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EXHIBIT 10.5
SUPPLEMENTAL GUARANTY AGREEMENT
THIS SUPPLEMENTAL GUARANTY AGREEMENT ("the "Guaranty"), dated as of
December 30, 1993, is by and between McDonnell Douglas Corporation, a Maryland
corporation (hereinafter called the "Guarantor"), and McDonnell Douglas
Finance Corporation, a Delaware corporation (hereinafter called "MDFC").
W I T N E S S E T H :
WHEREAS, the Guarantor has previously provided the guaranties listed on
Exhibit A hereto, covering some of the lease or financing agreements between
Trans World Airlines, Inc. ("TWA") and MDFC; and
WHEREAS, the parties deem it to be in their mutual best interest to
supplement such existing guaranties in order to safeguard MDFC against a
default affecting MDFC's entire TWA portfolio;
NOW, THEREFORE, in consideration of the premises and for valuable
consideration both parties hereto hereby agree as follows:
1. Upon the occurrence of a material default by TWA under any of the
agreements between TWA and MDFC listed on Exhibit B hereto (the "TWA
Agreements") under circumstances (such as a TWA bankruptcy) which lead MDFC to
reasonably conclude that it has incurred or is likely to incur a loss on its
TWA portfolio, MDFC shall promptly estimate and inform Guarantor of the net
fair market value, taking into account the guaranties listed in Exhibit A, of
MDFC's interest in the TWA Agreements. Such estimate shall be accompanied by
a copy of MDFC's calculations and other pertinent information demonstrating to
MDC's reasonable satisfaction the basis utilized by MDFC in arriving at such
estimated value. If such estimated value is less than the net asset value of
the TWA Agreements on MDFC's books, Guarantor shall, within 30 days of written
demand, pay to MDFC the full amount of such loss (the "Total Portfolio Loss");
provided, however, that the liability of Guarantor for the Total Portfolio
Loss under this Section 1 shall be limited to an aggregate amount equal to
$25,000,000.
2. Until all the assets covered by the TWA Agreements have been
disposed of, after the end of each calendar quarter following payment of the
Total Portfolio Loss, MDFC will recalculate the Total Portfolio Loss taking
into account (a) any changes in the estimated fair market value of MDFC's
interest in any of the TWA Agreements, (b) the amount by which any net
proceeds received or receivable by MDFC from the remarketing of any
repossessed equipment covered by any TWA Agreement (together with any proceeds
of a guaranty listed on Exhibit A with respect to such equipment) exceeds or
is less than MDFC's estimated value of such equipment incorporated in any
prior calculation of the Total Portfolio Loss and (c) any recoveries from TWA,
and furnish the Guarantor with a copy of such recalculation. Within 30 days
of receipt of any such recalculation the Guarantor shall (subject to the limit
in Section 1) pay to MDFC the amount of any increase in the Total Portfolio
Loss or, as the case may be, MDFC shall refund to Guarantor the amount of any
decrease in the Total Portfolio Loss.
3. If no Event of Default under any TWA Agreement has occurred and is
continuing, MDFC may enter into payment deferral arrangements with TWA without
limiting Guarantor's liability hereunder and without Guarantor's consent. If
a material Event of Default has occurred and is continuing under any TWA
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Agreement which could lead to a Total Portfolio Loss, MDFC shall not consent
to any deferral arrangement with TWA without the consent of Guarantor. If
Guarantor consents to any such deferral, it shall pay MDFC the amount of all
deferred payments when such amounts would have been due but for the granting
of the deferral. Only the portion of such payments of deferred amounts
allocable to principal shall be deemed to reduce the amount of Guarantor's
total liability under Section 1.
4. The obligations hereunder of Guarantor shall remain in full force
and effect without regard to, and shall not be impaired or affected by,
(a) any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of TWA, or (b) any repudiation or
disaffirmance of any TWA Agreement by any trustee in bankruptcy of TWA.
5. This Guaranty shall remain in full force and effect until payment in
full of all sums payable, and the full and complete performance and discharge
of all covenants, agreements and obligations to be performed or discharged by
Guarantor hereunder; provided, however, that this Guaranty shall terminate on
March 31, 1996 unless (a) an Event of Default which could result in a Total
Portfolio Loss has occurred and is continuing under any TWA Agreement on such
date or (b) the parties agree that MDFC's exposure on its TWA portfolio
justifies a continuation of all or a portion of this Guaranty. Guarantor
agrees that this Guaranty shall continue to be effective or shall be
reinstated, as the case may be, if any payment of any sum hereby guaranteed is
rescinded or must be otherwise restored or returned by MDFC upon the
insolvency, bankruptcy or reorganization of TWA, all as though such payment
had not been made.
6. This Guaranty contains all of the agreements of Guarantor and MDFC
in connection with the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings or inducements, oral or written,
except as expressly stated herein. Notwithstanding the immediately preceding
sentence, the guaranty agreements described in Exhibit A shall continue in
full force and effect and nothing in this Guaranty shall be construed as
limiting such guaranty agreements. The terms of this Guaranty may not be
changed orally but only by agreement in writing, duly executed on behalf of
Guarantor and MDFC.
7. At the end of each calendar quarter commencing in 1994 and so long
as this Guaranty remains in effect, MDFC will pay to the Guarantor a guaranty
fee in an amount equal to $75,000. Such guaranty fee shall cease to be
payable at the time a payment becomes due under this Guaranty. At the end of
each calendar quarter MDFC shall have the option to terminate or reduce the
maximum coverage set forth in Section 1 of this Guaranty (with a proportionate
reduction in future guaranty fees). Any such voluntary reduction by MDFC
shall be permanent for purposes of this Guaranty.
MCDONNELL DOUGLAS FINANCE MCDONNELL DOUGLAS CORPORATION
CORPORATION
By:___________________________ By:___________________________
Its:__________________________ Its:__________________________
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EXHIBIT "A"
TO
SUPPLEMENTAL GUARANTY AGREEMENT
GUARANTIES FROM MDC TO MDFC
COVERING LEASE AGREEMENTS BETWEEN MDFC AND TWA:
SERIAL NO. REGIS. NO.
OF OF
GUARANTY LEASED LEASED
TYPE OF AGREEMENT DATE AIRCRAFT AIRCRAFT
------------------- -------- --------- ---------
Deficiency Guaranty 10/15/87 49157 N905TW
Deficiency Guaranty 10/20/87 49160 N906TW
Deficiency Guaranty 10/21/87 49154 N903TW
Deficiency Guaranty 10/27/87 49185 N914TW
Deficiency Guaranty 10/15/87 49166 N901TW
Deficiency Guaranty 10/15/87 49153 N902TW
Guaranty* 6/30/93 53139 N9403W
Guaranty* 6/30/93 53138 N9402W
Guaranty* 9/30/93 53141 N9405T
Guaranty* 9/30/93 53137 N9401W
Guaranty* 9/30/93 53140 N9404V
Guaranty* 9/30/93 53126 N9406W
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* It is contemplated that these guaranties will be replaced by similar
guaranties from MDC covering a smaller percentage of TWA's obligations
under the respective covered Lease Agreements. As of the date such
replacement guaranties are signed and delivered to MDFC (or MDAFC in the
case of the guaranty covering Aircraft N9401W) they shall automatically
be deemed listed on this Exhibit A in lieu of the replaced guaranties.
GUARANTY FROM MDC TO MDFC COVERING SUBORDINATED NOTE
Guaranty from MDC to MDFC, dated as of August 27, 1993, covering TWA's
obligations under a subordinated note dated as of November 27, 1991
relating to Aircraft N952U.
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EXHIBIT "B"
TO
SUPPLEMENTAL GUARANTY AGREEMENT
A/C SER. A/C REG.
DESCRIPTION DATE PARTIES NO. NO.
------------ -------- ------------------ -------- --------
Sub. Note 11/27/91 Equitable/MDFC/TWA -- N952U
Secured Note 6/19/84 MDFC Loan 49230 N950U
Corp./Ozark/TWA
Finance Lease 12/8/69 MDFC/Ozark/TWA 47589 N986Z
Finance Lease 10/15/82 MDFC/Ozark/TWA 47669 N932L
Finance Lease 5/26/83 MDFC/TWA 49157 N905TW
Finance Lease 6/23/83 MDFC/TWA 49160 N906TW
Finance Lease 5/12/83 MDFC/TWA 49154 N903TW
Finance Lease 4/12/84 MDFC/TWA 49185 N914TW
Finance Lease 4/18/83 MDFC/TWA 49166 N901TW
Finance Lease 4/26/83 MDFC/TWA 49153 N902TW
Finance Lease 6/1/93 *MDC/TWA 53139 N9403W
Finance Lease 6/1/93 *MDC/TWA 53138 N9402W
Finance Lease 6/1/93 *MDC/TWA 53141 N9405T
Finance Lease 6/1/93 **MDC/TWA 53137 N9401W
Finance Lease 6/1/93 *MDC/TWA 53140 N9404V
Finance Lease 6/1/93 *MDC/TWA 53126 N9406W
Operating 6/1/93 MDFC/TWA 47676 N418EA
Lease
Operating 6/1/93 MDFC/TWA 47751 N416EA
Lease
Operating 6/1/93 MDFC/TWA 47753 N417EA
Lease
Operating 6/1/93 MDFC/TWA 47749 N415EA
Lease
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Operating 6/1/93 MDFC/TWA 47746 N414EA
Lease
Operating 6/1/93 MDFC/TWA 47731 N410EA
Lease
Operating 6/1/93 MDFC/TWA 47728 N409EA
Lease
Operating 6/1/93 MDFC/TWA 47732 N411EA
Lease
***
****
- - -----------
* Assigned by MDC to MDFC
** Assigned by MDC to MDAFC
*** TWA will lease from MDFC (or an affiliate) under an operating lease four
additional DC-9-51 aircraft and such leases are hereby deemed covered by
the Supplemental Guaranty Agreement.
**** TWA will lease from MDFC under a finance lease two MD-82 aircraft and
such leases are hereby deemed covered by the Supplemental Guaranty
Agreement.