustee, the Company shall promptly
furnish to the Trustee a certificate of a Certifying Officer
listing and identifying all Securities, if any, known by the
Company to be owned or held by or for the account of any of the
above-described Persons; and subject to Sections 7.1 and 7.2
herein, the Trustee shall be entitled to accept such certificate
as conclusive evidence of the facts therein set forth and of the
fact that all Securities not listed therein are Outstanding for
the purpose of any such determination. The Company shall not,
directly or indirectly, pay or cause to be paid any remuneration,
whether by way of supplemental or additional interest, fee or
otherwise, or grant any additional security, to any Holder of
Securities as consideration for or as an inducement to giving or
concurring in any amendment, request, demand, authorization,
direction, notice, consent or waiver under this Indenture or any
other Operative Document unless such remuneration is concurrently
paid, or such security is concurrently granted, as the case may
be, on the same terms ratably to the Holders of all Securities
then Outstanding (regardless of whether any such Holder has given
or concurred in such amendment, request, demand, authorization,
direction, notice, consent or waiver under this Indenture or any
other Operative Document).
<PAGE>
9
For purposes of this Section and without limiting the
generality of the foregoing, Securities which are subject to a
binding contract or irrevocable tender offer (including an offer
which is in any way conditioned upon or simultaneous with, or
requires as a condition precedent (whether by contract or
otherwise) or which cannot be effected without, the agreement or
consent of the transferor to any amendment, request, demand,
authorization, direction, notice, consent or waiver hereunder)
pursuant to which ownership (direct or indirect) is to be
transferred (including for example, Securities tendered to the
Company or any other Person in an exchange transaction) shall be
deemed owned by such transferee, and therefore, any such
simultaneous agreement or consent by the transferor shall be
invalid.
Section 2.9 Temporary Securities.
--------------------
Until definitive Securities are ready for delivery, the
Company may prepare, and, upon written order of the Company, the
Trustee shall authenticate, temporary Securities in any
authorized denominations. Temporary Securities shall be
substantially in the form of definitive Securities of the same
series but may have variations that the Company reasonably
considers appropriate and necessary for temporary Securities.
Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate and deliver definitive Securities in
exchange for temporary Securities. Until so exchanged, the
temporary Securities shall be entitled to the same benefits under
this Indenture as definitive Securities of the same series.
Section 2.10 Cancellation.
------------
The Company may at any time deliver Securities to the
Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them
for transfer, exchange, repurchase or payment. All Securities
purchased pursuant to any Offer to Purchase shall be canceled.
The Trustee and no one else shall cancel all Securities
surrendered for transfer, exchange, repurchase or cancellation.
The Company may not issue new Securities to replace Securities it
has paid or that have been converted (upon Tender or otherwise)
or which have been delivered to the Trustee for cancellation. The
Trustee shall destroy all canceled Securities and, if requested,
deliver a certificate of such destruction to the Company. If the
Company shall acquire any of the Securities, such acquisition
shall not operate as a satisfaction of the indebtedness
represented by such Securities unless and until the same are
delivered to the Trustee for cancellation.
Section 2.11 Defaulted Interest; Interest on Defaulted Principal.
---------------------------------------------------
If the Company defaults in a payment of any interest on, or
Special Interest, if any, with respect to, the Securities, it
shall pay the defaulted interest or Special Interest, as the case
may be, plus interest on such defaulted interest or Special
Interest at the rate then borne by the Securities to the extent
permitted by law and the terms thereof, to the persons who are
Securityholders on a subsequent Special Record Date. The Company
shall fix the Special Record Date and payment date. At least
fifteen (15) days before the Special Record Date, the Company
shall mail to each Securityholder a notice that states the
Special Record Date, the payment date and the amount of defaulted
interest to be paid. If the Company defaults in the payment of
principal on the Securities (whether on acceleration, at
maturity, upon tender for repurchase or otherwise), it shall
<PAGE>
10
pay interest on such defaulted principal at the rate then borne
by the Securities to the Trustee upon demand. The Trustee shall
apply any such payment in accordance with the provisions of
Section 6.10.
Section 2.12 CUSIP Numbers.
-------------
The Company in issuing the Securities may use "CUSIP"
numbers (if then generally in use) and, if so, the Trustee may
use "CUSIP" numbers in notices to the Holders regarding the
Securities as a convenience to Holders; provided, however, that
any such notice may state that no representation is made as to
the correctness of such numbers either as printed on the
Securities or as contained in any such notice and that reliance
may be placed only on the other identification numbers printed on
the Securities, and any such notice shall not be affected by any
defect in or omission of such numbers.
ARTICLE 3.
REDEMPTIONS
The Securities Outstanding shall not be subject to
redemption in whole or in part at any time.
ARTICLE 4.
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 4.1 Payment of Securities.
---------------------
The Company shall pay the principal of, interest on and
Special Interest, if any, with respect to, the Securities on the
dates and in the manner provided in this Indenture and in the
Securities. All interest and Special Interest, if any, due and
payable on the Securities shall be paid in cash, except that the
Company may at its option, make such Payments by check mailed to
the address of the Person entitled thereto as it appears in the
Register; provided, however, that such Payments on a certificated
Security will be made by wire transfer to a U.S. dollar account
maintained by a Holder with a bank in New York City if such
Holder owns at least $250,000 in aggregate principal amount of
certificated Securities and elects payment by wire transfer by
giving written notice to the Company and the Trustee to such
effect designating such account no later than 10 days immediately
preceding the relevant due date for payment (or such other date
as the Company and the Trustee may accept in their discretion).
An installment of principal, interest or Special Interest,
if any, shall be considered paid on the date due if the Trustee
or Paying Agent (other than the Company or any Affiliate thereof)
holds on that date Payments designated for and sufficient to pay
such installment and the Trustee or Paying Agent is not
prohibited from Paying such Payments to the Holders of the
Securities pursuant to this Indenture.
<PAGE>
11
The Company shall pay interest and Special Interest, if any, at
the rate set forth in this Indenture and the Securities, and the
Company shall pay interest on unpaid interest or Special
Interest, if any, at the same rate to the extent legally
permitted.
Section 4.2 Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in the Borough of Manhattan, The
City of New York, an office or agency where Securities may be
surrendered for registration of transfer or exchange or for
presentation for payment, repurchase or conversion and where
notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. At the request of
the Company, said office or agency may be the office of an agent
appointed by the Trustee for such purpose. The Company shall give
prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency not designated
or appointed by the Trustee. If at any time the Company shall
fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office.
The Company may also from time to time designate one or
more other offices or agencies where the Securities may be
presented or surrendered for any or all such purposes and may
from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, The City of New York, for
such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.
Section 4.3 Limitation on Dividends and Acquisition
---------------------------------------
of Common Stock.
---------------
The Company will not declare or pay any dividend or make
any distribution on its Common Stock, Employee Preferred Stock or
other Capital Stock of the Company (other than dividends or
distributions payable in the Company's Common Stock or Employee
Preferred Stock or options, warrants or other rights to acquire,
subscribe for or purchase the Company's Common Stock or Employee
Preferred Stock) and will not, and will not permit any of its
Subsidiaries to, purchase, redeem or otherwise acquire for value
any shares of its Common Stock, Employee Preferred Stock or other
Capital Stock of the Company, whether in cash or Property or in
obligations of the Company, if, at the time of such declaration,
payment, distribution, purchase, redemption or other acquisition
or, after giving effect thereto, a Default or Event of Default
shall have occurred and be continuing; provided, that
notwithstanding anything to the contrary written above, this
Section 4.3 shall not apply to: (a) any purchase or redemption of
Common Stock or Preferred Stock by the Company or an employee
stock ownership or benefit plan (i) from union employees or
former union employees, or their respective transferees, pursuant
to the terms of agreements with labor unions existing on the date
hereof; (ii) from recipients or their transferees of such stock
from employee stock ownership or benefit plans subject to ERISA;
(iii) from employee stock ownership or benefit plans subject to
ERISA in order to provide cash benefits to employees pursuant to
the terms of such plans; and (iv) as required by ERISA; (b) any
purchase or redemption of Common Stock or Preferred Stock by an
<PAGE>
12
employee stock ownership or benefit plan subject to ERISA for an
aggregate consideration, without regard to purchases or
redemptions pursuant to clause (a) above, of up to $200,000,000;
(c) the payment of fixed or mandatory dividends on or scheduled
redemptions or exchanges of any of the Company's 8% Preferred
Stock and 9 1/4% Preferred Stock and the payment of any interest
on the securities issuable upon such exchange; (d) the payment of
any dividends on or the purchase, redemption or other acquisition
or retirement of the Common Stock or Preferred Stock of the
Company within sixty (60) days after the date of declaration of
such dividend or the commitment to make such purchase, redemption
or other acquisition or retirement, if at said date of
declaration or commitment such payment or commitment complied
with this Section 4.3; (e) the purchase, redemption, retirement
or other acquisition of any shares of the Company's Common Stock
or Preferred Stock in exchange for, or out of the proceeds of the
substantially concurrent sale of, Common Stock or Preferred Stock
of the Company; (f) any consolidation or merger with or into any
Person or conveyance or transfer of all or substantially all of
the Company's Property to one or more Persons substantially as an
entirety, not prohibited by the terms of Section 5.1; and (g) the
conversion of Employee Preferred Stock into Common Stock.
Section 4.4 Corporate Existence.
-------------------
(a) Except as otherwise provided in Article 5, the Company
shall do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and the
corporate existence of each of its Subsidiaries engaged in
substantial business activity each in accordance with the
respective organizational documents of the Company and each such
Subsidiary and the rights (charter and statutory), licenses,
permits, approvals and governmental franchises of the Company and
each such Subsidiary necessary to the conduct of its respective
business; provided, however, that the Company shall not be
required to preserve any such right, license or franchise, or to
preserve the corporate existence of any such Subsidiary, if the
Board of Directors shall determine that the preservation thereof
is no longer in the interest of the Company and that termination
of the corporate existence is not disadvantageous to the Holders
in any material respect.
(b) The Company shall continue to be an air carrier
certificated under Section 604(b) of the Federal Aviation Act.
(c) The Company is and, to the extent required to operate
its business as presently conducted and to perform its
obligations under this Indenture and the Operative Documents,
shall remain a "citizen of the United States" as defined in
Section 101(16) of the Federal Aviation Act.
Section 4.5 Payment of Taxes and Other Claims.
---------------------------------
The Company shall, and shall cause each of its Subsidiaries
to, pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company and each
Subsidiary or upon the income, profits or Property of the Company
and each Subsidiary or upon the Collateral and (b) all lawful
claims for labor, materials and supplies which, if unpaid, might
by law become a Lien upon the Collateral or the other Property of
the Company or a Subsidiary; provided, however, that the Company
or a Subsidiary, as the case may be, shall not be required to pay
or
<PAGE>
13
discharge or cause to be paid or discharged any such tax,
assessment, charge or claim (i) the amount, applicability or
validity of which is being contested in good faith by appropriate
proceedings as permitted by and in accordance with the provisions
of the Operative Documents, to the extent applicable, and for
which adequate reserves have been established in accordance with
GAAP, as in effect from time to time, or (ii) if the Company
delivers to the Trustee a Certificate of an Officer stating that
such non-payment and non-discharge is in the interest of the
Company and not prejudicial in any material respect to the
Holders.
Nothing contained herein or in the Securities shall be
deemed to impose on the Trustee or on the Company any obligation
to pay on behalf of the Holder of any Securities any tax,
assessment or governmental charge required by any present or
future law of the U.S. or of any state, county, municipality or
other taxing authority thereof to be paid on behalf of, or
withheld from the amount payable to, the Holder of any
Securities; rather any tax, assessment or governmental charge
shall, to the extent required by law, be withheld from the
amounts provided for herein.
Section 4.6 Notices.
-------
The Company shall notify the Trustee in writing of any of
the following promptly (and in any event within five (5) Business
Days after an Officer learns of the occurrence thereof)
describing the same and, if applicable, the steps being taken by
the Person(s) affected with respect thereto:
(a) In the event that any Indebtedness of the Company or
any Significant Subsidiary of the Company in a principal amount
in excess of $10,000,000 (i) is declared due and payable before
its stated maturity because of the occurrence of any default (or
any event which, with notice or the lapse of time, or both, shall
constitute such default) under such Indebtedness or (ii) is not
paid at its stated maturity; or
(b) Any litigation, arbitration proceeding or governmental
proceeding involving damages or potential liability in excess of
$10,000,000 is instituted against the Company or any of its
Subsidiaries which, if adversely determined, would have a
material adverse effect on the business, operations or financial
condition of the Company and its Subsidiaries taken as a whole.
Section 4.7 Maintenance of Properties and Insurance.
---------------------------------------
Except as otherwise provided in this Indenture, the Company
shall, and shall cause each of its Subsidiaries to, cause all
Collateral and other Properties owned by or leased to it and used
or useful in the conduct of the business of the Company or any
such Subsidiary, as the case may be, to be maintained and kept in
good repair, working order and condition, except for reasonable
wear and use, and supplied with all necessary equipment and shall
cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of
the Company may be necessary, so that the business carried on in
connection therewith may be properly and advantageously conducted
at all times, except, in every case, as and to the extent that
the Company or any such Subsidiary may be prevented by fire,
strikes, lockouts, acts of God, inability to obtain labor or
materials, governmental restrictions, enemy action, civil
<PAGE>
14
commotion or unavoidable casualty or similar causes beyond the
control of the Company or such Subsidiary; provided, however,
that subject to all requirements of the Operative Documents,
nothing in this Section 4.7 shall prevent the Company or any such
Subsidiary from discontinuing the use, operation or maintenance
of any such Properties, or disposing of any of them, if such
discontinuance or disposal is, in the good faith judgment of an
Officer of the Company (or other agent employed by the Company)
having managerial responsibility for any such Property (or, in
the case of any materially important item, with respect to
operations or value, in the good faith judgment of the Company as
expressed in a resolution of the Board of Directors), desirable
in the conduct of the Company's business or that of its
Subsidiaries.
For so long as any Collateral or Property is deemed to be
useful to the conduct of the business of the Company or its
Subsidiaries, the Company shall, or shall cause such Subsidiaries
to, maintain appropriate insurance, in accordance with industry
practice, on such Collateral and Properties and as required under
the provisions of the applicable Operative Documents.
Notwithstanding the provisions of this Section 4.7, to the
extent there exists any inconsistency between the provisions
hereof and the provisions of the Mortgage relating to Property
which constitutes Collateral, the provisions of the Mortgage
shall prevail as to all Collateral.
Section 4.8 Default Notices and Compliance Certificates.
-------------------------------------------
Contemporaneously with furnishing quarterly financial
reports to the Trustee under Section 4.9(a) or mailing quarterly
statements to the Trustee and Holders under Section 4.9(c), the
Company shall furnish to the Trustee a Certifying Officer's
Certificate to the effect that no Default or Event of Default has
occurred or is continuing, or, if there is any such Default or
Event of Default, describing it and the steps, if any, being
taken to cure it.
The Company shall deliver to the Trustee within one hundred
twenty (120) days after the end of each fiscal year in which any
of the Securities remain Outstanding a certificate of the
principal executive officer, principal financial officer or
principal accounting officer of the Company (which need not
comply with the provisions of Section 11.5) stating whether or
not, to the knowledge of the signer after due inquiry, the
Company is in compliance with all conditions and covenants under
this Indenture and the Operative Documents (determined without
regard to any period of grace or requirement of notice), and if
the Company is not in compliance with all such conditions and
covenants, describing each Default or Event of Default and its
status. The first certificate to be delivered by the Company
pursuant to this Section 4.8 shall be for the fiscal year ending
December 31, 1998.
Section 4.9 SEC Reports.
-----------
(a) The Company shall deliver to the Trustee as soon as
practicable after it files them with the SEC, copies of the
annual reports and of the information, documents, and other
reports (or copies of such portions of any of the foregoing as
the SEC may by rules and regulations prescribe) which the Company
is required to file with the SEC pursuant to Sections 13 or 15(d)
of the Exchange Act. The Company also shall comply with the other
provisions of TIA ss. 314(a).
<PAGE>
15
(b) So long as any of the Securities remain Outstanding, the
Company shall cause its annual report to stockholders and any
quarterly or other financial reports furnished by it to
stockholders generally, to be mailed to the Holders of such
Outstanding Securities at their addresses appearing in the
Register.
(c) At any time the Company does not have a class of
securities registered, or is not otherwise required to file
quarterly and other reports under the Exchange Act, the Company
will prepare or cause to be prepared, for each of the first three
(3) quarters of each fiscal year, an unaudited balance sheet of
the Company and its consolidated Subsidiaries as at the end of
such quarter and related unaudited consolidated statements of
income and retained earnings and cash flow of the Company and its
consolidated Subsidiaries for such quarter and the portion of the
fiscal year through such date, setting forth in each case in
comparative form the figures for the corresponding year-to-date
period in the previous year, certified by the principal financial
officer of the Company, and for each fiscal year, an audited
balance sheet of the Company and its consolidated Subsidiaries as
at the end of such year and related audited consolidated
statements of income and retained earnings and cash flow of the
Company and its consolidated Subsidiaries for such year, setting
forth in comparative form the figures for the previous year,
reported on without a qualification arising out of the scope of
the audit, by the Company's independent public accountants. All
financial statements will be prepared by a nationally recognized
auditing firm and will be prepared in accordance with generally
accepted accounting principles, as in effect from time to time,
consistently applied, except for changes with which the Company's
independent public accountants concur and except that quarterly
statements may be subject to year-end adjustments. The Company
will cause a copy of the respective financial statements to be
mailed to the Trustee and each of the Holders of the Securities
within forty-five (45) days after the close of each of the first
three (3) quarters of each fiscal year and within one hundred
twenty (120) days after the close of each fiscal year, to the
addresses set forth in Section 11.2 or, in the case of each of
the Holders, to such Holder's address as set forth in the
Register of the Securities.
Section 4.10 Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim, and will resist any and all efforts
to be compelled to take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit
or forgive the Company from paying all or any portion of the
principal of, interest on, or Special Interest, if any, with
respect to, the Securities as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture and the
Operative Documents; and (to the extent that it may lawfully do
so) the Company hereby expressly waives all benefit or advantage
of any such law, and covenants that it will not hinder, delay or
impede the execution of any power granted to the Trustee herein
and in the Operative Documents, but will suffer and permit the
execution of every such power as though no such law had been
enacted.
<PAGE>
16
Section 4.11 Amendment to Certain Agreements.
-------------------------------
The Company shall not enter into or consent to any
amendment, supplement or other modification of the Operative
Documents except as permitted under Article 9 hereof.
Section 4.12 Title to Collateral and Limitation on Liens;
--------------------------------------------
Sale of Aircraft; Total Loss With Respect to Aircraft.
- -----------------------------------------------------
(a) The Company represents and warrants that it has, and
covenants that it shall continue to have, full power and lawful
authority to grant, release, convey, assign, transfer, mortgage,
pledge, hypothecate and otherwise create the security interests
in the Collateral referred to in Article 10; the Company shall
warrant, preserve and defend the interest and title of the
Trustee to the Collateral, against the claims of all persons and
will maintain and preserve the security interests contemplated by
Article 10; and the Company shall not, and not permit any of its
Subsidiaries to, directly or indirectly, incur, assume or suffer
to exist any Lien of any nature whatsoever upon or with respect
to the Collateral, other than Permitted Liens. The Company shall
cause the Operative Documents, including all necessary financing
statements, notifications of secured transactions and other
assurances or instruments to be properly recorded, registered and
filed and to be kept, recorded, registered and filed in such
manner and in such places as may be required by law and shall
take all such other actions as may be required in order to make
effective the security interests intended to be created in
connection with this Indenture. The Company shall furnish to the
Trustee the Opinions of Counsel required by Section 10.2 to
confirm such action.
(b) The Company shall not, directly or indirectly,
consummate any sale, lease, transfer or other disposition of any
Collateral for so long as any of the Securities remain
Outstanding.
(c) In the event that there shall occur a Total Loss with
respect to the Aircraft, the Company shall (subject to the
provisions of Section 4.12(d)) make an Offer to Purchase an
aggregate principal amount of Outstanding Securities (the "Total
Loss OTP Amount") equal to the aggregate principal amount of the
Securities Outstanding on the date such Offer to Purchase is
required to be commenced hereunder, at a purchase price equal to
100% of the aggregate principal amount of Securities to be
purchased, plus accrued and unpaid interest and Special Interest,
if any, on such Securities, to and including the Payment Date.
The Company shall commence such Offer to Purchase within thirty
(30) days after the Total Loss Date with respect to any such
Total Loss. Upon Request by the Company and payment by the
Company of the purchase price with respect to such Offer to
Purchase and the Trustee's costs (including reasonable legal fees
and disbursements) incurred in complying with such Request, the
Trustee shall release from the Lien of the Operative Documents,
all right, title and interest of the Trustee in and to the
Collateral.
(d) At its option the Company may reduce in whole or in
part its obligation to pay the Total Loss OTP Amount in cash by
delivering to the Trustee at least 15 days before the date the
related Offer to Purchase is or would be required to be commenced
under Section 4.12(c), (i) Securities which have been acquired by
the Company in open market purchases (and, for
<PAGE>
17
avoidance of doubt, not acquired by way of any Offer to Purchase
hereunder), together with (ii) an Officers' Certificate directing
the Trustee to cancel such Securities and stating the election of
the Company to have credited against the Total Loss OTP Amount a
specified principal amount of Securities so delivered. All
Securities made the basis of credit against the Total Loss OTP
Amount shall be credited at 100% of their principal amount. In
case of the failure of the Company to deliver such Officers'
Certificate, the Total Loss OTP Amount due on the Payment Date
therefor shall be paid entirely in cash without the option to
reduce the Company's obligation to make such payment as specified
in this Section 4.12(d). The Trustee shall promptly authenticate
and mail to the Company a new Security or Securities in an
aggregate principal amount equal to that portion (if any) of the
Securities delivered to the Trustee and not used by the Company
as a credit under this Section 4.12(d) (provided, that the
Company has previously delivered to the Trustee sufficient
executed Securities to enable the Trustee to so authenticate such
Securities).
Section 4.13 Books, Records, Access; Confidentiality.
---------------------------------------
(a) The Company shall, and shall cause each of its
Subsidiaries to, (i) maintain complete and accurate books and
records in which full and correct entries in conformity with GAAP
shall be made of all dealings and transactions in relation to its
respective business and activities, and (ii) permit authorized
representatives of the Trustee to visit and inspect the
Properties of the Company or its Subsidiaries, and any or all
books, records and documents in the possession of the Company
relating to the Collateral, including the records, logs and other
materials referred to in Section 2.1(c) of the Mortgage, and to
make copies and take extracts therefrom and to visit and inspect
the Collateral, all upon reasonable notice and at such reasonable
times during normal business hours and as often as may be
reasonably requested.
(b) The Trustee and its authorized representatives referred
to in clause (a) above agree not to use any information obtained
pursuant to this Section 4.13 for any purpose other than as
required in order to discharge their respective duties hereunder
and under the Operative Documents and except as otherwise
required for such purpose to keep confidential and not to
disclose any such information to any person except that (i) the
recipient of the information may disclose any information which
becomes publicly available other than as a result of disclosure
by such recipient, (ii) the recipient of the information may
disclose any information which its counsel reasonably concludes
is necessary to be disclosed by law or legal process, pursuant to
any court or administrative order or ruling or in any pending
legal or administrative proceeding or investigation after notice
to the Company adequate, subject to applicable laws, to allow the
Company to obtain a protective order or other appropriate remedy,
provided that the recipient of the information will (if not
otherwise required in order to discharge its duties as aforesaid)
cooperate at the Company's expense with the Company's efforts to
obtain a protective order or other reliable assurance that
confidential treatment will be accorded any such information
required to be so disclosed, and (iii) the recipient of the
information may disclose any information necessary to be
disclosed pursuant to any provision of the TIA.
<PAGE>
18
Section 4.14 Security Interests.
------------------
The Company and its Subsidiaries shall perform any and all
acts and execute any and all documents (including, without
limitation, the execution, amendment or supplementation of any
financing statement and continuation statement or other
statement) for filing under the provisions of the Federal
Aviation Act and the applicable Uniform Commercial Code and the
rules and regulations thereunder or any other statute, rule or
regulation of any applicable federal, state or local
jurisdiction, which are necessary or advisable, from time to
time, in order to grant and maintain in favor of the Trustee for
the benefit of the Holders a valid, perfected Lien on the
Collateral.
The Company and its Subsidiaries shall deliver or cause to
be delivered to the Trustee from time to time such other
documentation, consents, authorizations, approvals and orders in
form and substance satisfactory to the Trustee as it shall deem
reasonably necessary or advisable to perfect or maintain the
Liens for the benefit of the Holders.
Section 4.15 Repurchase of Securities Upon a Change in Control.
-------------------------------------------------
(a) In the event that there shall occur a Change in
Control, the Company shall make an Offer to Purchase all of the
Outstanding Securities, at a purchase price equal to 101% of the
aggregate principal amount of the Securities Outstanding, plus
accrued and unpaid interest and Special Interest, if any, to and
including the repurchase date. The right to require such
repurchase of Securities shall not continue after a discharge of
the Company from its obligations with respect to the Securities
in accordance with Article 8.
(b) The Company shall commence such Offer to Purchase
within thirty (30) days after the occurrence of a Change in
Control.
Section 4.16 Restrictions on Becoming an Investment Company.
----------------------------------------------
The Company shall not become an investment company within
the meaning of the Investment Company Act of 1940 as such statute
and the regulations thereunder and any successor statute or
regulations thereto may from time to time be in effect.
ARTICLE 5.
SUCCESSOR CORPORATION
Section 5.1 Covenant Not to Consolidate, Merge, Convey or
---------------------------------------------
Transfer Except Under Certain Conditions.
- ----------------------------------------
The Company shall not consolidate with, or merge with or
into, or convey or transfer (excluding by way of lease) all or
substantially all of its Properties (as determined at the time of
such transfer without regard to any prior conveyance or transfer
or series of conveyances or transfers made on unrelated
transactions) to any other Person, or permit any Person to
convey, lease or transfer all or substantially all of its
Properties to the Company, unless:
<PAGE>
19
(a) The Company shall be the continuing Person or the Person (if
other than the Company) formed by such consolidation or into
which the Company is merged or to which all or substantially all
of the Properties of the Company are conveyed or transferred (the
"surviving Person"): (i) shall be a corporation organized and
existing under the laws of the United States of America or any
state thereof or the District of Columbia; (ii) shall expressly
assume prior to or simultaneously with the consummation of such
transaction, by an indenture and other agreements supplemental
hereto and to the Operative Documents, executed and delivered to
the Trustee in form reasonably satisfactory to the Trustee, the
due and punctual payment of the principal of, interest on and
Special Interest, if any, with respect to, all the Securities and
the observance and performance of every covenant, condition and
obligation of this Indenture, the Securities and the Operative
Documents on the part of the Company to be observed or performed;
(b) Immediately before and immediately after giving effect
to such transaction, no Default or Event of Default shall have
occurred and be continuing hereunder;
(c) In the case of any such conveyance or transfer, such
conveyance or transfer includes, without limitation, all of the
Collateral and in any event such consolidation, merger,
conveyance or transfer shall be on such terms as shall fully
preserve the Lien and security of each of the Operative
Documents, the priority thereof purported to be established
thereby and the rights and powers of the Trustee and the Holders
of the Securities under each of the Operative Documents; and
(d) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that (i) such
merger, consolidation, transfer, conveyance, or acquisition of
assets and such supplemental indenture (if any) comply with the
terms of this Indenture, (ii) this Indenture and the Securities
constitute the valid and legally binding obligations of the
surviving Person, and (iii) this Indenture and the other
Operative Documents are enforceable against the surviving Person
in accordance with their terms.
Section 5.2 Successor Person Substituted.
----------------------------
Upon any consolidation or merger, or any conveyance or
transfer (excluding by way of lease) of all or substantially all
of the Properties of the Company in accordance with Section 5.1,
the surviving entity formed by such consolidation or into which
the Company is merged or the surviving entity to which such
conveyance or transfer is made shall succeed to, and be
substituted for, and be bound by and obligated to pay the
obligations of, and may exercise every right and power of, the
Company under this Indenture, the Securities and the Operative
Documents with the same effect as if such successor had been
named as the Company herein and therein; but the predecessor
Company in the event of any such conveyance or transfer shall not
be released from the obligation to pay the principal of, interest
on and Special Interest, if any, with respect to, the Securities.
Such surviving entity may cause to be signed, and may issue
either in its own name or in the name of the Company prior to
such succession any or all of the Securities issuable hereunder
which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such surviving
entity, instead of the Company, and subject to all the terms,
<PAGE>
20
conditions and limitations in this Indenture prescribed, the
Trustee shall authenticate and shall deliver any Securities which
previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication, and any
Securities which such surviving entity thereafter shall cause to
be signed and delivered to the Trustee for that purpose. All of
the Securities so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of
this Indenture as though all of such Securities had been issued
at the date of the execution hereof.
In case of any such consolidation, merger, sale, transfer
or conveyance such changes in phraseology and form (but not in
substance) may be made in the Securities thereafter to be issued
as may be appropriate.
Section 5.3 Limitation on Lease of Properties.
---------------------------------
Without limitation of the prohibitions set forth in the
other Operative Documents, the Company shall not lease all or
substantially all of its Properties to any Person.
ARTICLE 6.
DEFAULT AND REMEDIES
Section 6.1 Events of Default.
-----------------
An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest on, or
Special Interest, if any, with respect to, any Security when the
same becomes due and payable and the default continues for thirty
(30) days;
(b) the Company defaults in the payment of the principal
amount of any Securities when the same becomes due and payable at
maturity, upon acceleration, tender for repurchase or otherwise;
(c) the Company fails to comply with the agreements or
covenants contained in Article 13 hereof or in Sections 4.3 or
4.12 hereof, takes or agrees to take any action prohibited by
Section 5.1 hereof, discontinues or agrees to discontinue
substantially all of its commercial airlines operations or fails
to comply with the covenants contained in Sections 3, 6.3, 6.5 or
6.8 of the Mortgage within the time periods (if any) provided
therein;
(d) (i) the Company fails in any material respect to comply
with any of its other agreements contained in the Securities,
this Indenture or the other Operative Documents or (ii) any
representation or warranty made by the Company in this Indenture,
the other Operative Documents or any Mortgage Supplement or in
any certificate of the Company delivered hereunder or under any
such document shall prove to have been untrue in any material
respect when made, and in any such case such default continues
for the period and after the notice specified below;
<PAGE>
21
(e) there shall be a default or an event under or with
respect to any Indebtedness of the Company or any of its
Significant Subsidiaries in excess of $10,000,000 in principal
amount, whether such Indebtedness now exists or shall hereafter
be created, and the effect of any such default or event is to
cause the principal amount of any such Indebtedness to become
due, to have the date of payment thereof fixed prior to its
stated maturity or the date it would otherwise become due and
while any Securities are Outstanding, or to be unpaid at maturity
while any Securities are Outstanding;
(f) the Company or any of its Significant Subsidiaries
pursuant to or within the meaning of any Bankruptcy Law (as
hereinafter defined):
(i) commences a voluntary case or proceeding,
(ii) consents to the entry of an order for relief
against it in an involuntary case or proceeding,
(iii) consents to the appointment of a Custodian
(as hereinafter defined) of it or for all or substantially
all of its Property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is unable to pay its debts as the same
become due;
(g) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Significant Subsidiaries in an involuntary case or proceeding,
(ii) appoints a Custodian of the Company or any of its
Significant Subsidiaries for all or substantially all of
its properties, or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries,
and in each case the order and decree remains unstayed and in
effect for sixty (60) consecutive days;
(h) final, non-appealable judgments for the payment of
money, which judgments, in the aggregate, exceed $10,000,000
shall be rendered against the Company or any of its Significant
Subsidiaries by a court of competent jurisdiction and remain
undischarged, unstayed and unsatisfied for the period and after
the notice specified below; or
(i) any of the Operative Documents ceases, without the
consent of the Trustee, to be in full force and effect.
<PAGE>
22
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
A Default under clause (d), (e) or (h) of this Section 6.1
is not an Event of Default until the Trustee notifies the
Company, or the Holders of at least twenty-five percent (25%) in
aggregate principal amount of the Securities Outstanding notify
the Company and the Trustee, of the Default and the Company does
not cure the Default within sixty (60) days with respect to
clauses (d) and (h), or within thirty (30) days with respect to
clause (e), after receipt of the notice; provided, however, that
the Company shall be permitted such longer period of time, if
any, as may be provided for under the other Operative Documents
in respect of any particular Default. The notice must specify the
Default, demand that it be remedied and state that the notice is
a "Notice of Default." When a Default is cured, it ceases.
Section 6.2 Acceleration.
------------
If an Event of Default (other than an Event of Default
specified in Section 6.1(f) or (g)) occurs, and is continuing,
the Trustee may, by notice to the Company, or the Holders of at
least twenty-five percent (25%) in aggregate principal amount of
the Securities Outstanding may, by notice to the Company and the
Trustee, and the Trustee shall, upon the request of such Holders,
declare all unpaid principal of and accrued interest and Special
Interest, if any, to the date of acceleration on the Securities
Outstanding (if not then due and payable) to be due and payable
and upon any such declaration, the same shall become and be
immediately due and payable. If an Event of Default specified in
Section 6.1(f) or (g) occurs, all unpaid principal of and accrued
interest and Special Interest, if any, on the Securities
Outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the
Trustee or any Securityholder. Upon payment of such principal
amount, interest and Special Interest, if any, all of the
Company's obligations under the Securities and this Indenture,
other than obligations under Sections 7.7 and 8.4, shall
terminate. The Holders of a majority in principal amount of the
Securities then Outstanding by notice to the Trustee may rescind
an acceleration and its consequences if (a) all existing Events
of Default, other than the non-payment as to the Securities of
the principal, interest or Special Interest, if any, which has
become due solely by such declaration of acceleration, have been
cured or waived, (b) to the extent the payment of such interest
is permitted by law, interest on overdue installments of interest
or Special Interest and on overdue principal which has become due
otherwise than by such declaration of acceleration, has been
paid, (c) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction, and (d) all payments
due to the Trustee and any predecessor Trustee under Section 7.7
have been made.
Section 6.3 Other Remedies.
--------------
If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of, interest on or
Special Interest, if any, with respect to, the Securities or to
enforce the performance of any provision of the Securities or
this Indenture including, without limitation, instituting
proceedings
<PAGE>
23
and exercising and enforcing, or directing exercise and
enforcement of, all rights and remedies of the Trustee under the
other Operative Documents.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in
the proceeding. A delay or omission by the Trustee or any
Securityholder in exercising any right or remedy accruing upon an
Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default.
No remedy is exclusive of any other remedy. All available
remedies are cumulative.
Section 6.4 Waiver of Past Defaults.
-----------------------
Subject to Sections 6.7, 9.2 and 9.6, the Holders of a
majority in aggregate principal amount of the Securities
Outstanding by notice to the Trustee may authorize the Trustee to
waive an existing Default or Event of Default and its
consequences, except a Default (a) in the payment of principal
of, or interest on, or Special Interest, if any, with respect to,
any Security as specified in clauses (a) and (b) of Section 6.1
or (b) in respect of a covenant or provision hereof which cannot
be modified or amended without the consent of the Holder of each
Security affected. When a Default or Event of Default is waived,
it is cured and ceases, and the Company, the Holders and the
Trustee shall be restored to their former positions and rights
hereunder respectively; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any
right consequent thereon.
Section 6.5 Control by Majority.
-------------------
The Holders of a majority in aggregate principal amount of
the Securities Outstanding may direct the time, method and place
of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on it;
provided that the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction. The
Trustee may refuse to follow any direction hereunder or
authorization under Section 6.4 that legal counsel to the Trustee
determines in good faith conflicts with law or this Indenture,
that the Trustee reasonably determines may be unduly prejudicial
to the rights of another Securityholder, or that the Trustee
reasonably determines may subject the Trustee to personal
liability. However, the Trustee shall have no liability for any
actions or omissions to act which are in accordance with any such
direction or authorization.
Section 6.6 Limitation on Suits.
-------------------
A Securityholder may not pursue any remedy with respect to
this Indenture or the Securities unless:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least twenty-five percent (25%) in
principal amount of the Securities Outstanding make a written
request to the Trustee to pursue the remedy;
<PAGE>
24
(c) such Holder or Holders offer to the Trustee indemnity
reasonably satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within
sixty (60) days after receipt of the request and the offer of
indemnity; and
(e) during such 60-day period the Holders of a majority in
aggregate principal amount of the Securities Outstanding do not
give the Trustee a direction which, in the reasonable opinion of
the Trustee, is inconsistent with such request.
A Securityholder may not use this Indenture to prejudice
the rights of another Securityholder or to obtain a preference or
priority over such other Securityholder.
Section 6.7 Rights of Holders to Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of principal
of, interest on, and Special Interest, if any, with respect to,
the Security in cash, on or after the respective due dates
expressed in the Security, or to bring suit for the enforcement
of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of the Holder.
It is hereby expressly understood, intended and agreed that
any and all actions which a Holder of the Securities may take to
enforce the provisions of this Indenture and/or collect Payments
due hereunder or under the Securities, except to the extent that
such action is determined to be on behalf of all Holders of the
Securities, shall be in addition to and shall not in any way
change, adversely affect or impair the rights and remedies of the
Trustee or any other Holder of the Securities thereunder or under
this Indenture and the other Operative Documents, including the
right to foreclose upon and sell the Collateral or any part
thereof and to apply any proceeds realized in accordance with the
provisions of this Indenture.
Section 6.8 Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of interest or principal
specified in clause (a) or (b) of Section 6.1 occurs and is
continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company or any other
obligor on the Securities for the whole amount of principal,
accrued interest and Special Interest, if any, remaining unpaid,
together with interest on overdue principal and on overdue
installments of interest to the extent that payment of such
interest is permitted by law, in each case at the rate per annum
provided for by the Securities, and such further amount as shall
be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
Section 6.9 Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the
<PAGE>
25
reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and the Securityholders
allowed in any judicial proceedings relative to the Company (or
any other obligor upon the Securities), its creditors or its
Property and shall be entitled and empowered to collect and
receive any moneys or other Property payable or deliverable on
any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each
Securityholder to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such
payments directly to the Securityholders, to pay to the Trustee
any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel,
and any other amounts due the Trustee under Section 7.7, and
unless prohibited by law or applicable regulations to vote on
behalf of the Holders of Securities for the election of a trustee
in bankruptcy or other person performing similar functions.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights
of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Securityholder in any such proceeding
except, as aforesaid, for the election of a trustee in bankruptcy
or person performing similar functions.
Section 6.10 Application of Proceeds.
-----------------------
Any moneys collected by the Trustee pursuant to this
Article shall be applied in the following order at the date or
dates fixed by the Trustee and, in case of the distribution of
such moneys on account of principal, interest, or Special
Interest, if any, upon presentation of the several Securities and
stamping (or otherwise noting) thereon the payment, or issuing
Securities in reduced principal amounts in exchange for the
presented Securities if only partially paid, or upon surrender
thereof if fully paid:
FIRST: To the payment of reasonable costs and expenses
actually incurred, including reasonable compensation to the
Trustee, its predecessors, if any, and their respective
agents and attorneys (including amounts due and unpaid
under Section 7.7), and of all reasonable costs, fees,
expenses and liabilities incurred, and all advances made,
by any and all of the foregoing (including amounts due and
unpaid under Section 7.7), except as a result of negligence
or bad faith;
SECOND: In case the entire principal of the Securities
shall not have become and be then due and payable, as to
any Securities (a) first to the payment of interest and
Special Interest, if any, in default in the order of the
maturity of the installments of such interest and Special
Interest, with interest (to the extent that such interest
has been collected by the Trustee) upon the overdue
installments of interest or Special Interest, if any, at
the rate of interest specified in the Securities and (b)
second to the payment of principal of the Securities as the
same shall become due and payable, such payments to be made
ratably to the Persons entitled thereto, without
discrimination or preference;
THIRD: In case the entire principal of the Securities
shall have become and shall be then due and payable, as to
any Securities, to the payment of the whole amount
<PAGE>
26
then owing and unpaid upon all the Securities for
principal, interest and Special Interest, with interest
upon the overdue principal, and (to the extent that such
interest has been collected by the Trustee) upon overdue
installments of interest or Special Interest, if any, at
the same rate as the rate of interest specified in this
Indenture or in the Securities; and in case such moneys
shall be insufficient to pay in full the whole amount so
due and unpaid upon the Securities, then to the payment of
such principal, interest and Special Interest, without
preference or priority of any of principal, interest or
Special Interest, if any, over the other, or any
installment of interest or Special Interest, if any, over
any other installment of interest or Special Interest, if
any, or of any Security over any other Security, ratably to
the aggregate of such principal, and accrued and unpaid
interest and Special Interest; and
FOURTH: To the payment of the remainder, if any, after
payment in full of the entire principal balance, if any, of
the Securities and all interest, Special Interest and other
amounts due upon or in respect of such Securities, to the
Company or any other Person lawfully entitled thereto.
The Trustee, upon prior written notice to the Company, may
fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10.
Section 6.11 Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have
agreed, that any court of competent jurisdiction in its
discretion may require in any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the
Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess
reasonable costs, including reasonable attorneys' fees, against
any party litigant in the suit, having due regard to the merits
and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.7, or a suit by
Holders of more than ten percent (10%) in principal amount of the
Securities Outstanding.
Section 6.12 Restoration of Rights on Abandonment of Proceedings.
---------------------------------------------------
In case the Trustee shall have proceeded to enforce any
right under this Indenture and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been
determined adversely to the Trustee, then and in every such case
the Company, the Trustee and the Securityholders shall be
restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of the Company,
the Trustee and the Securityholders shall continue as though no
such proceedings had been taken.
<PAGE>
27
Section 6.13 Powers and Remedies Cumulative; Delay
-------------------------------------
or Omission Not Waiver of Default.
- ---------------------------------
No right or remedy herein conferred upon or reserved to the
Trustee or to the Securityholders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
No delay or omission of the Trustee or of any Holder of any
of the Securities to exercise any right or power accruing upon
any Event of Default occurring and continuing as aforesaid shall
impair any such right or power or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein;
and, subject to the other applicable provisions of this
Indenture, every power and remedy given by this Indenture or by
law to the Trustee or to the Securityholders may be exercised
from time to time, and as often as shall be deemed expedient, by
the Trustee or by the Securityholders.
Any right or remedy herein conferred upon or reserved to
the Trustee may be exercised by it in its capacity as Trustee, as
it may deem most efficacious, if it is then acting in such
capacity.
ARTICLE 7.
TRUSTEE
Section 7.1 Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested
in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under
the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties as are
specifically set forth in this Indenture and the other
Operative Documents and no others.
(ii) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act, or its
own willful misconduct or bad faith, except that:
<PAGE>
28
(i) This paragraph (c) does not limit the effect of
paragraph (b) of this Section 7.1 or of Section 7.2.
(ii) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it
is proved that the Trustee was negligent in ascertaining
the pertinent facts.
(iii) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 6.5.
(d) The Trustee shall be under no obligation to exercise
any of the rights, trusts or powers vested in it by this
Indenture at the request, order or direction of any of the
Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee security or indemnity reasonably
satisfactory to the Trustee against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request, order or direction.
(e) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b), (c) and
(d) of this Section 7.1.
(f) Funds held in trust for the benefit of the Holders of
the Securities by the Trustee or any Paying Agent on deposit with
itself or elsewhere shall be held in distinct, identifiable
accounts, and other funds or investments of any nature or from
any source whatsoever may be held in such accounts, except, in
each case, to the extent required by law. The Trustee shall not
be liable for interest on any money received by it except as the
Trustee may agree with the Company.
Section 7.2 Rights of Trustee.
-----------------
(a) The Trustee may rely on any document reasonably
believed by it to be genuine and to have been signed or presented
by the proper person. Subject to Section 7.1(b)(ii), the Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, which
shall conform to Section 11.5. The Trustee shall not be liable
for any action it takes or omits to take in good faith in
reliance on such certificate or opinion.
(c) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by
or through its attorneys and agents and the Trustee shall not be
responsible for the misconduct or negligence of any agent or
attorney appointed with due care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.
<PAGE>
29
Section 7.3 Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal
with and collect obligations owed to it by the Company or
Affiliates of the Company with the same rights it would have if
it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee is subject to Sections 7.10 and 7.11.
Section 7.4 Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the
Securities, and it shall not be responsible for any statement in
the Securities or in this Indenture other than its certificate of
authentication.
Section 7.5 Notice of Defaults.
------------------
If a Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to each Securityholder notice
of the Default within ninety (90) days after the occurrence
thereof except as otherwise permitted by the TIA. Except in the
case of a Default in payment of principal of, or interest on, or
Special Interest, if any, with respect to, any Security, the
Trustee may withhold the notice if and so long as it, in good
faith, determines that withholding the notice is in the interests
of the Securityholders.
Section 7.6 Reports by Trustee to Holders.
-----------------------------
If circumstances require any report to Holders under TIA
ss. 313(a), it shall be mailed to Securityholders within sixty
(60) days after each May 15 (beginning with the May 15 following
the date of this Indenture) as of which such circumstances exist.
The Trustee also shall comply with the remainder of TIA ss. 313.
The Company shall promptly notify the Trustee if the
Securities become listed on or delisted from any stock exchange
or other recognized trading market.
The Trustee shall, upon the written request of any Holder
of Securities but subject to applicable laws and contractual
limitations, provide to such Holder copies of any reports,
certificates, opinions or other materials of any kind or nature
required to be delivered to the Trustee under this Indenture or
any of the other Operative Documents or otherwise delivered by or
on behalf of the Company to the Trustee.
Section 7.7 Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time
reasonable compensation, as agreed upon from time to time, for
its services hereunder and under the other Operative Documents.
The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it in
any such capacities.
<PAGE>
30
Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel
and all agents and other persons not regularly in its employ.
The Company shall indemnify the Trustee and each
predecessor Trustee for, and hold each of them harmless against,
any loss or liability incurred by each of them in connection with
the administration of this Indenture and its duties hereunder. In
connection with any defense of such a claim, the Trustee may have
separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not reimburse any
expense or indemnify against any loss or liability incurred by
the Trustee or any predecessor Trustee through the negligence or
bad faith of such Trustee or each such predecessor Trustee.
To secure the Company's payment obligations in this Section
7.7, the Trustee shall have a Lien (legal and equitable) prior to
the Securities on all money or Property held or collected by the
Trustee, in its capacity as Trustee, or otherwise distributable
to Securityholders, except money, securities or Property held in
trust to pay principal of or interest on particular Securities
(including, without limitation, pursuant to Section 8.1(b)
hereof).
When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 6.1(f) or (g) occurs,
the expenses and the compensation for the services are intended
to constitute expenses of administration under any Bankruptcy
Law.
Section 7.8 Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company and the
Holders in writing. The Holders of a majority in aggregate
principal amount of the Securities Outstanding may remove the
Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee with the Company's consent, which consent shall
not be unreasonably refused or delayed. The Company may remove
the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of the
Trustee or its Property;
(d) the Trustee becomes incapable of acting; or
(e) no Default or Event of Default has occurred and is
continuing and the Company determines in good faith to remove the
Trustee.
If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason, the Company shall
promptly appoint a successor Trustee. Within one year after any
such successor Trustee takes office, the Holders of a majority in
aggregate principal amount of the Securities Outstanding may
appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
<PAGE>
31
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company.
Immediately after that, the retiring Trustee shall transfer all
Property held by it as Trustee to the successor Trustee, subject
to the Lien provided in Section 7.7, the resignation or removal
of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Securityholder.
No resignation or removal of the Trustee and no appointment
of a successor Trustee, pursuant to this Article, shall become
effective until the acceptance of appointment by the successor
Trustee under this Section 7.8. If a successor Trustee does not
take office within sixty (60) days after the retiring Trustee
resigns or is removed, the retiring Trustee, the Company or the
Holders of at least ten percent (10%) in principal amount of the
Securities Outstanding may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Holder of Securities may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment
of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's obligations under Section 7.7 shall
continue for the benefit of the retiring Trustee which shall
retain its claim pursuant to Section 7.7.
Section 7.9 Successor Trustee by Merger, etc.
--------------------------------
If the Trustee consolidates with, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the resulting, surviving or
transferee corporation without any further act shall be the
successor Trustee.
Section 7.10 Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies
the requirements of TIA ss. 310(a)(1). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth
in its most recent, published annual report of condition. The
Trustee shall comply with TIA ss. 310(b); provided, however, that
there shall be excluded from the operation of TIA ss. 310(b)(1)
any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of
the Company are outstanding, if the requirements for such
exclusion set forth in TIA ss. 310(b)(1) are met.
Section 7.11 Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has
resigned or been removed shall be subject to TIA ss. 311(a) to
the extent indicated.
<PAGE>
32
ARTICLE 8.
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligations.
------------------------------------
(a) The Company may terminate its obligations under this
Indenture, except those obligations referred to in the last
paragraph of Section 8.1(b), if all Securities previously
authenticated and delivered (other than destroyed, lost or stolen
Securities which have been replaced or paid or Securities for
whose payment Payments have theretofore been held in trust and
thereafter repaid to the Company, as provided in Section 8.3)
have been delivered to the Trustee for cancellation and the
Company has paid all sums payable by it hereunder.
(b) The Company may terminate all its obligations under
this Indenture except those obligations referred to in the
immediately succeeding paragraph if
(i) the Company has irrevocably deposited or caused
to be irrevocably deposited with the Trustee or a Paying
Agent, under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Trustee and any such
Paying Agent, as trust funds in trust solely for the
benefit of the Holders for that purpose, cash or U.S.
Government Obligations maturing as to principal and
interest, in such amounts and at such times as are
sufficient without consideration of any reinvestment of any
such interest to pay the then maximum possible principal
of, and the then maximum possible interest and Special
Interest with respect to, the Securities Outstanding to
maturity, provided, that the Trustee or such Paying Agent
shall have been irrevocably instructed to apply such money
or the proceeds of such U.S. Government Obligations to the
payment of said principal, interest and Special Interest,
if any, with respect to the Securities.
(ii) No Default or Event of Default with respect to
the Securities shall have occurred and be continuing (A) on
the date of such deposit described in clause (i), or (B)
insofar as paragraph (f) of Section 6.1 is concerned, at
any time during the period ending on the 91st day after the
date of such deposit or, if longer, ending on the day
following the expiration of the longest preference period
applicable to the Company in respect of such deposit (it
being understood that the condition in this clause (B) is a
condition subsequent and shall not be deemed satisfied
until the expiration of such period);
(iii) Such termination and deposit described in clause
(i) shall not (A) cause the Trustee to have a conflicting
interest as defined in TIA Section 310(b) or otherwise for
purposes of the TIA with respect to any securities of the
Company, or (B) result in the trust arising from such
deposit to constitute, unless it is qualified as, a
regulated investment company under the Investment Company
Act of 1940, as amended;
(iv) Such termination and deposit described in clause
(i) shall not result in a breach or violation of or
constitute a default under, this Indenture or any other
material agreement or instrument to which the Company is a
party or by which it is bound;
<PAGE>
33
(v) The Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the
Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such termination
and deposit described in clause (i) and will be subject to
federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such
termination and deposit had not occurred; and
(vi) The Company shall have delivered to the Trustee
and any Paying Agent an Officer's Certificate and an
Opinion of Counsel, each stating that all conditions
precedent and subsequent provided for above in this Section
8.1(b) have been complied with.
Notwithstanding the foregoing paragraph, the Company's
obligations in Article 13 and in Sections 2.3, 2.4, 2.5, 2.6,
2.7, 4.1, 4.2, 4.8, 7.7, 7.8, 8.2, 8.3, 8.4 and 10.4 shall
survive until the Securities are no longer Outstanding.
Thereafter, the Company's obligations in Sections 7.7 and 8.3
shall survive.
(c) After the effectiveness of any termination of its
obligations (except, in the case of Section 8.1(b), as set forth
in the last paragraph thereof), under this Indenture in
accordance with Section 8.1(a) or (b) above (such effective date,
the "Indenture Discharge Date") and payment of all obligations of
the Company accrued under Section 7.7, the Trustee upon Request
shall acknowledge in writing the discharge of the Company's
obligations under this Indenture except for those surviving
obligations specified above.
Section 8.2 Application of Trust Money.
--------------------------
The Trustee or Paying Agent shall hold in trust money or
U.S. Government Obligations deposited with it pursuant to Section
8.1, and shall apply the deposited money and the money from U.S.
Government Obligations in accordance with this Indenture to the
payment of principal of, and interest and Special Interest, if
any, on, the Securities. The obligations of the Trustee and
Paying Agent under this Section 8.2 shall survive,
notwithstanding any termination or discharge of the Company's
obligations pursuant to Section 8.1, until all Securities are
paid in full.
The Company shall pay and indemnify the Trustee or Paying
Agent, as the case may be, against any tax, fee or other charge
imposed on or assessed against the money or U.S. Government
Obligations deposited pursuant to Section 8.1(b)(i) or the
principal and interest received in respect thereof.
Section 8.3 Repayment to Company.
--------------------
Anything in Section 8.1(b) to the contrary notwithstanding,
the Trustee or Paying Agent, as the case may be, shall deliver or
pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations (or other Property and any
proceeds therefrom) held by it as provided in Section 8.1(b)
which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee and to the Paying
Agent, if applicable, are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent
termination under
<PAGE>
34
said Section 8.1(b). The Trustee and the Paying Agent shall Pay
to the Company any Payments held by them for the payment of
principal, interest and Special Interest, if any, that remains
unclaimed for two (2) years after the Stated Maturity of such
payment of principal, interest or Special Interest, as the case
may be; provided, however, that the Trustee or such Paying Agent
before making any Payment shall at the expense of the Company
cause to be published once in the national edition of The New
York Times or The Wall Street Journal or, if such newspapers are
not then in circulation, in a newspaper of general circulation in
the City of New York and mail to each Holder entitled to such
money, notice that such Payments remain unclaimed and that, after
a date specified therein which shall be at least thirty (30) days
from the date of such publication or mailing, any unclaimed
balance of such Payments then remaining will be repaid to the
Company. After payment to the Company, Securityholders entitled
to Payments must look to the Company for payment as general
creditors unless an applicable abandoned property law designates
another person.
Section 8.4 Reinstatement.
-------------
Anything herein to the contrary notwithstanding, (i) if the
Trustee or Paying Agent, as the case may be, is unable to apply
any money or U.S. Government Obligations in accordance with
Section 8.1 by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application,
or (ii) the deposited money or U.S. Government Obligations (or
the proceeds thereof) are, for any reason (including any
repayment to the Company under Section 8.3), insufficient in
amount, then the Company's obligations under this Indenture shall
be revived and reinstated as though no deposit had occurred
pursuant to Section 8.1 until such time as the Trustee, or Paying
Agent, as the case may be, is permitted to apply all such money
or U.S. Government Obligations and the proceeds of the investment
thereof in accordance with Section 8.1, or the deficiency is
cured in the manner set forth in Section 8.1(b), as the case may
be. In such event, the Trustee will invest all such money or the
proceeds from U.S. Government Obligations at the Company's
request in other U.S. Government Obligations and, upon written
notice from the Company, so long as there exists no Event of
Default, to the extent and only to the extent provided in the
first sentence of Section 8.3 return to the Company any money or
U.S. Government Obligations deposited with the Trustee pursuant
to Section 8.1. If the Company has made any payment of interest
on, principal of, or Special Interest, if any, with respect to
any Securities because of an event described in clause (i) of the
first sentence of this Section 8.4, the Company shall be
subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent, as the case may
be.
<PAGE>
35
ARTICLE 9.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Without Consent of Holders.
--------------------------
The Company and the Trustee, as the case may be, may amend
or supplement this Indenture, the Securities or the other
Operative Documents without notice to or consent of any
Securityholder:
(a) to provide for uncertificated Securities in addition to
or in place of certificated Securities;
(b) to provide for the assumption of the Company's
obligations to the Holders of the Securities in the case of a
merger or consolidation or transfer of all or substantially all
of the assets of the Company or otherwise to comply with Article
5;
(c) to comply with any requirements of the SEC in
connection with the qualification of this Indenture under the
TIA; or
(d) to cure any ambiguity, defect or inconsistency or to
make any other change, in each case, provided that such action
does not materially adversely affect the interests of any
Securityholder.
Section 9.2 With Consent of Holders.
-----------------------
Subject to Section 6.7, the Company (by resolution of its
Board of Directors if required) and the Trustee may amend or
supplement this Indenture, the Securities or the other Operative
Documents without notice to any Securityholder but with the
written consent of the Required Holders. Subject to Sections 6.4,
6.5 and 6.7, the Required Holders may authorize the Trustee to,
and the Trustee, subject to Section 9.6, upon such authorization
shall, waive compliance by the Company with any provision of this
Indenture, the Securities or the other Operative Documents.
However, an amendment, supplement or waiver, including a waiver
pursuant to any provision of Section 6.4, may not without the
consent of each Securityholder affected:
(a) reduce the amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the rate or extend the time for payment of
interest on, or Special Interest, if any, with respect to, any
Security;
(c) reduce the principal of (whether on repurchase or
otherwise), or change the fixed maturity of any Security;
(d) change the place of payment where, or the coin or
currency in which, any Security (or the repurchase price
thereof), interest thereon or Special Interest, if any, with
respect thereto, is payable;
<PAGE>
36
(e) waive a default in the payment of the principal of, or
interest on, or Special Interest with respect to any Security;
(f) make any changes in Article 3, Sections 2.8, 6.4, 6.7
or 6.10, or the third sentence of this Section 9.2;
(g) reduce any amount payable upon exercise of any
repurchase rights thereof or otherwise change any repurchase
right provision or impair the right of any Holder to institute
suit for the enforcement of any such payment on any Security when
due or adversely effect any repurchase rights hereunder; or
(h) except as otherwise permitted or required under this
Indenture, change the Conversion Date or the Conversion Price or
otherwise modify or affect Article 13 or any other provision of
this Indenture in any manner that would adversely affect any
Holder's conversion rights hereunder.
It shall not be necessary for the consent of the Holders
under this Section to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if
such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section
9.2 becomes effective, the Company shall mail to the Holders
affected thereby a brief notice describing such amendment,
supplement or waiver. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such amendment, supplement
or waiver.
Section 9.3 Compliance with Trust Indenture Act.
-----------------------------------
Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 9.4 Revocation and Effect of Consents.
---------------------------------
Until an amendment or waiver becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security, even
if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to
his Security or portion of a Security. Such revocation shall be
effective only if the Trustee receives the notice of revocation
before the date the amendment, supplement or waiver becomes
effective.
After an amendment, supplement or waiver becomes effective,
it shall bind every Securityholder, unless it makes a change
described in any of clauses (a) through (h) of Section 9.2. In
that case the amendment, supplement or waiver shall bind each
Holder of a Security who has consented to it and every subsequent
Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security; provided, however,
<PAGE>
37
that no amendment, supplement or waiver relating to any
impairment of the right to receive principal, interest and
Special Interest, if any, when due and payable consented to by a
Holder shall be binding upon any subsequent Holder of a Security
or a portion of a Security that evidences the same debt as the
consenting Holder's Security unless notation with regard thereto
is made upon such Security or the Security representing such
portion.
Section 9.5 Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of
a Security, the Trustee may require the Holder of the Security to
deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue
and the Trustee shall authenticate a new Security that reflects
the changed terms.
Section 9.6 Trustee to Sign Amendments, etc.
-------------------------------
The Trustee shall be entitled to receive and rely upon an
Officers' Certificate and an Opinion of Counsel stating that the
execution of any amendment, supplement or waiver authorized
pursuant to this Article 9 has been duly authorized by the
Company and is authorized or permitted by this Indenture and the
other applicable Operative Documents. The Trustee may, but shall
not be obligated to, execute any such amendment, supplement or
waiver which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 9.7 Effect of Supplement and/or Amendment.
-------------------------------------
Upon the execution of any supplemental indenture and/or any
such amendment or supplement to the other Operative Documents
pursuant to the provisions of this Article 9, this Indenture and
such Operative Documents shall be and be deemed to be modified
and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties and immunities under
this Indenture and the other Operative Documents of the Trustee,
the Company and the Holders of Securities shall thereafter be
determined, exercised and enforced hereunder and thereunder
subject in all respects to such modifications and amendments, and
all terms and conditions of any such supplemental indenture
and/or any such amendment or supplement to the other Operative
Documents shall be and be deemed to be part of the terms and
conditions of this Indenture and the other Operative Documents
for any and all purposes.
ARTICLE 10.
SECURITY
Section 10.1 Other Operative Documents.
-------------------------
To secure the due and punctual payment, performance and
observance of the Obligations (but not to exceed, in any event,
the aggregate amount of $10,250,000), the Company has
<PAGE>
38
simultaneously with the execution of this Indenture entered into
or caused to be assigned to the Trustee the other Operative
Documents and has made an assignment and pledge of or otherwise
transferred or caused to be transferred its right, title and
interest in and to the Collateral to the Trustee pursuant to the
other Operative Documents and in the manner and to the extent
therein provided. Each Securityholder, by accepting a Security,
agrees to all of the terms and provisions of each Operative
Document (including, without limitation, the provisions providing
for the release of Collateral and for the subordination of the
Lien of the Mortgage to the Lien of the First Mortgage), as the
same may be in effect or may be amended from time to time
pursuant to its terms and the terms hereof. The Company will
execute, acknowledge and deliver to the Trustee such further
assignments, transfers, assurances or other instruments as the
Trustee may reasonably require or request, and will do or cause
to be done all such acts and things as may be necessary or
proper, or as may be reasonably required by the Trustee to assure
and confirm to the Trustee the security interest in the
Collateral contemplated hereby and by the other Operative
Documents or any part thereof, as from time to time constituted,
so as to render the same available for the security and benefit
of this Indenture and of the Securities secured hereby, according
to the intent and purposes herein expressed.
Section 10.2 Opinions, Certificates and Appraisals.
-------------------------------------
(a) The Company shall furnish to the Trustee promptly after
the execution and delivery of this Indenture but prior to
authentication of any Securities, Opinions of Counsel covering
such jurisdictions as the Trustee may reasonably request either
(i) stating that in the opinion of such Counsel the actions
necessary to be taken under the Federal Aviation Act, the Uniform
Commercial Code of all applicable jurisdictions, or otherwise
with respect to the recording, registering and filing of this
Indenture, the other Operative Documents, financing statements or
other instruments to make effective and to perfect the Liens
intended to be created by the Mortgage have been taken and
reciting with respect to the security interests in the
Collateral, the details of such actions, or (ii) stating that, in
the opinion of such Counsel, no such action is necessary to make
such Liens effective and perfected.
(b) [Intentionally omitted.]
(c) The release of any Collateral from the terms of the
Mortgage will not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to the
extent the Collateral is released pursuant to the Mortgage or
this Indenture, as applicable. To the extent applicable, the
Company shall cause TIA ss. 314(d) relating to the release of
Property or securities from the Lien of the Mortgage and relating
to the substitution therefor of any Property or securities to be
subjected to the Lien of the Mortgage, to be complied with. Any
certificate or opinion required by TIA ss. 314(d) may be made by
an Officer of the Company, except in cases where TIA ss. 314(d)
requires that such certificate or opinion be made by an
independent person.
Section 10.3 Authorization of Actions to be Taken by the
-------------------------------------------
Trustee Under the Operative Documents.
- -------------------------------------
The Trustee may, in its sole discretion and without the
consent of the Securityholders, take all actions it deems
necessary or appropriate to (a) enforce any of the terms of the
Operative
<PAGE>
39
Documents and (b) collect and receive any and all amounts payable
in respect of the obligations of the Company hereunder and
thereunder. Subject to the provisions of this Indenture and the
other Operative Documents, the Trustee shall have power to
institute and to maintain such suits and proceedings as it may
deem expedient to prevent any impairment of the Collateral by any
acts which may be unlawful or in violation of the other Operative
Documents or this Indenture, and such suits and proceedings as it
may deem expedient to preserve or protect its interest and the
interests of the Securityholders in the Collateral (including
power to institute and maintain suits or proceedings to restrain
the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitu-
tional or otherwise invalid if the enforcement of, or compliance
with, such enactment, rule or order would impair the security
interest hereunder or be prejudicial to the interests of the
Securityholders or of the Trustee).
Section 10.4 Payment of Expenses.
-------------------
On demand of the Trustee, the Company forthwith shall pay
or satisfactorily provide for all reasonable expenditures
incurred by the Trustee under this Article 10, and all such sums
shall be a Lien upon the Collateral and shall be secured thereby.
Section 10.5 Authorization of Receipt of Funds by the Trustee
------------------------------------------------
Under the Operative Documents.
- -----------------------------
The Trustee is authorized to receive any funds for the
benefit of Securityholders distributed under the Operative
Documents, and to make further distributions of such funds to the
Holders according to the provisions of this Indenture and the
other Operative Documents.
ARTICLE 11.
MISCELLANEOUS
Section 11.1 Conflict with Trust Indenture Act of 1939.
-----------------------------------------
If and to the extent that any provision of this Indenture
limits, qualifies, or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the TIA, such imposed duties
shall control.
Section 11.2 Notices; Waivers.
----------------
Any request, demand, authorization, direction, notice,
consent, waiver or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with
(a) the Company shall be sufficient for every purpose
hereunder if in writing (including telecopied communications) and
made, given, furnished or filed by personal delivery or mailed by
registered or certified mail or by nationally recognized
overnight courier, postage or courier charges, as the case may
be, prepaid, to or with the Company at:
<PAGE>
40
Trans World Airlines, Inc.
One City Centre
515 N. 6th Street
St. Louis, Missouri 63101
Attention: Senior Vice President & General Counsel
Telecopier No.: (314) 589-3267
(b) the Trustee shall be sufficient for every purpose
hereunder if in writing (including telecopied communications) and
made, given, furnished or filed by personal delivery or mailed by
registered or certified mail or by nationally recognized
overnight courier, postage or courier charges, as the case may
be, prepaid, to or with the Trustee at:
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Services
Telecopier No.: (801) 246-5053
or to any of the above parties at any other address or telecopier
number subsequently furnished in writing by it to each of the
other parties listed above. An affidavit by any person
representing or acting on behalf of the Company or the Trustee as
to such mailing, having any registry receipt required by this
Section attached, shall be conclusive evidence of the giving of
such demand, notice or communication.
Any notice or communication mailed to a Holder shall be
mailed to such holder by first-class mail or by nationally
recognized overnight courier, postage or courier charges, as the
case may be, prepaid, at such holder's address as it appears on
the Register and shall be sufficiently given to such holder if so
mailed within the time prescribed.
Failure to mail a notice or send a communication to a
Holder or any defect in it shall not affect its sufficiency with
respect to other Holders. Notices to the Trustee or to the
Company are deemed given only when received. Where this Indenture
provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by the Holders shall
be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in
reliance upon such waiver.
Section 11.3 Communications by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA ss. 312(b)
with other Securityholders with respect to their rights under
this Indenture or the Securities. The Company, the Trustee, the
Registrar and any other person shall have the protection of TIA
ss. 312(c).
<PAGE>
41
Section 11.4 Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any Request or application by the Company to the
Trustee to take any action under this Indenture or the other
Operative Documents, the Company shall furnish to the Trustee:
(a) an Officers' Certificate, and (b) an Opinion of Counsel, each
stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, provided, that in the
case of any such application or Request as to which the
furnishing of an Officers' Certificate or Opinion of Counsel is
specifically required by any provision of this Indenture or the
other Operative Documents relating to such particular application
or Request, no additional certificate or opinion, as the case may
be, need be furnished.
Section 11.5 Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion provided for and delivered to
the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture or the other Operative
Documents shall include: (a) a statement that the Person signing
such certificate or opinion has read such condition or covenant
and the definitions herein or therein relating thereto; (b) a
brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in
such certificate or opinion are based; (c) a statement that, in
the opinion of such Person, he has made such examination or
investigation as is necessary to enable him to express an
informed opinion as to whether or not such condition or covenant
has been complied with; and (d) a statement as to whether or not
in the opinion of such Person, such condition or covenant has
been complied with.
Any certificate or opinion of an Officer or an engineer,
insurance broker, accountant or other expert may be based,
insofar as it relates to legal matters, upon a certificate or
opinion of or upon representations by counsel, unless such
officer, engineer, insurance broker, accountant or other expert
knows that the certificate or opinion or representations with
respect to the matters upon which his opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care
should have known that the same were erroneous.
Any certificate or Opinion of Counsel may be based, insofar
as it relates to factual matters, upon the certificate or opinion
of or representations by an officer or officers of the Company
stating that the information with respect to such factual matters
is in possession of the Company, unless such counsel knows that
the certificate or opinion or representations with respect to the
matters upon which his opinion may be based as aforesaid are
erroneous and insofar as it relates to legal matters in a
jurisdiction or area of law beyond the expertise of such counsel,
such counsel may rely upon the opinion of counsel qualified in
such other jurisdiction or area of law.
Wherever in this Indenture or the other Operative Documents
in connection with any application, certificate or report to the
Trustee it is provided that the Company shall deliver any
document as a condition of the granting of such application or as
evidence of the Company's compliance with any term hereof, it is
intended that the truth and accuracy at the time of the granting
of such application or at the effective date of such certificate
or report, as the case may
<PAGE>
42
be, of the facts and opinions stated in such document shall in
each such case be a condition precedent to the right of the
Company to have such application granted or to the sufficiency of
such certificate or report. Nevertheless, in the case of any such
application, certificate or report, any document required by any
provision of this Indenture or the other Operative Documents to
be delivered to the Trustee as a condition of the granting of
such application or as evidence of such compliance may be
received by the Trustee as conclusive evidence of any statement
therein contained and shall be full warrant, authority and
protection to the Trustee acting on the faith thereof.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Whenever any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements or opinions or other instruments under this Indenture
or any other Operative Document such Person may, but need not,
consolidate such instruments into one.
Section 11.6 Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Registrar or Paying Agent may
make reasonable rules for their respective functions.
Section 11.7 Holidays.
--------
In the event that any date for the payment of any amount
due hereunder shall not be a Business Day, then (notwithstanding
any other provision of this Indenture) such payment need not be
made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the due
date, and no interest or Special Interest, if any, shall accrue
from such due date to and including the next succeeding Business
Day.
Section 11.8 Governing Law; Waiver of Jury Trial.
-----------------------------------
(a) The laws of the State of New York shall govern this
Indenture and the Securities without regard to principles of
conflict of laws.
(b) The Company and the Trustee each waive any right to
have a jury participate in resolving any dispute, whether
sounding in contract, tort, or otherwise arising out of,
connected with, related to or incidental to the relationship
established between them in connection with this Indenture.
Instead, any disputes resolved in court will be resolved in a
bench trial without a jury.
<PAGE>
43
Section 11.9 No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret any agreement
of the Company or any of its Subsidiaries which is unrelated to
this Indenture, the Securities or the other Operative Documents.
Any such agreement may not be used to interpret this Indenture.
Section 11.10 No Recourse Against Others.
--------------------------
A director, officer, employee or stockholder, as such, of
the Company shall not have any liability for any obligations of
the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or
their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
Section 11.11 Benefits of Indenture and the Securities Restricted.
---------------------------------------------------
Subject to the provisions of Section 11.12 hereof, nothing
in this Indenture or the Securities, express or implied, shall
give or be construed to give to any Person, firm or corporation,
other than the parties hereto and the Holders, any legal or
equitable right, remedy or claim under or in respect of this
Indenture or under any covenant, condition, or provision herein
contained, all such covenants, conditions and provisions, subject
to Section 11.12 hereof, being for the sole benefit of the
parties hereto and of the Holders.
Section 11.12 Successors and Assigns.
----------------------
This Indenture and all obligations of the Company hereunder
shall be binding upon the successors and permitted assigns of the
Company, and shall, together with the rights and remedies of the
Trustee hereunder, inure to the benefit of the Trustee, the
Holders, and their respective successors and assigns. Any
assignment in violation hereof shall be null and void ab initio.
Section 11.13 Counterpart Originals.
---------------------
This Indenture may be signed in two or more counterparts,
each of which shall be deemed an original, but all of which shall
together constitute one and the same agreement.
Section 11.14 Severability.
------------
The provisions of this Indenture are severable, and if any
clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect in that jurisdiction
only such clause or provision, or part thereof, and shall not in
any manner affect such clause or provision in any other
jurisdiction or any other clause or provision of this Indenture
in any jurisdiction, and a Holder shall have no claim therefor
against any party hereto.
<PAGE>
44
Section 11.15 Effect of Headings.
------------------
The Article and Section headings and the Table of Contents
contained in this Indenture have been inserted for convenience of
reference only, and are and shall be without substantive meaning
or content of any kind whatsoever and are not a part of this
Indenture.
ARTICLE 12.
RELEASE OF COLLATERAL
Section 12.1 Release of Collateral.
---------------------
The Collateral securing the obligations evidenced by the
Securities shall be subject to release from the Lien of this
Indenture and the other Operative Documents from and to the
extent provided by this Indenture and the other Operative
Documents.
ARTICLE 13.
MANDATORY CONVERSION OF SECURITIES
Section 13.1 Mandatory Conversion and Conversion Price.
-----------------------------------------
(a) Subject to the other provisions of this Article 13, on
the Conversion Date, so long as no Default or Event of Default
shall then exist, each then Outstanding Security shall be
automatically converted into that number of fully paid and
non-assessable shares of Common Stock equal to the sum of (i) the
then outstanding principal amount of such Security, plus (ii)
accrued and unpaid interest and Special Interest, if any, on such
Security to the Conversion Date, divided by the product of (A)
1.00 multiplied by (B) the Closing Price per share of Common
Stock on the Trading Day immediately preceding the Conversion
Date (such product being hereinafter referred to as the
"Conversion Price"); provided, however, that the aggregate number
of shares of Common Stock issuable upon any such conversion shall
not exceed the Maximum Share Amount. If, on the Conversion Date,
the Company has taken all action required to authorize the
issuance of the Common Stock in conversion of the Securities and
no Default or Event of Default shall then exist, then,
notwithstanding that such Securities have not been Tendered, from
and after the Conversion Date, all of the Securities shall no
longer be deemed Outstanding and all rights relating to such
Securities shall terminate, except only the right to receive,
upon Tender of the Securities therefore, the Common Stock and
cash (if any) pursuant to the provisions hereof, and the Person
or Persons entitled to receive the Common Stock issuable upon the
conversion shall be treated for all purposes as the record holder
or holders of such Common Stock. If all the foregoing conditions
have been satisfied, interest and Special Interest, if any, will
cease to accrue on the Securities on the Conversion Date. Except
as expressly provided herein, no other payment or adjustment will
be made for dividends or distributions on shares of Common Stock
issued upon conversion which were declared for payment to holders
of Common Stock of record as of a date prior to the Conversion
Date.
<PAGE>
45
(b) As promptly as practicable on the Shelf Effective Date, the
Company shall send (or cause to be sent) a notice to each Holder
and the Trustee (which notice shall be sent to such Holder and
the Trustee by telex or telecopier if (with respect to such
Holder) such Holder has, at least five Business Days prior
thereto, provided such telex or telecopier information to the
Company or the Trustee), stating the Shelf Effective Date and, to
the extent then known, the following: (i) the Conversion Date,
(ii) the Conversion Price, (iii) the office or offices
(including, in any event, the office required to be maintained by
the Company pursuant to the first paragraph of Section 4.1) to
which the Securities should be Tendered for Common Stock, (iv)
that unless otherwise notified by such Holder, the certificate or
certificates of Common Stock issuable to such Holder on such
Conversion Date will be issued in the name of and delivered to
the address of such Holder as shown on the Register as of the
close of business of the Registrar on such Conversion Date and
(v) that interest and Special Interest, if any, will cease to
accrue on the Securities on the Conversion Date. Such a notice
containing the information in the foregoing clauses (i) through
(v) shall in any event be so sent as promptly as practicable on
the Conversion Date.
(c) As promptly as practicable (but in any event not later
than five Business Days) after receipt of a Security at any
office set forth in the notice referred to in paragraph (b)
above, the Company shall issue, execute and deliver to the Holder
of such Security, in such Holder's name and to such Holder's
address as shown on the Register as of the close of business of
the Registrar on the Conversion Date (or otherwise in accordance
with such Holder's written order received by the Company), a
certificate or certificates for the number of shares of Common
Stock resulting from such conversion, together with any cash
adjustment in lieu of fractional shares or cash payable as a
result of the Maximum Share Amount, as hereinafter provided.
(d) No fractional shares of Common Stock shall be issued
upon any conversion of Securities. In lieu of any fraction of a
share of Common Stock to which any Holder would otherwise be
entitled upon conversion of any Security, the Company shall pay
to such Holder (in accordance with paragraph (c) above) a cash
adjustment for such fraction in an amount equal to the same
fraction of the Conversion Price.
(e) The principal amount, if any, of any Security that
cannot be converted into Common Stock as a result of the Maximum
Share Amount (excluding any amount payable pursuant to paragraph
(d) above), shall be paid by the Company to the Holder thereof,
together with accrued and unpaid interest and Special Interest,
if any, thereon. Any such amounts shall be paid in cash in
accordance with paragraph (c) above.
Section 13.2 Effect of Consolidation, Merger or
----------------------------------
Conveyance on Conversion.
- ------------------------
(a) If any of the following shall occur, namely: (i) any
consolidation or merger to which the Company is a constituent
party other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification of,
or change (other than a change in name, or in par value, or from
par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination) in, outstanding
shares of Common Stock; (ii) any conveyance or transfer of all or
substantially all of the assets of the Company; or (iii) any
<PAGE>
46
share exchange pursuant to which all of the outstanding shares of
Common Stock are converted into or exchanged for other securities
or Property (including cash), then the Company, or such successor
or purchasing corporation, as the case may be, shall, as a
condition precedent to such consolidation, merger, conveyance,
transfer or share exchange, execute and deliver to the Trustee a
supplemental indenture providing that immediately after the
consummation of such consolidation, merger, conveyance, transfer
or share exchange, the Securities shall automatically convert
into and the Holder of each Security then outstanding shall have
the right thereafter to receive the kind and amount of shares of
stock and other securities and Property (including cash)
receivable upon such consolidation, merger, conveyance, transfer
or share exchange by a holder of the number of shares of Common
Stock deliverable upon conversion of such Security immediately
prior to the effective date of such consolidation, merger,
conveyance, transfer or share exchange, assuming that the Closing
Price is determined utilizing the Trading Day immediately prior
to such effective date. If, in the case of any such
consolidation, merger, conveyance, transfer or share exchange,
the stock or other securities and Property (including cash)
receivable thereupon by a holder of Common Stock include shares
of stock or other securities and Property of a corporation other
than the successor or purchasing corporation, as the case may be,
in such consolidation, merger, conveyance, transfer or share
exchange, then such supplemental indenture shall also be executed
by such other corporation and shall contain such additional
provisions to protect the interests of the Holders as the Board
of Directors shall reasonably consider necessary by reason of the
foregoing. If in connection with any such consolidation, merger,
conveyance, transfer, or share exchange each holder of shares of
Common Stock is entitled to elect to receive either securities,
cash or other assets (or any combination thereof) upon completion
of such transaction, the Company will provide or cause to be
provided to each Holder the right to elect to receive the
securities, cash or other assets into which the Securities held
by such Holder will be convertible after completion of any such
transaction on the same terms and subject to the same conditions
applicable to holders of the Common Stock (including, without
limitation, notice of the right to elect, limitations on the
period in which such election will be made and the effect of
failing to exercise the election). In the case of any such
consolidation, merger, conveyance, transfer or share exchange,
where the Holders of shares of Common Stock will be entitled to
receive securities upon completion of such transaction, the
Company will cause such successor or purchasers respectively to
provide that the securities issuable upon conversion of the
Securities will be freely transferable without any restrictions
imposed by federal, state or foreign securities laws. The
provisions of this Section 13.2 shall similarly apply to
successive consolidations, mergers, conveyances, transfers or
share exchanges. In the event the Company shall execute a
supplemental indenture pursuant to this Section 13.2, the Company
shall promptly file with the Trustee (x) an Officers' Certificate
briefly stating the reasons therefor, the kind or amount of
shares of stock or securities or Property (including cash)
receivable by Holders upon the automatic conversion of their
Securities immediately after any such consolidation, merger,
conveyance, transfer or share exchange, any adjustment to be made
with respect thereto and that all conditions precedent have been
complied with and (y) an Opinion of Counsel that all conditions
precedent have been complied with.
(b) The Trustee, subject to the provisions of Section 7.1,
shall not be responsible for any such consolidation, merger,
conveyance, transfer or share exchange, the form or substance of
any plan relating thereto, or the consequences thereof to any
Holder or the correctness of any
<PAGE>
47
provision contained in any such supplemental indenture relating
to the kind or amount of shares of stock or securities or
Property receivable by any Holder upon conversion of Securities
immediately after any such consolidation, merger, conveyance,
transfer or share exchange.
(c) As evidence of the kind and amount of stock or other
securities or Property into which Securities will be
automatically converted after any such consolidation, merger,
conveyance, transfer or share exchange, the Trustee, subject to
the provisions of Section 7.1, may accept the certificate of a
nationally recognized firm of independent public accountants with
respect thereto; and, in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely thereon, and shall
not be responsible or accountable to any Holder for any provision
in conformity therewith which may be contained in the said
supplemental indenture.
(d) The Company or the Trustee may retain accountants to
make any computation required under this Article 13, and the
certificate of a nationally recognized firm of independent public
accountants shall be conclusive evidence of the correctness of
any computation made under this Article 13.
Section 13.3 Costs of Conversion.
-------------------
The issuance of certificates for shares of Common Stock
issued upon the conversion of Securities shall be made without
charge to the Holders for such certificates or for any
documentary, stamp or similar issue or transfer tax in respect of
the issuance of such certificates; provided, however, that the
Company shall not be required to pay any such tax which may be
payable in respect of any transfer involved in the issuance and
delivery of any such certificate in a name other than that of the
Holder as shown on the Register as of the close of business of
the Registrar on the Conversion Date, and the Company shall not
be required to issue or deliver such certificates unless or until
the Person or Persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has
been paid. Nothing herein shall preclude any tax withholding
required by applicable law.
Section 13.4 No Liability to Trustee.
-----------------------
The Trustee shall not at any time be under any duty or
responsibility to any Holder to determine whether any facts exist
which may require any adjustment of the Conversion Price, or with
respect to the nature or extent of any such adjustment when made,
or with respect to the method employed, or herein or in any
supplemental indenture provided to be employed, in making the
same. The Trustee shall not be accountable with respect to the
validity or value (or the kind or amount) of any Common Stock or
of any securities or Property which may at any time be issued or
delivered upon the conversion of any Security; and it does not
make any representation with respect thereto. The Trustee shall
not be responsible for any failure of the Company to make any
cash payment or to issue, transfer or deliver any shares of
Common Stock or stock certificates or other securities or
Property upon the conversion of any Security or to comply with
any of the covenants of the Company contained in this Article 13.
<PAGE>
48
Section 13.5 Applicable Laws.
---------------
Anything herein to the contrary notwithstanding, the rights
and obligations of the Holders and the Company to convert the
Securities into Common Stock or to vote said stock shall be
subject to all applicable laws then in effect.
Section 13.6 Other Funds.
-----------
Anything elsewhere contained in this Indenture to the
contrary notwithstanding, any funds which at any time shall have
been deposited by the Company or on its behalf with the Trustee
or any other Paying Agent for the purpose of paying any
Securities which shall have been converted pursuant to the
provisions of this Article 13 into Common Stock, shall forthwith
upon such conversion be repaid upon demand to the Company by the
Trustee or such other Paying Agent.
Section 13.7 Release of Collateral Upon Conversion.
-------------------------------------
On or after the effectiveness of the conversion pursuant to
this Article 13, upon request by the Company and payment by the
Company of the Trustee's costs (including reasonable legal fees
and disbursements) incurred in complying with such Request, the
Trustee shall release from the Lien of the Operative Documents,
all right, title and interest of the Trustee in and to any
Collateral.
Section 13.8 Company to Provide Stock.
------------------------
The Company shall, prior to issuance of any Securities
hereunder, and from time to time as it may be necessary, reserve,
out of its authorized but unissued Common Stock, a sufficient
number of shares of Common Stock to permit the conversion of all
outstanding Securities into shares of Common Stock.
All shares of Common Stock delivered upon conversion of the
Securities shall be newly issued shares or treasury shares, shall
be duly authorized, validly issued, fully paid and nonassessable
and shall be free from preemptive rights and free of any lien or
adverse claim.
The Company will use its reasonable best efforts to list or
cause to have quoted all shares of Common Stock deliverable upon
conversion of the Securities on the American Stock Exchange and
each other national securities exchange or in the
over-the-counter market or such other market on which the Common
Stock is then listed or quoted.
<PAGE>
49
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, all as of the date first written above.
TRANS WORLD AIRLINES, INC.
By: /s/ Michael J. Lichty
--------------------------
Name: Michael J. Lichty
Title: Vice-President & Deputy
General Counsel
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Trustee
By: /s/ Arge Pavlos
--------------------------
Name: Arge Pavlos
Title: Assistant Trust Officer
<PAGE>
DEFINITIONS APPENDIX
Appendix I
To the Indenture between
Trans World Airlines, Inc.
and
First Security Bank, National Association, as Trustee
dated as of June 16, 1998
for the Company's 10 1/4% Mandatory Conversion
Equity Notes due 1999
and the Aircraft Second Mortgage and Security Agreement
dated as of an even date therewith
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Definitions................................... 1
Act........................................... 1
Affiliate..................................... 1
Agent......................................... 1
Aircraft...................................... 1
Aircraft Sale Agreement....................... 1
Airframe...................................... 1
Applicable Percentage......................... 1
Bankruptcy Law................................ 1
Bills of Sale................................. 2
Board of Directors............................ 2
Business Day.................................. 2
Capital Stock................................. 2
Capitalized Lease Obligation.................. 2
Certificated Air Carrier...................... 2
Certifying Officer............................ 2
Change in Control............................. 2
Closing Price................................. 3
Code.......................................... 3
Collateral.................................... 3
Common Stock.................................. 3
Company....................................... 3
Conversion Date............................... 3
Conversion Price.............................. 4
Corporate Trust Office........................ 4
Custodian..................................... 4
Default....................................... 4
Definitions Appendix.......................... 4
8% Preferred Stock............................ 4
Employee Preferred Stock...................... 4
Engine........................................ 4
ERISA......................................... 4
Event of Default.............................. 4
Exchange Act.................................. 4
FAA........................................... 4
FAA Bill of Sale.............................. 5
Federal Aviation Act.......................... 5
First Mortgage................................ 5
GAAP.......................................... 5
Holder or Holder of Securities................ 5
Indebtedness.................................. 5
(ii)
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
Indenture..................................... 6
Indenture Discharge Date...................... 6
Indenture Trustee............................. 6
Interest Payment Date......................... 6
Issue Date.................................... 6
Lazard........................................ 6
Legal Holiday................................. 6
Lien.......................................... 6
Maximum Share Amount.......................... 6
Mortgage...................................... 6
Mortgage Supplement........................... 6
9 1/4% Preferred Stock........................ 7
Notes Indenture............................... 7
Notes Trustee................................. 7
Obligations................................... 7
Offer to Purchase............................. 7
Officer....................................... 8
Officers' Certificate......................... 8
Operative Documents........................... 9
Opinion of Counsel............................ 9
Outstanding or outstanding.................... 9
Owner Trustee................................. 9
Parts......................................... 9
Paying Agent.................................. 10
Payment Date.................................. 10
Payments...................................... 10
Permitted Liens............................... 10
Person........................................ 11
Preferred Stock............................... 11
principal..................................... 11
Property...................................... 11
Record Date................................... 11
Register...................................... 11
Registrar..................................... 11
Registration Default.......................... 11
Registration Rights Agreement................. 11
Replacement Engine............................ 11
Request....................................... 12
Required Holders.............................. 12
SEC........................................... 12
Securities.................................... 12
Securities Act................................ 12
(ii)
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
Securityholder................................ 12
Seven Leasing................................. 12
Shelf Effective Date.......................... 12
Shelf Registration Statement.................. 12
Significant Subsidiary........................ 12
Special Interest.............................. 12
Special Record Date........................... 12
Stated Maturity............................... 12
Subsidiary.................................... 13
Taxes......................................... 13
10 1/4% Secured Notes......................... 13
Tender........................................ 13
TIA........................................... 13
Total Loss and Total Loss Date................ 13
Total Loss OTP Amount......................... 13
Trading Day................................... 13
Trust Agreement............................... 13
Trust Officer................................. 14
Trustee....................................... 14
TWA........................................... 14
U.S. or United States......................... 14
U.S. Government Obligations................... 14
Warranty Bill of Sale......................... 14
Section 2. Rules of Construction........................ 14
(iii)
<PAGE>
DEFINITIONS APPENDIX
Section 1. Definitions. Unless the context otherwise requires,
each of the terms included in this Section 1 shall have the
respective meanings given in this Section 1 for all purposes of
the Indenture and the other Operative Documents (including this
appendix and any other appendices, exhibits or schedules to any
thereof) and of such other agreements as may incorporate this
appendix by reference except as otherwise specifically provided
herein or therein.
"Act" means the Federal Aviation Act.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under
direct or indirect common control with such specified Person. For
the purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-Registrar
or co-Paying Agent.
"Aircraft" means the Airframe together with the two
associated Engines identified by manufacturer's serial number in
the Mortgage Supplement for the Airframe executed and delivered
on the Issue Date, whether or not any of such Engines may at any
time be installed on the Airframe or installed on any other
airframe.
"Aircraft Sale Agreement" means the Aircraft Sale and Note
Purchase Agreement, made and entered into as of the 16th day of
June, 1998, among the Company, the Owner Trustee, Seven Leasing
and Lazard.
"Airframe" means the Boeing Model 767-231 ETOPS airframe
(excluding any Engines and any other engines, but including any
and all Parts which may from time to time be incorporated or
installed in, or attached to such airframe, and including any and
all Parts removed therefrom so long as the removed Parts remain
subject to the Lien of the Mortgage under the terms thereof)
purchased by the Company under the Aircraft Sale Agreement and
identified by the FAA registration number and manufacturer's
serial number in the Mortgage Supplement executed and delivered
on the Issue Date.
"Applicable Percentage" means (i) with respect to any
amendment, supplement or waiver of the Indenture or any other
Operative Document that would (A) terminate the Lien of the
Mortgage with respect to any Collateral or permit the release of
any Collateral (other than releases permitted by the applicable
Operative Document, which releases shall not require any consent
of the Holders) or permit the creation of any Lien on any
Collateral (other than Permitted Liens), (B) increase the
aggregate principal amount of Securities that may be issued under
the Indenture or (C) modify this definition, 66 2/3%, and (ii)
otherwise, a majority.
"Bankruptcy Law" has the meaning provided in Section 6.1 of
the Indenture.
<PAGE>
2
"Bills of Sale" means the FAA Bill of Sale and the Warranty
Bill of Sale.
"Board of Directors" means the Board of Directors of the
Company or any committee of such board duly authorized to act in
respect of any particular matter.
"Business Day" means each day which is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations
or other equivalents of or interests in (however designated)
equity of such Person, including any Preferred Stock, but
excluding any debt securities convertible into such equity.
"Capitalized Lease Obligation" means, as applied to any
Person for any period, an obligation of such Person to pay rent
or other amounts under a lease that is required to be capitalized
for financial reporting purposes in accordance with GAAP, and the
amount of such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP.
"Certificated Air Carrier" means a United States "air
carrier" within the meaning of the Act, holding an air carrier
operating certificate issued pursuant to chapter 447 of the Act
and of the type referred to in 11 U.S.C. ss. 1110, or if such
certification shall cease to be available, a carrier of
comparable status under the laws of the United States then in
force.
"Certifying Officer" means an Officer or an assistant
secretary of the Company.
"Change in Control" means the occurrence of any of the
following events: (i) any person (including any entity or group
deemed to be a "person" under Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) is or becomes the direct or
indirect beneficial owner (as determined in accordance with Rule
13d-3 under the Exchange Act) of shares of the Company's Capital
Stock representing greater than 50% of the total voting power of
all shares of Capital Stock of the Company entitled to vote in
the election of directors of the Company under ordinary
circumstances or to elect a majority of the Board of Directors of
the Company, (ii) the Person then constituting the "Company"
under the Indenture sells, transfers or otherwise disposes of all
or substantially all of its assets (regardless of whether such
Person thereupon ceases to constitute the "Company" under the
Indenture pursuant to Section 5.2 thereof), (iii) when, during
any period of 12 consecutive months after the date of original
issuance of the Securities, individuals who at the beginning of
any such 12-month period constituted the Board of Directors
(together with any new directors whose election by such Board or
whose nomination for election by the stockholders of the Company
was approved by a vote of majority of the directors still in
office entitled to vote with respect to such nomination who were
either directors at the beginning of such period or whose
election or nomination for election was previously so approved,
but excluding any of the individuals who at the beginning of such
12-month period constituted such Board but who ceased to be a
member of the Board pursuant to the Company's mandatory
retirement policy as in effect as of the Issue Date), cease for
any reason to constitute a majority of the Board of Directors
then in office or (iv) the date of the consummation of the merger
or consolidation of the Person then constituting the "Company"
under the Indenture with another
<PAGE>
3
corporation where the stockholders of such Person, immediately
prior to the merger or consolidation, would not beneficially own,
immediately after the merger or consolidation, shares entitling
such stockholders to 50% or more of all votes (without
consideration of the rights of any class of stock to elect
directors by a separate class vote) to which all stockholders of
the corporation issuing cash or securities in the merger or
consolidation would be entitled in the election of directors or
where members of the Board of Directors of the Person then
constituting the "Company" under the Indenture, immediately prior
to the merger or consolidation, would not, immediately after the
merger or consolidation, constitute a majority of the board of
directors of the corporation issuing cash or securities in the
merger or consolidation.
"Closing Price" means, for any day, the last reported sales
price, regular way, per share of Common Stock, or, in case no
such reported sale takes place on such date, the average of the
reported closing bid and asked prices, regular way, per share of
Common Stock, in either case on the American Stock Exchange, or,
if the Common Stock is not listed or admitted to trading on the
American Stock Exchange, on the principal national securities
exchange on which the Common Stock is listed or admitted to
trading, or, if not listed or admitted to trading on any national
securities exchange, the closing sales price, regular way, of the
Common Stock as quoted by National Association of Securities
Dealers Automated Quotation System ('NASDAQ"), or, in case no
reported sale takes place, the average of the closing bid and
asked prices, regular way, as quoted by NASDAQ or any comparable
system, or, if the Common Stock is not quoted on NASDAQ or any
comparable system, the closing sales price, regular way, or, in
case no reported sale takes place, the average of the closing bid
and asked prices, regular way, as furnished by any two members of
the National Association of Securities Dealers, Inc. selected
from time to time by the Company for that purpose.
"Code" means the United States Internal Revenue Code of
1986, as amended from time to time, or any similar legislation of
the United States enacted to supersede, amend or supplement such
Code, and any reference to a provision or provisions of the Code
shall also mean and refer to any successor provision or
provisions, however designated or distributed.
"Collateral" has the meaning specified in Section 2.1 of
the Mortgage.
"Common Stock" includes any stock of any class of the
Company which has no preference in respect to 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; initially it refers
to the common stock, $0.01 par value, of the Company.
"Company" means the party named as such in the Indenture or
any obligor on the Securities until a successor replaces it
pursuant to the Indenture and thereafter means the successor.
"Conversion Date" means the first Business Day following
the earliest date on which either (a) both of the following
statements shall be true: (i) the Shelf Effective Date shall have
occurred and (ii) the Common Stock issuable on conversion of the
Equity Notes shall be listed on the American Stock Exchange or
such other stock exchange or market as the Common Stock
<PAGE>
4
of the
Company is then principally traded or (b) a transaction
contemplated by Section 13.2 (a) of the Indenture has been
consummated.
"Conversion Price" has the meaning provided in Section 13.1
of the Indenture.
"Corporate Trust Office" when used with respect to the
Trustee means the office of the Trustee at which at any
particular time its corporate trust business is administered and
which, at the Issue Date, is located at First Security Bank,
National Association, as Trustee, 79 South Main Street, Salt Lake
City, Utah 84111, Attention: Corporate Trust Services.
"Custodian" has the meaning provided in Section 6.1 of the
Indenture.
"Default" means any event which is, or after notice or
passage of time, or both, would be, an Event of Default.
"Definitions Appendix" means this Definitions Appendix
attached as Appendix I to the Indenture and the Mortgage and
constituting a part of the Indenture and each other Operative
Document.
"8% Preferred Stock" means the 8% Cumulative Convertible
Exchangeable Preferred Stock of the Company.
"Employee Preferred Stock" means the IFFA Preferred Stock,
the ALPA Preferred Stock and the IAM Preferred Stock of the
Company.
"Engine" means (i) each of the Pratt & Whitney Model
JT9D-7R4D aircraft engines identified by manufacturer's serial
number in the Mortgage Supplement executed and delivered on the
Issue Date, so long as a Replacement Engine shall not have been
substituted therefor pursuant to the Mortgage, and (ii) each
Replacement Engine, so long as another Replacement Engine shall
not have been substituted therefor pursuant to the Mortgage,
whether or not such engine or Replacement Engine, as the case may
be, is from time to time installed on the Airframe or installed
on another airframe, and including, in each case all Parts
incorporated or installed in or attached thereto and any and all
Parts removed therefrom so long as such Parts remain subject to
the Lien of the Mortgage under the terms thereof.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Event of Default" has the meaning provided in Section 6.1
of the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time.
"FAA" means the Federal Aviation Administration or similar
regulatory authority established to replace it.
<PAGE>
5
"FAA Bill of Sale" means the bill of sale for the Aircraft
on AC Form 8050-2 or such other form as may be acceptable to the
FAA for recordation with it, executed by the Owner Trustee in
favor of the Company.
"Federal Aviation Act" means Title 49 of the United States
Code, "Transportation," as amended from time to time, or any
similar legislation of the United States enacted in substitution
or replacement thereof. In the event there is enacted any
legislation replacing, modifying or repealing, in whole or in
part, the Federal Aviation Act, then the term "certificated,"
when used with reference to the Federal Aviation Act or any
particular provision thereof, shall mean authorized to provide,
or not prohibited from providing, air transportation services.
"First Mortgage" means the Aircraft Mortgage and Security
Agreement, dated as of the Issue Date, between the Company and
the Notes Trustee, securing, among other things, the obligations
of the Company under the Notes Indenture.
"GAAP" means generally accepted accounting principles in
the United States of America as in effect as of the Issue Date,
including those set forth in (i) the opinions and pronouncements
of the Accounting Principles Board of the American Institute of
Certified Public Accountants, (ii) statements and pronouncements
of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant
segment of the accounting profession and (iv) the rules and
regulations of the SEC governing the inclusion of financial
statements (including pro forma financial statements) in periodic
reports required to be filed pursuant to Section 13 of the
Exchange Act, including opinions and pronouncements in staff
accounting bulletins and similar written statements from the
accounting staff of the SEC.
"Holder" or "Holder of Securities" means the Person in
whose name a Security is registered on the Registrar's books.
"Indebtedness" means, with respect to any Person at any
date, without duplication, (a) all indebtedness, obligations and
other liabilities (contingent or otherwise) of such Person for
borrowed money (whether or not the recourse of the lender is to
the whole of the assets of such Person or only to a portion
thereof), (b) all obligations and other liabilities (contingent
or otherwise) of such Person evidenced by bonds, notes or other
similar instruments, (c) all obligations and other liabilities
(contingent or otherwise) of such Person in respect of letters of
credit or other similar instruments (and reimbursement
obligations with respect thereto), (d) all obligations and other
liabilities (contingent or otherwise) of such Person to pay the
deferred and unpaid purchase price of property or services (other
than any such obligations that represent trade payables or
accrued expenses incurred in the ordinary course of business),
(e) all Capitalized Lease Obligations of such Person, (f) all
Indebtedness of others secured by a Lien on any asset or assets
of such Person, whether or not such Indebtedness is assumed by
such Person (and, if not assumed, such Indebtedness shall be
limited to the fair market value of such asset or assets as
determined on the date such Indebtedness was incurred), and (g)
all Indebtedness of others guaranteed by such Person to the
extent of such guarantee. The amount of Indebtedness of any
Person at any date shall be the outstanding balance at such date
of all unconditional obligations as described above and the
maximum liability of such Person for any such contingent
obligations
<PAGE>
6
at such date. A change in GAAP that results in an obligation of
the Company existing at the time of such change becoming
Indebtedness shall not be deemed an incurrence of such
Indebtedness.
"Indenture" means the Indenture dated as of the Issue Date
between the Company and the Trustee, under which the Securities
are issued, as amended or supplemented from time to time.
"Indenture Discharge Date" means the date of the
effectiveness of the termination of the Company's obligations
under the Indenture pursuant to Section 8.1(a) or (b) thereof.
"Indenture Trustee" means the Trustee.
"Interest Payment Date" means (a) so long as no
Registration Default exists, the date on which the Securities
mature and (b) upon the occurrence of a Registration Default, the
15th day of each month during which any Security is Outstanding
(commencing the 15th day of the month next succeeding the month
in which such Registration Default occurs) and the date on which
the Securities mature, if different.
"Issue Date" means June 16, 1998 (the date on which the
Securities are originally issued).
"Lazard" means Lazard Freres & Co. LLC, a New York limited
liability company.
"Legal Holiday" means a Saturday, Sunday or any other day
on which banks located in New York City or the city and state of
the Trustee's Corporate Trust Office as of the Issue Date are
authorized or obligated by law to remain closed.
"Lien" means any conveyance in trust, assignment, mortgage,
pledge, security interest, encumbrance, lien or charge of any
kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Maximum Share Amount" means the maximum number of shares
of Common Stock that can be issued upon conversion of the
Securities on the Conversion Date without causing the Company to
be (without prior stockholder approval) in violation of any
applicable listing requirement of the American Stock Exchange.
"Mortgage" means the Aircraft Second Mortgage and Security
Agreement, dated as of the Issue Date, between the Company and
the Trustee in substantially the form attached to the Indenture
as Exhibit B.
"Mortgage Supplement" means (i) the Second Mortgage and
Security Agreement Supplement executed and delivered on the Issue
Date for the Aircraft, in substantially the form attached to the
Mortgage as Exhibit A, which describes with particularity the
Airframe and Engines associated with the Aircraft, (ii) each
other Second Mortgage and Security Agreement Supplement from time
to time executed and delivered, in substantially the form
attached to the Mortgage as Exhibit A, which shall describe with
particularity any Replacement Engine and (iii) any other
supplement to the Mortgage from time to time executed and
delivered in accordance with the provisions of the Mortgage or
any other Operative Document.
<PAGE>
7
"9 1/4% Preferred Stock" means the 9 1/4% Cumulative
Convertible Exchangeable Preferred Stock of the Company.
"Notes Indenture" means the Indenture dated as of the Issue
Date between the Company and First Security Bank, National
Association, as trustee, pursuant to which the Company is issuing
the 10 1/4% Secured Notes.
"Notes Trustee" means First Security Bank, National
Association, as trustee under the Notes Indenture, and its
successors and assigns in such capacity.
"Obligations" has the meaning provided in Section 2.1 of
the Mortgage.
"Offer to Purchase" means an offer to purchase all or a
portion, as the case may be, of the Securities by the Company
from the Holders commenced by the mailing (by first class mail,
postage prepaid) by the Company (or if requested by the Company
on at least five Business Days' prior notice to the Trustee and
at the Company's expense, by the Trustee) of a notice to each
Holder (and, if mailed by the Company, to the Trustee) at such
Holder's address appearing in the Register, stating: (i) the
covenant pursuant to which the offer is being made and that all
Securities validly tendered will be accepted for payment; (ii)
the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed) (the "Payment Date"); (iii) that
any Security not tendered will continue to accrue interest and
Special Interest (if any) pursuant to its terms; (iv) that,
unless the Company defaults in the payment of the purchase price
on the Payment Date, any Security accepted for payment pursuant
to the Offer to Purchase shall cease to accrue interest or
Special Interest (if any) on and after the Payment Date; (v) that
Holders electing to have a Security purchased pursuant to the
Offer to Purchase will be required to surrender the Security,
together with the form entitled "Option of the Holder to Elect
Purchase" attached to or on the reverse side of the Security
completed, to the Paying Agent at the address specified in the
notice at any time beginning with the date of such notice but
prior to the close of business on the Business Day immediately
preceding the Payment Date, and such Holder shall be entitled to
receive from the Paying Agent a non-transferable receipt of
deposit evidencing such deposit; (vi) that, unless the Company
defaults in making the payment of the purchase price or shall
otherwise, in its sole discretion, consent thereto, Holders will
be entitled to withdraw their election only if the Trustee
receives, not later than the close of business on the fifth
Business Day immediately preceding the Payment Date, a telegram,
facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Securities delivered for purchase
and a statement that such Holder is withdrawing his election to
have such Securities purchased; and (vii) that Holders whose
Securities are being purchased only in part will be promptly
issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered (which new
Securities, if such Offer to Purchase is being made pursuant to
Section 4.12(c) of the Indenture, will cease to be secured by the
Collateral); provided that each Security purchased and each new
Security issued shall be in a principal amount of $1,000 or
integral multiples thereof. The Company shall place such notice
in the national edition of The New York Times or The Wall Street
Journal or, if such newspapers are not then in circulation, in a
financial newspaper of general circulation in New York City. No
failure of the Company to give the foregoing notice shall limit
any Holder's
<PAGE>
8
right to exercise a repurchase right. On the Payment Date, the
Company shall (i) accept for payment Securities or portions
thereof tendered pursuant to an Offer to Purchase; (ii) deposit
with the Trustee money sufficient to pay the purchase price of
all Securities or portions thereof so accepted; and (iii)
deliver, or cause to be delivered, to the Trustee all Securities
or portions thereof so accepted together with an Officers'
Certificate specifying the Securities or portions thereof
accepted for payment by the Company. The Trustee shall promptly
mail to the Holders of Securities so accepted payment in an
amount equal to the purchase price, and the Trustee shall
promptly authenticate, and the Company shall promptly execute and
mail (or cause to be mailed) to such Holders a new Security equal
in principal amount to any unpurchased portion of the Securities
surrendered; provided that each Security purchased and each new
Security issued shall be in a principal amount of $1,000 or
integral multiples thereof; provided, further, that if the
Payment Date is between a regular Record Date and the next
succeeding Interest Payment Date, Securities to be repurchased
must be accompanied by payment of an amount equal to the interest
and Special Interest, if any, payable on such succeeding Interest
Payment Date on the principal amount to be repurchased, and the
interest on the principal amount of the Security being
repurchased, and Special Interest, if any, with respect thereto,
will be paid on such next succeeding Interest Payment Date to the
registered holder of such Security on the immediately preceding
Record Date. A Security repurchased on an Interest Payment Date
need not be accompanied by any such payment, and the interest on
the principal amount of the Security being repurchased and
Special Interest, if any, with respect thereto, will be paid on
such Interest Payment Date to the registered holder of such
Security on the corresponding Record Date. The Company will
publicly announce the results of an Offer to Purchase as soon as
practicable after the Payment Date. The Trustee shall act as the
Paying Agent for an Offer to Purchase. The Company will comply
with Rule 14e-l under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and
regulations are applicable, in the event that the Company is
required to repurchase Securities pursuant to an Offer to
Purchase. Both the notice of the Company and the notice of the
Holder having been given as specified above, the Securities so to
be repurchased shall, on the Payment Date become due and payable
at the purchase price applicable thereto and from and after such
date (unless the Company shall default in the payment of such
purchase price) such Securities shall cease to bear interest or
Special Interest (if any). If any Security shall not be paid upon
surrender thereof for repurchase, the principal shall, until
paid, bear interest and Special Interest (if any) from the
Payment Date at the rate and in accordance with the provisions
set forth in such Security and the Indenture. Any Security which
is to be submitted for repurchase only in part shall be delivered
pursuant to the above provisions with (if the Company or Trustee
so requires) due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or such Holder's attorney duly
authorized in writing.
"Officer" means the Chairman of the Board, the President,
any Vice President of any grade, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Secretary or the
Controller of the Company.
"Officers' Certificate" means a certificate signed by an
Officer and by a Certifying Officer satisfying the requirements
of Sections 11.4 and 11.5 of the Indenture.
<PAGE>
9
"Operative Documents" means the Indenture, the Mortgage and
the Mortgage Supplements.
"Opinion of Counsel" means a written opinion from the
General Counsel of the Company, legal counsel to the Company or
another legal counsel who is reasonably acceptable to the
Trustee, which Opinion of Counsel shall comply with Sections 11.4
and 11.5 of the Indenture. The counsel may be an employee of the
Company. The acceptance by the Trustee (without written objection
to the Company during the fifteen (15) Business Days following
receipt) of, or its action on, an opinion of counsel not
specifically referred to above shall be sufficient evidence that
such counsel is acceptable to the Trustee.
"Outstanding" or "outstanding" when used with respect to
Securities or a Security, means all Securities theretofore
authenticated and delivered under the Indenture, except:
(a) Securities theretofore canceled by the Trustee,
delivered to the Trustee for cancellation or converted in
accordance with Article 13 of the Indenture;
(b) Securities for which payment has been deposited
with the Trustee or any Paying Agent in trust other than
deposits pursuant to Section 8.1 of the Indenture; and
(c) Securities which have been paid, or for which
other Securities shall have been authenticated and
delivered in lieu thereof or in substitution therefor
pursuant to the terms of Section 2.7 of the Indenture,
unless proof satisfactory to the Trustee is presented that
any such Securities are held by holders in due course.
A Security does not cease to be Outstanding because the Company
or one of its Affiliates holds the Security; provided, however,
that in determining whether the Holders of the requisite
aggregate principal amount of Securities Outstanding have given
any request, demand, authorization, direction, notice, consent or
waiver under the Indenture, Section 2.8 of the Indenture shall be
applicable.
"Owner Trustee" means First Security Bank, National
Association (f/k/a First Security Bank of Utah, National
Association), not in its individual capacity (except as otherwise
expressly set forth) but as trustee under the Trust Agreement.
"Parts" means any and all appliances, parts, spare parts,
instruments, appurtenances, accessories, furnishings, seats and
other equipment of whatever nature (other than Engines or
engines) which may from time to time be incorporated or installed
in or attached to the Airframe or any Engine, or which have been
removed therefrom but which remain subject to the Lien of the
Mortgage in accordance with the terms thereof, exclusive of any
items (i) permitted by the Mortgage to be leased by the Company
in the ordinary course of business from third parties (and
installed without discrimination with respect to other Boeing
Model 767-231 ETOPS aircraft (or improved models) owned or
operated by the Company) and (ii) not required in the navigation
of the Aircraft. The terms "spare parts" and "appliances" (as
used in this definition) shall include, but not be limited to,
the definitions assigned to those terms by Section 40102 of Title
49 of the
<PAGE>
10
United States Code as amended from time to time or any recodifi-
cation thereof or any regulation of the FAA.
"Paying Agent" has the meaning provided in Section 2.3 of
the Indenture, except that for the purposes of Article 8 of the
Indenture and any Offer to Purchase, the Paying Agent shall not
be the Company.
"Payment Date" with respect to any Offer to Purchase, has
the meaning specified in the definition herein of Offer to
Purchase.
"Payments" means such monies as the Company shall cause to
be delivered to the Trustee or any Paying Agent for the purpose
of paying principal or purchase price of, or interest on or
Special Interest, if any, with respect to, the Securities on any
Interest Payment Date, Payment Date or acceleration; and "Pay"
means paying such monies.
"Permitted Liens" shall mean any of the following Liens:
(a) Liens in favor of the Trustee arising by reason of
the Mortgage or any other Operative Document and Liens in
favor of the Notes Trustee arising by reason of the First
Mortgage or any other Operative Document (as defined in the
Notes Indenture);
(b) Liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter
payable without penalty or being contested by the Company
in good faith by appropriate proceedings and for which
adequate reserves have been established if required in
accordance with GAAP, and which Lien presents no material
risk of sale, forfeiture or loss of any Collateral;
(c) Liens of carriers, warehousemen, mechanics,
materialmen and landlords incurred in the Company's
ordinary course of business for sums not overdue or being
contested by the Company in good faith by appropriate
proceedings and for which adequate reserves have been
established if required in accordance with GAAP, and which
Lien presents no material risk of sale, forfeiture or loss
of any Collateral;
(d) Liens incurred in the ordinary course of business
in connection with workmen's compensation, unemployment
insurance or other forms of governmental insurance or
benefits, or to secure performance of tenders and statutory
obligations entered into in the ordinary course of business
or to secure obligations on surety or appeal bonds;
(e) judgment Liens (so long as the related judgments
do not, individually or in the aggregate, constitute an
Event of Default) in existence less than sixty (60) days
after the entry thereof or with respect to which execution
has been stayed or the payment of which is covered in full
by insurance;
<PAGE>
11
(f) Liens on the Aircraft in favor of a permitted
lessee of the Aircraft which result solely from the lease
(so long as it is a permitted lease under the Mortgage) on
the Aircraft; and
(g) Liens on the Aircraft which are "Permitted Liens"
arising under, and defined by definitions substantially
similar to above subparagraphs (b) and (c) in, the lease
(if any) for the Aircraft; provided, however, that such
lease is permitted under the Mortgage.
"Person" means any individual, corporation, partnership,
limited liability issuer, joint venture, association, joint-stock
issuer, trust, unincorporated organization, government or any
agency or political subdivision thereof or any other entity.
"Preferred Stock" as applied to the Capital Stock of any
Person means Capital Stock of any class or classes (however
designated) which is preferred as to the payment of dividends or
distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such
Person.
"principal" of a Security means the principal of the
Security plus the premium, if any, payable on the Security which
is due or overdue or is to become due at the relevant time.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, present or future, or
tangible or intangible.
"Record Date" means the fifteenth (15th) day preceding any
Interest Payment Date, whether or not a Business Day.
"Register" has the meaning provided in Section 2.3 of the
Indenture.
"Registrar" has the meaning provided in Section 2.3 of the
Indenture.
"Registration Default" means the occurrence of any of the
following events: (a) the Company shall fail to file with the SEC
the Shelf Registration Statement on or before the sixtieth (60th)
day following the Issue Date, (b) the Shelf Effective Date shall
not occur on or before the one hundred and fiftieth (150th) day
following the Issue Date or (c) the Company shall fail to list,
on or prior to the Shelf Effective Date, the Common Stock
issuable on conversion of the Equity Notes on the American Stock
Exchange or such other stock exchange or market as the Common
Stock of the Company is then principally traded.
"Registration Rights Agreement" means the Registration
Rights Agreement, made and entered into as of the Issue Date, by
and among the Company, the Owner Trustee and Lazard, relating to
the shares of Common Stock to be issuable upon conversion of the
Securities.
"Replacement Engine" means a Pratt & Whitney Model
JT9D-7R4D aircraft engine (or engine of the same or another
manufacturer of a comparable or an improved model and suitable
for installation and use on the Airframe) (i) which has a value,
utility and remaining useful life at
<PAGE>
12
least equal to the Engine which it is replacing, assuming such
Engine was of the value and utility required by the terms of the
Mortgage; provided that any such engine shall be of the same make
and model as the other engine then installed on the Airframe,
shall be an engine model then being utilized by the Company on
other Boeing Model 767-231 ETOPS aircraft operated by the Company
and, for so long as such engine has been operated by the Company,
shall have been maintained, serviced, repaired and overhauled in
substantially the same manner as the Company maintains, services,
repairs and overhauls similar engines utilized by the Company,
and (ii) which shall have been made subject to the Lien of the
Mortgage pursuant to Section 2 and Section 3.3 of the Mortgage.
"Request" means a written request for the action therein
specified signed on behalf of the Company by any Officer and
delivered to the Trustee. Each Request shall be accompanied by an
Officers' Certificate if and to the extent required by Section
11.4 of the Indenture.
"Required Holders" means from time to time the Holders of
the Applicable Percentage in principal amount of the Securities
then Outstanding.
"SEC" means the Securities and Exchange Commission and any
government agency succeeding to its functions.
"Securities" means the "Securities" (as defined in the
preamble to the Indenture and includes the Company's 10 1/4%
Mandatory Conversion Equity Notes due 1999), as amended or
supplemented from time to time, that are issued under the
Indenture.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Seven Leasing" means 767 Leasing HY, LLC, a Delaware
limited liability company.
"Shelf Effective Date" means the date that the Shelf
Registration Statement shall become effective as declared by the
SEC.
"Shelf Registration Statement" has the meaning provided in
Section 3(a) of the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary which is a
Significant Subsidiary within the meaning of Article I of
Regulation S-X under the Exchange Act.
"Special Interest" has the meaning provided in Paragraph
No. 1 of the Form of Reverse Side of Security attached to the
Indenture as part of Exhibit A.
"Special Record Date" has the meaning provided in Section
2.1 of the Indenture.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the
final payment of principal of such security is due and payable,
<PAGE>
13
including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening
of any contingency unless such contingency has occurred).
"Subsidiary" means, in respect of any Person, any
corporation, association, partnership or other business entity of
which more than 50% of the total voting power of shares of
Capital Stock or other interests (including membership or
partnership interests) entitled (without regard to the occurrence
of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by (i) such Person, (ii) such Person and
one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.
"Taxes" means any and all fees (including, without
limitation, license, documentation and registration fees), taxes
(including, without limitation, income, gross receipts, sales,
rental, use, turnover, value-added, property (tangible and
intangible), excise and stamp taxes), levies, imposts, duties,
recording charges or fees, charges, assessments or withholdings
of any nature whatsoever, together with any and all assessments,
penalties, additions to tax, fines or interest thereon.
"10 1/4% Secured Notes" means the 10 1/4% Senior Secured
Notes due 2003 of the Company issued concurrently with the
Securities.
"Tender" means, with respect to any Security, the effective
tender of such Security (in whole or in part) for repurchase or
conversion in accordance with the provisions of the Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture;
provided, however, that in the event the Trust Indenture Act of
1939 is amended after such date, "Trust Indenture Act" means, to
the extent required by any such amendment, the Trust Indenture
Act of 1939 as so amended.
"Total Loss" and "Total Loss Date" have the meanings
provided in Section 1.1 of the Mortgage.
"Total Loss OTP Amount" has the meaning provided in Section
4.12 of the Indenture.
"Trading Day" means, with respect to any Common Stock, each
Monday, Tuesday, Wednesday, Thursday and Friday, other than any
day on which securities are not generally traded on the exchange
or market in which such Common Stock is principally traded.
"Trust Agreement" means the Trust Agreement N607TW, dated
as of March 28, 1995, between Seven Leasing, as assignee of ING
Lease Delaware, Inc. (f/k/a Internationale Nederlanden Aviation
Lease Delaware, Inc.), and First Security Bank, National
Association (f/k/a First Security Bank of Utah, National
Association), not in its individual capacity, except as expressly
stated therein, but solely as trustee thereunder.
<PAGE>
14
"Trust Officer" means any officer in the corporate trust
department of the Trustee, or any other officer or assistant
officer of the Trustee assigned by the Trustee to administer its
corporate trust matters.
"Trustee" means the party named as such in the Indenture
until a successor replaces it in accordance with the provisions
of the Indenture and thereafter means the successor.
"TWA" means the Company.
"U.S." or "United States" means the United States of
America.
"U.S. Government Obligations" means securities which are
(i) direct obligations of the United State government or (ii)
obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States government, are
full faith and credit obligations of the United States government
and are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a
bank or trust Company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or
principal of any such U.S. Government Obligation held by such
custodian for the account of the holder of a depository receipt,
provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the
specific payment of interest on or principal of the U.S.
Government Obligation evidenced by such depository receipt.
"Warranty Bill of Sale" means, the warranty (as to title)
bill of sale covering the Aircraft executed by the Owner Trustee
in favor of the Company.
Section 2. Rules of Construction. Unless the context otherwise
requires, the following rules of construction shall apply to all
purposes of the Indenture and the other Operative Documents
(including this appendix) and of such agreements as may
incorporate this appendix by reference.
(a) a term has the meaning assigned to it;
(b) whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and
neuter forms;
(c) the words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without
limitation";
(d) all terms used in Article 9 of the Uniform
Commercial Code as in effect in the State of New York that
are used but not defined herein shall have the meaning
assigned to such terms therein;
(e) references to a specific Person shall include the
Person and (except as limited by any agreement by which
such Person is bound) the successors and assigns of such
Person;
<PAGE>
15
(f) references to "applicable laws" shall include
statutes, ordinances, rules, regulations, court and
administrative decisions and conditions, restrictions and
limitations in licenses, permits, approvals and
authorizations issued or granted by federal, state or local
United States or foreign governmental bodies and agencies;
(g) unless otherwise specified in the computation of a
period of time from a specified date to a later specified
date, the word "from" means "from and including", and the
words "to" and "until" each mean "to but excluding";
(h) words in the singular include the plural, and
words in the plural include the singular;
(i) provisions apply to successive events and
transactions;
(j) "herein", "hereto" and other words of similar
import in any agreement refer to that agreement as a whole
and not to any particular Article, Section or other
subsection of that agreement;
(k) unless otherwise specified, all references in any
Operative Document to Sections, Articles, Exhibits,
Appendices and Schedules are to Sections of, Articles of,
Exhibits to, Appendices to and Schedules to such Operative
Document;
(l) all accounting terms used herein and not expressly
defined shall have the meanings given to them in accordance
with GAAP; and
(m) unless otherwise specified, references in this
Definitions Appendix to any instrument, contract, agreement
or other document shall be deemed to be references to such
instrument, agreement or other document as it may be
amended, restated, supplemented or otherwise modified from
time to time pursuant to and as permitted by the terms
thereof, whether or not so stated in any particular
definition.
<PAGE>
EXHIBIT A
to
INDENTURE
[FORM OF FACE OF SECURITY]
[Restricted Securities Legend]
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT, OR ANY STATE SECURITIES LAWS. NEITHER THESE
SECURITIES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
THE HOLDER OF THESE SECURITIES BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL, OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE RESALE RESTRICTION TERMINATION DATE WHICH
IS THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE DATE OF
ORIGINAL ISSUANCE OF THESE SECURITIES AND THE LAST DATE ON WHICH
THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THESE SECURITIES (OR ANY PREDECESSOR OF THESE SECURITIES) ONLY
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (a)(1), (2) (3), OR (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED
INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE, OR TRANSFER (i) PURSUANT TO CLAUSES (C) OR
(D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM ATTACHED TO OR ON THE REVERSE
SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.
<PAGE>
2
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL
DELIVER TO THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS
THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.
<PAGE>
3
No. CUSIP No.
$
10 1/4% Mandatory Conversion Equity Note due 1999
TRANS WORLD AIRLINES, INC., a Delaware corporation
promises to pay to __________, or registered assigns, the
principal sum of __________ Dollars on June 15, 1999.
Interest Payment Dates: (a) So long as no Registration
Default exists, the date on which the Securities mature and (b)
upon the occurrence of a Registration Default, the 15th day of
each month during which any Security is Outstanding (commencing
the 15th day of the month next succeeding the month in which such
Registration Default occurs) and the date on which the Securities
mature, if different.
Record Dates: The 15th day preceding any Interest
Payment Date, whether or not a Business Day.
Additional provisions of this Security are set forth
on the other side of this Security.
Dated:
TRANS WORLD AIRLINES, INC.
By: _______________________
Name:
Title:
Attest:
_______________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
First Security Bank,
National Association,
as Trustee, certifies
that this is one of the
Securities referred to
in the Indenture.
By:_______________________
Authorized Signatory
<PAGE>
4
[FORM OF REVERSE SIDE OF SECURITY]
10 1/4% Mandatory Conversion Equity Note due 1999
This Security is one of a duly authorized issue of
securities of the Company designated as its 10 1/4% Mandatory
Conversion Equity Notes due 1999 (hereinafter called the
"Securities"), limited in aggregate principal amount Outstanding
to $13,000,000, issued or to be issued pursuant to an Indenture,
dated as of June 16, 1998 (hereinafter called the "Indenture")
between the Company and First Security Bank, National
Association, as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture).
1. Interest; Special Interest. The Company promises to pay
interest on the principal amount of this Security at the rate of
ten and one-quarter percent (10 1/4%) per annum; provided,
however, that upon a Registration Default (and for so long as
such Registration Default shall continue uncured and unwaived)
(each period during which a Registration Default has occurred and
is continuing referred to herein as a "Registration Default
Period"), additional interest will accrue on this Security at a
per annum rate of 0.50% for the first 90 days of the Registration
Default Period, at a per annum rate of 1.0% for the second 90
days of the Registration Default Period, at a per annum rate of
1.5% for the third 90 days of the Registration Default Period and
at a per annum rate of 1.5% thereafter for the remaining portion
of the Registration Default Period (such additional interest is
referred to herein as "Special Interest"). The Company will pay
interest and Special Interest, if any, on the Interest Payment
Dates set forth on the face of this Security. Interest on the
Securities will accrue from June 16, 1998 or the most recent
Interest Payment Date to which interest and Special Interest, if
any, have been paid. Interest will be computed on the basis of a
360-day year of twelve 30-day months. The Company and each Holder
of a Security, by the acceptance hereof, agree that in the event
a Registration Default shall occur and be continuing and the
Company shall have failed to use its reasonable best efforts to
avoid or cure such Registration Default, Holders shall be
entitled to make a claim for damages incurred as a result of such
Registration Default, which damages shall not necessarily be
limited to the increases in the interest rate set forth herein;
provided, however, that any amount of interest paid pursuant to
this provision shall be credited against any amount of damages to
be paid by the Company in connection with such claim.
2. Method of Payment. Subject to the provisions of
paragraph 8 hereof, the Company will pay interest on and Special
Interest, if any, with respect to, the Securities (except
defaulted interest and interest on defaulted principal) to the
persons who are registered Holders of Securities at the close of
business on the Record Date set forth on the face of this
Security next preceding the applicable Interest Payment Date.
Defaulted interest and interest on defaulted principal will be
paid by the Company in accordance with the applicable provisions
of the Indenture. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay
principal and interest and Special Interest, if any, at the
office or agency of the Company maintained for that purpose in
the Borough of Manhattan, The City of New York and at any other
office or agency maintained by the Company for such purpose in
money of the United States that at the time of payment is legal
tender for payment of public and private
<PAGE>
5
debts; provided, however, that at the option of the Company,
payment of interest on and Special Interest, if any, with respect
to, the Securities may be by check payable in such money and
mailed to a Holder's registered address; provided further,
however, that payments on a certificated Security will be made by
wire transfer to a U.S. dollar account maintained by a Holder
with a bank in New York City if such Holder owns at least
$250,000 in aggregate principal amount of certificated Securities
and elects payment by wire transfer by giving written notice to
the Company and the Trustee to such effect designating such
account no later than 10 days immediately preceding the relevant
due date for payment (or such other date as the Company and the
Trustee may accept in their discretion). If a payment date is a
legal holiday at a place of payment, payment may be made at that
place on the next succeeding Business Day, and no interest shall
accrue for the intervening period.
3. Registrar, Paying Agent and Tender Agent. Initially, the
Trustee will act as Registrar and Paying Agent. The Company may
change any Paying Agent or Registrar or co-registrar without
prior notice to any Securityholder. The Company may act in any
such capacity, except in certain circumstances.
4. Indenture. The Company issued the Securities under the
Indenture. The terms of the Securities include those stated in
the Indenture and those made applicable to the Indenture by the
TIA. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and such Act for a
statement of such terms. Until converted as described in
paragraph 8 hereof and in the Indenture and subject to paragraph
6 hereof, the Securities are senior secured obligations of the
Company limited to $13,000,000 aggregate principal amount, except
as otherwise provided in the Indenture. Terms used in this
Security and not defined in this Security shall have the meaning
set forth in Section 1 of the Definitions Appendix attached as
Appendix I to the Indenture, which shall be a part of this
Security as if fully set forth in this place. The rules of
construction for this Security are set forth in Section 2 of the
Definitions Appendix.
5. Redemption. This Security is not subject to redemption
in whole or in part at any time.
6. Security. The Securities are secured by second priority
Liens on certain Properties of the Company pursuant to the
Mortgage and the other Operative Documents described in the
Indenture and such Liens are subject to release as provided
herein and in the Mortgage and the other Operative Documents.
Enforcement of the Lien of the Mortgage is limited to an
aggregate amount of Obligations not exceeding $10,250,000 and is
further restricted due to its second priority status, as more
fully set forth in the Mortgage, and each Holder, by accepting a
Security, agrees to all the provisions thereof.
7. Offers to Purchase. In the event that there shall occur
a Change in Control, the Company shall make an Offer to Purchase
all of the Outstanding Securities, at a purchase price equal to
101% of the aggregate principal amount of the Securities
Outstanding, plus accrued and unpaid interest, if any, to and
including the repurchase date. The right to require such
repurchase of Securities shall not continue after a discharge of
the Company from its obligations with respect to the Securities
in accordance with Article 8 of the Indenture. The Company shall
<PAGE>
6
commence such Offer to Purchase within thirty (30) days after the
occurrence of a Change in Control.
In the event that there shall occur a Total Loss with
respect to any Aircraft, the Company shall (subject to the
provisions of Section 4.12 of the Indenture) make an Offer to
Purchase an aggregate principal amount of Outstanding Securities
(the "Total Loss OTP Amount") equal to the aggregate principal
amount of the Securities Outstanding on the date such Offer to
Purchase (if any) is required to be commenced under the
Indenture, at a purchase price equal to 100% of the aggregate
principal amount of Securities to be purchased, plus accrued and
unpaid interest and Special Interest, if any, on such Securities,
to and including the Payment Date, and the Aircraft shall be
released from the Lien of the Operative Documents in accordance
with the provisions thereof. The Company shall commence such
Offer to Purchase (if any) within thirty (30) days after the
Total Loss Date with respect to any such Total Loss. The Company
may receive credit against any or all of the Total Loss OTP
Amount for open market purchases of Securities as provided in the
Indenture.
"Offer to Purchase" means an offer to purchase all, or a
portion, as the case may be, of the Securities by the Company
from the Holders commenced by the mailing (by first class mail,
postage prepaid) by the Company (or, if requested by the Company
on at least five Business Days' prior notice to the Trustee and
at the Company's expense, by the Trustee) of a notice to each
Holder (and, if mailed by the Company, to the Trustee) at such
Holder's address appearing in the Register, stating: (i) the
covenant pursuant to which the offer is being made and that all
Securities validly tendered will be accepted for payment; (ii)
the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed) (the "Payment Date"); (iii) that
any Security not tendered will continue to accrue interest and
Special Interest (if any) pursuant to its terms; (iv) that,
unless the Company defaults in the payment of the purchase price
on the Payment Date, any Security accepted for payment pursuant
to the Offer to Purchase shall cease to accrue interest or
Special Interest, if any, on and after the Payment Date; (v) that
Holders electing to have a Security purchased pursuant to the
Offer to Purchase will be required to surrender the Security,
together with the form entitled "Option of the Holder to Elect
Purchase" attached to or on the reverse side of the Security
completed, to the Paying Agent at the address specified in the
notice at any time beginning with the date of such notice but
prior to the close of business on the Business Day immediately
preceding the Payment Date, and such Holder shall be entitled to
receive from the Paying Agent a non-transferable receipt of
deposit evidencing such deposit; (vi) that, unless the Company
defaults in making the payment of the purchase price or shall
otherwise, in its sole discretion, consent thereto, Holders will
be entitled to withdraw their election only if the Trustee
receives, not later than the close of business on the fifth
Business Day immediately preceding the Payment Date, a telegram,
facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Securities delivered for purchase
and a statement that such Holder is withdrawing his election to
have such Securities purchased; and (vii) that Holders whose
Securities are being purchased only in part will be promptly
issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered (which new
Securities, if such Offer to Purchase is being made pursuant to
Section 4.12(c) of the Indenture, will cease to be secured by the
Collateral); provided that each Security purchased and each new
Security
<PAGE>
7
issued shall be in a principal amount of $1,000 or integral
multiples thereof. The Company shall place such notice in the
national edition of The New York Times or The Wall Street Journal
or, if such newspapers are not then in circulation, in a
financial newspaper of general circulation in New York City. No
failure of the Company to give the foregoing notice shall limit
any Holder's right to exercise a repurchase right. On the Payment
Date, the Company shall (i) accept for payment Securities or
portions thereof tendered pursuant to an Offer to Purchase; (ii)
deposit with the Trustee money sufficient to pay the purchase
price of all Securities or portions thereof so accepted; and
(iii) deliver, or cause to be delivered, to the Trustee all
Securities or portions thereof so accepted together with an
Officers' Certificate specifying the Securities or portions
thereof accepted for payment by the Company. The Trustee shall
promptly mail to the Holders of Securities so accepted payment in
an amount equal to the purchase price, and the Trustee shall
promptly authenticate, and the Company shall promptly execute and
mail (or cause to be mailed) to such Holders a new Security equal
in principal amount to any unpurchased portion of the Securities
surrendered; provided that each Security purchased and each new
Security issued shall be in a principal amount of $1,000 or
integral multiples thereof; provided, further, that if the
Payment Date is between a regular Record Date and the next
succeeding Interest Payment Date, Securities to be repurchased
must be accompanied by payment of an amount equal to the interest
and Special Interest, if any, payable on such succeeding Interest
Payment Date on the principal amount to be repurchased, and the
interest on the principal amount of the Security being
repurchased, and Special Interest, if any, with respect thereto,
will be paid on such next succeeding Interest Payment Date to the
registered holder of such Security on the immediately preceding
Record Date. A Security repurchased on an Interest Payment Date
need not be accompanied by any such payment, and the interest on
the principal amount of the Security being repurchased, and
Special Interest, if any, with respect thereto, will be paid on
such Interest Payment Date to the registered holder of such
Security on the corresponding Record Date. The Company will
publicly announce the results of an Offer to Purchase as soon as
practicable after the Payment Date. The Trustee shall act as the
Paying Agent for an Offer to Purchase. The Company will comply
with Rule 14e-l under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and
regulations are applicable, in the event that the Company is
required to repurchase Securities pursuant to an Offer to
Purchase. Both the notice of the Company and the notice of the
Holder having been given as specified above, the Securities so to
be repurchased shall, on the Payment Date become due and payable
at the purchase price applicable thereto and from and after such
date (unless the Company shall default in the payment of such
purchase price) such Securities shall cease to bear interest or
Special Interest (if any). If any Security shall not be paid upon
surrender thereof for repurchase, the principal shall, until
paid, bear interest and Special Interest (if any) from the
Payment Date at the rate and in accordance with the provisions
set forth in this Security and the Indenture. Any Security which
is to be submitted for repurchase only in part shall be delivered
pursuant to the above provisions with (if the Company or Trustee
so requires) due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or such Holder's attorney duly
authorized in writing.
8. Mandatory Conversion. Subject to the provisions of
Article 13 of the Indenture, on the Conversion Date, so long as
no Default or Event of Default shall then exist, this Security
(if then Outstanding) shall be automatically converted into that
number of fully paid and non-
<PAGE>
7
assessable shares of Common Stock equal to the sum of (i) the
then outstanding principal amount of this Security, plus (ii)
accrued and unpaid interest and Special Interest, if any, on this
Security to the Conversion Date, divided by the product of (A)
1.00 multiplied by (B) the Closing Price per share of Common
Stock on the Trading Day immediately preceding the Conversion
Date.
Any such conversion is subject to the procedures,
restrictions and adjustments as set forth in Article 13 of the
Indenture, and on or after the effectiveness of the conversion,
the Liens on the Collateral are subject to release as provided in
the Indenture.
9. Denominations, Transfer, Exchange. The Securities shall
be issuable only in registered form without coupons and in
denominations of $1,000 and integral multiples thereof. The
transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes required by law or
permitted by the Indenture.
10. Persons Deemed Owners. The Company, the Trustee and any
agent of the Company or the Trustee may treat the person in whose
name the Security is registered with the Registrar as the owner
for all purposes.
11. Discharge. Subject to certain conditions set forth in
Article 8 of the Indenture, the Company may terminate its
obligations under the Securities and the Indenture, except those
obligations referred to in Section 8.1(b) of the Indenture, if
the Company deposits with the Trustee or a Paying Agent cash or
U.S. Government Obligations for the payment of principal of,
interest, if any, on the Securities to Stated Maturity.
12. Amendments and Waivers. Subject to certain exceptions,
the Indenture, the Securities, or the other Operative Documents
may be amended with the consent of the Holders of at least a
majority in principal amount of the then Outstanding Securities,
and any existing Default, Event of Default or acceleration may be
waived with the consent of the Holders of a majority in principal
amount of the then Securities Outstanding. Without the consent of
any Holder, the Indenture, the Securities or any of the Operative
Documents may be amended to, among other things, cure any
ambiguity, defect or inconsistency.
13. Defaults and Remedies. Events of Default under the
Indenture include the following: default for the period specified
in the Indenture in payment of interest on or Special Interest,
if any, with respect to, the Securities; default in payment of
the principal amount of any Securities when the same becomes due
and payable (at maturity, upon acceleration, tender for
repurchase or otherwise); failure by the Company to comply with
specific covenants of the Indenture or of the Mortgage within the
time periods provided therein, discontinuing substantially all of
its commercial airlines operations, or failure to pay over
amounts required under the Mortgage; failure to comply in any
material respect with any of its other agreements contained in
the Indenture, the other Operative Documents or the Securities
within the time periods (if any) and after the notice (if any)
provided in any thereof; a representation or warranty of the
Company in the Indenture, the other Operative Documents or any
Mortgage Supplement or in any certificate of the Company
delivered under any such document proves to be untrue in
<PAGE>
9
any material respect when made, and the failure to cure such
default within the time periods and after the notice specified in
the Indenture; the occurrence of certain defaults under any
Indebtedness of the Company or any of its Significant
Subsidiaries in excess of $10,000,000 in principal amount; the
rendering of final judgments by a court of competent jurisdiction
against the Company or any of its Significant Subsidiaries in an
aggregate amount of $10,000,000 or more which remain undischarged
for a period (during which execution is not stayed) of sixty (60)
days after the date on which the right to appeal has expired;
cessation of effectiveness of the Operative Documents without the
consent of the Trustee; and certain events of bankruptcy,
insolvency or reorganization. Subject to certain limitations in
the Indenture, if an Event of Default occurs and is continuing,
the Trustee or the Holders of twenty-five percent (25%) in
principal amount of the Securities Outstanding may declare all
the Securities to be due and payable immediately, except that in
the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all Securities Outstanding become due
and payable immediately without further action or notice.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture and the Mortgage. Enforcement
of the Lien of the Mortgage is limited to an aggregate amount of
Obligations not exceeding $10,250,000 and is further restricted
due to its second priority status, as more fully set forth in the
Mortgage. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Securities. Subject to
certain limitations, Holders of a majority in principal amount of
the then Outstanding Securities may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing default (except a
default in payment of principal or interest) if it determines
that withholding notice is in their interests. The Company must
furnish compliance certificates to the Trustee. The above
description of Events of Default and remedies is qualified by
reference, and subject in its entirety to the more complete
description thereof contained in the Indenture and the other
Operative Documents.
14. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with
and collect obligations owed to it by the Company or Affiliates
of the Company with the same rights it would have if it were not
Trustee.
15. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have
any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. Each
Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the
consideration for the issue of the Securities.
16. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an
authenticating agent.
17. Unclaimed Money. If money for the payment of principal
of, or interest, if any, on, or the purchase price for the
Securities remains unclaimed for two (2) years, the Trustee or
Paying Agent will pay the money back to the Company at its
request. After such payment, Holders entitled to any portion of
such money must look to the Company for payment unless an
applicable law designates another person.
<PAGE>
10
18. Abbreviations. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants
in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
19. CUSIP Numbers. The Company in issuing this Security may
use a "CUSIP" number (if then generally in use) and, if so, the
Trustee may use "CUSIP" numbers in notices to the Holders
regarding the Securities as a convenience to Holders; provided,
however, that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on
the Securities or as contained in any such notice and that
reliance may be placed only on the other identification numbers
printed on the Securities, and any such notice shall not be
affected by any defect in or omission of such numbers.
20. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Security, by acceptance hereof, acknowledges and
agrees to the provisions of the Registration Rights Agreement,
including, without limitation, the obligations of the Holders
with respect to a registration and the indemnification of the
Company to the extent provided therein.
21. Governing Law. THIS SECURITY SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF
LAWS.
The Company will furnish to any Holder of this
Security, upon written request and without charge, a copy of the
Indenture. Request may be made to: Trans World Airlines, Inc.,
One City Centre, 515 N. 6th Street, St. Louis, Missouri 63101,
Attention: Corporate Secretary.
<PAGE>
11
ASSIGNMENT FORM
To assign this Security, fill in the form below: I or we assign
and transfer this Security to:
(Insert Assignee's Soc. Sec. or Tax I.D. No.)
(Print or type assignee's name, address and zip
code)
and irrevocably appoint ______________ agent
to transfer this Security on the books of the
Company. The agent may substitute another to
act for him.
Date:____________________________ Signature(s):__________________________
__________________________
(Sign exactly as your name(s) appear(s)
on the other side of this Security)
Signature(s) guaranteed by:
________________________________________
(All signatures must be guaranteed by
a member of a national securities
exchange or of the National Association
of Securities Dealers, Inc. or by a
commercial bank or trust company located
in the United States)
<PAGE>
12
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security repurchased
by the Company pursuant to any Offer to Purchase under the
Indenture, check the box:
|_|
If you want to elect to have only part of this
Security repurchased by the Company pursuant to any Offer to
Purchase under the Indenture, state the amount to be repurchased:
$ _________________________________
(in an integral multiple of $1,000)
Date:______________________________ Signature(s):___________________________
________________________________________
(Sign exactly as your name(s) appear(s)
on the other side of this Security)
Signature(s) guaranteed by:
________________________________________
(All signatures must be guaranteed by
a member of a national securities
exchange or of the National Association
of Securities Dealers, Inc. or by a
commercial bank or trust company located
in the United States)
<PAGE>
CERTIFICATE OF TRANSFER
Re: 10 1/4% Mandatory Conversion Equity Notes due 1999 (the "Notes")
of Trans World Airlines, Inc. (the "Company")
This Certificate relates to Notes held in definitive
form by ___________ (the "Transferor").
The Transferor has requested the Registrar by written
order to exchange or register the transfer of a Note or Notes. In
connection with such request and in respect of each such Note,
the Transferor does hereby certify that the Transferor is
familiar with the Indenture relating to the above captioned Notes
and that the transfer of this Note does not require registration
under the Securities Act of 1933 (the "Securities Act"),
because:*
|_| Such Note is being transferred to the Company.
|_| Such Note is being transferred pursuant to an
effective Registration Statement under the Securities Act.
|_| Such Note is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the Securities
Act) in reliance on Rule 144A.
|_| Such Note is being transferred to an Institutional
"Accredited Investor" within the meaning of Subparagraph (a)(1),
(2), (3) or (7) of Rule 501 under the Securities Act.
|_| Such Note is being transferred in a transaction
meeting the requirements of Rule 144 under the Securities Act.
The Registrar and the Company are entitled to rely
upon this Certificate and are irrevocably authorized to produce
this Certificate or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
____________________________
[INSERT NAME OF TRANSFEROR]
By:________________________
Date:_____________________________
__________________________________
* Please check applicable box.
<PAGE>
EXHIBIT B
=================================================================
AIRCRAFT SECOND MORTGAGE AND SECURITY AGREEMENT
Dated as of June 16, 1998
Between
TRANS WORLD AIRLINES, INC.,
as Mortgagor
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Trustee,
as Mortgagee
=================================================================
Covering Boeing Model 767-231 ETOPS Aircraft
<PAGE>
TABLE OF CONTENTS
Page
1. DEFINITIONS ........................................... 1
1.1 Definitions ...................................... 1
1.2 Rules of Construction ............................ 3
2. SECURITY INTEREST ..................................... 3
2.1 Granting of Security Interest .................... 3
2.2 Certain Releases of Lien ......................... 5
2.3 Liability of Mortgagor ........................... 7
2.4 No Segregation of Moneys; No Interest ............ 7
3. OPERATION, REPLACEMENT OF PARTS AND POSSESSION
OF AIRCRAFT ........................................... 7
3.1 Operation ........................................ 7
3.2 Transfer of Possession ........................... 8
3.3 Total Loss of Engine and not Airframe; Total
Loss of Airframe ................................. 8
3.4 Replacement of Parts ............................. 9
3.5 Installation of Video Equipment and Telephone
Systems owned by Third Parties on the Aircraft ... 9
3.6 Interchange and Pooling Agreements ............... 10
4. EVENTS OF DEFAULT; DISPOSITION OF COLLATERAL;
APPLICATION OF PROCEEDS AND LIMITATIONS ON AND
SUBORDINATION OF LIEN ................................. 10
4.1 Judicial Proceedings, etc., Following Event
of Default ....................................... 10
4.2 Delivery of Collateral, Power of Sale, etc. ...... 12
4.3 Right to Possession, etc. ........................ 12
4.4 Application of Proceeds .......................... 14
(i)
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
4.5 Matters Involving Manner of Sale ................. 15
4.6 Limitations on and Subordination of Lien ......... 16
5. REPRESENTATIONS AND WARRANTIES ........................ 17
5.1 Corporate Status ................................. 17
5.2 Governmental Approvals ........................... 17
5.3 Binding .......................................... 18
5.4 No Breach ........................................ 18
5.5 Filings .......................................... 18
5.6 Licenses ......................................... 18
5.7 No Suits ......................................... 18
5.8 Taxes ............................................ 18
5.9 No Event of Default or Total Loss ................ 19
5.10 Aircraft Certification ........................... 19
5.11 Investment Company Act ........................... 19
5.12 Condition of Aircraft ............................ 19
5.13 Title ............................................ 19
5.14 No Default ....................................... 19
5.15 Mortgage Liens ................................... 19
5.16 Engines .......................................... 19
5.17 FAA Aircraft Registry ............................ 19
5.18 Insurances ....................................... 20
6. COVENANTS ............................................. 20
6.1 This Agreement ................................... 20
(ii)
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
6.2 Certain Rights ................................... 20
6.3 Insurance ........................................ 20
6.4 Compliance with Laws ............................. 22
6.5 Subleasing or Leasing ............................ 22
6.6 Further Assurances ............................... 24
6.7 Maintenance ...................................... 24
6.8 Registration ..................................... 25
6.9 Insignia ......................................... 25
6.10 Inspection ....................................... 26
6.11 Alterations, Modifications and Additions ......... 26
6.12 Notice of Change of Mortgagor's Chief
Executive Office ................................. 27
7. CONDEMNATION .......................................... 27
7.1 Dedication to CRAF ............................... 27
7.2 Notice to Mortgagee .............................. 28
7.3 Requisition of Engine ............................ 28
7.4 Government Indemnification ....................... 28
7.5 No Geographic Limits ............................. 28
7.6 Notice of Default ................................ 28
7.7 Receipts of Payments ............................. 28
8. GENERAL INDEMNIFICATION ............................... 29
8.1 General Indemnification and Waiver of
Certain Claims ................................... 29
8.2 Tax Indemnification .............................. 32
8.3 Survival of Indemnities .......................... 36
(iii)
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
9. MISCELLANEOUS ......................................... 36
9.1 Performance by Mortgagee ......................... 36
9.2 Power of Attorney ................................ 37
9.3 Waiver, etc., by Mortgagor ....................... 37
9.4 Amendment, etc. .................................. 38
9.5 [Intentionally Omitted.] ......................... 38
9.6 Successors and Assigns ........................... 38
9.7 Severability ..................................... 38
9.8 Governing Law; Waiver of Jury Trial .............. 39
9.9 Notices; Waivers ................................. 39
9.10 No Adverse Interpretation of Other Agreements .... 39
9.11 Benefits of Agreement Restricted ................. 39
9.12 Counterpart Originals ............................ 39
9.13 Effect of Headings ............................... 39
9.14 Section 1110 of the Bankruptcy Code .............. 39
EXHIBIT A Form of Mortgage Supplement
EXHIBIT B Insurance
EXHIBIT C Pre-Approved List
(iv)
<PAGE>
AIRCRAFT SECOND MORTGAGE AND SECURITY AGREEMENT
THIS AIRCRAFT SECOND MORTGAGE AND SECURITY AGREEMENT (this
"Agreement"), dated as of June 16, 1998, is entered into between
TRANS WORLD AIRLINES, INC., a Delaware corporation (together with
its successors and permitted assigns, "Mortgagor"), and FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, as Trustee under the Indenture hereinafter referred
to (together with its successors and assigns, "Mortgagee") for
the benefit of Mortgagee and the Holders (as defined in such
Indenture), in light of the following facts:
RECITALS
WHEREAS, Mortgagor and First Security Bank, National
Association (f/k/a First Security Bank of Utah, National
Association), not in its individual capacity, except as expressly
stated therein, but soley as Owner Trustee ("Owner Trustee")
under the Trust Agreement N607TW, dated as of March 28, 1995
between 767 Leasing HY, LLC ("Beneficiary") as assignee of ING
Lease Delaware, Inc. (f/k/a Internationale, Nederlanden Aviation
Lease Delaware, Inc.) and Owner Trustee, have entered into that
certain Aircraft Sale and Note Purchase Agreement, made and
entered into as of the 16th day of June, 1998 among Mortgagor,
Owner Trustee, Beneficiary and Lazard Freres & Co. LLC, (the
"Aircraft Sale Agreement"), pursuant to which Mortgagor agreed to
purchase, and Owner Trustee agreed to sell, the Aircraft (as
hereinafter defined);
WHEREAS, Mortgagor and Mortgagee are contemporaneously
herewith entering into that certain Indenture, dated as of even
date herewith (the "Indenture"), pursuant to which Mortgagor will
issue its 10 1/4% Mandatory Conversion Equity Notes due 1999 (the
"Securities") to a certain holder or holders (the "Holders"), as
payment of part of the purchase price of the Aircraft under the
Aircraft Sale Agreement; and
WHEREAS, it is a condition precedent to Mortgagee's
authentication of the Securities that Mortgagor grant to
Mortgagee a second priority security interest in the Aircraft in
order to secure, among other things, (a) Mortgagor's obligations
to the Holders and Mortgagee under the Indenture and (b)
Mortgagor's obligation to the Holders and Mortgagee hereunder.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS
1.1 Definitions. Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to such
terms in Section 1 of the Definitions Appendix attached hereto as
Appendix I, which shall be a part of this Agreement as if fully
set forth in this place. In addition, the following terms shall
have the respective meanings set forth below:
<PAGE>
2
"CRAF" means the Civil Reserve Air Fleet Program authorized
under 10 U.S.C. ss. 9511 et seq. or any substantially similar
program.
"Government Entity" means any (a) national, state or local
government, (b) board, commission, department, division,
instrumentality, court, agency or political subdivision thereof
and (c) association, organization or institution of which any
thereof is a member or in whose activities any thereof is a
participant.
"Law" means any (a) statute, decree, constitution,
regulation, order or any directive of any Government Entity, (b)
treaty, pact, compact or other agreement to which any Government
Entity is a signatory or party and (c) judicial or administrative
interpretation or application of any of the foregoing.
"Total Loss" means any of the following in relation to the
Aircraft, Airframe or any Engine and "Total Loss Date" means the
date set forth in parentheses after each Total Loss:
(i) Destruction, damage beyond repair or being
rendered permanently unfit for normal use for any
reason whatsoever (the date such event occurs or, if
not known, the date on which the Aircraft, Airframe or
Engine was last heard of).
(ii) Actual, constructive, compromised, arranged
or agreed total loss (the earlier of the date on which
the loss is agreed or compromised by the insurers or
thirty (30) days after the date of notice to
Mortgagor's brokers or insurers claiming such total
loss).
(iii) Requisition of title, confiscation,
forfeiture or any compulsory acquisition whatsoever,
except for an acquisition of the Aircraft, Airframe or
Engines by the Air Mobility Command pursuant to CRAF
(the date on which the same takes effect).
(iv) Sequestration, detention or seizure for more
than thirty (30) consecutive days (the earlier of the
date on which insurers make payment on the basis of a
total loss or the date of expiration of such period).
(v) Requisition for use for more than one hundred
eighty (180) consecutive days (the earlier of the date
on which the insurers make payment on the basis of a
total loss or the date of expiration of such period).
(vi) Loss or loss of use due to theft or
disappearance for a period greater than sixty (60)
consecutive days (the date of expiration of such
period).
(vii) Any other occurrence which deprives
Mortgagor of use or possession for a period of one
hundred eighty (180) consecutive days or longer (the
one hundred eightieth (180th) day of such period).
<PAGE>
3
A Total Loss with respect to the Aircraft shall be deemed
to have occurred if a Total Loss has occurred with respect to the
Airframe constituting part of the Aircraft.
1.2 Rules of Construction. The rules of construction for
this Agreement are set forth in Section 2 of the Definitions
Appendix.
2. SECURITY INTEREST
2.1 Granting of Security Interest. Mortgagor does hereby
transfer, convey, mortgage, hypothecate, assign and grant to
Mortgagee a second priority purchase-money security interest in,
and second priority mortgage lien on (subject and subordinate
only to the first priority interests of the Notes Trustee under
the First Mortgage), all right, title, interest, claims and
demands of Mortgagor in and to the Properties, rights, interests
and privileges described in clauses (a) through (h) below,
whether now or hereafter acquired (which Properties, rights,
interests and privileges described in clauses (a) through (h)
below, including all such Properties, rights, interests and
privileges hereafter subjected to the Lien of this Agreement by
any Mortgage Supplement, are included in and defined as the
"Collateral"), to wit:
(a) the Airframe and Engines, each of which Engines is
of 750 or more rated takeoff horsepower or the equivalent of such
horsepower, and in the case of each such Engine, whether or not
such Engine shall be installed in or attached to the Airframe or
any other airframe, and the Parts, together with all accessories,
equipment, parts and appurtenances appertaining or attached to
the Airframe or an Engine, whether now owned or hereafter
acquired, and all substitutions, renewals and replacements of and
additions, alterations, modifications, improvements, accessions
and accumulations to the Airframe, any Engine or any Part;
(b) all proceeds from the sale or other disposition
of, all proceeds of insurance due to Mortgagor on, and all
proceeds of any condemnation or requisition of title or use due
to Mortgagor with respect to, any of the Properties described in
clause (a) above;
(c) all logs, books, records (including, without
limitation, all inspection, modification, maintenance and
overhaul records), data, manuals and other documents, in each
case, maintained in respect of the Airframe or any Engine,
including, without limitation, all such logs, books, records,
data, manuals and other documents maintained pursuant to
requirements of the FAA;
(d) the Aircraft Sale Agreement and the Bills of Sale
to the extent the same relate to continuing rights of Mortgagor
in respect of any warranty, indemnity or agreement, express or
implied, as to title, materials, workmanship, design or patent
infringement matters with respect to the Airframe or any Engine
(reserving to Mortgagor, however, all of Mortgagor's other rights
and interest in and to the Aircraft Sale Agreement) together with
all rights, powers, privileges, options and other benefits of
Mortgagor thereunder (subject to such reservation) with respect
to the Airframe or the Engines, including, without limitation,
the right to make all waivers and agreements, to give and receive
all notices and other instruments or communications, to take such
action upon the occurrence of a default thereunder, including the
commencement, conduct and consummation of legal, administrative
or other proceedings, as
<PAGE>
4
shall be permitted thereby or by law, and to do any and all other
things which Mortgagor is or may be entitled to do thereunder
(subject to such reservation, and all warranties and any other
rights of Mortgagor against any manufacturer relating to the
Airframe, any Engine or any Part);
(e) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with
Mortgagee by or for the account of Mortgagor pursuant to any term
hereof or held or required to be held by Mortgagee hereunder;
(f) all other items of equipment and furnishings,
wherever located, appertaining to the Aircraft, including without
limitation, the auxiliary power unit bearing Manufacturer's
Serial No. P40261 delivered with the Aircraft on the Issue Date,
and all substitutions, renewals and replacements thereof and
additions, modifications and accessories thereto;
(g) all rents, issues, profits, revenues and other
income of the Property intended, subjected or required to be
subjected to the Lien of this Agreement hereby, by the other
Operative Documents or by any Mortgage Supplement; and
(h) all proceeds, howsoever arising, of any of the
foregoing;
TO HAVE AND TO HOLD the Collateral unto Mortgagee, for the
benefit of the Holders and Mortgagee and their respective
successors and assigns, as security for (subject to Section 4.6):
(i) the due and punctual indefeasible payment in
full of (A) all sums, together with interest, Special
Interest, or premium, if any, thereon, owing or
outstanding under the Securities or that may be or
become due and payable to Mortgagee, any of the
Holders, or their respective successors and assigns,
by Mortgagor under or in connection with the
Securities, the Indenture, this Agreement or the other
Operative Documents, (B) the reasonable costs and
expenses of collection and foreclosure with respect to
the indebtedness and obligations secured hereby,
whether now existing or hereafter arising, including
without limitation reasonable attorneys' fees and
other costs and expenses expended or incurred by
Mortgagee under or pursuant to this Agreement, the
Securities, the Indenture or any other Operative
Document or otherwise in connection with discovering,
locating, satisfying Liens and charges on, protecting
and taking possession of the Collateral or any part
thereof, the returning of the Collateral or any part
thereof to any place in the continental United States
designated by Mortgagee (including, without
limitation, costs of repairing, rehabilitating and
storing the Collateral or any part thereof), and the
enforcement of, or collection of amounts owing or
outstanding or due and payable under or in connection
with the Securities, the Indenture, and the other
agreements and instruments referred to in this clause
(i) and (C) interest (to the extent permitted by
applicable Law) on all costs and expenses described in
this clause (i), at a rate of interest per annum equal
to the highest rate that may, under any circumstance
(whether or not such circumstance has or could
actually occur), be applicable to
<PAGE>
5
the Securities thereunder or under the Indenture,
computed on the basis of a 360-day year and the actual
number of days elapsed; and
(ii) the timely and faithful performance and
observance by Mortgagor of all agreements, promises
and covenants undertaken by it hereunder, in the
Indenture and the other instruments, agreements and
obligations referred to in clause (i) above (the
foregoing, together with all the sums, interest,
Special Interest, premium, expenses, costs and other
amounts referred to in clause (i) above, being
hereinafter referred to collectively as the
"Obligations"); provided, however, that, and these
presents are subject to the condition that, if
Mortgagor shall have paid or caused to be paid in
full, and Mortgagor shall have well and faithfully
performed and observed, all the Obligations at the
time and in the manner specified therefor, and any
other indebtedness, obligation or account whatsoever
(whether presently existing or subsequently arising)
secured hereby, or made provision therefor pursuant to
Article 8 of the Indenture then, upon the request of
Mortgagor, delivered to Mortgagee, Mortgagee shall, at
the cost and expense of Mortgagor, execute and deliver
to Mortgagor, such instruments of satisfaction and
discharge as may be appropriate (without, however,
being under any duty to cause such instruments to be
filed or recorded in the public records wherein this
Agreement shall have been filed and/or recorded), and
otherwise the same shall be and remain in full force
and effect.
2.2 Certain Releases of Lien. (a) At any time and from time
to time prior to or upon the release of the Lien of this
Agreement pursuant to this Section 2.2, upon the Total Loss of an
Engine in accordance with the express terms of this Agreement, or
the replacement of any Part of the Aircraft in accordance with
the express terms of this Agreement, Mortgagee shall, upon the
Request of and at the cost and expense of Mortgagor and provided,
that no Default or Event of Default shall have occurred and be
continuing, release such Engine or such Part, as the case may be,
from the Lien of this Agreement so long as the Replacement Engine
and Part complies with the terms and conditions of this Agreement
on Replacement Engines and Parts. In connection with the release
of the Lien on any Engine, Mortgagee shall execute and deliver
such instrument as aforesaid upon a Request from Mortgagor,
requesting such release and describing the Property so to be
released only upon receipt by or deposit with Mortgagee of the
following:
(i) An Officers' Certificate stating the
following:
(A) a description of the Engine to be
released, which shall be identified by
manufacturer's serial number;
(B) a description of the Replacement Engine
to be received as consideration for the Engine to
be released pursuant to the provisions of this
Agreement;
(C) that no Default or Event of Default has
occurred that has not been remedied or waived and
that Mortgagor will not be in default, by
<PAGE>
6
the making and granting of the request for
release, in the performance of any of the terms
and covenants of any Operative Document; and
(D) that the release of the Engine so to be
released will not be inconsistent with any of the
provisions of this Agreement, the Indenture or
any other Operative Document.
(ii) The appropriate instruments transferring
title to the Replacement Engine to be received as
consideration for the Engine to be released to
Mortgagor, subjecting such Replacement Engine to the
Lien of this Agreement including, without limitation,
any Mortgage Supplement if so required by Mortgagee.
(iii) Upon the request of Mortgagee, an Opinion
of Counsel (and, as to matters relating to title and
perfection under the Federal Aviation Act, an opinion
of special FAA counsel) satisfactory to Mortgagee:
(A) stating that the certificates, opinions
and other instruments and/or Property that have
been or are therewith delivered to and deposited
with Mortgagee conform to the requirements of
this Agreement and that, upon the basis of such
application, the Property so sold or disposed of
may be released from the Lien of this Agreement
in accordance with the provisions of this
Agreement, and that all conditions precedent
herein provided for relating to such release have
been complied with; and
(B) stating that Mortgagor has good title to
the Replacement Engine to be received as
consideration for the Engine to be released, free
of any Liens or encumbrances whatsoever, except
the Lien hereof and Permitted Liens, that such
Replacement Engine has been validly subjected to
the Lien of this Agreement, that the instruments
subjecting such Replacement Engine to the Lien of
this Agreement have been duly filed for
recordation pursuant to the Federal Aviation Act
and that no further action or filing or recording
of any document is necessary or advisable in
order to establish and perfect the title of
Mortgagor to, and the Lien of this Agreement on,
such Replacement Engine.
(iv) Uniform Commercial Code financing statements
covering the security interests created by this
Agreement as are deemed necessary or desirable by
Mortgagee to protect the security interests of
Mortgagee in the Replacement Engine.
(v) to the extent assignable, an assignment to
Mortgagee as security under this Agreement of all
representations, warranties, agreements and
indemnities given to Mortgagor by the manufacturer or
vendor of such Replacement Engine.
<PAGE>
7
(vi) an appraisal from a nationally recognized
firm of independent aircraft appraisers reasonably
acceptable to Mortgagee as to the fair market value of
the Replacement Engine (which shall not be less than
the fair market value of the Engine it replaces,
assuming such replaced Engine had been maintained in
the condition and repair required hereunder) and of
the Aircraft after giving effect to such replacement
(which shall not be less than the fair market value of
the Aircraft prior to such replacement, assuming the
Aircraft had been maintained in the condition required
hereunder).
(b) In the event of the substitution of a Replacement
Engine, all provisions of this Agreement relating to the Airframe
or Engine being replaced shall be applicable to such Replacement
Engine with the same force and effect as if such Replacement
Engine were the same engine, as the case may be, as the Engine
being replaced but for the Total Loss with respect to the Engine
being replaced.
2.3 Liability of Mortgagor. Mortgagor shall be personally
liable hereunder for any and all amounts from time to time due
and payable hereunder. Mortgagor hereby agrees that Mortgagee may
proceed directly against it in connection with its liability
hereunder without first proceeding to enforce its rights or
remedies against Mortgagor or in the Collateral. Mortgagor hereby
authorizes Mortgagee to exercise in any order any right or remedy
it might have, including, without limitation, any right of
judicial foreclosure or power of sale of the Collateral, with
respect to the Obligations. All rights, powers and remedies of
Mortgagee hereunder and under the other Operative Documents are
cumulative and not alternative and are in addition to all rights,
power and remedies given to Mortgagee by applicable Law.
2.4 No Segregation of Moneys; No Interest. Moneys received
by Mortgagee hereunder need not be segregated in any manner
except to the extent required by applicable Law or any Operative
Document, and may be deposited under such general conditions as
may be prescribed by applicable Law, and Mortgagee shall not be
liable for any interest thereon, provided that, to the extent
such information is or was available to Mortgagee, any payments
received or applied hereunder by Mortgagee shall be accounted for
by Mortgagee so that any portion thereof paid or applied pursuant
hereto shall be identifiable as to the source thereof.
3. OPERATION, REPLACEMENT OF PARTS AND
POSSESSION OF AIRCRAFT
3.1 Operation. Mortgagor agrees that it will not use or
operate, or permit any permitted lessee or sublessee (if any) of
the Aircraft or any other Person to use or operate the Aircraft
in violation of any law or any rule, regulation or order
(including, without limitation, concerning alcoholic beverages or
prohibited substances) of any Government Entity having
jurisdiction (domestic or foreign) or in violation of any
airworthiness certificate, license or registration relating to
the Aircraft or any Engine issued by any such authority, except
to the extent the validity or application of any such law, rule,
regulation or order is being contested in good faith and by
appropriate proceedings and for the payment of which adequate
reserves have been provided and are being maintained on the books
of Mortgagor (but only so long as
<PAGE>
8
Mortgagee has been given notice of such proceedings and such
proceedings do not, in Mortgagee's reasonable opinion, involve
any danger of the attachment, sale, forfeiture or loss of the
Aircraft, any Engine, or any Part thereof or otherwise materially
adversely affect the Lien of this Agreement or subject Mortgagee
or any Holder to any risk of civil or criminal penalty). In the
event that any such law, rule, regulation or order requires
alteration of the Aircraft, any Engine, or any Part thereof,
unless the validity thereof is being contested in good faith and
by appropriate proceedings and for the payment of which adequate
reserves have been provided and are being maintained on the books
of Mortgagor (but only so long as Mortgagee has been given notice
of such proceedings and such proceedings do not, in Mortgagee's
reasonable opinion, involve any danger of the attachment, sale,
forfeiture or loss of any item of the Aircraft, any Engine, or
any Part thereof or otherwise materially adversely affect the
Lien of this Agreement or subject Mortgagee or any Holder to any
risk of civil or criminal penalty), Mortgagor will conform
thereto or obtain conformance therewith at no expense to
Mortgagee and will maintain the Aircraft in proper operating
condition under such laws, rules, regulations and orders.
Mortgagor agrees that it will not permit the Aircraft or any
Engine to be operated, used or located (a) in any area excluded
from coverage by the insurance required by the terms of Section
6.3, except in the case of a requisition by the United States of
America where Mortgagor obtains indemnity from the United States
of America against substantially the same risks and for at least
the amounts of the insurance required by Section 6.3 covering
such area, or (b) outside the United States or Canada in any
recognized or, in the Mortgagor's reasonable judgment, threatened
area of hostilities unless, notwithstanding the provisions of
Section 6.3, covered by war risk and allied perils insurance, or
in either case unless the Aircraft is operated or used under
contract with the government of the United States or any agency
or instrumentality thereof (backed by the full faith and credit
of the United States Government) under which contract such
government assumes liability for substantially the same risks in
at least the same amounts as would be covered by such insurance.
3.2 Transfer of Possession. Except as expressly set forth
herein or in the Indenture, Mortgagor will not, without the prior
written consent of Mortgagee, lease, sublease or otherwise in any
manner deliver, transfer or relinquish possession of the Aircraft
or any Engine, except that Mortgagor may install an Engine on
another aircraft in Mortgagor's fleet to the extent consistent
with Section 6.2 below.
3.3 Total Loss of Engine and not Airframe; Total Loss of
Airframe.
(a) Upon a Total Loss of any Engine not installed on
the Aircraft or a Total Loss of an Engine installed on the
Airframe not involving a Total Loss of the Airframe, Mortgagor
will give Mortgagee prompt (but in any event, within five
Business Days after the Total Loss Date) written notice thereof.
Mortgagor will, as soon as reasonably possible and in any event
within 120 days of the Total Loss Date with respect to such Total
Loss, and on at least five days' written notice to Mortgagee,
replace such Engine by duly obtaining title to a Replacement
Engine free of all liens and encumbrances other than Permitted
Liens and such Replacement Engine will have a value and utility
at least equal to, and of the same model, service bulletin, and
modification status and in at least as good operating condition
as, the Engine which sustained such Total Loss. Such Replacement
Engine will be an Engine as defined herein.
<PAGE>
9
(b) Mortgagor agrees at its own expense to take such
action as Mortgagee may reasonably request in order that any such
Replacement Engine becomes the Property of Mortgagor and is
subject to the Lien provided by this Agreement.
(c) Upon a Total Loss of the Airframe, Mortgagor will
give Mortgagee prompt (but in any event, within five Business
Days after the Total Loss Date) written notice thereof and will
comply with the provisions of Section 4.12 (d) of the Indenture.
3.4 Replacement of Parts. Mortgagor, at its own cost and
expense, will promptly replace or cause the replacement of all
Parts that may from time to time become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever,
with Parts of at least equivalent model, operating condition and
modification status as the replaced Part if the replaced Part had
been maintained in accordance with the provisions hereof.
Mortgagor may substitute for any Part a Part that does not meet
the foregoing requirements if a complying Part could not be
procured or installed within the available ground time of the
Aircraft and as soon as practicable the noncomplying part is
removed and replaced by a complying Part. All Parts at any time
removed from the Aircraft or any Engine shall remain part of the
Aircraft or any Engine no matter where located, until such time
as such Parts shall be replaced by Parts which have been
incorporated in the Aircraft or any Engine and which meet the
requirements for replacement Parts specified above. Immediately
upon any replacement Part becoming incorporated or installed in
or attached to the Aircraft or any Engine as above provided,
without further act, (i) such replacement Part shall be deemed
part of the Aircraft or Engine, as applicable, for all purposes
hereof to the same extent as the Parts originally incorporated in
the Aircraft or Engine, as applicable, and (ii) the replaced Part
shall no longer be deemed a Part hereunder.
3.5 Installation of Video Equipment and Telephone Systems
owned by Third Parties on the Aircraft. Mortgagor may lease or
purchase subject to a security lien equipment for the Aircraft
(including video systems and telephone systems) from third
parties and install such equipment on the Aircraft. The
installation of such equipment on the Aircraft is considered a
modification to the Aircraft and Mortgagor must comply (or, with
respect to such equipment existing and already installed on the
Issue Date, have complied) with the requirements of Section 6.11
prior to the installation of such equipment on the Aircraft. Such
equipment will remain the Property of its owner, unless such
equipment has not been removed from the Aircraft prior to the
repossession of the Aircraft by Mortgagee or the owner or holder
of the security interest in such equipment shall not have
requested in writing that the same be removed in accordance with
this Section (at which time title will pass to Mortgagee). Prior
to repossession of the Aircraft by Mortgagee, Mortgagor or the
holder of the security interest may remove any such equipment
from the Aircraft, so long as Mortgagor restores and repairs any
of the alterations made to the Aircraft in connection with the
installation of such equipment on the Aircraft to the same
condition that the Aircraft was in prior to the installation of
such equipment on the Aircraft. In the event that the Aircraft is
repossessed by Mortgagee in any manner permitted by this
Agreement which does not allow the removal of the equipment prior
to such repossession, upon written notice to Mortgagee by any
such lessor or holder of a security interest within ten days of
such termination requesting removal of the equipment, Mortgagee
shall remove or cause to be
<PAGE>
10
removed such equipment, restore and repair the Aircraft to the
condition that such Aircraft was in prior to the installation of
such equipment on the Aircraft and return such equipment to the
lessor or holder of the security interest, all of which will be
at the cost and expense of the lessor or security holder of such
security interest. As a condition precedent to removal and
return, the owner or security holder must provide Mortgagee with
the security requested by Mortgagee to cover the costs of such
removal, restoration and return and the associated downtime.
3.6 Interchange and Pooling Agreements. Mortgagor may
subject the Engines and Parts to normal interchange or pooling
agreements with responsible international scheduled commercial
air carriers customary in the airline industry and entered into
by Mortgagor in the ordinary course of its business with respect
to its entire Boeing 767-200 fleet so long as (i) in the case of
pooling of an Engine, such Engine is returned to Mortgagor within
one (1) month, (ii) no reregistration of the Engine occurs, (iii)
all other terms of this Agreement continue to be observed with
respect to the Engines or Parts, and (iv) Mortgagor continues to
be fully responsible to Mortgagee for the performance of all of
its obligations hereunder.
4. EVENTS OF DEFAULT; DISPOSITION OF
COLLATERAL; APPLICATION OF PROCEEDS
AND LIMITATIONS ON AND SUBORDINATION OF
LIEN
4.1 Judicial Proceedings, etc., Following Event of Default.
Subject to Section 4.6, if any Event of Default shall occur and
be continuing, then, and in any such event, Mortgagee may,
forthwith upon notice to Mortgagor (it being understood and
agreed that such provision of notice to Mortgagor shall not be
deemed to limit or otherwise restrict Mortgagee's rights and
remedies hereunder or under any other Operative Document or
agreement): (a) apply to a court of competent jurisdiction to
obtain specific performance or observance by Mortgagor of any
covenant, agreement or undertaking on the part of Mortgagor
hereunder that Mortgagor shall have failed to observe or perform
or to obtain aid in the execution of any power granted herein;
and/or (b) proceed to foreclose against the Collateral or any
part thereof pursuant to this Agreement, and according to the
applicable Law of the jurisdiction or jurisdictions in which such
Collateral or part thereof shall at the time be located, by doing
any one or more or all of the acts described in Sections 2.1 or
4.2 and/or the following acts, as Mortgagee, in its sole and
complete discretion (acting in good faith), may then elect to:
(i) exercise all the rights and remedies, in
foreclosure and otherwise, available to it as a
mortgagee and secured party under the provisions of
applicable Law, including, in any event, all of the
rights, powers and remedies under the Uniform
Commercial Code of the State of New York;
(ii) institute legal proceedings to obtain a
judgment conferring on Mortgagee the right to
immediate possession or requiring Mortgagor to deliver
immediate possession of all or part of the Collateral
to Mortgagee;
(iii) institute legal proceedings to foreclose
upon and against the security interest granted in and
by this Agreement, to recover judgment for all
<PAGE>
11
Obligations then due and owing, and to collect the
same out of any of the Collateral or the proceeds of
any sale thereof;
(iv) institute legal proceedings for the sale,
under the judgment or decree of any court of competent
jurisdiction, of any or all of the Collateral;
(v) without regard to the adequacy of the
security for the Indenture or any other Operative
Document or agreement between Mortgagee and Mortgagor,
Mortgagor and its Affiliates, by virtue of this
Agreement or otherwise, or any other collateral or
other security or to the solvency of Mortgagor,
institute legal proceedings for the appointment of a
receiver or receivers pending foreclosure hereunder or
for the sale of any of the Collateral under the order
of a court of competent jurisdiction or under other
legal process; or
(vi) personally, or by agents or attorneys, enter
upon any premises where the Collateral or any part
thereof may then be located, and take possession of
and remove all or any part thereof or render it
unusable; and without being responsible for loss or
damage to such Collateral, hold, store and keep idle,
or lease, operate or otherwise use or permit the use
of, the same or any part thereof, for such time and
upon such terms as Mortgagee may in its sole and
complete discretion deem to be in its own best
interests, and demand, collect and retain all hire,
earnings and other sums due and to become due in
respect of the same from any party whomsoever,
accounting for net earnings, if any, arising from such
use and charging against all receipts from the use of
the same or from the sale thereof, by court
proceedings or pursuant to Section 4.2, all other
costs, expenses, charges, damages and other losses
resulting from such use in good faith.
All expenses of obtaining any such judgment, bringing any such
legal proceeding or of pursuing, searching for and taking such
Property shall, until paid, be secured by the Lien of this
Agreement.
4.2 Delivery of Collateral, Power of Sale, etc. If
Mortgagee should elect to foreclose upon and against the security
interest created in and by this Agreement, Mortgagor shall, upon
demand of Mortgagee, deliver to Mortgagee all or any part of the
Collateral at such time or times and to such airport within the
continental United States of America as Mortgagee may specify;
and Mortgagee is hereby authorized and empowered, in accordance
with applicable Law and without being responsible for loss or
damage to such Collateral incurred other than solely by reason of
Mortgagee's willful misconduct, to enter upon any premises where
the Collateral or any part thereof may be located and take
possession of and remove the same. Mortgagee may thereafter sell
and dispose of, or cause to be sold and disposed of, all or any
part of the Collateral at one or more public or private sales, at
such places and times and on such terms and conditions as
Mortgagee may deem fit in good faith, with or without any
previous demand to Mortgagor or any other person, or
advertisement of any such sale or other disposal upon notice to
Mortgagor (it being understood and agreed that such provision of
notice to Mortgagor shall not be deemed to limit or otherwise
restrict Mortgagee's rights and remedies hereunder or under any
other
<PAGE>
12
Operative Document or agreement); and for the aforesaid purpose,
any other notice of sale, any advertisement and other notice or
demand, any right of equity of redemption and any obligation of a
prospective purchaser to inquire as to the power and authority of
Mortgagee to sell or the application by Mortgagee of the proceeds
of sale or otherwise that would otherwise be required by, or
available to Mortgagor under, applicable Law are hereby expressly
waived by Mortgagor to the fullest extent permitted by such Law.
In the event that any mandatory requirement of applicable Law
shall obligate Mortgagee to give different, additional or prior
notice to Mortgagor of any of the foregoing acts, Mortgagor
hereby agrees that, to the extent permitted by applicable Law, a
written notice sent to it by mail or by telecopy, so as
reasonably to be expected to be delivered to Mortgagor at least
ten (10) Business Days before the date of any such act shall be
deemed to be reasonable notice of such act and, specifically,
reasonable notification of the time after which any private sale
or other disposition intended to be made hereunder is to be made.
4.3 Right to Possession, etc.
(a) To the fullest extent Mortgagor may lawfully
agree, the right of Mortgagee to take possession of and sell any
of the Collateral in compliance with the provisions of this
Section 4 shall not be affected by the provisions of any
applicable reorganization or other similar law or any
jurisdiction; and Mortgagor shall not take advantage of any such
law or agree to allow any agent, assignee or other party to take
advantage of such law in its place, to which end Mortgagor, for
itself and all who may claim through it, as far as it or they now
or hereafter lawfully may do so, hereby waives, to the fullest
extent permitted under applicable Law, any rights or defenses
arising under any such law, and all rights to have the Collateral
marshaled upon any foreclosure hereof, and hereby agrees that any
court having jurisdiction to foreclose upon and against the
security interest created in this Agreement may order the sale of
the Collateral subject to such jurisdiction as an entirety or
severally.
(b) Mortgagee shall not have any duty or obligation to
use, operate, store, lease, control, manage, sell, dispose of or
otherwise deal with the Aircraft or any other part of the
Collateral, or otherwise to take or refrain from taking any
action under, or in connection with, this Agreement. If an Event
of Default shall occur and be continuing and Mortgagee shall have
obtained possession of or title to the Aircraft or any Engines,
Mortgagee shall not be obligated to use or operate the Aircraft
or Engines or cause the Aircraft or Engines to be used or
operated directly or indirectly by itself or through agents or
other representatives or to lease, license or otherwise permit or
provide for the use or operation of the Aircraft or Engines by
any other Person, provided, however, that if Mortgagee in its
sole discretion elects to so use or operate the Aircraft or
Engines, Mortgagee may obtain insurance in kinds, at rates and in
amounts satisfactory to it in its reasonable opinion to protect
the Collateral and Mortgagee and the Holders against any and all
liability for loss or damage to the Aircraft or Engines and for
public liability and Property damage resulting from the use or
operation of the Aircraft or Engines by application of any funds
available in the Collateral to pay for all such insurance or, in
lieu of such insurance, Mortgagee is furnished with
indemnification from any other Person upon terms and in amounts
satisfactory to Mortgagee in its sole discretion to protect the
Collateral and Mortgagee, both as Mortgagee and individually, and
the Holders, against any and all such liabilities. Upon every
taking of possession of any Collateral under this Section 4,
Mortgagee
<PAGE>
13
may (but shall not be obligated to), from time to time, at the
expense of the Collateral, make all such expenditures for
maintenance, storage, insurance, leasing, control, management,
disposition, repairs, replacements, alterations, additions and
improvements to and of the Collateral, as it may deem proper. In
each such case, Mortgagee shall have the right to maintain,
store, insure, lease, control, modify, alter, sell, transfer,
convey or otherwise dispose of or manage the Collateral and to
exercise all rights and powers of Mortgagor relating to the
Collateral in connection therewith, as Mortgagee shall deem
appropriate, including the right to enter into any and all such
agreements with respect to the maintenance, insurance, storage,
leasing, control, management, disposition, modification or
alteration of the Collateral or any part thereof as Mortgagee may
determine, all as may be reasonably necessary or desirable for
the general upkeep of the Collateral or to prepare any Collateral
for sale or other disposition hereunder; and Mortgagee shall be
entitled to collect and receive directly all tolls, rents,
revenues, issues, income, products and profits of the Collateral
and every part thereof, without prejudice, however, to the right
of Mortgagee under any provision of this Agreement to collect and
receive all cash held by, or required to be deposited with,
Mortgagee hereunder.
(c) Mortgagor does hereby irrevocably constitute and
appoint Mortgagee the true and lawful attorney of Mortgagor
(which appointment is coupled with an interest) with full power
(in the name of Mortgagor or otherwise) to ask, require, demand
and receive any and all moneys and claims for moneys (in each
case including insurance and requisition proceeds) due and to
become due under or arising out of or which now or hereafter
constitute part of the Collateral, to endorse any checks or other
instruments or orders in connection therewith and to file any
claims or to take any action or to institute any proceeding which
Mortgagee may deem to be necessary or advisable in the premises;
provided, Mortgagee shall not exercise any such rights except
upon the occurrence and during the continuance of an Event of
Default.
4.4 Application of Proceeds. Subject to Section 4.6:
(a) All payments or proceeds received by Mortgagee
under or pursuant to this Agreement the application of which is
not otherwise provided for herein shall be applied or in the
absolute discretion of Mortgagee (exercised in good faith)
retained for application in the manner set forth in Section 6.10
of the Indenture.
(b) All payments and proceeds received and amounts
realized by Mortgagee after an Event of Default has occurred and
is continuing which funds would, but for the provisions of this
paragraph (b), be distributed to Mortgagor, shall be held by
Mortgagee as collateral security (and part of the Collateral) for
the Obligations, may be applied by the Mortgagee in the manner
set forth in Section 6.10 of the Indenture, and at such time as
no Event of Default shall be continuing, any such funds remaining
shall be distributed to Mortgagor to the extent so distributable
hereunder or under the Indenture.
(c) All payments received by Mortgagee with respect to
a Total Loss of any Aircraft shall be held as part of the
Collateral until Mortgagor has complied with Section 4.12(c) of
the Indenture. On the Payment Date with respect to the Offer to
Purchase required under such Section, Mortgagee shall, upon
Request, release such payments with respect to such Total Loss
<PAGE>
14
to Mortgagor for payment to the Holders of all or any part of the
purchase price with respect to such Offer to Purchase.
(d) All payments received by Mortgagee with respect to
a Total Loss of any Engine not installed on the Aircraft or a
Total Loss of an Engine installed on the Airframe not involving a
Total Loss of the Airframe, shall be held as part of the
Collateral until Mortgagor shall comply with Sections 2.2 and 3.3
with respect to such Engine and shall promptly thereafter be
turned over to Mortgagor.
(e) All payments received by Mortgagee with respect to
loss or damage to the Aircraft not involving a Total Loss shall
be held as part of the Collateral and paid over to Mortgagor upon
Request therefor and upon receipt by Mortgagee of an Officers'
Certificate and such other documents or instruments as Mortgagee
may reasonably request to evidence compliance by Mortgagor with
its repair or replacement obligations hereunder.
(f) All amounts from time to time distributable under
this Section 4.4 by Mortgagee to Mortgagor shall be paid by
Mortgagee to Mortgagor at its address set forth in Section 11.2
of the Indenture and, to the extent so timely received, in funds
of the same type as received.
If the payments or proceeds received by Mortgagee under this
Agreement or any other Operative Document shall be insufficient
to indefeasibly pay in full the Obligations then due and payable
to Mortgagee and as set forth above in this Section 4.4,
Mortgagor shall forthwith pay any balance of such amounts
remaining unpaid to Mortgagee or as Mortgagee directs, and any
deficiencies remaining thereafter may be entered as a judgment
against Mortgagor in any court of competent jurisdiction.
4.5 Matters Involving Manner of Sale.
(a) At any sale pursuant to this Section 4, whether by
virtue of judicial proceedings contemplated in Section 4.1 or
under the power of sale granted in Section 4.2, it shall not be
necessary for Mortgagee or a public officer under order of a
court to have present physical or constructive possession of the
Collateral to be sold. The recitals contained in any conveyances
and receipts made and given by Mortgagee in good faith or such
public officer to any purchaser at any sale made pursuant to this
Agreement shall, to the extent permitted by applicable Law,
conclusively establish the truth and accuracy of the matters
therein stated (including, without limiting the generality of the
foregoing, the amounts due and payable under the Indenture and
any other indebtedness secured hereby, the accrual and nonpayment
thereof and advertisement and conduct of such sale in the manner
provided herein and by applicable Law); and all prerequisites to
such sale shall be presumed to have been satisfied and performed.
(b) At any sale or sales made pursuant to this Section
4, Mortgagee, any Holder or their respective agents may bid for
or purchase, free from any right or equity of redemption in favor
of Mortgagor and any Person claiming by, through or under
Mortgagor (all such rights being in this Section 4 waived and
released), any part of or all of the Collateral offered for sale,
and may make payment on account thereof by using any claim for
moneys then
<PAGE>
15
due and payable to Mortgagee by Mortgagor as a credit against the
purchase price; and Mortgagee, upon compliance with the terms of
sale, may hold, retain and dispose of such Collateral without
further accountability therefor to Mortgagor or any third party,
except as expressly required by applicable Law. In any such sale
Mortgagee shall not be obligated to make any representations or
warranties with respect to the Collateral or any part thereof,
and Mortgagee shall not be chargeable with any of the obligations
or liabilities of Mortgagor with respect thereto. Mortgagor
hereby agrees (i) that it will indemnify and hold Mortgagee
harmless from and against any and all claims with respect to the
Collateral asserted before the taking of actual possession or
control thereof by Mortgagee or its agents pursuant to this
Section 4, or arising out of any act of, or omission to act on
the part of, any party other than Mortgagee or any of its agents
prior to such taking of actual possession or control by
Mortgagee, or arising out of any act of, or omission to act on
the part of, Mortgagor or any Person claiming by, through or
under Mortgagor or any of its Affiliates or agents before or
after the commencement of such actual possession or control by
Mortgagee or any of its agents; and (ii) that Mortgagee shall
have no liability or obligation arising out of any such claim;
except, however, in each of clause (i) and (ii) with respect to
claims arising from the willful misconduct of Mortgagee.
(c) Except as provided in Section 4.6, nothing herein
contained shall be deemed to impair in any manner the absolute
right of Mortgagee to sell and convey title to the Collateral to
the purchaser(s) at such public or private sale(s) or to grant
options with respect to or otherwise to realize upon all or such
portion of the Collateral, at such time, and in such order as it
may elect in its sole and complete discretion in good faith, or
to enforce any one or more remedies relative hereto either
successively or concurrently; and Mortgagor hereby agrees that
the security interest, options and other rights hereby given to
Mortgagee shall remain unimpaired and unprejudiced until all the
Collateral shall have been sold or this Agreement shall otherwise
have ceased to be of any force or effect according to its terms,
and that the enforcement of any right or remedy shall not operate
to bar or estop Mortgagee from exercising any other right or
remedy available hereunder or under any other Operative Document
or agreement between Mortgagee and any of its Affiliates, on the
one hand, and Mortgagor or any Person claiming by, through or
under Mortgagor and its Affiliates on the other hand, or
otherwise, available at law, in equity or otherwise.
(d) Upon the completion of any sale under this Section
4, Mortgagor shall deliver, in accordance with the instructions
of Mortgagee (including flying the Aircraft or any Engine or
causing the same to be flown to such airports in the continental
United States as Mortgagee may specify) such Collateral so sold.
Mortgagee may execute and deliver to the accepted purchaser or
purchasers a good and sufficient instrument or instruments of
conveyance, sale and transfer of all of the Property sold; and
Mortgagee is hereby irrevocably appointed the true and lawful
attorney of Mortgagor, with full power of substitution, in its
name and stead, to make all necessary conveyances of the Property
thus sold. Nevertheless, if so requested by Mortgagee or by any
purchaser, Mortgagor shall confirm any such sale or transfer by
executing and delivering to Mortgagee or to such purchaser all
proper instruments of conveyance and transfer and releases as may
be designated in any such request.
<PAGE>
16
4.6 Limitations on and Subordination of Lien.
Notwithstanding anything herein or in the Indenture to the
contrary, Mortgagee and each of the Holders, by their acceptance
of the Securities, agree that the maximum aggregate amount of
Obligations that are secured by this Agreement is $10,250,000,
and they further agree, for the benefit of the Notes Trustee, the
holders of the 10 1/4% Secured Notes and Mortgagor that so long
as the First Mortgage shall be in effect:
(a) The Lien of this Agreement shall be subject and
subordinate to the Lien of the First Mortgage, and in furtherance
thereof, Mortgagee and the Holders shall not take any action
against the Collateral, or any part thereof, including without
limitation, foreclosure, sale or other transfer pursuant to the
exercise of remedies contained herein relating to such
Collateral, without the prior written consent of the holders of
at least 66 2/3% in aggregate principal amount of the 10 1/4%
Secured Notes then outstanding, unless and until all obligations
under the 10 1/4% Secured Notes and the Notes Indenture have been
fully paid or provided for.
(b) Mortgagee and the Holders shall be obligated to
hold in trust for the benefit of the Notes Trustee and the
holders of the 10 1/4% Secured Notes and shall promptly pay over
to or as instructed by the Notes Trustee for its benefit and the
benefit of the holders of the 10 1/4% Secured Notes (i) any
proceeds of or amounts received with respect to the Collateral
(including insurance proceeds with respect to loss of or damage
to any Collateral) which, under the terms of the First Mortgage
or the Notes Indenture are payable to or required to be turned
over to the Notes Trustee and (ii) any proceeds realized on
foreclosure, sale or other transfer of the Collateral, in each
case, until the 10 1/4% Secured Notes shall have been fully paid
or provided for.
(c) Mortgagee and the Holders, to the full extent that
they may lawfully so agree, shall not challenge, hinder or delay
any foreclosure, sale or other transfer of the Collateral
pursuant to the exercise of remedies in accordance with the First
Mortgage and in accordance with the requirements of applicable
law, and Mortgagee and the Holders shall have, if any such
transaction is challenged by it or any of them, the burden of
showing that such transaction was not commercially reasonable and
they acknowledge that the fact that a better price could have
been obtained by a sale at a different time or in a different
method from that selected in the exercise of remedies under the
First Mortgage is not of itself sufficient to establish that the
sale or sales were not made in a commercially reasonable manner.
For purposes of this Section 4.6, the term
"Collateral" shall have the definition specified for such term in
the First Mortgage.
5. REPRESENTATIONS AND WARRANTIES
Mortgagor makes the following representations and
warranties which shall be true and correct in all material
respects as of the Issue Date and such representations and
warranties shall survive the execution and delivery of this
Agreement and the issuance of the Securities:
5.1 Corporate Status. Mortgagor is a corporation duly
incorporated, validly existing and in good standing under the
Laws of the State of Delaware, is an "air carrier" within the
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17
meaning of the Federal Aviation Act operating under a certificate
of public convenience and necessity issued pursuant to Section
41102 thereof, holds an "air carrier operating certificate"
issued pursuant to chapter 447 of the Act and of the type
referred to in 11 U.S.C. ss. 1110, is a "citizen of the United
States" as defined in Section 40102(a)(15) of the Act, and has
the corporate power and authority to own or hold under lease its
Properties and to enter into and perform its obligations under
the Operative Documents. It is duly qualified to do business as a
foreign corporation in the state of Missouri and in each other
state of the United States in which failure to so qualify would
have a material adverse effect on its financial condition or on
its ability to perform its Obligations. It holds all material
licenses, certificates, permits and franchises from the
appropriate United States or other governmental agencies
necessary to authorize it to engage in air transport and to
conduct scheduled passenger service as presently conducted. Its
chief executive office (as such term is used in sections 9-103
and 9-401 of the Uniform Commercial Code as in effect in New York
and Missouri) is located at One City Centre, 515 North Sixth
Street, St. Louis, Missouri 63101. Its correct U.S. tax
identification number is 43-1145889.
5.2 Governmental Approvals. No authorization, approval,
consent, license or order of, or registration with, or the giving
of notice to the FAA or any other Government Entity is required
for the valid authorization, execution, delivery and performance
by Mortgagor of this Agreement, the Securities, the Indenture or
any other Operative Document except as will have been duly
effected as of the date of purchase of the Aircraft.
5.3 Binding. The execution, delivery and performance by
Mortgagor of the Securities and the other Operative Documents and
the consummation or performance by Mortgagor of the transactions
contemplated thereby have been duly authorized by all necessary
corporate action and do not require any stockholder approval or
the approval or consent of or notice to any trustee or holder of
any indebtedness or obligations of Mortgagor. This Agreement, the
Securities, the Indenture and the other Operative Documents have
been duly executed and delivered by Mortgagor and represent the
valid, enforceable and binding obligations of Mortgagor except as
enforceability may be limited by bankruptcy, insolvency,
reorganization or other Laws of general application affecting the
enforcement of creditors' rights.
5.4 No Breach. The execution and delivery of this
Agreement, the Securities, the Indenture and the other Operative
Documents, the consummation by Mortgagor of the transactions
contemplated herein and therein and compliance by Mortgagor with
the terms and provisions hereof and thereof do not and will not
contravene any Law applicable to Mortgagor, or result in any
breach of or constitute any default under or result in the
creation of any Lien (except the Liens in favor of the Trustee
created hereby or thereby) upon any Property of Mortgagor,
pursuant to any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, bank loan or credit agreement,
corporate charter, by-law or other agreement or instrument to
which Mortgagor is a party or by which Mortgagor or its
Properties or assets may be bound or affected.
5.5 Filings. Except for filing this Agreement and the
Mortgage Supplements with the FAA and filing Uniform Commercial
Code financing statements in the offices of the Secretary of
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18
State of Missouri and the offices of the Clerks of St. Louis City
and Platte Counties, Missouri (all of which filings have been
made), no filing or recording of any instrument or document is
necessary under the Laws of the U.S. in order for this Agreement
to create a valid and second priority perfected security interest
of record relating to the Aircraft and the other Collateral.
5.6 Licenses. Mortgagor holds all licenses, certificates
and permits from applicable Government Entities in the U.S. for
the conduct of its business as a certificated air carrier and
performance of its obligations under this Agreement, the
Securities, the Indenture and the other Operative Documents.
5.7 No Suits. There are no suits, arbitrations,
investigations or other proceedings pending or threatened against
Mortgagor before any court or administrative agency against or
affecting Mortgagor with respect to this Agreement, the
Collateral, the Securities, the Indenture or the other Operative
Documents or the transactions contemplated thereby.
5.8 Taxes. Mortgagor has filed or caused to be filed all
material tax returns which are required to be filed by it and has
paid or caused to be paid all Taxes which have been shown to be
due and payable by such returns or (except to the extent being
contested in good faith and for the payment of which adequate
reserves have been provided) tax assessments received by
Mortgagor to the extent that such Taxes have become due and
payable.
5.9 No Event of Default or Total Loss. There has not
occurred any event which constitutes a Default, an Event of
Default, a Total Loss or an event which, but for the passage of
time or the giving of notice, or both, would constitute a Total
Loss, and no such Default, Event of Default, Total Loss or event
will result from Mortgagor's purchasing and mortgaging the
Collateral as contemplated hereby.
5.10 Aircraft Certification. The Aircraft has been duly
certified by the FAA as to type and airworthiness, has a
currently valid Standard Certificate of Airworthiness issued by
the FAA, has been insured by Mortgagor in accordance with the
terms of this Agreement and is in the condition and state of
repair required under the terms of this Agreement.
5.11 Investment Company Act. Neither Mortgagor nor any
subsidiary thereof is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
5.12 Condition of Aircraft. The Aircraft is fully equipped
to operate in United States commercial service and complies with
all material governmental requirements governing such service.
5.13 Title. Mortgagor has good and marketable title to the
Aircraft, free and clear of all Liens other than Permitted Liens.
5.14 No Default. Mortgagor is not in default in the
performance of any term or condition of the Aircraft Sale
Agreement.
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19
5.15 Mortgage Liens. Mortgagor has and will have at all
times full power and authority to grant a Lien on and security
interest in the Collateral in the manner set forth in this
Agreement, and this Agreement constitutes a valid second priority
mortgage Lien on and security interest in the Collateral, duly
securing the Obligations.
5.16 Engines. Each Engine is of 750 or more rated takeoff
horsepower.
5.17 FAA Aircraft Registry. As of the Issue Date, the
Aircraft is duly registered in the name of Mortgagor, the
Aircraft is not registered under the laws of any country other
than the United States, this Agreement and the Mortgage
Supplement covering the Aircraft being purchased by Mortgagor on
the Issue Date pursuant to the Aircraft Sale Agreement are in due
form for recording with the FAA Aircraft Registry and this
Agreement and the Mortgage Supplement has been duly filed for
recording with the FAA Aircraft Registry in favor of Mortgagee in
accordance with applicable law.
5.18 Insurances. As of the Issue Date, all insurance
policies required pursuant to this Agreement are in full force
and effect.
6. COVENANTS.
6.1 This Agreement. So long as this Agreement remains in
effect Mortgagor shall duly observe and perform its obligations
under the Securities and the Operative Documents to which it is a
party and pay to Mortgagee all amounts due and owing hereunder
and under the Securities and the other Operative Documents. All
such covenants are specifically incorporated herein and made a
part hereof.
6.2 Certain Rights. Mortgagor and Mortgagee agree each for
itself and for the benefit of any lessor, seller or secured party
of any engines leased, operated or purchased by Mortgagor that
neither Mortgagee nor its successors and assigns will acquire or
claim, as against such lessor, seller or secured party, any
right, title or interest in any such engine as the result of such
engine being installed on the Airframe at any time while such
engine is subject to such lease, conditional sale or other
security agreement and owned by such lessor or seller or subject
to a security interest in favor of such secured party; provided,
that such agreement of Mortgagor and Mortgagee shall not be for
the benefit of any lessor, seller or secured party of any such
engines unless such lessor, seller or secured party has agreed to
substantially the same extent as provided above (which agreement
may be contained in such lease, conditional sale or other
security agreement) that neither it nor its successors or assigns
will acquire, as against Mortgagor or Mortgagee, any right, title
or interest in any Engine as a result of such Engine being
installed on any airframe owned by, leased to or held under any
security agreement by such lessor, seller or secured party.
6.3 Insurance.
(a) Categories of Insurance. From the date of purchase
of the Aircraft by Mortgagor through the date which is two (2)
years after the Stated Maturity of the Securities, Mortgagor
will, at its own expense, effect and maintain in full force and
effect the insurance
<PAGE>
20
described in this Section 6.3 and in Exhibit B through such
brokers and with such insurers which are internationally
recognized and have a good reputation.
(b) Insurance for Indemnities. The insurance referred
to in Section 6.3(a) will in each case include and insure (to the
extent of the risks covered by the policies) the indemnity
provisions of Section 8.1 and Mortgagor will maintain such
insurance of the indemnities for a minimum of two (2) years
following the Stated Maturity of the Securities.
(c) Renewal. Mortgagor will use its best reasonable
efforts to try and provide to Mortgagee at least five (5)
Business Days prior to the date of termination or expiration of
any insurance, telex or fax confirmation from Mortgagor's
insurance brokers that renewed certificates of insurance
evidencing the renewal or replacement will be issued on the
termination date of the prior certificate. But in any event, not
less than one (1) Business Day before the expiration or
termination date of any insurance required hereunder, Mortgagor
will provide Mortgagee with telex or fax confirmation from
Mortgagor's insurance brokers that renewed certificates of
insurance evidencing the renewal or replacement of such insurance
and complying with this Section 6.3 and Exhibit B will be issued
on the termination date of the prior certificate. Within seven
(7) days after such renewal, Mortgagor will furnish its brokers'
certificates of insurance to Mortgagee.
(d) Assignment of Rights by Mortgagee. If Mortgagee
assigns all or any of its rights under this Agreement as
permitted by this Agreement or the Indenture or otherwise
disposes of any interest in the Aircraft to any other Person as
permitted by this Agreement or the Indenture, Mortgagor will,
upon request, procure that such Person hereunder be added as loss
payee and/or additional assured in the policies effected
hereunder and enjoy the same rights and insurance enjoyed by
Mortgagee under such policies. Mortgagee will nevertheless
continue to be covered by such policies.
(e) [Intentionally omitted.]
(f) Other Insurance. Mortgagee may from time to time
by notice to Mortgagor require Mortgagor at Mortgagor's expense
to effect such other insurance or such variations to the terms of
the existing insurance as may then be customary in the airline
industry for aircraft of the same type as the Aircraft and at the
time commonly available in the insurance market.
(g) Information. Mortgagor will provide Mortgagee with
any information reasonably requested by Mortgagee from time to
time concerning the insurance maintained with respect to the
Aircraft or in connection with any claim being made or proposed
to be made thereunder.
(h) Currency. All proceeds of insurance pursuant to
this Agreement will be payable in Dollars except as may be
otherwise agreed by Mortgagee.
(i) Grounding of Aircraft. If at any time any of the
insurance required pursuant to this Agreement will cease to be in
full force and effect, Mortgagor will forthwith
<PAGE>
21
ground the Aircraft and keep the Aircraft grounded until such
time as such insurance is in full force and effect again. Nothing
contained in this paragraph (i) shall be deemed to release
Mortgagor from its obligation to maintain insurance as required
herein.
(j) Failure to Insure. If at any time Mortgagor fails
to maintain insurance in compliance with this Section 6.3,
Mortgagee will be entitled but not bound to do any of the
following (without prejudice to any other rights which it may
have under this Agreement by reason of such failure):
(i) To effect or maintain insurance satisfactory
to Mortgagee or otherwise remedy such failure in such
manner as Mortgagee considers appropriate (and
Mortgagor will upon demand reimburse Mortgagee in full
for any amount so expended in that connection).
(ii) At any time while such failure is
continuing, to require the Aircraft to remain at any
airport or (as the case may be), proceed to and remain
at any airport designated by Mortgagee, until such
failure is remedied to Mortgagee's satisfaction.
(k) Reinsurance. If in the future any reinsurance
placed by Mortgagor or a permitted lessee or sublessee (if any)
of Mortgagor is maintained on the Aircraft, then such
reinsurance will be maintained with reinsurers and brokers
approved by Mortgagee. Such reinsurance will contain each of the
following terms and will in all other respects (including amount)
be satisfactory to Mortgagee:
(i) The same terms as the original insurance.
(ii) A cut-through and assignment clause
satisfactory to Mortgagee.
(iii) Payment will be made notwithstanding (A)
any bankruptcy, insolvency, liquidation or dissolution
of any of the original insurers and/or (B) that the
original insurers have made no payment under the
original insurance policies.
6.4 Compliance with Laws. Mortgagor shall exercise all due
diligence in order to comply with the requirements of all
applicable laws, rules, regulations and orders of any
governmental authority, noncompliance with which would have a
material adverse effect on Mortgagor.
6.5 Subleasing or Leasing.
(a) No Sublease or Lease without Consent. Except as
permitted under the Indenture or as set forth below in this
Section 6.5, MORTGAGOR WILL NOT SUBLEASE, LEASE OR PART WITH
POSSESSION OF THE AIRCRAFT OR ANY ENGINE (EXCEPT FOR MAINTENANCE
AND REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF THE
REQUIRED HOLDERS (THE GRANT OR REFUSAL OF WHICH WILL
<PAGE>
22
BE IN THE DISCRETION OF SUCH HOLDERS) AND IN ACCORDANCE WITH SUCH
REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING
BETWEEN THE REQUIRED HOLDERS AND MORTGAGOR. The wet leasing of
the Aircraft in the ordinary course of Mortgagor's business (in
which Mortgagor and its crews retain operational control of the
Aircraft) will not be considered a sublease of the Aircraft and
shall be permitted hereunder so long as no Default or Event of
Default then exists.
(b) Pre-Approved Subleasing or Leasing. Attached
hereto as Exhibit C is a list (the "Pre-Approved List") of
airlines to whom the Holders hereby agree Mortgagor may, subject
to paragraph (c) below, sublease or lease the Aircraft, without
requiring the consent of the Holders. Mortgagor shall have the
right to provide Mortgagee and the Holders with a new list (the
"New Pre-Approved List") from time to time which the Required
Holders shall approve, disapprove or disapprove in part and
approve in part within fifteen (15) days of receipt, provided
that any such approval will not be unreasonably withheld. In the
event that the Required Holders fail to respond within such
fifteen (15) day period, Mortgagor will once again deliver the
New Pre-Approved List to Mortgagee and the Holders and if the
Required Holders then fail to respond within five (5) Business
Days of receipt of the New Pre-Approved List (the second time it
is sent), the Required Holders shall be deemed not to have
consented to the New Pre-Approved List. The New Pre-Approved
List, as approved by the Required Holders, shall constitute the
Pre-Approved List from the date of such approval. Notwithstanding
the foregoing, Mortgagor shall not lease or sublease (including
renewals thereof) the Aircraft to any Person otherwise permitted
hereunder if at the time such lease or sublease would be entered
into or renewed such Person is subject to any bankruptcy,
insolvency, liquidation reorganization, dissolution or similar
proceeding, is seeking any reorganization or any readjustment of
its debts, has substantially all of its Property in the
possession of any liquidator, trustee, receiver or similar
Person, or is not generally paying its debts as and when they are
due.
(c) Any Approved Sublease or Lease. Any sublease or
lease (hereinafter in this paragraph (c), a "Sublease") of the
Aircraft or any Engine will be fully subject to fulfillment of
the following conditions:
(i) The Mortgagor shall provide at least ten (10)
Business Days' prior notice to Mortgagee of any
proposed Sublease, setting forth the identity of the
sublessee, the Property to be subject to such Sublease
and the term of such Sublease, and such Sublease shall
contain an express agreement by the sublessee to the
effect that: (A) such Sublease is fully subject and
subordinate in all respects to this Agreement and to
Mortgagee's rights, powers and remedies hereunder, (B)
such Sublease shall prohibit any assignment or further
sublease of the Property subject thereto, and (C) upon
notice of the occurrence of an Event of Default given
by Mortgagee to such sublessee, Mortgagee may avoid
such Sublease, and the sublessee shall forthwith
deliver the Aircraft or Engine to Mortgagee;
(ii) All necessary action shall have been taken
which is required to continue the perfection of
Mortgagee's security interest in the Aircraft and
Engine
<PAGE>
23
and the Mortgagee's rights under this Agreement and
the Sublease and all other necessary documents shall
have been filed, registered or recorded in such public
offices as may be required to fully preserve the
priority of the interest of Mortgagee in the Aircraft
and Engine under all applicable Laws;
(iii) Mortgagor shall deliver to Mortgagee,
promptly after execution thereof, a duly executed copy
of such Sublease;
(iv) Each Sublease shall be assigned by Mortgagor
to Mortgagee as security for Mortgagor's obligations
hereunder, and the sublessee shall be required upon
the occurrence and during the continuance of an Event
of Default to make all payments under such Sublease
directly to Mortgagee; provided that if such Event of
Default shall cease or shall be waived pursuant to the
provisions of the Indenture, Mortgagee shall
immediately pay to Mortgagor all funds so received and
not yet applied in accordance with the provisions
hereof or of the Indenture;
(v) Any such Sublease shall include provisions
for the maintenance, operation, possession, inspection
or insurance of the Property subject thereto that are
the same in all material respects as the applicable
provisions of this Agreement;
(vi) Mortgagor shall furnish to Mortgagee
evidence reasonably satisfactory to Mortgagee that the
insurance required by Section 6.3 remains in effect;
(vii) Mortgagor shall pay or reimburse Mortgagee
for all reasonable out-of-pocket fees and expenses,
including, without limitation, reasonable fees and
disbursements of counsel, incurred by Mortgagee in
connection with any such Sublease;
(viii) For all purposes of this Section 6.5, the
term "Sublease" shall be deemed to include interchange
agreements with respect to the Aircraft or Airframe;
and
(ix) Mortgagor shall remain primarily liable
hereunder for the performance of all the terms of this
Agreement to the same extent as if such Sublease had
not occurred, and no transfer of possession of the
Aircraft, the Airframe, any Engine or any Part shall
in any way discharge or diminish any of Mortgagor's
obligations hereunder or under any other Operative
Document.
In its sole discretion, Mortgagee may require an
Opinion of Counsel in connection with such Sublease, including
Mortgagee's rights to repossess the Aircraft in the event of an
Event of Default hereunder or under the Sublease. Mortgagor will
not amend the terms of any approved Sublease without the prior
written consent of the Mortgagee, which will not be unreasonably
withheld.
<PAGE>
24
6.6 Further Assurances. At any time or from time to time
upon the reasonable request of Mortgagee, Mortgagor shall cause
the appropriate Person to execute, acknowledge, deliver, and
cause to be recorded or registered (if so requested) all such
additional instruments and documents and further assurances of
title and shall do or cause to be done all such further acts and
things as may reasonably be necessary or desirable to effectuate
fully the intent and purposes of this Agreement, the Securities,
the Operative Documents, and any other agreement entered into in
connection therewith.
6.7 Maintenance. So long as the Lien of this Agreement
shall not have been discharged, Mortgagor, at its own cost and
expense, shall service, repair, maintain, overhaul and test the
Airframe and Engines (and each engine and part which is not an
Engine or Part, respectively, but is installed on the Airframe)
or cause the same to be done in accordance with a maintenance
program approved by the FAA (and in compliance with all
airworthiness directives thereof), and shall keep or cause to be
kept the Airframe and Engines (and each such other engine or
part) (i) in such operating condition as may be necessary to
enable the airworthiness certification of the Aircraft to be
maintained in good standing at all times under the applicable
rules and regulations of the FAA and the FAA-approved maintenance
program of Mortgagor and (ii) in good operating condition in
accordance with all mandatory service bulletins and
airworthiness directives of the United States Government and in
substantially the same manner as Mortgagor services, repairs,
maintains, overhauls and tests similar aircraft operated by
Mortgagor in similar circumstances and in accordance with
Mortgagor's maintenance program approved by the FAA and without
discriminating against the Aircraft with respect to its
maintenance, repair, condition or overhaul status based upon the
existence of this Agreement. Notwithstanding the foregoing, when
aircraft of the same type, model or series as the Airframe
(powered by engines of the same type as those with which the
Airframe shall be equipped at the time of grounding) have been
grounded by the FAA, Mortgagor shall not be required to maintain
such certification of airworthiness so long as it continues to
comply with all the other provisions of this Agreement with
respect to the Aircraft. Nothing herein shall be deemed to
prevent Mortgagor from taking the Aircraft out of service for
maintenance or modifications permitted hereunder or storage in
accordance with applicable FAA requirements, as appropriate and
sound practice for such storage. Mortgagor shall maintain or
cause to be maintained in the English language all records, logs
and other documents required by the FAA to be maintained in
respect of the Aircraft.
6.8 Registration. Except as otherwise permitted by this
Agreement or as otherwise required by the Federal Aviation Act or
rules, regulations, or orders promulgated thereunder, so long as
the Lien of this Agreement shall not have been discharged, the
Aircraft shall be duly registered in the name of Mortgagor under
such Act at all times. Mortgagee shall, at Mortgagor's expense,
execute and deliver all such documents as Mortgagor may
reasonably request for the purpose of effecting or continuing
such registration.
6.9 Insignia. Mortgagor shall for so long as the Aircraft
shall be subject to the Lien of this Agreement maintain or cause
to be maintained in the cockpit of the Airframe in a location
reasonably adjacent to the airworthiness certificate and on each
Engine, a metal nameplate identifying the security interest of
Mortgagee in the Aircraft, as follows:
<PAGE>
25
"Subject to a security interest in favor
of [Name of current Mortgagee], as Trustee"
Mortgagor will not allow the name of any Person other than
Mortgagee, or its successors or assigns, to be placed on the
Airframe or any Engine as a designation that might be interpreted
as a claim of ownership or of any security interest therein,
except that Mortgagor or any permitted lessee may operate the
Airframe and Engines in its livery, including its name and logo
and except that so long as the First Mortgage is in effect,
Mortgagor may comply with Section 6.9 of the First Mortgage.
6.10 Inspection. At all reasonable times so long as the
Aircraft is subject to the Lien of this Agreement, Mortgagee or
its authorized representatives may at its own expense (unless an
Event of Default shall have occurred and be continuing, or unless
such inspection discloses any material failure by Mortgagor to
comply with the provisions of this Agreement in which case, at
Mortgagor's expense) and risk conduct a visual walk-around
inspection of the Aircraft and any Engine (including, without
limitation, a visual walk-around inspection of the Aircraft
during any "C" check or other heavy maintenance) and may inspect
the books, logs and records of Mortgagor (and make copies of such
books, logs and records) relating to the operation and
maintenance thereof; provided that (a) any such inspection shall
be subject to the safety, security and workplace rules applicable
at the location where such inspection is conducted and any
applicable governmental rules or regulations and (b) in the case
of an inspection during a maintenance visit, such inspection
shall not interfere with the normal conduct of such maintenance
visit or extend the time required for such maintenance visit or,
in any event, at any time interfere with the use or operation of
the Airframe or any Engine or with the normal conduct of
Mortgagor's business. All information obtained in connection with
any such inspection shall be held confidential by Mortgagee and
the Holders and shall not be furnished or disclosed by them to
anyone other than each other, their bank examiners, regulators,
auditors, accountants, agents and legal counsel and any Person
with whom any Holder is in good faith conducting negotiations
relating to the possible transfer and sale of such Holder's
interest in any Security, if such Person shall have entered into
an agreement similar to that contained in this Section 6.10
whereby such Person agrees to hold such information confidential,
and except as may be required by an order of any court or
administrative agency or by any statute, rule, regulation or
order of any governmental authority or as may be necessary to
enforce the terms of this Agreement. Neither Mortgagee nor any
Holder shall have any duty to make any such inspection or incur
any liability or obligation by reason of not making any such
inspection. No inspection under this Section 6.10 shall relieve
Mortgagor of any of its obligations under this Agreement.
If requested by Mortgagee, Mortgagor shall give reasonable
prior written notice to Mortgagee of the date on which the
Aircraft, Airframe or any Engine undergoes its next scheduled
maintenance visit and next major check, and with respect to any
Engine the next off-the-wing maintenance, and shall advise
Mortgagee of the name and location of the relevant maintenance
provider and shall, at least five days prior to commencement of
such major check or maintenance, make available for inspection by
Mortgagee all relevant records, logs and documents relating to
the Aircraft.
<PAGE>
26
6.11 Alterations, Modifications and Additions. Mortgagor,
at its own expense, shall make alterations and modifications in
and additions to the Airframe and each Engine as may be required
to be made from time to time to comply with the applicable rules
and regulations of the FAA, to maintain the Standard Certificate
of Airworthiness for the Aircraft and as otherwise required by
applicable Law regardless of upon whom such requirements are, by
their terms, nominally imposed; provided that Mortgagor may, in
good faith, contest the validity or application of any such
standard in any reasonable manner which does not materially
adversely affect the Lien of this Agreement or subject Mortgagee
or any Holder to any risk of civil or criminal penalty. In
addition, Mortgagor, at its own expense, may from time to time
make or cause to be made such alterations and modifications in
and additions to the Airframe and any Engine as Mortgagor may
deem desirable in the proper conduct of its business (including,
without limitation, removal of Parts), provided further that no
such alteration, modification or addition diminishes, in
Mortgagee's reasonable judgment, the value, utility, condition,
airworthiness or remaining useful life of the Airframe or Engine
below the value, utility, condition, airworthiness or remaining
useful life thereof immediately prior to such alteration,
modification or addition, assuming the Airframe or Engine was
then in the condition required to be maintained by the terms of
this Agreement, except that the value (but not the utility,
condition, airworthiness or remaining useful life) of the
Aircraft may be reduced by the value of Parts which Mortgagor
deems obsolete or no longer suitable or appropriate for use in
the Airframe or Engine which shall have been removed and not
replaced, if the aggregate value of all such obsolete or
unsuitable Parts removed from the Aircraft and not replaced shall
not exceed $500,000. All Parts incorporated or installed in or
attached or added to the Airframe or any Engine as the result of
any alteration modification or addition effected by Mortgagor
shall be free and clear of any Liens except Permitted Liens and,
without further act, become subject to the Lien of this
Agreement; provided that Mortgagor may remove any such Part from
the Airframe or Engine if (i) such Part is in addition to, and
not in replacement of or in substitution for, any Part originally
incorporated or installed in or attached to the Airframe or
Engine at the time of delivery thereof hereunder or any Part in
replacement of, or in substitution for, any such original Part,
(ii) such Part is not required to be incorporated or installed in
or attached or added to the Airframe or Engine pursuant to the
terms hereof and (iii) such Part can be removed from the Airframe
or Engine without diminishing or impairing the value, condition,
utility, airworthiness or remaining useful life which the
Airframe or Engine would have had at the time of removal had such
alteration, modification or addition not been effected by
Mortgagor assuming the Aircraft was otherwise maintained in the
condition required by this Agreement. Upon the removal by
Mortgagor of any such Part as above provided, title thereto
shall, without further act, be free and clear of all rights of
Mortgagee and such Part shall no longer be deemed a Part
hereunder. Any such Part not so removed shall, so long as the
Lien of this Agreement shall not have been discharged, remain
subject to such Lien.
6.12 Notice of Change of Mortgagor's Chief Executive
Office. So long as the Lien of this Agreement shall not have been
discharged, Mortgagor shall notify Mortgagee at least 30 days
prior to any change in the location of the chief executive office
of Mortgagor.
<PAGE>
27
7. CONDEMNATION
7.1 Dedication to CRAF. Mortgagor may transfer possession
of the Airframe or any Engine to the United States of America or
any instrumentality or agency thereof as part of the Civil
Reserve Air Fleet Program authorized under 10 U.S.C. ss. 9511 et
seq. (or any substantially similar program) ("CRAF Program") for
a period which includes (collectively, the "CRAF Program
Requisition Period") (a) the entire period of requisition under
the CRAF Program and (b) an additional six (6) months after the
expiration of the requisition under the CRAF Program.
7.2 Notice to Mortgagee. Mortgagor will promptly notify
Mortgagee in writing in the event of the requisition for use of
the Aircraft under CRAF activation by the U.S. Government. All of
Mortgagor's obligations under this Agreement will continue to the
same extent as if such requisition had not occurred.
7.3 Requisition of Engine. If there is a requisition for
use of any Engine (but not the Airframe) by the U.S. Government
in connection with the CRAF Program, Mortgagor will replace such
Engine by complying with the terms of Section 3.3 to the same
extent as if a Total Loss had occurred with respect to such
Engine.
7.4 Government Indemnification. Any provisions of this
Agreement to the contrary notwithstanding, if there is a
requisition for use of the Aircraft pursuant to the CRAF Program
and/or CRAF activation, Mortgagee agrees that Mortgagor's
insurances described in Section 6.3 and in Exhibit B hereof may
be supplemented by insurances provided under Title XIII of the
Federal Aviation Act of 1958, as amended, and/or U.S. Government
indemnification (which Title XIII insurances and indemnification
will be, as to the Aircraft, in an amount not less than the
Agreed Value (as defined in Exhibit B) and, as to all other
insurances, in amounts not less than those established in Exhibit
B hereof); provided, however, that Mortgagor will remain
responsible for full compliance with all the provisions of this
Agreement, to the extent Title XIII and/or the U.S. Government
indemnification do not satisfy Mortgagor's obligations under this
Agreement and the Indenture.
7.5 No Geographic Limits. If there is a requisition for use
of the Aircraft pursuant to the CRAF Program and/or CRAF
activation, there will be no limitation on the geographic area in
which the Aircraft may be operated so long as, taken as a whole,
Mortgagor's insurance, the Title XIII insurance and/or the
indemnification provided by the U.S. Government fully cover
(without any geographic exclusions) Mortgagor's Section 6.3 and
Exhibit B insurance requirements.
7.6 Notice of Default. If an Event of Default occurs under
this Agreement during a CRAF Program Requisition Period with
respect to the Airframe and Mortgagee elects to pursue its
remedies under Section 4 to terminate this Agreement and
repossess the Airframe, Mortgagee will so notify the U.S.
Government by sending a written communication as follows:
Headquarters Air Mobility Command
AMC Contracting Office -- XOKA
Scott Air Force Base, Illinois 62225-5007
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28
7.7 Receipts of Payments. So long as no Event of Default
has occurred and is continuing, all payments received by
Mortgagee or Mortgagor from such Government Entity in connection
with the requisition of the Aircraft under the CRAF Program will
be paid over to or retained by Mortgagor. If an Event of Default
has occurred and is continuing, all payments received by
Mortgagor or Mortgagee from such Government Entity in connection
with the requisition of the Aircraft under the CRAF Program may
be used by Mortgagee to satisfy any Obligations owing by
Mortgagor in the order provided in Section 6.10 of the Indenture.
8. GENERAL INDEMNIFICATION
8.1 General Indemnification and Waiver of Certain Claims.
(a) Claims Defined. For the purposes of this Section
8.1, "Claims" shall mean any and all costs, liabilities
(including strict or absolute liability without fault in tort or
otherwise), losses, damages, penalties, actions or suits or
claims which may be imposed on, incurred by, suffered by, or
asserted against an Indemnified Person, as defined herein, and,
except as otherwise expressly provided in this Section 8.1, shall
include all reasonable out-of-pocket costs, disbursements and
expenses (including legal fees and expenses) paid or incurred by
an Indemnified Person in connection therewith.
(b) Indemnified Person Defined. For the purposes of
this Section 8.1, "Indemnified Person" means Mortgagee and each
Holder, and each of their respective successors, transferees or
assigns permitted under the terms of the Securities or the
Operative Documents, and all directors, officers, employees,
agents, servants and Affiliates of any such Person; provided
that, as a condition precedent to any performance by Mortgagor in
connection with such indemnity with respect to any Person which
is not a signatory to this Agreement, such Person shall adhere to
and expressly agree in writing to be bound by all the terms of
this Section 8.1.
(c) Claims Indemnified. Subject to the exclusions
stated in subsection (d) below, Mortgagor hereby indemnifies and
agrees to indemnify, defend and hold harmless, on an after-tax
basis as defined in Section 8.2(d), each Indemnified Person
against Claims arising out of or resulting from:
(i) the operation, possession, use, nonuse,
purchase, airworthiness, control, return, transfer,
maintenance, overhaul, testing, registration, title,
lease, reregistration, storage, modification,
replacement, repair, substitution, pooling or
interchange of the Aircraft, the Airframe, any Engine
or any Part, or any engine used in connection with the
Airframe, or any part thereof, or any other Property
used in connection therewith, or any other Collateral,
by Mortgagor, any lessee or any other Person
whatsoever, whether or not such operation, possession,
use, nonuse, title, lease, purchase, airworthiness,
control, return, transfer, maintenance, overhaul,
testing, registration, reregistration, storage,
modification, replacement, repair, substitution,
pooling or interchange is in compliance with the terms
of this Agreement or any other Operative Document,
including, without limitation, claims for death,
personal injury or Property damage or other loss or
harm to any
<PAGE>
29
Person whatsoever and Claims relating to any laws,
rules or regulations pertaining to such operations,
possession, use, nonuse, title, lease, purchase,
airworthiness, control, return, transfer maintenance,
overhaul, testing, registration, reregistration,
storage, modification, replacement, repair,
substitution, pooling or interchange, including
environmental control, noise and pollution laws, rules
or regulations;
(ii) the manufacture, design, purchase,
acceptance, rejection, delivery, nondelivery,
condition or ownership of the Aircraft, any Engine or
any Part, or any engine used in connection with the
Airframe, or any part thereof, or any other
Collateral, including, without limitation, latent and
other defects, whether or not discoverable, and
patent, trademark or copyright infringement; and
(iii) any breach of or failure to perform or
observe, or any other noncompliance with, any covenant
or agreement to be performed by, or other obligation
of Mortgagor under, the Securities or any of the
Operative Documents, or the falsity, inaccuracy or
breach of any representation or warranty of Mortgagor
in any of the Operative Documents.
(d) Claims Excluded. The following are excluded from
Mortgagor's agreement to indemnify under this Section 8.1:
(i) Claims attributable to acts or events
occurring after the repayment in full of the
Securities and the payment and performance of all
other Obligations;
(ii) Claims which are attributable to Taxes
(other than the obligations to "gross up" set forth in
Section 8.1(c)), whether or not Mortgagor is required
to indemnify therefor under Section 8.2; or
(iii) With respect to any particular Indemnified
Person, Claims to the extent attributable to the gross
negligence or willful misconduct (other than gross
negligence or willful misconduct imputed to such
Indemnified Person solely by reason of its interest in
the Aircraft) of, or to the breach of any contractual
obligation by, or the falsity or inaccuracy or breach
of any representation or warranty of, such Indemnified
Person (unless such breach or falsity or inaccuracy is
a result of Mortgagor's failure to comply with the
terms of any Operative Document or any representation
or warranty therein).
(e) Insured Claims. In the case of any Claim
indemnified by Mortgagor hereunder which is covered by a policy
of insurance maintained by Mortgagor pursuant to Section 6.3 or
otherwise, Mortgagor shall not be obligated to indemnify such
Indemnified Person with respect to such Claim to the extent of
any loss of benefits of such insurance resulting from the failure
of such Indemnified Person to cooperate with the insurers in the
exercise of their rights to investigate, defend or compromise
such Claim as may be required to retain the benefits of such
insurance with respect to such Claim.
<PAGE>
30
(f) Claims Procedure. An Indemnified Person shall
promptly notify Mortgagor of any Claim as to which
indemnification is sought, provided that failure of an
Indemnified Person to provide such notice shall not release
Mortgagor from any of its obligations to indemnify hereunder to
the extent such failure does not impair the rights of Mortgagor
with respect to the availability or extent of coverage of
insurance or otherwise result in any material adverse
consequences to Mortgagor. Subject to the rights of insurers
under policies of insurance maintained by Mortgagor, Mortgagor
shall have the right to investigate, and the right to defend or
compromise, employing counsel reasonably acceptable to such
Indemnified Person (except as may otherwise be required by any
applicable policy of insurance), any Claim for which
indemnification is sought under this Section 8.1; provided that,
Mortgagor shall not be entitled to defend or compromise any such
Claim if an Event of Default shall have occurred and be
continuing or if such proceedings involve a material risk of the
sale, forfeiture, or loss of, or the creation of any Lien (other
than a Permitted Lien) on, the Aircraft or other Collateral,
unless Mortgagor shall have posted a bond or other security
satisfactory to the relevant Indemnified Persons with respect to
such risk. The Indemnified Person shall cooperate with all
reasonable requests of Mortgagor in connection with any of the
foregoing. Where Mortgagor or the insurers under a policy of
insurance maintained by Mortgagor undertake the defense of an
Indemnified Person with respect to a Claim, no additional legal
fees or expenses of such Indemnified Person in connection with
the defense of such Claim shall be indemnified hereunder unless
such fees or expenses were incurred at the written request of
Mortgagor or such insurers; provided, however, that if (i) in the
written opinion of counsel to such Indemnified Person an actual
or potential material conflict of interest exists where it is
advisable for such Indemnified Person to be represented by
separate counsel or (ii) such Indemnified Person has been
indicted or otherwise charged in a criminal complaint and such
Indemnified Person informs Mortgagor that such Indemnified Person
desires to be represented by separate counsel, the reasonable
fees and expenses of any such separate counsel shall be borne by
Mortgagor. Subject to the requirements of any policy of insurance
applicable to a Claim, an Indemnified Person may participate at
its own cost and expense in any judicial proceeding controlled by
Mortgagor or its insurers pursuant to the preceding provisions,
provided that such party's participation does not, in the opinion
of the independent counsel appointed by Mortgagor or its insurers
to conduct such proceedings, unduly interfere with such control;
and such participation shall not constitute a waiver of the
indemnification provided in this Section 8.1. Nothing contained
in this Section 8.1(f) shall be deemed to require an Indemnified
Person to contest any Claim or to assume responsibility for or
control of any judicial proceeding with respect thereto. Payments
required to be made pursuant to this Section 8.1 to each
Indemnified Person shall be made directly to such Indemnified
Person in immediately available funds within 30 days after
written demand upon Mortgagor by such Indemnified Person. To the
extent permitted by applicable Law, interest at the highest rate
that may, under any circumstance (whether or not such
circumstance has or could actually occur), be applicable to the
Securities thereunder or under the terms of the Indenture shall
be paid, on demand, on any amount or indemnity not paid when due
pursuant to this Section 8.1 until the same shall be paid.
(g) Subrogation. To the extent that a Claim
indemnified by or on behalf of Mortgagor under this Section 8.1
is in fact paid in full by or on behalf of Mortgagor and/or an
insurer under a policy of insurance maintained by or on behalf of
Mortgagor, Mortgagor and/or
<PAGE>
31
such insurer, as the case may be, shall be subrogated to the
extent of such payment to the rights and remedies of the
Indemnified Person on whose behalf such Claim was paid with
respect to the transaction or event giving rise to such Claim.
Should an Indemnified Person receive any refund, in whole or in
part, with respect to any Claim paid by Mortgagor hereunder
(other than a refund pursuant to a separate insurance policy
maintained by an Indemnified Person, it shall (so long as no
Default or Event of Default has occurred and is continuing)
promptly pay over the amount refunded, together with any interest
received with respect to such amount for the period between the
indemnification payment and the receipt of such refund, to
Mortgagor.
(h) Waiver of Certain Claims. Mortgagor hereby waives
and releases any claim now or hereafter existing against any
Indemnified Person arising out of death or personal injury to
personnel of Mortgagor, loss or damage to Property of Mortgagor,
or the loss of use of any Property of Mortgagor, which results
from or arises out of the condition, use or operation of the
Aircraft prior to the payment in full of the Securities and all
other Obligations, including, without limitation, any latent or
patent defect whether or not discoverable, except as otherwise
provided in the Aircraft Sale Agreement.
(i) Certain Limitations. The general indemnification
provisions of this Section 8.1 are not intended to waive or
supersede any specific provisions of, or any rights or remedies
Mortgagor or Mortgagee may have under or with respect to, the
Aircraft Sale Agreement, the Indenture or any other Operative
Document to the extent such provisions, rights or remedies apply
to any Claim.
(j) Effect of Other Indemnities. The indemnification
obligations of Mortgagor under this Section 8.1 shall be those of
a primary obligor whether or not an Indemnified Person shall also
be indemnified with respect to the same matter under the terms of
any other instrument, and the Indemnified Person seeking
indemnification from Mortgagor pursuant to this Section 8 may
proceed directly against Mortgagor without first seeking to
enforce any other right of indemnification.
8.2 Tax Indemnification.
(a) Indemnitee Defined. For purposes of this Section
8.2, "Indemnitee" means Mortgagee, the Holders and their
respective Affiliates, successors and permitted transferees and
assigns.
(b) Taxes Indemnified. Subject to the exclusions
stated in Section 8.2(c), Mortgagor shall indemnify, pay, defend,
protect and hold harmless each Indemnitee against all Taxes,
howsoever imposed (whether imposed upon any Indemnitee,
Mortgagor, all or any part of the Aircraft, any other Collateral
or otherwise), by any federal, state or local government,
political subdivision, or taxing authority in the United States,
by any government or taxing authority of or in a foreign country
or of or in a territory or possession of the United States, or by
any international authority, upon or with respect to or in
connection with, based upon or measured by, in whole or in part:
<PAGE>
32
(i) the Aircraft, the Airframe, the Engines, the
Parts, or any other Collateral or any part of any of
the foregoing or interest therein;
(ii) the manufacture, purchase, financing,
ownership, delivery, registration or reregistration,
redelivery, leasing, charter, possession, use,
location, operation, return, storage, transfer of
title, sale, acceptance, rejection or other
disposition of or action or event with respect to the
Aircraft, the Airframe, the Engines, the Parts, or any
other Collateral or any part of any of the foregoing
or interest therein;
(iii) the rentals, receipts, income or earnings
arising from the purchase, financing, ownership,
delivery, redelivery, leasing, possession, use,
operation, return, storage, transfer of title, sale or
other disposition of the Aircraft, the Airframe, the
Engines, the Parts, or any other Collateral or any
part of any of the foregoing or interest therein;
(iv) the Securities, their issuance or
acquisition, or the payments of any amounts
thereunder;
(v) the Property, or other proceeds received with
respect to the Property, held by Mortgagee hereunder;
or
(vi) the Operative Documents or amendments or
supplements thereto, their execution or the
transactions contemplated thereby.
(c) Taxes Excluded. The indemnity provided for in
Section 8.2(b) shall not extend to any of the following:
(i) Taxes on, based on, or measured by income
(including gross income), receipts, capital,
franchises, excess profits or conduct of business of
an Indemnitee, except to the extent Taxes of such type
would not have been imposed on such Indemnitee but for
the location of the Aircraft, activities or place of
incorporation or principal place of business of
Mortgagor or any other user of the Aircraft or any
Affiliate of any of the foregoing, registration of the
Aircraft, or payment of amounts due under any Security
or other Operative Document from, the jurisdiction of
the taxing authority imposing such Taxes;
(ii) Taxes imposed against a transferee of an
Indemnitee to the extent of the excess of such Taxes
over the amount of such Taxes which would have been
imposed had there not been a transfer by an Indemnitee
other than Mortgagee or its Affiliates of any interest
of such Indemnitee in the Aircraft, any Security, or
any Operative Document;
(iii) in the case of any Indemnitee, Taxes which
arise out of or are caused by (a) the willful
misconduct or gross negligence of such Indemnitee or a
Related Party (as defined below) with respect to such
Indemnitee or (b) such
<PAGE>
33
Indemnitee's making a representation under any
Operative Document which proves to be untrue;
(iv) in the case of any Indemnitee, Taxes upon
(x) any voluntary transfer by such Indemnitee or a
Related Party with respect to such Indemnitee of all
or any portion of its interest in the Aircraft or any
part thereof, any Operative Document or any Security
(other than transfers which occur or result from the
exercise of any rights under Section 4) or (y) any
involuntary transfer of the Aircraft or any interest
therein or any Security, any Operative Document, or
shares of stock by an Indemnitee resulting from any
bankruptcy, foreclosure or similar proceedings in
which any Indemnitee is the debtor;
(v) United States withholding taxes imposed on
payments to a foreign Person;
(vi) Taxes imposed with respect to any fees
received by Mortgagee; or
(vii) Taxes imposed by Section 4795 of the Code
or any successor provision thereto.
For purposes of this Section 8.2, each transferee or
assignee of Mortgagee or a Holder shall be a "Related Party" with
respect to each other.
(d) Calculation of Indemnities. The amount Mortgagor
shall be required to pay with respect to any Tax indemnified
against under this Section 8.2 or with respect to any claim under
Section 8.1 shall be an amount that after taking into account any
Taxes, fees and other charges imposed upon the receipt of an
indemnity under this Section 8.2 or under Section 8.1 and any Tax
benefits recognized upon payment of such Taxes, equals the amount
otherwise due under Section 8.1. All computations for the
purposes hereof shall be based on the assumption that the
Indemnitee is taxable on all of its income at the highest
marginal rate in effect on the date payment pursuant to this
Section 8 is made.
(e) Procedures. Any amount payable to an Indemnitee
pursuant to this Section 8.2 shall be paid within 60 days after
receipt of a written demand therefor from such Indemnitee
accompanied by a written statement describing in reasonable
detail the basis for such indemnity and the computation of the
amount so payable; provided that such amount need not be paid
prior to the earlier of (i) the time such Taxes are paid or (ii)
in the case of amounts which are being contested by Mortgagor in
good faith or by the Indemnitee pursuant to this Section 8.2, the
time such contest is finally resolved. Within 30 days following
Mortgagor's receipt of the computation of the amount of the
indemnity, Mortgagor may request that an accounting firm to be
jointly selected by Mortgagor and such Indemnitee (but not
including the accounting firm that regularly prepares the
certified financial statements of Mortgagor or such Indemnitee)
determine whether such computations of the Indemnitee are
correct. The computations of such accounting firm shall be final,
binding and conclusive upon the parties, and Mortgagor shall have
no right to inspect the books, records or tax returns of the
Indemnitee to verify such computation. All fees and expenses
payable under this Section 8.2 in connection with such
verification shall be borne
<PAGE>
34
by Mortgagor, unless such verification discloses an error adverse
to Mortgagor of 5% or more of the amount calculated by the
Indemnitee, in which case such fees shall be paid by the
Indemnitee.
(f) Contest. If a written claim is made against an
Indemnitee for Taxes with respect to which Mortgagor is liable
for payment or indemnity hereunder, such Indemnitee shall give
Mortgagor prompt notice in writing of such claim and shall
furnish Mortgagor with copies of any requests for information
from any taxing authority relating to such Taxes with respect to
which Mortgagor may be required to indemnify hereunder, but a
failure to give such notice or to furnish such requests shall not
diminish Mortgagor's obligations hereunder except to the extent
such failure precludes Mortgagor from exercising its contest
rights hereunder. The Indemnitee shall in good faith, and at
Mortgagor's expense, if timely requested in writing by Mortgagor,
contest in the name of the Indemnitee the validity, applicability
or amount of such Taxes by:
(i) resisting payment thereof if practical;
(ii) not paying the same except under protest if
protest is necessary and proper;
(iii) if the payment be made, using reasonable
efforts to obtain a refund thereof in appropriate
administrative and judicial proceedings; or
(iv) taking such other action as is reasonably
requested by Mortgagor from time to time.
Notwithstanding the foregoing provisions of this Section
8.2(f), such Indemnitee shall not be required to take, and shall
not be required to permit Mortgagor to take, any administrative
or judicial action to contest any such Tax unless (A) Mortgagor
shall have agreed to pay such Indemnitee on demand and shall pay
all reasonable out-of-pocket costs and expenses which such
Indemnitee may incur in connection with contesting such Taxes,
(B) no payment Event of Default shall have occurred and be
continuing unless Mortgagor shall have posted a satisfactory bond
with respect to such claim or provided other security therefor
reasonably satisfactory to such Indemnitee, (C) in the event of a
contest by or in the name of an Indemnitee or in the event of a
judicial contest, upon written request of the Indemnitee
Mortgagor shall provide to such Indemnitee within 30 days after
such request an Officers' Certificate to the effect that a
reasonable basis exists for contesting such claim, (D) prior to
commencing any judicial action, Mortgagor acknowledges its
liability hereunder on the contested amount, and (E) it shall
have been reasonably determined that the action to be taken will
not (i) result in the material danger of a sale, forfeiture or
loss of the Aircraft or Airframe (except if Mortgagor shall have
adequately bonded any Lien that results in such material danger
or otherwise made adequate provision reasonably satisfactory to
such Indemnitee to protect the interest of such Indemnitee) or
(ii) subject such Indemnitee to any material risk of criminal
prosecution. To the extent not inconsistent with the provisions
contained elsewhere in this Section 8.2(f), the Indemnitee shall
have control over the conduct of a contest of a claim hereunder
(except to the extent that a contest is being conducted by
Mortgagor in accordance with the provisions hereof).
Notwithstanding the foregoing, if any Indemnitee shall release,
waive, compromise or settle any
<PAGE>
35
claim which may be indemnifiable by Mortgagor pursuant to the
foregoing provisions of this Section 8.2 without the express
written permission of Mortgagor, Mortgagor's obligation to
indemnify such Indemnitee with respect to such claim shall
terminate to that extent. Nothing contained in this Section 8.2
shall require any Indemnitee to contest, or require any
Indemnitee to permit Mortgagor to contest, a claim which such
Indemnitee would otherwise be required to contest pursuant to
this Section 8.2(f), if such Indemnitee shall waive its rights to
any indemnity payment by Mortgagor which would otherwise be
payable by Mortgagor pursuant to this Section 8.2 in respect of
such claim.
(g) Refund. Upon receipt by an Indemnitee of a refund
or credit of all or part of any Taxes which Mortgagor shall have
paid for such Indemnitee or for which Mortgagor shall have
reimbursed, advanced funds to or indemnified such Indemnitee,
such Indemnitee shall pay or repay to Mortgagor an amount which,
after the subtraction of the amount of any further net tax
savings realized by such Indemnitee as a result of the payment
under this Section 8.2(g), and the addition of any net tax
detriment realized by such Indemnitee as a result of the receipt
or accrual of such refund and any interest received or accrued by
such Indemnitee in such refund, is equal to the amount of such
refund and any interest received or accrued by such Indemnitee on
such refund; provided, that such amount shall be reduced by the
amount of any payment or indemnity then due from Mortgagor to or
on behalf of such Indemnitee pursuant to the Securities or the
Operative Documents and not made (and any amount so withheld
shall not be payable before such time and to such extent as
Mortgagor shall have made such payments or indemnities). Any
subsequent loss of such refund and interest as an erroneous
refund shall be indemnifiable in accordance with the provisions
of this Section 8.2 (disregarding Section 8.2(c)).
(h) Return. So long as the Aircraft is subject to the
Lien of this Agreement Mortgagor will prepare and file all
property tax returns with respect to the Aircraft, except with
respect to any such return that Mortgagor is not permitted to
file under applicable Law.
8.3 Survival of Indemnities. The agreement and indemnities
contained in Sections 8.1 and 8.2 shall survive the discharge of
this Agreement (but only with respect to any Person who was
entitled to the benefit of such agreements and indemnities at or
prior to the time of such termination) but only to the extent
relating to claims, obligations and other liabilities arising out
of acts or events occurring, or otherwise attributable to the
period, prior to the payment in full of the Securities and all
other Obligations.
9. MISCELLANEOUS
9.1 Performance by Mortgagee. If Mortgagor shall fail to
maintain, or cause to be maintained, any insurance required to be
carried pursuant to this Agreement, Mortgagee may obtain the same
for the account of Mortgagor; and Mortgagor shall pay to
Mortgagee interest (to the extent permitted by applicable Law) at
the highest rate that may, under any circumstance (whether or not
such circumstance has or could actually occur), be applicable to
the Securities thereunder or under the Indenture, computed on the
basis of a 360-day year and the actual number of days elapsed, on
the amount of any such payment from the date made until the date
reimbursed by Mortgagor pursuant hereto. If Mortgagor shall fail
in a timely and effective
<PAGE>
36
manner to take and complete any other action that it has herein
undertaken to perform, strictly in accordance with the provisions
hereof, Mortgagee may do or cause the same to be done; and there
shall be added to the indebtedness secured hereby any loss, cost
or expense incurred by or on behalf of Mortgagee incurring such
default or failure, or caused to be suffered by Mortgagee through
the incorrectness or breach of any of the covenants, agreements,
representations or warranties of Mortgagor herein or by any other
default of Mortgagor hereunder; and all sums so lost or expended
shall be payable on demand and shall bear interest as provided in
the first sentence of this Section 9.1, and Mortgagee shall be
subrogated to all of the rights against Mortgagor of any Person
to whom it shall have made any payment or payments under the
foregoing authority.
9.2 Power of Attorney. Mortgagor hereby irrevocably
appoints Mortgagee, and its successors and assigns, the true and
lawful attorney of Mortgagor (with the full power of
substitution), in the name and place and at the expense of
Mortgagor, (i) to give any necessary receipts or acquittance for
amounts collected or received pursuant to Section 4 hereof, (ii)
at any time after the occurrence of an Event of Default and so
long as the same shall be continuing, to make all necessary
transfers of all or any part of the Collateral in connection with
any sale or other disposition thereof made pursuant to such
Section 4, (iii) at any time after the occurrence of any such
Event of Default and so long as the same shall be continuing, to
execute and deliver for value all necessary instruments of
negotiation, assignment and transfer, (iv) at any time after the
occurrence of any such Event of Default and so long as the same
shall be continuing, to employ legal counsel and to appear in its
name in any court in any jurisdiction to commit and compromise
and discharge any alleged Lien, charge or other encumbrance
asserted against any of the Collateral, in any manner and by any
means that shall to it or them, in its or their sole and complete
discretion, seem proper; provided, however, that any such
undertaking on the part of Mortgagee shall not qualify in any
manner or to any extent or degree the obligation of Mortgagor so
to defend its title to, and the security interest of Mortgagee
in, the Collateral and every part thereof and (v) to file and
record such copies or memoranda hereof and financing statements,
continuation statements and other instruments or documents with
respect to the security interest created hereby as Mortgagee may
deem desirable fully to protect its interest hereunder, and for
such purpose Mortgagor hereby authorizes Mortgagee to effect any
such filings or recordings without the signature of Mortgagor to
the extent permitted by applicable Law, Mortgagor hereby
ratifying and confirming all that its said attorney shall
lawfully do hereunder and pursuant hereto and acknowledging that
its said attorney shall have no duty, by virtue of this Section
9.2 or at the risk of otherwise waiving or qualifying the
obligation of Mortgagor to do so, to do any of the above acts.
9.3 Waiver, etc., by Mortgagor. To the fullest extent that
it may now and hereafter lawfully so agree, Mortgagor hereby
agrees that it shall not at any time plead, claim or take the
benefit of any appraisal, valuation, extension, moratorium,
redemption or other law now or hereafter in effect in any
jurisdiction in order to prevent or delay the enforcement of any
provision of this Agreement or the indebtedness or agreements
secured hereby, or the absolute sale of any portion of or all the
Collateral to any purchaser at any sale under Section 4 hereof;
and Mortgagor, for itself and all who may claim through it, to
the fullest extent that it or they now and hereafter may lawfully
so agree, hereby waives the benefit of all such laws. Any sale
<PAGE>
37
of, grant of options to purchase or other realization against all
or any part of the Collateral shall operate to divest all right,
title and interest, at law, in equity and otherwise, of Mortgagor
in and to the Collateral so sold, optioned or realized upon, and
shall be a perpetual bar, at law, in equity and otherwise,
against Mortgagor and against any and all persons claiming or
attempting to claim the Collateral so sold, optioned or realized
upon, or any part thereof, from, through or under Mortgagor. No
delay on the part of Mortgagee in exercising any power of sale,
Lien or option, or any other right or remedy hereunder, or
otherwise, and no notice or demand that may be given to or made
upon Mortgagor with respect to any such power, right or remedy,
shall constitute a waiver thereof or limit or impair the right of
Mortgagee to take any other or similar action or to exercise any
power of sale, Lien or option, or any other right or remedy
granted in this Agreement or in any other agreement secured
hereby or otherwise available to Mortgagee; nor shall any single
or partial exercise of any such power, right or remedy preclude
any other or further exercise thereof, or the exercise of any
power, right or remedy granted in this Agreement or otherwise
available to Mortgagee, or prejudice its rights against Mortgagor
in any respect. Each and every remedy of Mortgagee shall, to the
extent permitted by applicable Law, be cumulative and in addition
to any other remedy granted hereunder or now or hereafter
available to it at law, in equity or otherwise.
9.4 Amendment, etc. Neither this Agreement nor any
provision hereof may be amended, modified, waived or discharged
orally, but only by an instrument in writing in accordance with
Article 9 of the Indenture. No waiver by Mortgagee of any breach
or default of or by Mortgagor under this Agreement, any other
agreement or indebtedness secured hereby, or otherwise, shall be
deemed a waiver of any other or similar, previous or subsequent
breach or default.
9.5 [Intentionally Omitted.]
9.6 Successors and Assigns. This Agreement and all
obligations of Mortgagor hereunder shall be binding upon the
successors and assigns of Mortgagor permitted under the
Indenture, and shall, together with the rights and remedies of
Mortgagee hereunder, inure to the benefit of Mortgagee, the
Holders, and their respective successors and assigns. Any
assignment in violation hereof shall be null and void ab initio.
9.7 Severability. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid,
illegal or unenforceable in whole or in part in any jurisdiction,
then such invalidity or unenforceability shall affect in that
jurisdiction only such clause or provision, or part thereof, and
shall not in any manner affect such clause or provision in any
other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction. Any impairment or invalidity,
under the laws of any jurisdiction, of this Agreement, in its
aspect as security for any portion of the Obligations, hereunder
or under the Securities, the Indenture or the other Operative
Documents, for any portion of any other indebtedness or
obligation secured hereby, shall not impair or invalidate this
Agreement as security for any other portion thereof.
<PAGE>
38
9.8 Governing Law; Waiver of Jury Trial.
(a) The laws of the State of New York shall govern
this Agreement without regard to principles of conflict of laws.
(b) Mortgagee and Mortgagor each waive any right to
have a jury participate in resolving any dispute, whether
sounding in contract, tort, or otherwise arising out of,
connected with, related to or incidental to the relationship
established between them in connection with this Agreement.
Instead, any disputes resolved in court will be resolved in a
bench trial without a jury.
9.9 Notices; Waivers. Any request, demand, authorization,
direction, notice, consent, waiver or other document provided or
permitted by this Agreement to be made upon, given or furnished
to, or filed with the parties hereto and/or the Holders, as the
case may be, shall be made, given, furnished or filed in the
manner and subject to the provisions of Section 11.2 of the
Indenture.
9.10 No Adverse Interpretation of Other Agreements. This
Agreement may not be used to interpret any agreement of Mortgagor
or any of its Subsidiaries which is unrelated to this Agreement
or the other Operative Documents. Any such agreement may not be
used to interpret this Agreement.
9.11 Benefits of Agreement Restricted. Subject to the
provisions of Section 9.6 hereof, nothing in this Agreement,
express or implied, shall give or be construed to give to any
Person, firm or corporation, other than the parties hereto and
the Holders, any legal or equitable right, remedy or claim under
or in respect of this Agreement or under any covenant, condition,
or provision herein contained, all such covenants, conditions and
provisions, subject to Section 9.6 hereof, being for the sole
benefit of the parties hereto and of the Holders.
9.12 Counterpart Originals. This Agreement may be signed in
two or more counterparts, each of which shall be deemed an
original, but all of which shall together constitute one and the
same agreement.
9.13 Effect of Headings. The Section headings and the Table
of Contents contained in this Agreement have been inserted for
convenience of reference only, and are and shall be without
substantive meaning or content of any kind whatsoever and are not
a part of this Agreement.
9.14 Section 1110 of the Bankruptcy Code. It is the
intention of the parties that the security interest created by
this Agreement shall be a security interest within the meaning of
Section 1110 of the Bankruptcy Code (11 U.S.C. ss. 1110) which
shall entitle Mortgagee to all of the benefits of such Section or
any similar successor provision with respect to the right to
repossess the Airframe, Engines and Parts as provided herein; and
in any circumstances where more than one construction of the
terms and conditions of this Agreement is possible, a
construction which would preserve such benefits shall control
over any construction which would not preserve such benefits or
would render them doubtful. In that regard, the parties
<PAGE>
39
acknowledge and agree that the security interest created by this
Agreement is intended to be a purchase-money security interest
retained and taken by Mortgagee for the benefit of the holders of
the Securities as seller of the Collateral to Mortgagor to secure
the purchase price of the Collateral as evidenced by the
Operative Documents. To the extent consistent with the provisions
of such Section 1110 or any analogous Section of the Federal
bankruptcy laws, as amended from time to time, it is hereby
expressly agreed and provided that, notwithstanding any other
provisions of the Federal bankruptcy laws, as amended from time
to time, any right of Mortgagee to take possession of the
Aircraft in compliance with the provisions of this Agreement
shall not be affected by the provisions of 11 U.S.C. ss. 362 or
ss. 363, as amended from time to time, or any analogous
provisions of any superseding statute or any power of the
bankruptcy court to enjoin such taking of possession. It is the
intention of the parties that the entitlement to such benefits
shall not be adversely affected by any sale or other transfer of
any Security to a subsequent Holder or by any modification of the
terms hereof, of the Securities or of the other Operative
Documents.
<PAGE>
40
IN WITNESS WHEREOF, the parties hereto have, by their indicated
officers thereunto duly authorized, caused this Aircraft Second
Mortgage and Security Agreement to be executed as of the day and
year first above written.
Mortgagor,
TRANS WORLD AIRLINES, INC.
By:__________________________
Name:
Title:
Mortgagee,
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Trustee
By:__________________________
Name:
Title:
<PAGE>
EXHIBIT A
SECOND MORTGAGE AND
SECURITY AGREEMENT SUPPLEMENT NO.
Second Mortgage and Security Agreement Supplement No.
__, dated _______, ("Mortgage Supplement"), of TRANS WORLD
AIRLINES, INC. (the "Company") under the Agreement (as
hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Second Aircraft Mortgage and Security
Agreement dated as of June __, 1998 (the "Agreement"), between
the Company and First Security Bank, National Association, as
Trustee under the Indenture referred to in the Agreement (the
"Mortgagee"), provides for the execution and delivery of one or
more supplements thereto substantially in the form hereof which
shall particularly describe the [Aircraft]* [Engine(s)]** (such
term and other defined terms in the Agreement being used herein
with the same meanings) being delivered on [the date thereof]*
[insert applicable date],** and shall specifically grant an
equipment security interest in the Company's interest in such
[Aircraft]* [Engine(s)]** to the Mortgagee; and
[WHEREAS, it is intended that an executed counterpart
of the Agreement be duly recorded pursuant to the Federal
Aviation Act concurrently with the recording pursuant to such Act
of an executed counterpart of this Mortgage Supplement and,
accordingly, such executed counterpart of this Mortgage
Supplement shall be attached to and constitute a part of the
Agreement for all purposes and shall be recorded together with
such Agreement pursuant to such Act; and]*
[WHEREAS, the Agreement was duly recorded pursuant to
the Federal Aviation Act on June __, 1998 and has been assigned
Conveyance No. __________; and]**
WHEREAS, the Company hereby acknowledges that the
[Aircraft]* [Engine(s)]** referred to in Annex A attached hereto
and made a part hereof has been delivered to the Company, and is
included in the Property of the Company covered by the terms and
conditions of the Agreement, subject to the equipment security
interest created thereunder;
NOW, THEREFORE, in order to secure all Obligations for
the benefit of Mortgagee and the Holders, subject to the terms
and conditions of the Agreement, and in consideration of the
premises and of the covenants contained in the Agreement, and of
other good and valuable consideration, the receipt whereof is
hereby acknowledged, the Company has transferred, assigned,
granted, bargained, sold, conveyed, mortgaged, hypothecated,
pledged, set over and confirmed and does hereby transfer, assign,
grant, bargain, sell, convey, mortgage, hypothecate, pledge, set
over and confirm, a second priority equipment security interest
in and a
- --------
* For Mortgage Supplement executed and delivered on the Issue
Date.
** For Mortgage Supplement executed and delivered after the Issue
Date for any Replacement Engine(s).
<PAGE>
2
mortgage lien on, the Property comprising all its right, title
and interest in and to [each of the Airframe and Engines]* [the
Engine(s)]** described in Annex A attached hereto whether or not
any such Engine(s) shall be installed in or attached to the
Airframe or any other aircraft, to the Mortgagee, its successors
and assigns;
To have and to hold all and singular the aforesaid
Property unto the Mortgagee, its successors, transferees and
assigns, for the uses and purposes and subject to the terms and
provisions set forth in the Agreement.
This Mortgage Supplement shall be construed as
supplemental to the Agreement and shall form a part thereof, and
the Agreement is hereby incorporated by reference herein and is
hereby ratified, approved and confirmed and terms not otherwise
defined herein shall have the meanings provided in the Agreement.
This Mortgage Supplement is being delivered in the
State of New York and shall be in all respects, including all
matters of construction, validity and performance, be governed by
the laws of the State of New York without regard to principles of
conflict of laws.
* * *
- --------
* For Mortgage Supplement executed and delivered on the Issue
Date.
** For Mortgage Supplement executed and delivered after the Issue
Date for any Replacement Engine(s).
<PAGE>
3
IN WITNESS WHEREOF, the Company has caused this
Mortgage Supplement to be duly executed by one of its duly
authorized officers, as of the day and year first above written.
TRANS WORLD AIRLINES, INC.
By:_________________________
Name:_______________________
Title:______________________
<PAGE>
Annex A to
Second Mortgage and
Security Agreement Supplement
No. ___
DESCRIPTION OF AIRFRAME AND ENGINES
AIRFRAME
FAA Regis- Manufacturer's
Manufacturer Model tration No. Serial No.
The Boeing _______ _______ _________
Company
ENGINES
Manufacturer Model Manufacturer's Serial Nos.
Pratt & Whitney __________ __________
Pratt & Whitney __________ __________
Each Engine is of 750 or more "rated take-off horsepower"
or the equivalent of such horsepower.
<PAGE>
EXHIBIT B
INSURANCE
[Refer to the Aircraft Second Mortgage and Security
Agreement dated as of June 16, 1998 between Mortgagor and
Mortgagee (the "Agreement"). Capitalized terms used in this
Exhibit and not otherwise defined herein or in the insurance
policies referred to herein shall have the meanings ascribed to
such terms in Section 1 of the Definitions Appendix attached to
the Agreement as Appendix I. If applicable, insurance
certificates from the insurers will be provided.]
To: First Security Bank, National Association, as Trustee
("Mortgagee")
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Services
TRANS WORLD AIRLINES, INC.
Boeing 767-231 ETOPS
Manufacturer's Serial No.: 22570
FAA Registration Mark: N607TW (the "Aircraft")
The following underwriters have subscribed to the insurance
policies:
[LIST COMPANIES & PERCENTAGES]
THIS IS TO CERTIFY THAT, as insurance brokers, we have
effected fleet insurance in respect of aircraft owned or operated
by Mortgagor (including the Aircraft) as specified below.
AIRCRAFT HULL ALL RISKS
COVERING:
All risks of physical loss or damage to the Aircraft from
any cause (subject only to the exclusions as specified
below), for an agreed value of the Aircraft in an amount
equal to $27,500,000 (the "Agreed Value").
DEDUCTIBLES:
US$ 1,000,000 each and every loss. Not applicable to Total
Loss/Constructive Total Loss or Arranged Total Loss.
GEOGRAPHICAL COVERAGE:
Worldwide
<PAGE>
2
AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY
COVERING:
Aircraft Third Party, Passenger, Baggage, Cargo and Mail
Liability and Airline General Third Party Liability
(including but not limited to Premises, Hangarkeepers,
Contractual and Products Liability) for combined single
limit of not less than US$ 600,000,000 (or such higher
amount as Mortgagor may carry on any other aircraft in its
fleet) any one accident/occurrence (but in the aggregate in
relation to Products Liability), extended to cover
Mortgagor's liability under the Agreement to the extent of
the risks covered by the policy; including war and allied
perils under Extended Coverage Endorsement as per AVN 52;
subject only to exclusions as specified below.
GEOGRAPHICAL LIMITS:
Worldwide
HULL WAR AND ALLIED PERILS
COVERING:
Hull War Risks as per RJM Airline One, but including (i)
confiscation or requisition (including by State of
Registration), (ii) hijacking or other unlawful seizure or
wrongful exercise of control of the Aircraft or crew in
flight (including any attempt at such seizure or control)
and including "All Risks" Continuation Clause and Extortion
Risks (including expenses) and covering claims excluded
from Hull All Risks Policy while Aircraft outside Assured's
control by reason of perils insured under this policy, for
the Agreed Value.
DEDUCTIBLE:
US$ 1,000,000
GEOGRAPHICAL LIMITS:
Worldwide
AIRCRAFT SPARES ALL RISKS INSURANCE
COVERING:
All risks of physical loss or damage to Aircraft Parts or
spares or Engines at all times when removed from the
Aircraft from whatever cause, subject only to the
exclusions specified below, including the risks set down in
AVN 48B other than paragraphs (a) and (b) thereof (but
including paragraph (a) in respect of transit risks) for
limits of:
<PAGE>
3
US$ 18,000,000
and covering replacement cost.
DEDUCTIBLE:
US$ 250,000 each and every loss
GEOGRAPHICAL COVERAGE:
Worldwide
CONTRACTUAL INDEMNITY
Mortgagor has insurance coverage for the indemnities agreed
to by Mortgagor pursuant to Section 6.3 of the Agreement
but only to the extent of the risks covered by the
policies.
PERIOD OF COVERAGE (ALL POLICIES)
From Issue Date to [EXPIRATION DATE]
It is further certified that Mortgagee has an interest in
respect of the Aircraft under the Agreement. Accordingly,
with respect to losses occurring during the period from the
Issue Date until the expiry of the Insurance or until the
expiry or agreed termination of the Agreement or until the
obligations under the Agreement are terminated by any
action of Mortgagor or Mortgagee and it is confirmed that
the Insurance afforded by the Policy is in full force and
effect and it is further agreed that the following
provisions are specifically endorsed to the Policy.
1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS) AND
AIRCRAFT SPARES INSURANCES
[MORTGAGEE ONLY-NO OTHER CONTRACT PARTIES] In respect of
any claim on the Aircraft that becomes payable on the basis of a
total loss, settlement shall be made to, or to the order of
Mortgagee and Notes Trustee, as their interests may appear, and
no other loss payee, up to the Agreed Value. With respect to
repairable damage to the Aircraft or any Engine, Mortgagee will
receive all insurance proceeds in excess of US$ 500,000; provided
that upon receipt by the insurance broker of written notice of a
Default on the part of Mortgagor, all insurance proceeds which
otherwise would be payable to Mortgagor will be made directly to
Mortgagee. In respect of any other claim, settlement (net of any
relevant policy deductible) shall be made with such party(ies) as
may be necessary to repair the Aircraft unless otherwise agreed
after consultation between the Insurers and the insured and,
where necessary under the terms of the Agreement with Mortgagee.
Such payments shall only be made provided they are in compliance
with all applicable laws and regulations.
Insurers agree 50/50 settlement in terms of AVS 103.
<PAGE>
4
Insurers have no right to replace the Aircraft on a Total
Loss (arranged, constructive or otherwise).
Insurers recognize that Mortgagor and Mortgagee have agreed
that a Total Loss of the Airframe will constitute a Total Loss of
the Aircraft.
"Constructive Total Loss" means any physical damage loss
for which the cost to repair equals or exceeds one-half of the
Agreed Value of the Aircraft. As part of a constructive total
loss of the Aircraft, the insured will abandon the Aircraft to
the underwriter.
In the event of Total Loss of the Aircraft, Insurers agree
to pay Mortgagee all amounts up to the Agreed Value based solely
upon Mortgagee's (not Mortgagor's) execution of the appropriate
form of release/discharge document; Mortgagee may sign any
required release in lieu of the Insured in the event of a Total
Loss, Constructive Total Loss or Arranged Total Loss.
"Cut-through clause": The Reinsurers and the Insurers
confirm and agree that in the event of any claim arising under
the hull reinsurances where such claim is to be paid to the
person named as sole loss payee under the primary insurances, the
Reinsurers shall in lieu of payment to the Insurers, their
successors in interest and assigns, pay to the person named as
sole loss payee under the primary insurances that portion of any
loss due for which the Reinsurers would otherwise be liable to
pay the Insurers (subject to proof of loss), it being understood
and agreed that any such payment by any Reinsurers shall (to the
extent of such payment) fully discharge and release such
Reinsurer from any and all further liability in connection
therewith and provide for payment to be made notwithstanding (a)
any bankruptcy, insolvency, liquidation or dissolution of the
Insurers; and (b) that the Insurers have made no payment under
the original insurance policies.
Insurers confirm that if the Airframe and not the Engines
suffers a Total Loss, Constructive Total Loss or Arranged Total
Loss that Mortgagee will receive the entire Agreed Value
regardless of any claim by any third party to the insurance
proceeds on account of their engines being installed on the
airframe at the time of the Total Loss, Constructive Total Loss
or Arranged Total Loss.
2. UNDER THE LEGAL LIABILITY INSURANCE
Subject to the provisions of this Endorsement, the
Insurance shall operate in all respects as if a separate Policy
had been issued covering each party insured hereunder, but this
provision shall not operate to include any claim howsoever
arising in respect of loss or damage to the Aircraft insured
under the Hull or Spares Insurance of the Insured.
Notwithstanding the foregoing the total liability of Insurers in
respect of any and all Insureds shall not exceed the limits of
liability stated in the Policy.
The Insurance provided hereunder shall be primary and
without right of contribution from any other insurance which may
be available to Mortgagee.
<PAGE>
5
This Endorsement does not provide coverage for Mortgagee
with respect to claims arising out of its legal liability as
manufacturer, repairer, or servicing agent of the Aircraft.
3. UNDER ALL INSURANCES
Mortgagee, its successors and assigns, and (with respect to
Aviation and Airline General Third Party Liability only) its
directors, officers and employees for their respective rights and
interests, are included as Additional Insured.
The cover afforded to Mortgagee by the Policy in accordance
with this Endorsement shall not be invalidated by any act or
omission (including misrepresentation and non-disclosure) of any
other person or party which results in a breach of any term,
condition or warranty of the Policy.
Additional Insureds shall have no responsibility for
premium and insurers shall waive any right of set-off or
counterclaim against Additional Insureds.
Upon payment of any loss or claim to or on behalf of
Mortgagee, Insurers will not have, and shall waive all rights
with respect to, subrogation against, any Additional Insured.
Except in respect of any provision for Cancellation or
Automatic Termination specified in the Policy or any endorsement
thereof, cover provided by this Endorsement may only be canceled
or materially altered in a manner adverse to Mortgagee by the
giving of not less than thirty (30) days notice in writing to the
appointed broker except with respect to nonpayment of premium, in
which event the Insurers will provide Mortgagee with not less
than ten (10) days prior written notice of the cancellation.
Notice shall be deemed to commence from the date such notice is
given by the Insurers. Such notice will NOT, however, be given at
normal expiry date of the Policy or any endorsement.
The insurance policy is being delivered in the United
States and will in all respects be governed by and construed in
accordance with the Laws of the United States or any applicable
State thereof. The underwriter consents to the non-exclusive
jurisdiction of the federal courts of the United States.
4. EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF
THE ENDORSEMENT:
MORTGAGOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS,
CONDITIONS, LIMITATIONS, WARRANTIES, EXCLUSIONS AND CANCELLATION
PROVISIONS THEREOF.
THE POLICY SHALL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN
THE AGREEMENT WHICH PURPORT TO SERVE AS AN ENDORSEMENT OR
AMENDMENT TO THE POLICY.
<PAGE>
6
SUBJECT (save as specifically stated in this Certificate)
to policy terms, conditions, limitations and exclusions.
<PAGE>
EXHIBIT C
PRE-APPROVED LIST
America West Airlines, Inc.
American Airlines, Inc.
Air Canada
British Airways Plc.
Delta Air Lines, Inc.
United Airlines, Inc.
TRANS WORLD AIRLINES, INC.
10 1/4% Mandatory Conversion Equity Notes due 1999
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement")
is made and entered into as of June 16, 1998, by and among Trans
World Airlines, Inc., a Delaware corporation (the "Company"),
First Security Bank, National Association, as Owner Trustee (the
"Owner Trustee") under the Trust Agreement N607TW dated as of
March 28, 1995 between the Owner Trustee and Internationale
Nederlanden Aviation Lease Delaware, Inc. (currently known as ING
Lease Delaware, Inc.) (the "Original Beneficiary") and Lazard
Freres & Co. LLC ("Lazard"). (The Original Beneficiary has
assigned its beneficial rights in the trust created by such Trust
Agreement to 767 Leasing HY, LLC ("767 Leasing").) Subject to the
terms and conditions stated in the Aircraft Sale and Note
Purchase Agreement made and entered into as of the 16th day of
June, 1998 among the Company, the Owner Trustee, 767 Leasing and
Lazard (the "Sale Agreement"), the Owner Trustee will sell to the
Company one Boeing 767-231 ETOPS aircraft and its associated
engines for $27,500,000, payable by the issuance by the Company
of (i) $14,500,000 aggregate principal amount of the Company's 10
1/4% Senior Secured Notes due 2003 (the "Notes") and (ii)
$13,000,000 aggregate principal amount of the Company's 10 1/4%
Mandatory Conversion Equity Notes due 1999 (the "Equity Notes").
The Notes will be issued pursuant to an indenture dated as of
June 16, 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.
In order to fulfill its obligations to the Owner Trustee and
Lazard under the Sale 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 U.S. Securities and Exchange Commission and
any successor federal agency having similar powers.
<PAGE>
2
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: 10 1/4% 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 June 16, 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 June 16, 1998, and all amendments and
supplements thereto, relating to the Equity Notes and prepared by
the Company pursuant to the Sale 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
<PAGE>
3
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 salable 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 no event prior
to June 23, 1998 and 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
<PAGE>
4
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
<PAGE>
5
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 until the Shelf Registration Statement again
becomes effective and usable or the approval for listing is cured
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
<PAGE>
6
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;
<PAGE>
7
(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
<PAGE>
8
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; (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
<PAGE>
9
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
<PAGE>
10
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 one 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."
<PAGE>
11
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,
<PAGE>
12
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
<PAGE>
13
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) In order to provide for just and equitable
contribution in circumstances in which the indemnification
provided for in the foregoing paragraphs of this Section 8 is
applicable in accordance with its terms but for any reason is
held to be unavailable or insufficient, then each indemnifying
party will contribute to the total losses, claims, liabilities,
expenses and damages (including any investigative, legal and
other expenses reasonably incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or
any claim asserted, but
<PAGE>
14
after deducting any contribution received by the indemnifying
party from persons other than the party to be indemnified), to
which the indemnifying party and the party to be indemnified may
be subject in such proportion as shall be appropriate to reflect
the relative fault of the indemnifying party, on the one hand,
and the party to be indemnified, on the other, with respect to
the statements or omissions which resulted in such loss, claim,
liability, expense or damage, or action in respect thereof, as
well as any other relevant equitable considerations with respect
to such offering. Such relative fault shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or 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, the intent
of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement
or omission. The parties hereto agree that it would not be just
and equitable if contributions pursuant to this Section 8(d) were
to be determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the losses, claims,
liabilities, expenses or damages, or actions in respect thereof,
referred to above in this Section 8(d) shall be deemed to
include, for purpose of this Section 8(d), 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 the
provisions of this Section 8(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 found guilty
of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8(d), any person
who controls a party to this Agreement within the meaning of the
Securities Act or the Exchange Act will have the same rights to
contribution as that party, subject in each case to the
provisions hereof. Any party entitled to contribution, promptly
after receipt of notice of commencement of any action against
such party in respect of which a claim for contribution may be
made under this Section 8(d), will notify any such party or
parties from whom contribution may be sought, but the omission so
to notify will not relieve the party or parties from whom
contribution may be sought from any other obligation it or they
may have under this Section 8(d). Except for a settlement entered
into pursuant to the penultimate sentence of Section 8(c) hereof,
no party will be liable for contribution with respect to any
action or claim settled without its written consent (which
consent will not be unreasonably withheld or delayed).
(e) 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
<PAGE>
15
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 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 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, 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
<PAGE>
16
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 or Lazard, 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 on a business day (or otherwise on the first business day
following such answer back); when receipt acknowledged, if
telecopied on a business day (or otherwise on the first business
day following such acknowledgment); 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.
<PAGE>
17
(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, except as provided in the
Indenture and the Sale 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.
<PAGE>
18
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 Counsel
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual
capacity but as Owner Trustee
By: /s/ Arge Pavlos
----------------------
Name: Arge Pavlos
Title: Assistant Trust Officer
LAZARD FRERES & CO. LLC
By: /s/ Michael S. Liss
----------------------
Name: Michael S. Liss
Title: Managing Director
[CGS&H Letterhead]
Writer's Direct Dial: (212) 225-2552
July 17, 1998
Trans World Airlines, Inc.
One City Centre
515 N. Sixth Street
St. Louis, Missouri 63101
Ladies and Gentlemen:
We have acted as counsel for Trans World Airlines,
Inc., a Delaware corporation (the "Company"), in connection with
the registration by the Company under the Securities Act of 1933,
as amended (the "Securities Act"), of the exchange offering of
$14,500,000 aggregate principal amount of 10 1/4% Senior Secured
Notes due 2003 (the "Exchange Notes") for the outstanding
$14,500,000 10 1/4% Senior Secured Notes due 2003 (the "Old Notes
and, together with the Exchange Notes, the "Notes"). The Old
Notes were and the Exchange Notes will be issued pursuant to an
indenture dated as of June 16, 1998 (the "Indenture") between the
Company and First Security Bank, National Association, as
trustee. The Exchange Notes are being registered under a
registration statement of the Company on Form S-4 filed today
with the Securities and Exchange Commission (the "Commission")
under the Securities Act (the "Registration Statement").
We have reviewed the originals or copies certified or
otherwise identified to our satisfaction of all such corporate
records of the Company and such other instruments and other
certificates of public officials, officers and representatives of
the Company and such other persons, and we have made such
investigations of law, as we have deemed appropriate as a basis
for the opinion expressed below.
<PAGE>
Trans World Airlines, Inc., p. 2
In rendering the opinion expressed below, we have
assumed the authenticity of all documents submitted to us as
originals and the conformity to the originals of all documents
submitted to us as copies. In addition, we have assumed and have
not verified the accuracy as to factual matters of each document
we have reviewed.
Based on the foregoing, and subject to the further
assumptions and qualifications set forth below, it is our opinion
that the execution and delivery of the Exchange Notes have been
duly authorized by all necessary corporate action of the Company,
and when the Exchange Notes have been duly executed and delivered
by the Company and duly authenticated by the Trustee in the
manner provided for in the Indenture and delivered in exchange
for the Old Notes in the manner provided for in the Indenture,
the Exchange Notes will be the valid and binding obligations of
the Company, entitled to the benefits of the Indenture, and
enforceable against the Company in accordance with their terms.
Insofar as the foregoing opinion relates to the
validity, binding effect or enforceability of any agreement or
obligation of the Company, (a) we have assumed that each other
party to such agreement or obligation has satisfied those legal
requirements that are applicable to it to the extent necessary to
make such agreement or obligation enforceable against it, and (b)
such opinion is subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and to general
principles of equity. In addition, certain of the remedial
provisions of the Indenture may be further limited or rendered
unenforceable by other applicable laws or judicially adopted
principles which, however, in our judgment do not make the
remedies provided for therein (taken as a whole) inadequate for
the practical realization of the principal benefits purported to
be afforded thereby (except for the economic consequences of
procedural or other delay).
The foregoing opinion is limited to the federal law of
the United States of America, the law of the State of New York
and the General Corporation Law of the State of Delaware.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the reference to our
name under the heading "Legal Matters" in the Prospectus included
in the Registration Statement. By giving such consent, we do not
thereby admit that we are experts with respect to any part of the
Registration Statement, including this exhibit, within the
meaning of the term "expert" as used in the Securities Act or the
rules and regulations of the Commission issued thereunder.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By /s/ David W. Hirsch
--------------------------------
David W. Hirsch, a Partner
Exhibit 23.1
AUDITORS' CONSENT
The Board of Directors
Trans World Airlines, Inc.:
We consent to the use of our report incorporated herein by
reference and to the reference to our firm under the heading
"Experts" in the prospectus. In addition, our report, dated
March 4, 1998 refers to the application of fresh start reporting
as of September 1, 1995.
/s/ KPMG Peat Marwick LLP
Kansas City, Missouri
July 13, 1998
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, John W. Bachman, 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 10 1/4% 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 THEREOF, I have hereunto set my hand this 25th
day of June, 1998.
/s/ John W. Bachman
--------------------------------
John W. Bachman
<PAGE>
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 10 1/4% 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 THEREOF, I have hereunto set my hand this 26th
day of June, 1998.
/s/ William F. Compton
--------------------------------
William F. Compton
<PAGE>
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 10 1/4% 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 THEREOF, I have hereunto set my hand this 29th
day of June, 1998.
/s/ Eugene P. Conese
--------------------------------
Eugene P. Conese
<PAGE>
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 10 1/4% 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 THEREOF, I have hereunto set my hand this 26th
day of June, 1998.
/s/ Edgar M. House
--------------------------------
Edgar M. House
<PAGE>
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 10 1/4% 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 THEREOF, I have hereunto set my hand this 26th
day of June, 1998.
/s/ Thomas H. Jacobsen
--------------------------------
Thomas H. Jacobsen
<PAGE>
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 10 1/4% 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 THEREOF, I have hereunto set my hand this 25th
day of June, 1998.
/s/ Myron Kaplan
--------------------------------
Myron Kaplan
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, David M. Kennedy, 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 10 1/4% 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 THEREOF, I have hereunto set my hand this 25th
day of June, 1998.
/s/ David M. Kennedy
--------------------------------
David M. Kennedy
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, General 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 10 1/4% 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 THEREOF, I have hereunto set my hand this 25th
day of June, 1998.
/s/ General Merrill A. McPeak
--------------------------------
General Merrill A. McPeak
<PAGE>
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 10 1/4% 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 THEREOF, I have hereunto set my hand this 30th
day of June, 1998.
/s/ Thomas F. Meagher
--------------------------------
Thomas F. Meagher
<PAGE>
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 10 1/4% 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 THEREOF, I have hereunto set my hand this 26th
day of June, 1998.
/s/ Brent S. Miller
--------------------------------
Brent S. Miller
<PAGE>
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 10 1/4% 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 THEREOF, I have hereunto set my hand this ____th
day of June, 1998.
/s/ William O'Driscoll
--------------------------------
William O'Driscoll
<PAGE>
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 10 1/4% 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 THEREOF, I have hereunto set my hand this 25th
day of June, 1998.
/s/ G. Joseph Reddington
--------------------------------
G. Joseph Reddington
<PAGE>
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 10 1/4% 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 THEREOF, I have hereunto set my hand this 29th
day of June, 1998.
/s/ Blanche M. Touhill
--------------------------------
Blanche M. Touhill
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
---------------------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
---------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
NOT APPLICABLE 87-0131890
(Jurisdiction of Incorporation (I.R.S. Employer
if not a U.S. national bank) identification No.)
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(Address of principal executive offices) (Zip Code)
NOT APPLICABLE
(Name, address and telephone number of agent for service)
TRAN WORLD AIRLINES, INC.
(Exact name of obligor as specified in its charter)
DELAWARE 43-1145889
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
One City Centre, 515 N. Sixth Street
St. Louis, Missouri 63101
(Address or principal executive offices) (Zip Code)
Offer To Exchange
10 1/4% Senior Secured Notes Due 2003
(Title of the Indenture securities)
<PAGE>
Item 1. General Information. Furnish the following information as
to the trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
Comptroller of the Currency, Washington, D.C. 20230;
Federal Reserve Bank of San Francisco, San Francisco,
CA 94120; Federal Deposit Insurance Corporation,
Washington, D.C. 20429.
(b) Whether it is authorized to exercise corporate
trust powers.
The Trustee is authorized to exercise corporate trust
powers.
Item 2. Affiliations With The Obligor. If the obligor is an
affiliate of the trustee, describe each such affiliation.
Neither the obligor nor any underwriter for the obligor
is an affiliate of the Trustee.
Item 16. List of Exhibits. List below all exhibits filed as part
of this statement of eligibility and qualification.
Exhibit 1: copy of the articles of association as now
in effect
Exhibit 2: certificate of authority to commence
business including a certificate of the
Comptroller of the Currency evidencing the change
of the Trustee's name
Exhibit 3: copy of the authorization of the trustee to
exercise corporate trust powers
Exhibit 4: copy of the bylaws of the trustee
Exhibit 5: Not applicable
Exhibit 6: Not applicable
Exhibit 7: A copy of the latest report published
pursuant to law or its supervising or examining
authority
Exhibit 8: Not applicable
Exhibit 9: Not applicable
<PAGE>
Signature
---------
Pursuant to the requirements of the Trust Indenture Act of
1939, as amended, the trustee, First Security Bank, National
Association, a national banking association organized and
existing under the laws of the United States, has duly caused
this statement of eligibility and qualification to be signed on
its behalf by the undersigned thereunder duly authorized, all in
the City of Salt Lake City, and State of Utah, on the 29th day of
June, 1998.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, Trustee
By:/s/ Brett R. King
-----------------
Brett R. King
Assistant Vice President
<PAGE>
EXHIBIT 1
ARTICLES OF ASSOCIATION
OF
FIRST SECURITY BANK
NATIONAL ASSOCIATION
(As Amended)
FIRST. The title of this Association, which shall carry
on the business of banking under the laws of the United States,
shall be "First Security Bank, National Association."
SECOND. The place where the main banking house or
office of this Association shall be located shall be Ogden,
County of Weber, State of Utah. Its general business and its
operations of discount and deposit shall also be carried on in
said city, and the branch or branches established or maintained
by it in accordance with the provisions of Section 36 of Title
12, United States Code. The Board of Directors shall the power to
change the location of the main office of this Association (i) to
any other authorized branch location within the limits of Ogden,
Utah, without the approval of the shareholders of this
Association and upon notice to the Comptroller of the Currency
or, (ii) to any other place within Ogden, Utah, or within thirty
(30) miles of Ogden, Utah, with the approval of the shareholders
and the Comptroller of the Currency. The Board of Directors shall
have the power to change the location of any branch or branches
of this Association to any other location, without the approval
of the shareholders of this Association but subject to the
approval of the Comptroller of the Currency.
THIRD. The Board of Directors of the consolidated
association shall consist of not less than five (5) nor more than
twenty-five (25) of its shareholders.
FOURTH. There shall be an annual meeting of the
shareholders the purpose of which shall be the election of
Directors and the transaction of whatever other business may be
brought before said meeting. It shall be held at the main office
of the Bank or other convenient place as the Board of Directors
may designate, on the third Monday of March of each year, but if
no election is held on that day, it may be held on any subsequent
day according to such lawful rules as may be prescribed by the
Board of Directors. Nominations for election to the Board of
Directors may be made by the Board of Directors or by any
stockholder of any outstanding class of capital stock of the Bank
entitled to vote for election of directors. Nominations, other
than those made by or on behalf of the existing management of the
Bank, shall be made in writing and shall be delivered or mailed
to the President of the Bank and to the Comptroller of the
Currency, Washington, D.C., not less than 14 days nor more than
50 days prior to any meeting of stockholders called for the
election of directors, provided, however, that if less than 21
days notice of the meeting is given to shareholders, such
nomination shall be mailed or delivered to the President of the
Bank and to the Comptroller of the Currency not later than the
close of business on the seventh day following the day on which
the notice of meeting was mailed. Such notification shall contain
the following information to the extent known to the notifying
shareholder: (a) the name and address of each proposed nominee;
(b) the principal occupation of each proposed nominee; (c) the
total number of shares of capital stock of the Bank that will be
voted for each proposed nominee; (d) the name and residence
address of the notifying shareholder; and (e) the number of
shares of capital stock of the Bank owned by the notifying
shareholder. Nominations not made in accordance herewith may, in
his discretion, be disregarded by the Chairman of the meeting,
and upon his instructions, the voting inspectors may disregard
all votes cast for each such nominee.
<PAGE>
FIFTH. The authorized amount of capital stock of this
Association shall be One Hundred Million Dollars
($100,000,000.00), divided into 4,000,000 shares of common stock
of the par value of Twenty-five Dollars ($25.00) each; provided,
however, that said capital stock may be increased or decreased
from time to time, in accordance with the provision of the laws
of the United States. The shareholders of this Association shall
not have any pre-emptive rights to acquire unissued shares of
this Association.
SIXTH. (1) The Board of Directors shall appoint one of
its members President of this Association. It may also appoint a
Chairman of the Board, and one or more Vice Chairman. The Board
of Directors shall have the power to appoint one or more Vice
Presidents, at least one of whom shall also be a member of the
Board of Directors, and who shall be authorized, in the absence
of the President, to perform all acts and duties pertaining to
the office of the President; to appoint a Cashier and such other
officers and employees as may be required to transact the
business of this Association; to fix the salaries to be paid to
such officers or employees and appoint others to take their
place.
(2) The Board of Directors shall have the power to
define the duties of officers and employees of this Association
and to require adequate bonds from them for the faithful
performance of their duties; to make all By-Laws that may be
lawful for the general regulation of the business of this
Association and the management of its affairs, and generally to
do and perform all acts that may be lawful for a Board of
Directors to do and perform.
(3) Each person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, administrative or
investigative (other than an action by or in the right of the
Association) by reason of the fact that he is or was a director,
officer, employee or agent of the Association or is or was
serving at the request of the Association as a director, officer,
employee, fiduciary or agent of another corporation, partnership,
joint venture, trust, estate or other enterprise or was acting in
furtherance of the Association's business shall be indemnified
against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Association;
provided, however, no indemnification shall be given to a person
adjudged guilty of, or liable for, willful misconduct, gross
neglect of duty, or criminal acts or where there is a final order
assessing civil money penalties or requiring affirmative action
by such person in the form of payments to the Association. The
termination of any action, suit or proceeding by judgment, order,
settlement, or its equivalent, shall not of itself, create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the Association.
(4) Each person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action
or suit by or in the right of the Association (such action or
suit being known as a "derivative proceeding") to procure a
judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the Association or is or
was serving at the request of the Association as a director,
officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust, estate or other enterprise
shall be indemnified against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good
faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Association; provided,
however, that no indemnification shall be given where there is a
final order assessing civil money penalties or requiring
affirmative action by such person in the form of payments to the
Association; and provided further that no indemnification shall
be made in respect of any claim, issue or matter as to
<PAGE>
which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the
Association, unless and only to the extent that the court in
which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such
court shall deem proper.
(5) To the extent that a director, officer, employee or
agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred
to in (3) or (4) of this Article or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses
(including attorney's fees) actually and reasonably incurred by
him in connection therewith.
(6) Any indemnification under (3) or (4) of this
Article (unless ordered by a court) shall be made by the
Association only as authorized in the specific case upon a
reasonable determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in (3) or
(4) of this Article. Such determination shall be made (a) by the
Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or
proceeding, or (b) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in written opinion, or (c) by the
stockholders.
(7) Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the Association in
advance of the final disposition of such action, suit or
proceeding as authorized in the manner provided in (6) of this
Article (i) if the Board of Directors determines, in writing,
that (1) the director, officer, employee or agent has a
substantial likelihood or prevailing on the merits; (2) in the
event the director, officer, employee or agent does not prevail,
he or she will have the financial capability or reimburse the
Association; and (3) payment of expenses by the Association will
not adversely affect its safety and soundness; and (ii) upon
receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by
the Association as authorized in this Article.
(8) The indemnification provided by this Article shall
not be deemed exclusive of any other rights to which those
indemnified may be entitled under any By-Law, agreement, vote of
shareholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another
capacity while holding such 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,
successors in interest, and administrators of such a person.
SEVENTH. This Association shall have succession from
the date of its organization certificate until such time as it be
dissolved by the act of its shareholders in accordance with the
provisions of the banking laws of the United States, or until its
franchise becomes forfeited by reason of violation of law, or
until terminated by either a general or a special act of
Congress, or until its affairs be placed in the hands of a
receiver and finally wound up by him.
<PAGE>
EIGHTH. The Board of Directors of this Association, or
any three or more shareholders owning, in the aggregate, not less
than ten per centum of the stock of this Association, may call a
special meeting of shareholders at any time: Provided, however,
that unless otherwise provided by law, not less than ten days
prior to the date fixed for any such meeting, a notice of the
time, place and purpose of the meeting shall be given by
first-class mail, postage prepaid, to all shareholders of record
of this Association. These Articles of Association may be amended
at any regular or special meeting of the Shareholders by the
affirmative vote of the shareholders owning at least a majority
of the stock of this Association, subject to the provisions of
the banking laws of the United States. The notice of any
shareholders' meeting, at which an amendment to the Articles of
Association of this Association is to be considered shall be
given as hereinabove set forth.
<PAGE>
EXHIBIT 2
CERTIFICATE
TREASURY DEPARTMENT )
Office of ) ss:
Comptroller of the Currency )
I, Thomas G. DeShazo, Deputy Comptroller of the Currency, do
hereby certify that:
Pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C.
1, et seq., the Comptroller of the Currency charters and
exercises regulatory and supervisory authority over all national
banking associations;
On December 9, 1881, The First National Bank of Ogden, Ogden,
Utah was chartered as a National Banking Association under the
laws of the United States and under Charter No. 2597;
The document hereto attached is a true and complete copy of the
Comptroller Certificate issued to The First National Bank of
Ogden, Ogden, Utah, the original of which certificate was issued
by this Office on December 9, 1881;
On October 2, 1922, in connection with a consolidation of The
First Bank of Ogden, Ogden, Utah, and The Utah National Bank of
Ogden, Ogden, Utah, the title was charged to "The First & Utah
National Bank of Ogden"; on January 18, 1923, The First & Utah
National Bank of Ogden changed its title to "First Utah National
Bank of Ogden"; on January 19, 1926, the title was changed to
"First National Bank of Ogden"; and on February 24, 1934, the
title was changed to "First Security Bank of Utah, National
Association"; and
First Security Bank of Utah, National Association, Ogden, Utah,
continues to hold a valid certificate to do business as a
National Banking Association.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused the seal of
Office of the Comptroller of the Currency to
be affixed to these presents at the Treasury
Department, in the City of Washington and
District of Columbia, this fourth day of
April, A.D. 1972.
Thomas G. DeShazo
----------------------------------
Deputy Comptroller of the Currency
<PAGE>
TREASURY DEPARTMENT
Comptroller of the Currency,
Washington, December 9th, 1881
WHEREAS, by satisfactory evidence presented
to the undersigned it has been made to
appear that "The First National Bank of
Ogden" in Ogden City in the County of Weber,
and Territory of Utah has complied with all
the provisions of the Revised Statutes of
the United States, required to be complied
with before an association shall be
authorized to commence the business of
Banking. Now, therefore, I, John Jay Knox,
Comptroller of the Currency, do hereby
certify that "The First National Bank of
Ogden" in Ogden City in the County of Weber,
and Territory of Utah is authorized to
commence the business of Banking, as
provided in Section Fifty-one hundred and
sixty-nine of the Revised Statutes of the
United States.
In testimony whereof, witness my hand and
seal of office this 9th day of December,
1881.
John Jay Knox
---------------------------
Comptroller of the Currency
<PAGE>
EXHIBIT 3
FEDERAL RESERVE BOARD
WASHINGTON, D.C.
I, S.R. Carpenter, Assistant Secretary of the Federal
Reserve Board, do hereby certify that it appears from the
records of the Federal Reserve Board that:
(1) Pursuant to authority vested in the Federal
Reserve Board by an Act of Congress approved December 23,
1913, known as the Federal Reserve Act, as amended, the
Federal Reserve Board has heretofore granted to the First
National Bank of Ogden, Ogden, Utah, the right to act when
not in contravention of State or local law, as trustee,
executor, administrator, registrar of stocks and bonds,
guardian of estates, assignee, receiver, committee of
estates of lunatics, or in any other fiduciary capacity in
which State banks, trust companies or other corporations
which come into competition with national banks are
permitted to act under the laws of the State of Utah;
(2) On February 24, 1934, the First National Bank of
Ogden, Ogden, Utah, changed its title to First Security Bank
of Utah, National Association, under the provisions of an
Act of Congress approved May 1, 1886, whereby all of the
rights, liabilities and powers of such national bank under
its old name devolved upon and inured to the bank under its
new name; and
(3) Pursuant to the permission heretofore granted
by the Federal Reserve Board to the First National Bank
of Ogden, Ogden, Utah, as aforesaid, and by virtue of
the change in the title of such bank, the First
<PAGE>
Security Bank of Utah, National Association has
authority to act, when not in contravention of State or
local law, as trustee, executor, administrator,
registrar of stocks and bonds, guardian of estates of
lunatics, or in any other fiduciary capacity in which
State banks, trust companies or other corporations
which come into competition with national banks are
permitted to act under the laws of the State of Utah,
subject to regulations prescribed by the Federal
Reserve Board.
IN WITNESS WHEREOF, I have hereunto subscribed my name
and caused the seal of the Federal Reserve Board to be
affixed at the City of Washington, in the District of
Columbia, on the 1st day of March, 1934.
S.R. Carpenter
-------------------------------------------
Assistant Secretary, Federal Reserve Board.
<PAGE>
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE TO
THE FEDERAL RESERVE BOARD
March 1, 1934.
First Security Bank of Utah, National Association,
Ogden, Utah.
Dear Sirs:
Reference is made to the change in the name of the First
National Bank of Ogden, Ogden, Utah, pursuant to the provisions
of the Act of May 1, 1886, to First Security Bank of Utah,
National Association, and there is enclosed a certificate issued
by the Federal Reserve Board showing the trust powers heretofore
granted to the bank under its former name and that it is
authorized to exercise such powers under its new name.
Very truly yours,
S.R. Carpenter
S.R. Carpenter,
Assistant Secretary.
Enclosure
<PAGE>
[GRAPHIC OMITTED]
- -----------------------------------------------------------------
Comptroller of the Currency
Administrator of National Banks
- -----------------------------------------------------------------
Licensing Unit (Applications)
50 Fremont Street, Suite 3900
San Francisco, CA 94105
(415) 545-5900, FAX (415) 545-5925
June 20, 1996
Board of Directors
First Security Bank of Utah, N.A.
c/o First Security Corporation
Attn: Brad D. Hardy, EVP
Post Office Box 30006
Salt Lake City, Utah 84130
Re: Merger - First Security Bank of Idaho, N.A., Boise, Idaho
into First Security Bank of Utah, N.A., Ogden, Utah, under
the title of First Security Bank, N.A., Odgen, Utah. Control
No: 96-WE-02-010
Dear Members of the Board:
This letter is the official certification of the Comptroller of
the Currency to merge First Security Bank of Idaho, National
Association, Boise, Idaho into First Security Bank of Utah,
National Association, Ogden, Utah, effective as of June 21, 1996.
The resulting bank title is First Security Bank, National
Association and charter number is 2597.
This is also the official authorization given to First Security
Bank, National Association to operate the branches of the target
institution and to operate the main office of the target
institution as a branch. Branches of a national bank target are
not listed since they are automatically carried over to the
resulting bank and retain their current OCC branch numbers.
Please be advised that the Charter Certificate for the merged
bank, First Security Bank of Idaho, National Association, must be
returned to the Western District Office for cancellation.
Very truly yours,
Robert G. Tornborg
Robert G. Tornborg
Acting Director of Bank Supervision - Compliance and Analysis
<PAGE>
EXHIBIT 4
BY-LAWS OF THE
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
Organized under the National Banking laws of the United States.
MEETINGS
--------
SECTION 1. Unless otherwise provided by the articles of
association a notice of each shareholder's meeting, setting forth
clearly the time, place and purpose of the meeting, shall be
given, by mail, to each shareholder of record of this bank at
lease 10 days prior to the date of such meeting. Any failure to
mail such notice or any irregularity therein, shall not affect
the validity of such meeting or of any of the proceedings
thereat.
SECTION 2. A record shall be made of the shareholders represented
in person and by proxy, after which the shareholders shall
proceed to the transaction of any business that may properly come
before the meeting. A record of the shareholder's meeting, giving
the names of the shareholders present and the number of shares of
stock held by each, the names of the shareholders represented by
proxy and the number of shares held by each, and the names of the
proxies, shall be entered in the records of the meeting in the
minute book of the bank. This record shall show the names of the
shareholders and the number of shares voted for each resolution
or voted for each candidate for director.
Proxies shall be secured for the annual meeting alone, shall be
dated, and shall be filed with the records of the meeting. No
officer, director, employee, or attorney for the bank may act as
proxy.
The chairman or Secretary of the meeting shall notify the
directors-elect of their election and of the time at which they
are required to meet at the banking house for the purpose of
organizing the new board. At the appointed time, which as closely
as possible shall follow their election, the directors-elect
shall convene and organize.
The president or cashier shall then forward to the office of the
Comptroller of the Currency a letter stating that a meeting of
the shareholders was held in accordance with these by-laws,
stating the number of shares represented in person and the number
of shares represented by proxy, together with a list of the
directors elected and the report of the appointment and
signatures of officers.
OFFICERS
--------
SECTION 3. Each officer and employee of this bank shall be
responsible for all such moneys, funds, valuables, and property
of every kind as may be entrusted to his care or otherwise come
into his possession, and shall faithfully and honestly discharge
his duties and apply and account for all such moneys, funds,
valuables and other property that may come into his hands as such
officer or employee and pay over and deliver the same to the
order of the Board of Directors or to such person or persons as
may be authorized to demand and receive same.
<PAGE>
SECTION 4. If the Board of Directors shall not require separate
bonds, it shall require a blanket bond in an amount deemed by it
to be sufficient.
SECTION 5. The following is an impression of the seal adopted by
the Board of Directors of this bank: (Here in the original
resolution was imprinted the Association's seal).
SECTION 6. The various branches of this bank shall be open for
business during such hours as shall be customary in the vicinity,
or as shall be fixed, as to any branch, by the clearing house
association of which such branch shall be a member.
SECTION 7. The regular meeting of the board of directors shall be
held on the first Wednesday after the first Tuesday of each
month. When any regular meeting of the board of directors falls
upon a holiday, the meeting shall be held on such other day as
the board may previously designate. Special meetings may be
called by the president, any vice-president, the secretary or the
cashier, or at the request of three or more directors.
MINUTE BOOK
-----------
SECTION 8. The organization papers of this bank, the returns of
the elections, the proceedings of all regular and special
meetings of the directors and of the shareholders, the by-laws
and any amendments thereto, and reports of the committees of
directors shall be recorded in the minute book; and the minutes
of each meeting shall be signed by the chairman and attest by the
secretary of the meeting.
TRANSFERS OF STOCK
------------------
SECTION 9. The stock of this bank shall be assignable and
transferable only on the books of this bank, subject to the
restrictions and provisions of the national banking laws; and a
transfer book shall be provided in which all assignments and
transfers of stock shall be made.
SECTION 10. Certificates of stock, signed by the president or
vice-president, and the secretary or the cashier or any assistant
cashier, may be issued to shareholders, and when stock is
transferred the certificates thereof shall be returned to the
association, cancelled, preserved, and new certificates issued.
Certificates of stock shall state upon the face thereof that the
stock is transferable only upon the books of the association, and
shall meet the requirements of section 5139, United States
Revised Statutes, as amended.
EXPENSES
--------
SECTION 11. All the current expenses of the bank shall be paid by
the cashier, except that the current expenses of each branch
shall be paid by the manager thereof; and such officer shall,
every six months, or more often if required, make to the board a
report thereof.
<PAGE>
EXAMINATIONS
------------
SECTION 12. There shall be appointed by the board of directors a
committee of three members, exclusive of the active officers of
the bank, whose duty it shall be to examine, at least once in
each period of eighteen months, the affairs of each branch as
well as the head office of the association, count its cash, and
compare its assets and liabilities with the accounts of the
general ledgers, ascertain whether the accounts are correctly
kept and that the condition of the bank corresponds therewith,
and whether the bank is in a sound and solvent condition, and to
recommend to the board such changes in the manner of doing
business, etc., as shall seem to be desirable, the result of
which examination shall be reported in writing to the board at
the next regular meeting thereafter, provided that the
appointment of such committee and the examinations by it may be
dispensed with if the board shall cause such examination to be
made and reported to the board by accountants approved by it.
CHANGES IN BY-LAWS
------------------
SECTION 13. These by-laws may be changed or amended by the vote
of a majority of the directors at any regular or special meeting
of the board, provided, however, that the directors shall have
been given 10 days notice of the intention to change or offer an
amended thereto.
REPEAL
------
SECTION 14. All by-laws heretofore adopted are repealed.
<PAGE>
First Security Bank, N.A.
P.O. Box 30011
Salt Lake City, UT 84130
EXHIBIT 7 Call Date 03/31/97 ST-BK: 49-0290 FFIEC 031
Page R1-9
Vendor ID: D Cert: 13718
11
Transit Number: 12400001 Transmitted to EDS as 0042861 on
04/30/97 at 19:02:11 CST
Consolidated Report of Condition for Insured Commercial and
State-Chartered Savings Banks for March 31,1997
All schedules are to be reported in thousands of dollars. Unless
otherwise indicated, report the amount outstanding as of the last
business day of the quarter.
Schedule RC - Balance Sheet
C400
Dollar amounts in thousands
- -------------------------------------------------------------------------------
ASSETS
1. Cash and balances due from depository
institutions (from Schedule RC-A): RCFD
----
a. Noninterest-bearing balances and
currency and coin(1) .......................... 0081 .... 655,052 1.a
b. Interest-bearing balances(2) .................. 0071 .... 67 1.b
2. Securities:
a. Held-to-maturity securities
(from Schedule RC-B, column A) ................ 1754 .... 0 2.a
b. Available-for-sale securities
(from Schedule RC-B, column B) ................ 1773 ....2,180,112 2.b
3. Federal funds sold and securities
purchased under agreements to resell ............. 1350 .... 66,178 3.
4. Loans and lease financing receivables: RCFD
----
a. Loans and leases, net of unearned income
(from Schedule RC-C) ....................... 2122 ..7,516,685 ..... 4.a
b. LESS: Allowance for loan and lease losses .. 3123 .. 99,148 ..... 4.b
c. LESS: Allocated transfer risk revserve ..... 3128 .. 0 ..... 4.c
d. Loans and leases, nor of unearned income,
allowance, and reserve (items 4.a minus
4.b and 4.c) .................................. 2125 ....7,417,537 4.d
5. Trading assets (from Schedule RC-D) .............. 3545 .... 388,486 5.
6. Premises and fixed assets (including
capitalized leases) .............................. 2145 .... 174,816 6.
7. Other real esate owned (from Schedule RC-W) ...... 2150 .... 825 7.
8. Investements in unconsolidated subsidiaries and
associated companies (from Schedule RC-M) ........ 2130 .... 0 8.
9. Customers' liability to this bank on acceptances
oustanding ....................................... 2155 .... 803 9.
10. Intangible assets (from Scheule RC-W) ............ 2143 .... 157,257 10.
11. Other assets (from Schedule RC-F) ................ 2160 .... 332,647 11.
12. Total assets (sum of items 1 through 11) ......... 2170 ....11,373,780 12.
- ---------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
First Security Bank, N.A.
P.O. Box 30011
Salt Lake City, UT 84130
EXHIBIT 7 Call Date 03/31/97 ST-BK: 49-0290 FFIEC 031
Page R1-10
Vendor ID: D Cert: 13718
12
Transit Number: 12400001 Transmitted to EDS as 0042861 on 04/30/97
at 19:02:11 CST
Schedule RC - Continued
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------
LIABILITIES:
13. Deposits:
RCON
----
a. In domestic offices (sum of totals
columns A and C from Schedule RC-E,
part 1) ...................................... 2200 ...7,079,084 13.a
RCON
----
(1) Noninterest-bearing (1) ........6631 ...1,582,595 13.a.1
(2) Interest-bearing ...............6636 ...5,496,489 13.a.2
RCFN
----
b. In foreign offices, Edge and Agreement
subsidiaries, and IBFs (from Schedule
RC-E, part 11) .............................. 2200 51,656 13.b
RCFN
----
(1) Noninterest-bearing (1) ........6631 ... 0 ........... 13.b.1
(2) Interest-bearing ...............6636 ... 51,656 ........... 13.b.2
RCFD
----
14. Federal funds purchased and securities sold
under agreements to repurchase ............... 2800 ...1,987,674 14.
RCDN
----
15. a. Demand notes issued to the U.S.
Treasury ................................. 2840 ... 20,244 15.a
RCFD
----
b. Trading liabilities (from Schedule
RC-D) .................................... 3548 ... 130 15.b
16. Other borrowed money (includes
mortgage indebtedness and
obligations under capitalized
Leases: .....................................
a. with a remaining maturity of one
year or less .............................. 2332 ... 552,757 16.a
b. With a remaining maturity of more
than one year ............................. 2333 ... 353,202 16.b
17. Not applicable.
18. Bank's liability on acceptances
executed and oustanding ..................... 2920 ... 803 18.
19.Subordianted notes and debentures(2) .......... 3200 ... 45,000 19.
20. Other liabilities (from Schedule RC-G) ......... 2930 ... 362,343 20.
21. Total liabilities (sum of items 13
through 20) .................................... 2948 .10,452,893 21.
22. Not applicable.
EQUITY CAPITAL
RCFD
----
23. Perpetual preferred stock and related
surplus ....................................... 3838 ... 0 23.
24. Common stock .................................. 3230 ... 59,270 24.
25. Surplus (exclude all surplus related
to preferred stock) .......................... 3839 285,944 25.
26. a. Undivided profits and capital reserves .... 3632 ... 590,530 26.a
b. Net unrealized holding gains (losses)
on available-for-sale securities .......... 8434 ...( 14,857) 26.b
27. Cumulative foreign currency translation
adjustments .................................. 3284 ... 0 27.
28. Total equity capital (sum of items 23
through 27) .................................. 3210 ... 920,887 28.
29. Total liabilities, limited-life preferred stock,
and equity capital (sum of items 21 and 28) .. 3300..11,373,780 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number RCFD Number
---- ------
of the statement below that best describes
the most comprehensive level of auditing
work performed for the bank by independent
external auditors as of any date during 1996 .. 6724 2 M.1
1 = Independent audit of the bank conducted in accordance with
generally accepted auditing standards by a certified public
accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company
conducted in accordance with generally accepted auditing
standards by a certified public accounting firm which
submits a report on the consolidated holding company (but
not on the bank separately)
3 = Directors' examination of the bank conducted in accordance
with generally accepted auditing standards by a certified
public accounting firm (may be required by state chartering
authority)
4 = Directors' examination of the bank performed by other external
auditors (may be required by state chartering authority)
5 = Review of the bank's financial statements by external
auditors
6 = Compilation of the bank's financial statements by external
auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- -------------------
(1) Includes total demand deposits and noninterest-bearing time
and savings deposits.
(2) Includes limited-life preferred stock and related surplus.
CGSH Draft 7/8/98
LETTER OF TRANSMITTAL
Offer to Exchange
10 1/4% Senior Secured Notes due 2003,
which have been registered under
the Securities Act of 1933, as amended,
for any and all outstanding
10 1/4% Senior Secured Notes due 2003
of
Trans World Airlines, Inc.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON
_______, 1998 (THE "EXPIRATION DATE")
UNLESS EXTENDED BY TRANS WORLD AIRLINES, INC.
EXCHANGE AGENT:
FIRST SECURITY BANK, NATIONAL ASSOCIATION
By Hand or Overnight By Registered or
Delivery: Certified Mail:
First Security Bank, First Security Bank,
National Association National Association
Corporate Trust Department Corporate Trust Department
79 South Main Street 79 South Main Street
Salt Lake City, Utah 84111 Salt Lake City, Utah 84111
Facsimile Transmissions:
(Eligible Institutions Only)
(801) 246-5053
To Confirm by Telephone
or for Information Call:
(801) 246-5630
Delivery of this Letter of Transmittal to an address other
than as set forth above or transmission of this letter of
transmittal via a facsimile transmission to a number other than
as set forth above will not constitute a valid delivery.
The undersigned acknowledges receipt of the Prospectus
dated July __, 1998 (the "Prospectus") of Trans World Airlines,
Inc. (the "Company") which, together with this Letter of
Transmittal (the "Letter of Transmittal"), describes the
Company's offer (the "Exchange Offer") to exchange $1,000 in
principal amount of 10 1/4% Senior Secured Notes due 2003 (the
"Exchange Notes") for each $1,000 in principal amount of
outstanding 10 1/4% Senior Secured Notes due 2003 (the "Old
Notes"). The terms of the Exchange Notes are identical in all
material respects (including principal amount, interest rate and
maturity) to the terms of the Old Notes for which they may be
exchanged pursuant to the Exchange Offer, except that the
offering of the Exchange Notes will have been registered under
the Securities Act of 1933, as amended, and, therefore, the
Exchange Notes will not bear legends restricting the transfer
thereof and certain provisions relating to an increase in the
stated rate of interest shall be eliminated.
The undersigned has checked the appropriate boxes below and
signed this Letter of Transmittal to indicate the action the
undersigned desires to take with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE
PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX BELOW.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL
MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR
ADDITIONAL COPIES OF
<PAGE>
THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO
THE EXCHANGE AGENT.
List below the Old Notes to which this Letter of
Transmittal relates. If the space provided below is inadequate,
the certificate numbers and principal amounts should be listed on
a separate signed schedule affixed hereto.
- -------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES TENDERED HEREWITH
- -------------------------------------------------------------------------------
Name(s) and Address(es) of | Certificates(s) Tendered
Registered Holder(s) | (Attach Signed List
(Please fill in) | if Necessary)
- -------------------------------------------------------------------------------
| | Aggregate |
| | Principle |
| | Amount |
| | Repre- | Principal
| Certificate | sented by | Amount
| Holders(s)* | Old Notes* | Tendered**
|_____________|_____________|_____________
|_____________|_____________|_____________
|_____________|_____________|_____________
|_____________|_____________|_____________
|_____________|_____________|_____________
|_____________|_____________|_____________
| Total | |
- -------------------------------------------------------------------------------
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full aggregate principal amount represented by Old Notes. See Instruction 2.
- -------------------------------------------------------------------------------
This Letter of Transmittal is to be used either if
certificates for Old Notes are to be forwarded herewith or if
delivery of Old Notes is to be made by book-entry transfer to an
account maintained by the Exchange Agent at The Depository Trust
Company ("DTC"), pursuant to the procedures set forth in "The
Exchange Offer--Book-Entry Transfer" in the Prospectus. Delivery
of documents to a book-entry transfer facility does not
constitute delivery to the Exchange Agent.
Unless the context requires otherwise, the term "Holder"
for purposes of this Letter of Transmittal means any person in
whose name Old Notes are registered on the books of the Company
or any other person who has obtained a properly completed bond
power from the registered holder or any person whose Old Notes
are held of record by DTC or its nominee who desire to deliver
such Old Notes by book-entry transfer at DTC.
Holders whose Old Notes are not immediately available or
who cannot deliver their Old Notes and all other documents
required hereby to the Exchange Agent on or prior to the
Expiration Date may tender their Old Notes according to the
guaranteed delivery procedure set forth in the Prospectus under
the caption "The Exchange Offer--Guaranteed Delivery Procedures."
2
<PAGE>
|_| CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE
EXCHANGE AGENT WITH THE DEPOSITORY TRUST COMPANY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution____________________________________
_________________________________________________________________
The Depository Trust Company
Account Number___________________________________________________
Transaction Code Number__________________________________________
|_| CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED
PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE
FOLLOWING:
Name of Registered Holder(s)_____________________________________
_________________________________________________________________
Name of Eligible Institution that Guaranteed Delivery
_________________________________________________________________
If Delivered by Book-Entry Transfer:
Account Number___________________________________________________
|_| 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:_________________________________________________________
_________________________________________________________________
3
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the
Exchange Offer, the undersigned hereby tenders to the Company the
above-described principal amount of Old Notes. Subject to, and
effective upon, the acceptance for exchange of the Old Notes
tendered herewith, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title
and interest in and to such Old Notes. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent as the
true and lawful agent and attorney-in-fact of the undersigned
(with full knowledge that said Exchange Agent acts as the agent
of the undersigned in connection with the Exchange Offer) to
cause the Old Notes to be assigned, transferred and exchanged.
The undersigned represents and warrants that it has full power
and authority to tender, exchange, assign and transfer the Old
Notes and to acquire Exchange Notes issuable upon the exchange of
such tendered Old Notes, and that, when the same are accepted for
exchange, the Company will acquire good and unencumbered title to
the tendered Old Notes, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any
adverse claim. The undersigned also warrants that it will, upon
request, execute and deliver any additional documents deemed by
the Exchange Agent or the Company to be necessary or desirable to
complete the exchange, assignment and transfer of tendered Old
Notes or transfer ownership of such Old Notes on the account
books maintained by The Depository Trust Company.
The Exchange Offer is subject to certain conditions as set
forth in the Prospectus under the caption "The Exchange Offer."
The undersigned recognizes as a result of these conditions (which
may be waived, in whole or in part, by the Company), as more
particularly set forth in the Prospectus, the Company may not be
required to exchange any of the Old Notes tendered hereby and, in
such event, the Old Notes not exchanged will be returned to the
undersigned at the address shown below the signature of the
undersigned.
By tendering, each holder of Old Notes represents to the
Company that (i) the Notes acquired pursuant to the Exchange
Offer are being obtained in the ordinary course of business of
the person receiving such Exchange Notes, whether or not such
person is such holder, (ii) neither the holder of Old Notes nor
any such other person has an arrangement or understanding with
any person to participate in the distribution of such Exchange
Notes, (iii) if the holder is not a broker-dealer or is a
broker-dealer but will not receive Exchange Notes for its own
account in exchange for Old Notes, neither the holder nor any
such other person is engaged in or intends to participate in a
distribution of the Exchange Notes and (iv) neither the holder
nor any such other person is an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act of 1933, as
amended (the "Act"), or if such holder is an "affiliate," that
such holder will comply with the registration and prospectus
delivery requirements of the Act to the extent applicable. If the
tendering holder is a broker-dealer (whether or not it is also an
"affiliate") that will receive Exchange Notes for its own account
in exchange for Old Notes, it represents that the Old Notes to be
exchanged for the Exchange Notes were acquired by it as a result
of market-making activities or other trading activities, and
acknowledges that it will deliver a prospectus meeting the
requirements of the Act in connection with any resale of such
Exchange Notes. By acknowledging that it will deliver and by
delivering a prospectus meeting the requirements of the Act in
connection with any resale of such Exchange Notes, the
undersigned is not deemed to admit that it is an "underwriter"
within the meaning of the Act.
All authority herein conferred or agreed to be conferred
shall survive the death, bankruptcy or incapacity of the
undersigned and every obligation of the undersigned hereunder
shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Tendered Old Notes may
be withdrawn at any time prior to the Expiration Date.
4
<PAGE>
Certificates for all Exchange Notes delivered in exchange
for tendered Old Notes or for any Old Notes delivered herewith
but not exchanged, in each case registered in the name of the
undersigned, shall be delivered to the undersigned at the address
shown below the signature of the undersigned.
TENDERING HOLDER(S) SIGN HERE
______________________________________________________
______________________________________________________
Signature(s) of Holder(s)
Dated:____________, 1998
(Must be signed by registered holder(s) exactly as
name(s) appear(s) on certificate(s) for Old Notes or
by any person(s) authorized to become registered
holder(s) by endorsements and documents transmitted
herewith or, if the Old Notes are held of record by
DTC or its nominee, the person in whose name such Old
Notes are registered on the books of DTC. If signature
by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative
capacity, please set forth the full title of such
person. See Instruction 3.)
Name(s):
______________________________________________________
(Please print)
Capacity (full title):________________________________
Address:______________________________________________
______________________________________________________
(Including Zip Code)
Area Code and Telephone No.___________________________
______________________________________________________
Tax Identification No.
GUARANTEE OF SIGNATURE(S)
(If Required--See Instruction 3)
Authorized Signature:_________________________________
Name:_________________________________________________
Title:________________________________________________
Address:______________________________________________
Name of Firm:_________________________________________
Area Code and Telephone No.___________________________
5
<PAGE>
Dated: July __, 1998
INSTRUCTIONS
Forming Part of the Terms and Conditions
of the Exchange Offer
1. Delivery of this Letter of Transmittal and Certificates.
Certificates for physically delivered Old Notes or confirmation
of any book-entry transfer to the Exchange Agent's account at The
Depository Trust Company of Old Notes tendered by book-entry
transfer, as well as a properly completed and duly executed copy
of this Letter of Transmittal or facsimile thereof, and any other
documents required by this Letter of Transmittal, must be
received by the Exchange Agent at any of its addresses set forth
herein on or prior to the Expiration Date.
The method of delivery of this Letter of Transmittal, the
Old Notes and any other required documents is at the election and
risk of the holder and, except as otherwise provided below, the
delivery will be deemed made only when actually received by the
Exchange Agent. If such delivery is by mail, it is suggested that
registered mail with return receipt requested, properly insured,
be used.
Holders whose Old Notes are not immediately available or
who cannot deliver their Old Notes and all other required
documents to the Exchange Agent on or prior to the Expiration
Date or comply with book-entry transfer procedures on a timely
basis may tender their Old Notes pursuant to the guaranteed
delivery procedure set forth in the Prospectus under "The
Exchange Offer--Guaranteed Delivery Procedures." Pursuant to such
procedure: (i) such tender must be made by or through an Eligible
Institution (as defined therein); (ii) on or prior to the
Expiration Date the Exchange Agent must have received from such
Eligible Institution, a letter, telegram or facsimile
transmission setting forth the name and address of the tendering
holder, the names in which such Old Notes are registered, if
possible, the certificate numbers of the Old Notes to be
tendered, and the principal amount at maturity of Old Notes
tendered; and (iii) all tendered Old Notes (or a confirmation of
any book-entry transfer of such Old Notes into the Exchange
Agent's account at The Depository Trust Company) as well as this
Letter of Transmittal and all other documents required by this
Letter of Transmittal must be received by the Exchange Agent
within three American Stock Exchange trading days after the date
of execution of such letter, telegram or facsimile transmission,
all as provided in the Prospectus under the caption "The Exchange
Offer--Guaranteed Delivery Procedures."
No alternative, conditional, irregular or contingent
tenders will be accepted. All tendering holders, by execution of
this Letter of Transmittal (or facsimile thereof), shall waive
any right to receive notice of the acceptance of the Old Notes
for exchange.
2. Partial Tenders; Withdrawals. Tenders of Old Notes will
be accepted in all denominations of $1,000 and integral multiples
in excess thereof. If less than the entire principal amount of
Old Notes evidenced by a submitted certificate is tendered, the
tendering holder must fill in the principal amount tendered in
the box entitled "Principal Amount Tendered." A newly issued
certificate for the principal amount of Old Notes submitted but
not tendered will be sent to such holder as soon as practicable
after the Expiration Date. All Old Notes delivered to the
Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
Tenders of Old Notes pursuant to the Exchange Offer are
irrevocable, except that Old Notes tendered pursuant to the
Exchange Offer may be withdrawn at any time prior to the
Expiration Date. To be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely
received by the Exchange Agent. Any such notice of withdrawal
must specify the person named in the Letter of Transmittal as
having tendered Old Notes to be withdrawn, identify the Old Notes
to be withdrawn (including the certificate number and the
principal amount of Old Notes delivered for exchange), include a
statement that such holder is withdrawing its election to have
such Old Notes exchanged and the name of the registered holder
of such Old Notes, and be signed by the holder in the same manner
as the original signature on the Letter of Transmittal (including
any required signature guarantees) or be accompanied by evidence
satisfactory to the Company that the person withdrawing the
tender has succeeded to the beneficial ownership of the Old Notes
being withdrawn. The Exchange Agent will return the properly
withdrawn Old Notes promptly following receipt of notice of
withdrawal. If Old Notes have been tendered pursuant to the
procedure for book-entry transfer, any notice of withdrawal must
6
<PAGE>
specify the name and number of the account at The Depository
Trust Company to be credited with the withdrawn Old Notes or
otherwise comply with The Depository Trust Company's procedures.
3. Signature on this Letter of Transmittal; Written
Instruments and Endorsements; Guarantee of Signatures. If this
Letter of Transmittal is signed by the registered holder(s) of
the Old Notes tendered hereby, the signature must correspond with
the name(s) as written on the face of certificates without
alteration, enlargement or any change whatsoever.
If any of the Old Notes tendered hereby are owned of record
by two or more joint owners, all such owners must sign this
Letter of Transmittal.
If a number of Old Notes registered in different names are
tendered, it will be necessary to complete, sign and submit as
many separate copies of this Letter of Transmittal as there are
different registrations of Old Notes.
When this Letter of Transmittal is signed by the registered
holder or holders of Old Notes listed and tendered hereby, no
endorsements of certificates or separate written instruments of
transfer or exchange are required.
If this Letter of Transmittal is signed by a person other
than the registered holder or holders of the Old Notes listed,
such Notes must be endorsed or accompanied by separate written
instruments of transfer or exchange in form satisfactory to the
Company and duly executed by the registered holder, in either
case signed exactly as the name or names of the registered holder
or holders appear(s) on the Old Notes.
If this Letter of Transmittal, any certificates or separate
written instruments of transfer or exchange are signed by
trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper
evidence satisfactory to the Company of their authority so to act
must be submitted.
Endorsements on certificates or signatures on separate
written instruments of transfer or exchange required by this
Instruction 3 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal need not be
guaranteed by an Eligible Institution, provided the Old Notes are
tendered: (i) by a registered holder of such Old Notes who has
not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on this Letter of Transmittal
where the certificates for Exchange Notes to be issued in
exchange therefor are to be issued (or any untendered amount of
Old Notes are to be reissued) to the registered holder; or (ii)
for the account of any Eligible Institution.
4. Transfer Taxes. The Company shall pay all transfer
taxes, if any, applicable to the transfer and exchange of Old
Notes to it or its order pursuant to the Exchange Offer. If,
however, Exchange Notes or Old Notes for principal amounts not
tendered or accepted for exchange are to be delivered to, or are
to be registered or issued in the name of, any person other than
the registered holder of the Old Notes tendered hereby, or if
tendered Old Notes are registered in the name of any person other
than the person signing this Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the transfer of
Old Notes to the Company or its order pursuant to the Exchange
Offer, the amount of any such transfer taxes (whether imposed on
the registered holder or any other person) will be payable by the
tendering holder. If satisfactory evidence of payment of such
taxes or exception therefrom is not submitted herewith the amount
of such transfer taxes will be billed directly to such tendering
holder.
Except as provided in this Instruction 4, it will not be
necessary for transfer tax stamps to be affixed to the Old Notes
listed in this Letter of Transmittal.
5. Waiver of Conditions. The Company reserves the absolute
right to waive, in whole or in part, any of the conditions to the
Exchange Offer set forth in the Prospectus.
6. Mutilated, Lost, Stolen or Destroyed Notes. Any holder
whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated below
for further instructions.
7
<PAGE>
7. Requests for Assistance or Additional Copies. Questions
relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter of
Transmittal, may be directed to the Exchange Agent at the address
and telephone number set forth below. In addition, all questions
relating to the Exchange Offer, as well as requests for
assistance or additional copies of the Prospectus and this Letter
of Transmittal, may be directed to the Company at One City
Centre, 515 N. Sixth Street, St. Louis, Missouri 63101,
Attention: Paul Rutterer.
8. Irregularities. All questions as to the validity, form,
eligibility (including time of receipt), and acceptance of
Letters of Transmittal or Old Notes will be resolved by the
Company, whose determination will be final and binding. The
Company reserves the absolute right to reject any or all Letters
of Transmittal or tenders that are not in proper form or the
acceptance of which would, in the opinion of the Company's
counsel, be unlawful. The Company also reserves the right to
waive any defects, irregularities or conditions of tender as to
the particular Old Notes covered by any Letter of Transmittal or
tendered pursuant to such letter. None of the Company, the
Exchange Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur
any liability for failure to give any such notification. The
Company's interpretation of the terms and conditions of the
Exchange Offer shall be final and binding.
9. Definitions. Capitalized terms used in this Letter of
Transmittal and not otherwise defined have the meanings given to
such terms in the Prospectus.
IMPORTANT: This Letter of Transmittal or a facsimile
thereof (together with certificates for Old Notes or confirmation
of book-entry transfer and all other required documents) or a
Notice of Guaranteed Delivery must be received by the Exchange
Agent on or prior to the Expiration Date.
8
CGSH Draft 7/8/98
NOTICE OF GUARANTEED DELIVERY
for
Offer to Exchange
101/4% Senior Secured Notes due 2003,
which have been registered under
the Securities Act of 1933, as amended,
for any and all outstanding
101/4% Senior Secured Notes due 2003
of
Trans World Airlines, Inc.
Registered holders of outstanding 10 1/4% Senior Secured
Notes due 2003 (the "Old Notes") who wish to tender their Old
Notes in exchange for a like principal amount of 10 1/4% Senior
Secured Notes due 2003 (the "Exchange Notes"), which have been
registered under the Securities Act of 1933, as amended, and, in
each case, whose Old Notes are not immediately available or who
cannot deliver their Old Notes and Letter of Transmittal (and any
other documents required by the Letter of Transmittal) to First
Security Bank, National Association (the "Exchange Agent") prior
to the Expiration Date, may use this Notice of Guaranteed
Delivery or one substantially equivalent hereto. This Notice of
Guaranteed Delivery may be delivered by hand, sent by facsimile
transmission (receipt confirmed by telephone and an original
delivered by guaranteed overnight delivery) or mailed to the
Exchange Agent. See "Exchange Offer--Guaranteed Delivery
Procedures" in the Prospectus.
The Exchange Agent for the Exchange Offer is:
FIRST SECURITY BANK, NATIONAL ASSOCIATION
By Hand or Overnight By Registered or
Delivery: Certified Mail:
First Security Bank, First Security Bank,
National Association National Association
Corporate Trust Department Corporate Trust Department
79 South Main Street 79 South Main Street
Salt Lake City, Utah 84111 Salt Lake City, Utah 84111
Facsimile Transmissions:
Facsimile Transmissions:
(Eligible Institutions Only)
(801) 246-5053
To Confirm by Telephone
or for Information Call:
(801) 246-5630
Delivery of this Notice of Guaranteed Delivery to an
address other than as set forth above or transmission of
instructions via a facsimile transmission to a number other than
as set forth above will not constitute a valid delivery.
This Notice of Guaranteed Delivery is not to be used to
guarantee signatures. If a signature on the Letter of Transmittal
is required to be guaranteed by an Eligible Institution, such
signature guarantee must appear in the applicable space provided
on the Letter of Transmittal for Guarantee of Signatures.
<PAGE>
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a firm that is a member of a registered national
securities exchange or a member of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company
having an office, branch, agency or correspondent in the United
States, hereby guarantees to deliver to the Exchange Agent at one
of its addresses set forth above, the certificates representing
the Old Notes, together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, and any other documents required
by the Letter of Transmittal within three American Stock Exchange
trading days after the date of execution of this Notice of
Guaranteed Delivery.
Name of Firm:_________________ ________________________________
Authorized Signature
Address:______________________ Title___________________________
______________________________ Name:___________________________
(Zip Code) (Please type or print)
Area Code and Telephone Number: Date:___________________________
______________________________
NOTE: DO NOT SEND NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY.
NOTES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
CGSH Draft 7/7/98
INSTRUCTION TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM OWNER
of
Trans World Airlines, Inc.
10 1/4% Senior Secured Notes due 2003
To Registered Holder and/or Participant of the
Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the
Prospectus dated July __, 1998 (the "Prospectus") of Trans World
Airlines, Inc., a Delaware corporation (the "Company"), and the
accompanying Letter of Transmittal (the "Letter of Transmittal"),
which together constitute the Company's offer (the "Exchange
Offer"). Capitalized terms used but not defined herein have the
meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or
book-entry transfer facility participant, as to the action to be
taken by you relating to the Exchange Offer with respect to the
Old Notes held by you for the account of the undersigned.
The aggregate face amount in the Old Notes held by you for
the account of the undersigned is (fill in amount):
$ ___________ of the 10 1/4% Senior Secured Notes due 2003
With respect to the Exchange Offer, the undersigned hereby
instructs you (check appropriate box):
|_| To TENDER the following Old Notes held by you for the
account of the undersigned (insert principal amount of Old Notes
to be tendered, if any):
$ ____________ of the 10 1/4% Senior Secured Notes due 2003
|_| NOT to TENDER any Old Notes held by you for the account
of the undersigned.
If the undersigned instructs you to tender the Old Notes
held by you for the account of the undersigned, it is understood
that you are authorized to make, on behalf of the undersigned
(and the undersigned, by its signature below, hereby makes to
you), the representation and warranties contained in the Letter
of Transmittal that are to be made with respect to the
undersigned as a beneficial owner, including but not limited to
the representations that (i) the Exchange Notes acquired pursuant
to the Exchange Offer are being obtained in the ordinary course
of business of the undersigned, (ii) if the undersigned is not a
broker-dealer, or is a broker-dealer but will not receive
Exchange Notes for its own account in exchange for Old Notes,
neither the undersigned nor any such other person is engaged in
or intends to participate in the distribution of such Exchange
Notes, (iii) neither the undersigned nor any such other person
has an arrangement or understanding with any person to
participate in the distribution of such Exchange Notes, and (iv)
neither the undersigned nor any such person is an "affiliate" of
the Company within the meaning of Rule 405 under the Securities
Act of 1933, as amended (the "Securities Act"), or if the
undersigned is an "affiliate," that the undersigned will comply
with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable. If the undersigned is a
broker-dealer (whether or not it is also an "affiliate") that
will receive Exchange Notes for its own account in exchange for
Old Notes, it represents that such Old Notes were acquired as a
result of market-making activities or other trading activities,
and it acknowledges that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale
of such Exchange Notes. By acknowledging that it will deliver and
by delivering a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange
Notes, the undersigned is not deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE>
SIGN HERE
Name of beneficial owner(s):_______________________________
Signature(s):______________________________________________
Name(s) (please print):____________________________________
Address:___________________________________________________
___________________________________________________________
Telephone Number:__________________________________________
Taxpayer Identification or Social Security Number:_________
___________________________________________________________
___________________________________________________________
Date:______________________________________________________
2
CGSH Draft 7/8/98
Offer to Exchange
10 1/4% Senior Secured Notes due 2003,
which have been registered under
the Securities Act of 1933, as amended,
for any and all outstanding
10 1/4% Senior Secured Notes due 2003
of
Trans World Airlines, Inc.
To Registered Holders and The Depository
Trust Company Participants:
We are enclosing herewith the material listed below
relating to the offer by Trans World Airlines, Inc., a Delaware
corporation (the "Company"), to exchange its 10 1/4% Senior
Secured Notes due 2003 (the "Exchange Notes"), pursuant to an
offering registered under the Securities Act of 1933, as amended
(the "Securities Act"), for a like principal amount of its issued
and outstanding 10 1/4% Senior Secured Notes due 2003 (the "Old
Notes") upon the terms and subject to the conditions set forth in
the Company's Prospectus, dated July __, 1998, and the related
Letter of Transmittal (which together constitute the "Exchange
Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated July __, 1998;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Instruction to Registered Holder and/or Book-Entry
Transfer Participant from Owner; and
5. Letter which may be sent to your clients for whose
account you hold Old Notes in your name or in the name of your
nominee, to accompany the instruction form referred to above, for
obtaining such client's instruction with regard to the Exchange
Offer.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE
THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON ____________________, 1998, UNLESS EXTENDED.
The Exchange Offer is not conditioned upon any minimum
number of Old Notes being tendered.
Pursuant to the Letter of Transmittal, each holder of Old
Notes will represent to the Company, among other things, that (i)
the Exchange Notes acquired in the Exchange Offer are being
obtained in the ordinary course of business of the person
receiving such Exchange Notes, whether or not such person is such
holder, (ii) neither the holder of the Old Notes nor any such
other person has an arrangement or understanding with any person
to participate in the distribution of such Exchange Notes, (iii)
if the holder is not a broker-dealer or is a broker-dealer but
will not receive Exchange Notes for its own account in exchange
for Old Notes, neither the holder nor any such other person is
engaged in or intends to participate in a distribution of the
Exchange Notes and (iv) neither the holder nor any such other
person is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act or if such holder is an
"affiliate," that such holder will comply with the registration
and prospectus delivery requirements of the Securities Act to the
extent applicable. If the tendering holder is a broker-dealer
(whether or not it is also an "affiliate") that will receive
Exchange Notes for its own account in exchange for Old Notes,
such holder will represent on behalf of such broker-dealer that
the Old Notes to be exchanged for the Exchange Notes were
acquired by it as a result of market-
<PAGE>
making activities or other trading activities, and acknowledge on
behalf of such broker-dealer that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with
any resale of such Exchange Notes. By acknowledging that it will
deliver and by delivering a prospectus meeting the requirements
of the Securities Act in connection with any resale of such
Exchange Notes, the undersigned is not deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
The enclosed Instruction to Registered Holder and/or
Book-Entry Transfer Participant from Owner contains an
authorization by the beneficial owners of the Old Notes for you
to make the foregoing representations.
The Company will not pay any fee or commission to any
broker or dealer or to any other persons (other than the Exchange
Agent) in connection with the solicitation of tenders of Old
Notes pursuant to the Exchange Offer. The Company will pay or
cause to be paid any transfer taxes payable on the transfer of
Old Notes to it, except as otherwise provided in Instruction 4 of
the enclosed Letter of Transmittal.
Additional copies of the enclosed material may be obtained
from the undersigned.
Very truly yours,
FIRST SECURITY BANK, NATIONAL
ASSOCIATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL
CONSTITUTE YOU THE AGENT OF TRANS WORLD AIRLINES, INC. OR FIRST
SECURITY BANK, NATIONAL ASSOCIATION OR AUTHORIZE YOU TO USE ANY
DOCUMENT OR MAKE ANY STATEMENT ON THEIR BEHALF IN CONNECTION WITH
THE EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND
THE STATEMENTS CONTAINED THEREIN.
2
CGSH Draft 7/8/98
Offer to Exchange
10 1/4% Senior Secured Notes due 2003,
which have been registered under
the Securities Act of 1993, as amended,
for any and all outstanding
10 1/4% Senior Secured Notes due 2003
of
Trans World Airlines, Inc.
To Our Clients:
We are enclosing herewith a Prospectus, dated July __,
1998, of Trans World Airlines, Inc. (the "Company"), a Delaware
corporation, and a related Letter of Transmittal (which together
constitute the "Exchange Offer") relating to the offer by the
Company to exchange its 10 1/4% Senior Secured Notes due 2003
(the "Exchange Notes"), pursuant to an offering registered under
the Securities Act of 1933, as amended (the "Securities Act"),
for a like principal amount of its issued and outstanding 10 1/4%
Senior Secured Notes due 2003 (the "Old Notes") upon the terms
and subject to the conditions set forth in the Exchange Offer.
PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON _______, 1998, UNLESS EXTENDED.
The Exchange Offer is not conditioned upon any minimum
number of Old Notes being tendered.
We are the holder of record and/or participant in the
book-entry transfer facility of Old Notes held by us for your
account. A tender of such Old Notes can be made only by us as the
record holder and/or participant in the book-entry transfer
facility and pursuant to your instructions. The Letter of
Transmittal is furnished to you for your information only and
cannot be used by you to tender Old Notes held by us for your
account.
We request instructions as to whether you wish to tender
any or all of the Old Notes held by us for your account pursuant
to the terms and conditions of the Exchange Offer. We also
request that you confirm that we may on your behalf make the
representations contained in the Letter of Transmittal.
Pursuant to the Letter of Transmittal, each holder of Old
Notes will represent to the Company, among other things, that (i)
the Exchange Notes acquired in the Exchange Offer are being
obtained in the ordinary course of business of the person
receiving such Exchange Notes, whether or not such person is such
holder, (ii) neither the holder of the Old Notes nor any such
other person has an arrangement or understanding with any person
to participate in the distribution of such Exchange Notes, (iii)
if the holder is not a broker-dealer or is a broker-dealer but
will not receive Exchange Notes for its own account in exchange
for Old Notes, neither the holder nor any such other person is
engaged in or intends to participate in a distribution of the
Exchange Notes and (iv) neither the holder nor any such other
person is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act or if such holder is an
"affiliate," that such holder will comply with the registration
and prospectus delivery requirements of the Securities Act to the
extent applicable. If the tendering holder is a broker-dealer
(whether or not it is also an "affiliate") that will receive
Exchange Notes for its own account in exchange for Old Notes, we
will represent on behalf of such broker-dealer that the Old Notes
to be exchanged for the Exchange Notes were acquired by it as a
result of market-making activities or other trading activities,
and acknowledge on behalf of such broker-dealer that it will
deliver a prospectus meeting the requirements of the Securities
Act in connection with any resale of such Exchange Notes. By
acknowledging that it will deliver and by delivering a prospectus
meeting the requirements of the Securities Act in connection with
any resale of such Exchange Notes, the undersigned is not deemed
to admit that it is an "underwriter" within the meaning of the
Securities Act.
Very truly yours,
