<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 2000
Commission file number 1-442
THE BOEING COMPANY
7755 East Marginal Way South
Seattle, Washington 98108
Telephone: (206) 655-2121
State of incorporation: Delaware
IRS identification number: 91-0425694
The registrant has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months and has
been subject to such filing requirements for the past 90 days.
As of October 31, 2000, there were 888,449,295 shares of common stock, $5.00 par
value, issued and outstanding.
1
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THE BOEING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions except per share data)
(Unaudited)
Nine months ended Three months ended
September 30 September 30
-------------------------------------------------------------------------------
2000 1999 2000 1999
-------------------------------------------------------------------------------
Sales and other operating revenues $36,628 $42,793 $11,877 $13,279
Cost of products and services 31,484 37,980 9,993 11,802
-------------------------------------------------------------------------------
5,144 4,813 1,884 1,477
Equity in income (loss) from joint ventures 38 3 8 (9)
General and administrative expense 1,639 1,509 607 493
Research and development expense 1,024 1,026 361 315
Gain on dispositions, net 20 70 7 63
Share-based plans expense 193 151 66 55
-------------------------------------------------------------------------------
Operating earnings $ 2,346 $ 2,200 $ 865 $ 668
Other income, principally interest 343 501 121 126
Interest and debt expense (320) (330) (110) (111)
-------------------------------------------------------------------------------
Earnings before income taxes 2,369 2,371 876 683
Income taxes 722 724 267 206
-------------------------------------------------------------------------------
Net earnings $ 1,647 $ 1,647 $ 609 $ 477
===============================================================================
Basic earnings per share $1.91 $1.78 $.71 $.52
===============================================================================
Diluted earnings per share $1.89 $1.76 $.70 $.52
===============================================================================
Cash dividends per share $ .42 $ .42 $.14 $.14
===============================================================================
See notes to condensed consolidated financial statements.
2
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THE BOEING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Dollars in millions except per share data)
September 30 December 31
2000 1999
-------------------------------------------------------------------------------
Assets (Unaudited)
-------------------------------------------------------------------------------
Cash and cash equivalents $ 6,162 $ 3,354
Short-term investments 100 100
Accounts receivable 3,693 3,453
Current portion of customer and commercial financing 314 799
Deferred income taxes 1,757 1,467
Inventories, net of advances and progress billings 6,071 6,539
-------------------------------------------------------------------------------
Total current assets 18,097 15,712
Customer and commercial financing 5,655 5,205
Property, plant and equipment, net 7,930 8,245
Goodwill 2,434 2,233
Prepaid pension expense 4,249 3,845
Other assets 1,082 907
-------------------------------------------------------------------------------
$39,447 $36,147
===============================================================================
Liabilities and Shareholders' Equity
-------------------------------------------------------------------------------
Accounts payable and other liabilities $11,567 $11,269
Advances in excess of related costs 1,748 1,215
Income taxes payable 1,011 420
Short-term debt and current portion of long-term debt 692 752
-------------------------------------------------------------------------------
Total current liabilities 15,018 13,656
Deferred income taxes 178 172
Accrued retiree health care 5,017 4,877
Long-term debt 7,081 5,980
Shareholders' equity:
Common shares, par value $5.00 -
1,200,000,000 shares authorized;
Shares issued - 1,011,870,159 and 1,011,870,159 5,059 5,059
Additional paid-in capital 2,557 1,684
Treasury shares, at cost - 117,675,595 and 102,356,897 (4,902) (4,161)
Retained earnings 11,882 10,487
Accumulated other comprehensive income 6
Unearned compensation (9) (12)
ShareValue Trust shares - 39,075,848 and 38,696,289 (2,434) (1,601)
-------------------------------------------------------------------------------
Total shareholders' equity 12,153 11,462
-------------------------------------------------------------------------------
$39,447 $36,147
===============================================================================
See notes to condensed consolidated financial statements.
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THE BOEING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
(Unaudited)
Nine months ended
September 30
-------------------------------------------------------------------------------
2000 1999
-------------------------------------------------------------------------------
Cash flows - operating activities:
Net earnings $1,647 $1,647
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Share-based plans 193 151
Depreciation 970 1,123
Amortization of goodwill and intangibles 89 80
Customer and commercial financing valuation provision 9 40
Gain on dispositions, net (20) (70)
Changes in assets and liabilities -
Short-term investments 179
Accounts receivable (193) 25
Inventories, net of advances and progress billings 477 (386)
Accounts payable and other liabilities 254 969
Advances in excess of related costs 533 (189)
Income taxes payable and deferred 328 312
Other (575) (378)
Accrued retiree health care 132 63
-------------------------------------------------------------------------------
Net cash provided by operating activities 3,844 3,566
-------------------------------------------------------------------------------
Cash flows - investing activities:
Customer financing and properties on lease, additions (1,121) (1,559)
Customer financing and properties on lease, reductions 1,026 1,550
Property, plant and equipment, net additions (617) (1,042)
Acquisitions, net of cash acquired (316)
Proceeds from dispositions 120 324
-------------------------------------------------------------------------------
Net cash used by investing activities (908) (727)
-------------------------------------------------------------------------------
Cash flows - financing activities:
New borrowings 1,610 267
Debt repayments (569) (586)
Common shares purchased (894) (1,681)
Stock options exercised, other 104 58
Dividends paid (379) (407)
-------------------------------------------------------------------------------
Net cash used by financing activities (128) (2,349)
-------------------------------------------------------------------------------
Net increase in cash and cash equivalents 2,808 490
Cash and cash equivalents at beginning of year 3,354 2,183
-------------------------------------------------------------------------------
Cash and cash equivalents at end of 3nd quarter $6,162 $2,673
===============================================================================
See notes to condensed consolidated financial statements.
4
<PAGE> 5 THE BOEING COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions)
(Unaudited)
Note 1 - Condensed Consolidated Interim Financial Statements
The condensed consolidated interim financial statements included in this report
have been prepared by the Company without audit. In the opinion of management,
all adjustments necessary for a fair presentation are reflected in the interim
financial statements. Such adjustments are of a normal and recurring nature. The
results of operations for the period ended September 30, 2000, are not
necessarily indicative of the operating results for the full year. The interim
financial statements should be read in conjunction with the audited consolidated
financial statements and notes thereto included in the Company's 1999 Annual
Report. Certain reclassifications have been made to prior periods to conform
with current reporting.
Note 2 - Acquisitions
Acquisitions completed during third quarter 2000 included Autometric, Inc., a
geospatial information technology company, and Continental Graphics Corp., a
provider of technical information to the aviation industry, as well as AeroInfo
Systems, Inc. and SVS, Inc. Total third quarter 2000 acquisitions were for $316
in cash and were accounted for under the purchase method. These purchases
resulted in an increase in goodwill of $263 based upon preliminary assessments
of purchase prices and net tangible assets.
Subsequent events
-----------------
On October 4, 2000, the Company completed its acquisition of Jeppesen Sanderson,
Inc., a supplier of flight information services, for $1,515 in cash.
On October 6, 2000, the Company completed its acquisition of Hughes space and
communications and related businesses for $4,000 in cash, representing a
purchase price of $3,750 and $250 for an adjustment attributable to the
beginning net asset balance. Hughes is a satellite-based communications company
with approximately 9,000 employees located primarily in Southern California.
These acquisitions will be accounted for under the purchase method. The excess
of the purchase price over the fair value of the net tangible assets acquired
will be classified as intangibles. The portion of the intangibles that will be
accounted for as assets, principally goodwill, and the portion that will be
immediately expensed as an in-process research and development non-cash charge
are currently undergoing an independent evaluation.
Note 3 - Earnings per Share
The weighted average number of shares outstanding (in millions) used to compute
earnings per share for the periods ended September 30, 2000 and 1999, are as
follows:
Nine months ended Three months ended
September 30 September 30
----------------------------------------------------------------------
2000 1999 2000 1999
----------------------------------------------------------------------
Basic shares 864.4 927.5 858.2 914.5
Diluted shares 873.5 936.3 873.3 924.3
----------------------------------------------------------------------
5
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Note 3 - Earnings per Share (continued)
Basic earnings per share are calculated based on the weighted average number of
shares outstanding, excluding treasury shares and the outstanding shares held by
the ShareValue Trust. Diluted earnings per share are calculated based on that
same number of shares plus additional dilutive shares representing stock
distributable under stock option and stock unit plans computed using the
treasury stock method, plus contingently issuable shares from other share-based
plans on an as-if converted basis.
Note 4 - Available for Sale Securities
The Company holds certain common stock investments with a readily determinable
fair market value. Under Statement of Financial Accounting Standard (SFAS) No.
115, Accounting for Certain Investments in Debt and Equity Securities, such
equity securities are carried as available for sale and reported at market
value. The aggregate value of all available for sale securities held on
September 30, 2000, totaled $28, and is included in "other assets" on the
Condensed Consolidated Statements of Financial Position.
The unrealized gains and losses are excluded from earnings and reported in a
separate component of shareholders' equity. The gross unrealized holding losses
totaled $11 for the period ended September 30, 2000.
Note 5 - Income Taxes
The effective income tax provision rate of 30.5% for the first nine months of
2000 is lower than the statutory federal rate, principally due to Foreign Sales
Corporation tax benefits. Partially offsetting this reduction from the statutory
federal rate are state income taxes and non-deductibility of goodwill. Net
income tax payments were $362 and $387 for the nine months ended September 30,
2000 and 1999.
Note 6 - Accounts Receivable
Accounts receivable consisted of the following:
September 30 December 31
2000 1999
-------------------------------------------------------------------------------
U.S. Government contracts $2,031 $1,970
Other 1,662 1,483
-------------------------------------------------------------------------------
$3,693 $3,453
===============================================================================
Note 7 - Inventories
Inventories consisted of the following:
September 30 December 31
2000 1999
-------------------------------------------------------------------------------
Commercial aircraft programs and
long-term contracts in progress $ 19,351 $ 19,537
Commercial spare parts, general
stock materials and other 1,951 2,042
-------------------------------------------------------------------------------
21,302 21,579
Less advances and progress billings (15,231) (15,040)
-------------------------------------------------------------------------------
$ 6,071 $ 6,539
===============================================================================
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Note 7 - Inventories (continued)
Inventory costs at September 30, 2000, included unamortized tooling of $1,167
and $474 relating to the 777 and Next-Generation 737 programs, and excess
deferred production costs of $1,240 and $646 relating to the 777 and Next-
Generation 737 programs. There are no significant deferred production costs or
unamortized tooling associated with the 717 program.
Note 8 - Customer and Commercial Financing
Customer and commercial financing consisted of the following:
September 30 December 31
2000 1999
-------------------------------------------------------------------------------
Aircraft financing
Notes receivable $ 476 $ 781
Investment in sales-type/financing leases 1,005 1,497
Operating lease equipment, at cost,
Less accumulated depreciation of $288 and $304 2,317 2,357
Commercial equipment financing
Notes receivable 868 730
Investment in sales-type/financing leases 728 506
Operating lease equipment, at cost,
Less accumulated depreciation of $87 and $92 760 408
-------------------------------------------------------------------------------
Less valuation allowance (185) (275)
-------------------------------------------------------------------------------
$5,969 $6,004
===============================================================================
Financing for aircraft is collateralized by security in the related asset, and
historically the Company has not experienced a problem in accessing such
collateral when necessary. Commercial equipment financing also includes amounts
attributable to regional aircraft, principally with fewer than 80 seats.
The change in the valuation allowance for the first nine months of 2000
consisted of the following:
Valuation
Allowance
-------------------------------------------------------------------------------
Beginning balance - December 31, 1999 $(275)
Charged to costs and expenses (9)
Reduction in customer and commercial financing assets 99
-------------------------------------------------------------------------------
Ending balance - September 30, 2000 $(185)
===============================================================================
Note 9 - Accounts Payable and Other Liabilities
Accounts payable and other liabilities consisted of the following:
September 30 December 31
2000 1999
-------------------------------------------------------------------------------
Accounts payable $ 5,155 $ 4,909
Accrued compensation and employee benefit costs 2,668 2,421
Dividends payable 128
Lease and other deposits 514 647
Other 3,230 3,164
-------------------------------------------------------------------------------
$11,567 $11,269
===============================================================================
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Note 10 - Postretirement Plans
Beginning January 1, 2000, the actuarial assumptions used to calculate net
periodic pension income were the following: a discount rate of 7.50%, an
expected return on plan assets of 9.25%, and an annual rate of compensation
increase of 5.50%. The increase in the expected return on plan assets from 9.00%
as of December 31, 1999, to 9.25% resulted in additional net periodic pension
income of $21 in the third quarter of 2000 and $63 for the nine months ended
September 30, 2000.
Note 11 - Debt
Short- and long-term debt consisted of the following:
September 30 December 31
2000 1999
-------------------------------------------------------------------------------
Unsecured debentures and notes:
8.25% due Jul. 1, 2000 $ - $ 200
8 3/8% due Feb. 15, 2001 175 177
7.565% due Mar. 30, 2002 50 52
9.25% due Apr. 1, 2002 120 120
6 3/4% due Sep. 15, 2002 299 298
6.35% due Jun. 15, 2003 300 300
7 7/8% due Feb. 15, 2005 206 207
6 5/8% due Jun. 1, 2005 294 293
6.875% due Nov. 1, 2006 249 248
8 1/10% due Nov. 15, 2006 175 175
9.75% due Apr. 1, 2012 348 348
8 3/4% due Aug. 15, 2021 398 398
7.95% due Aug. 15, 2024 300 300
7 1/4% due Jun. 15, 2025 247 247
8 3/4% due Sep. 15, 2031 248 248
8 5/8% due Nov. 15, 2031 173 173
6 5/8% due Feb. 15, 2038 300 300
7.865% due Aug. 15, 2042 100 100
7 7/8% due Apr. 15, 2043 173 173
6 7/8% due Oct. 15, 2043 125 125
Senior debt securities,
6.0% - 9.4%, due through 2011 1,524 30
Senior medium-term notes,
5.6% - 7.6%, due through 2017 1,310 1,426
Subordinated medium-term notes,
5.5% - 8.3%, due through 2004 25 45
Capital lease obligations due through 2008 401 386
Other notes 233 363
-------------------------------------------------------------------------------
$7,773 $6,732
===============================================================================
The Company has $3,000 currently available under credit line agreements with a
group of commercial banks. The Company has complied with the restrictive
covenants contained in various debt agreements. Total debt interest, including
amounts capitalized, was $388 and $390 for the nine-month periods ended
September 30, 2000 and 1999, and interest payments were $459 and $419,
respectively.
8
<PAGE> 9
Note 11 - Debt (continued)
Additionally, Boeing Capital Corporation (BCC), a wholly owned subsidiary of the
Company, has filed a shelf registration with the Securities and Exchange
Commission totaling $2,500. The previous shelf registration of $1,200, which had
$140 undrawn, no longer exists. The remaining $140 from the previous shelf
registration was added to the current shelf registration, bringing the total to
$2,640 and was made effective on August 31, 2000. From this new $2,640 shelf,
$1,500 was issued in Senior Global Notes consisting of three tranches: $500 2-
year variable rate notes, $500 5-year 7.10% fixed rate notes, and $500 10-year
7.375% fixed rate notes. The remaining $1,140 was allocated to a new Medium Term
Note (MTN) Program made effective August 31, 2000. To date, there were no
drawdowns under the MTN Program.
Short-term debt and current portion of long-term debt as of September 30, 2000,
consist of the following: $175 of unsecured debentures and notes, $303 of senior
debt securities, senior medium-term notes, subordinated medium-term notes,
$64 of capital lease obligations, and $150 of other notes.
Note 12 - Shareholders' Equity
Changes in shareholders' equity for the nine-month periods ended September 30,
2000 and 1999, consisted of the following:
-------------------------------------------------------------------------------
2000 1999
(Shares in thousands) Shares Amount Shares Amount
-------------------------------------------------------------------------------
Common stock
Beginning balance - January 1 1,011,870 $ 5,059 1,011,870 $ 5,059
-------------------------------------------------------------------------------
Ending balance - September 30 1,011,870 $ 5,059 1,011,870 $ 5,059
===============================================================================
Additional paid-in capital
Beginning balance - January 1 $ 1,684 $ 1,147
Share-based compensation 193 152
Treasury shares issued for
stock plans, net (174) (35)
Tax benefit related to stock plans 21 8
ShareValue Trust market value adjustment 833 414
-------------------------------------------------------------------------------
Ending balance - September 30 $ 2,557 $ 1,686
===============================================================================
Treasury stock
Beginning balance - January 1 102,357 $(4,161) 35,846 $(1,321)
Treasury shares issued for
stock plans, net (3,976) 153 (2,156) 80
Treasury shares acquired 19,295 (894) 38,803 (1,681)
-------------------------------------------------------------------------------
Ending balance - September 30 117,676 $(4,902) 72,493 $(2,922)
===============================================================================
Retained earnings
Beginning balance - January 1 $10,487 $ 8,706
Net earnings 1,647 1,647
Cash dividends declared (252) (270)
-------------------------------------------------------------------------------
Ending balance - September 30 $11,882 $10,083
===============================================================================
9
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Note 12 - Shareholders' Equity (continued)
Changes in shareholders' equity for the nine-month periods ended September 30,
2000 and 1999, consisted of the following:
-------------------------------------------------------------------------------
2000 1999
(Shares in thousands) Shares Amount Shares Amount
-------------------------------------------------------------------------------
Accumulated other comprehensive income
Beginning balance - January 1 $ 6 $ (23)
Unrealized losses on certain investments (11)
Foreign currency translation adjustment 5
-------------------------------------------------------------------------------
Ending balance - September 30 $ 0 $ (23)
===============================================================================
Unearned compensation
Beginning balance - January 1 $ (12) $ (17)
Amortization 3 2
Forfeitures 2
-------------------------------------------------------------------------------
Ending balance - September 30 $ (9) $ (13)
===============================================================================
ShareValue Trust
Beginning balance - January 1 38,696 $(1,601) 38,167 $(1,235)
Shares acquired from dividend reinvestment 380 394
Market value adjustment (833) (415)
-------------------------------------------------------------------------------
Ending balance - September 30 39,076 $(2,434) 38,561 $(1,650)
===============================================================================
For the nine months ended September 30, 2000 and 1999, the Company did not incur
items to be reported in comprehensive income that were not already included in
the reported net earnings, except for the $5 currency translation adjustment and
$11 unrealized losses on certain investments reported for the nine months ended
September 30, 2000. As a result, comprehensive income and net earnings were
substantially the same for these periods.
Note 13 - Share-Based Compensation
Share-based plans expense consisted of the following:
Nine months ended Three months ended
September 30 September 30
-------------------------------------------------------------------------------
2000 1999 2000 1999
-------------------------------------------------------------------------------
Performance shares $ 91 $ 56 $33 $20
ShareValue Trust 54 54 18 18
Stock Options, other 48 41 15 17
-------------------------------------------------------------------------------
$193 $151 $66 $55
===============================================================================
As of September 30, 2000, the Company has issued 4,683,563 stock units that
are convertible to either stock or a cash equivalent, of which 3,736,521 are
fully vested, and the remainder vest with employee service. These stock units
principally represent a method of deferring employee compensation by which
a liability is established based upon the current stock price. An expense is
recongnized associated with the charge in that liablity balance and is
recorded against general and administrative expense.
10
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Note 14 - Derivatives and Hedging Activities
The Company will be required to adopt Statement of Financial Accounting
Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging
Activities, at the beginning of 2001. This standard requires that the
statement of financial position reflect the current market price of
derivatives. If the Company had adopted SFAS No. 133 at the beginning of the
fourth quarter of 2000, it would have recognized a pretax transition loss of
approximately $75 as of October 1, 2000. It is not possible to estimate the
actual transition effect because of uncertainty of both the market value of
the Company's derivatives (impacted principally by interest rates) and the
actual derivatives in place as of January 1, 2001.
Note 15 - Contingencies
Various legal proceedings, claims and investigations related to products,
contracts and other matters are pending against the Company. Most significant
legal proceedings are related to matters covered by insurance. Major
contingencies are discussed below.
The Company is subject to U.S. Government investigations of its practices from
which civil, criminal or administrative proceedings could result. Such
proceedings could involve claims by the Government for fines, penalties,
compensatory and treble damages, restitution and/or forfeitures. Under
government regulations, a company, or one or more of its operating divisions or
subdivisions, can also be suspended or debarred from government contracts, or
lose its export privileges, based on the results of investigations. The Company
believes, based upon all available information, that the outcome of any such
government disputes and investigations will not have a material adverse effect
on its financial position or continuing operations.
In 1991, the U.S. Navy notified the Company and General Dynamics Corporation
(the Team) that it was terminating for default the Team's contract for
development and initial production of the A-12 aircraft. The Team filed a legal
action to contest the Navy's default termination, to assert its rights to
convert the termination to one for "the convenience of the Government," and to
obtain payment for work done and costs incurred on the A-12 contract but not
paid to date. As of September 30, 2000, inventories included approximately $581
of recorded costs on the A-12 contract, against which the Company has
established a loss provision of $350. The amount of the provision, which was
established in 1990, was based on the Company's belief, supported by an opinion
of outside counsel, that the termination for default would be converted to a
termination for convenience, that the Team would establish a claim for contract
adjustments for a minimum of $250, that there was a range of reasonably possible
results on termination for convenience, and that it was prudent to provide for
what the Company then believed was the upper range of possible loss on
termination for convenience, which was $350.
11
<PAGE> 12
On July 1, 1999, the United States Court of Appeals for the Federal Circuit
reversed a March 31, 1998, judgment of the United States Court of Federal Claims
for the Team. The 1998 judgment was based on a determination that the Government
had not exercised the required discretion before issuing a termination for
default. It converted the termination to a termination for convenience, and
determined the Team was entitled to be paid $1,200, plus statutory interest from
June 26, 1991, until paid. The Court of Appeals remanded the case to the Court
of Federal Claims for a determination as to whether the Government is able to
sustain the burden of showing a default was justified and other proceedings.
Final resolution of the A-12 litigation will depend on such litigation and
possible further appeals or negotiations with the Government.
In the Company's opinion, the loss provision continues to provide adequately
for the reasonably possible reduction in value of A-12 net contracts in
process as of September 30, 2000, as a result of a termination of the contract
for the convenience of the Government. The Company has been provided with an
opinion of outside counsel that (i) the Government's termination of the
contract for default was contrary to law and fact, (ii) the rights and
obligations of the Company are the same as if the termination had been issued
for the convenience of the Government, and (iii) subject to prevailing on the
issue that the termination is properly one for the convenience of the
Government, the probable recovery by the Company is not less than $250.
On October 31, 1997, a federal securities lawsuit was filed against the Company
in the U.S. District Court for the Western District of Washington, in Seattle.
The lawsuit names as defendants the Company and three of its then executive
officers. Additional lawsuits of a similar nature have been filed in the same
court. These lawsuits were consolidated on February 24, 1998. The lawsuits
generally allege that the defendants desired to keep the Company's share price
as high as possible in order to ensure that the McDonnell Douglas shareholders
would approve the merger and, in the case of two of the individual defendants,
to benefit directly from the sale of Boeing stock during the period from April
7, 1997 through October 22, 1997. By order dated May 1, 2000, the Court
certified two subclasses of plaintiffs in the action: a. all persons or entities
who purchased Boeing stock or call options or who sold put options during the
period from July 21, 1997 through October 22, 1997, and b. all persons or
entities who purchased McDonnell Douglas stock on or after April 7, 1997 and who
held such stock until it converted to Boeing stock pursuant to the merger. The
plaintiffs seek compensatory damages and treble damages. The action is currently
set for trial on March 7, 2002. The Company believes that the allegations are
without merit and that the outcome of these lawsuits will not have a material
adverse effect on its earnings, cash flow or financial position.
On October 19, 1999, an indictment was returned by a federal grand jury sitting
in the District of Columbia charging that McDonnell Douglas Corporation (MDC), a
wholly owned subsidiary of the Company, and MDC's Douglas Aircraft Company
division, conspired to and made false statements and concealed material facts on
export license applications and in connection with export licenses, and
possessed and sold machine tools in violation of the Export Administration Act.
The indictment also charged one employee with participation in the alleged
conspiracy; the indictment has since been dismissed as against this employee.
The indictment relates to the sale and export to China in 1993-1995 of surplus,
used machine tools sold by Douglas Aircraft Company to China National Aero-
Technology Import and Export Corporation for use in connection with the MD-80/90
commercial aircraft Trunkliner Program in China.
12
<PAGE> 13
As a result of the indictment, the Department of State has discretion to deny
defense-related export privileges to MDC or a division or subsidiary of MDC. The
agency exercised that discretion on January 5, 2000, by establishing a "denial
policy" with respect to defense-related exports of MDC and its subsidiaries.
Most of MDC's major existing defense programs were, however, excepted from that
policy due to overriding U.S. foreign policy and national security interests.
Other exceptions may be granted. There can, however, be no assurance as to how
the Department will exercise its discretion as to program or transaction
exceptions for other programs or future defense-related exports. In addition,
the Department of Commerce has authority to temporarily deny other export
privileges to, and the Department of Defense has authority to suspend or debar
from contracting with the military departments, MDC or a division or subsidiary
of MDC. Neither agency has taken action adverse to MDC or its divisions or
subsidiaries thus far. Based upon all available information, the Company does
not expect actions that would have a material adverse effect on its financial
position or continuing operations. In the unanticipated event of a conviction,
MDC would be subject to Department of State and Department of Commerce denials
or revocations of MDC export licenses. MDC also would be subject to Department
of Defense debarment proceedings.
On February 25, 2000, a purported class action lawsuit alleging gender
discrimination and harassment was filed against The Boeing Company, Boeing North
American, Inc., and McDonnell Douglas Corporation. The complaint, filed with the
United States District Court in Seattle, alleges that the Company has engaged in
a pattern and practice of unlawful discrimination, harassment and retaliation
against females over the course of many years. The complaint, Beck v. Boeing,
names 28 women who have worked for Boeing in the Puget Sound area; Wichita,
Kansas; St. Louis, Missouri; and Tulsa, Oklahoma. On March 15, an amended
complaint was filed naming an additional 10 plaintiffs, including the first from
California. The lawsuit attempts to represent all women who currently work for
the Company, or who have worked for the Company in the past several years.
The Company has denied the allegation that it has engaged in any unlawful
"pattern and practice" and believes that the plaintiffs cannot satisfy the
rigorous requirements necessary to achieve the class action status they seek.
The deadline for filing plaintiffs' motion for class certification, originally
scheduled to be heard on August 25, 2000, has been deferred pending resolution
of several discovery disputes. The motion is anticipated to be filed by second
quarter 2001. The Company intends to vigorously contest this lawsuit.
13
<PAGE> 14
Note 16 - Business Segment Data
Segment information for revenues, earnings, and research and development
consisted of the following:
Nine months ended Three months ended
September 30 September 30
-------------------------------------------------------------------------------
2000 1999 2000 1999
-------------------------------------------------------------------------------
Revenues:
Commercial Airplanes $22,512 $28,479 $ 7,461 $8,562
Military Aircraft and Missiles 8,951 8,937 2,894 2,760
Space and Communications 5,071 4,935 1,614 1,663
Customer and Commercial Financing/Other 526 543 171 186
Accounting differences/eliminations (432) (101) (263) (108)
-------------------------------------------------------------------------------
Operating revenues $36,628 $42,793 $11,877 $13,279
===============================================================================
Earnings from operations:
Commercial Airplanes $ 1,880 $ 1,378 $ 739 $ 534
Military Aircraft and Missiles 922 792 374 102
Space and Communications 8 292 (14) 137
Customer and Commercial Financing/Other 343 270 123 78
Accounting differences/eliminations (360) (164) (113) (44)
Share-based plans (193) (151) (66) (55)
Other unallocated expense (254) (217) (178) (84)
-------------------------------------------------------------------------------
Earnings from operations $ 2,346 $ 2,200 $ 865 $ 668
Other income, principally interest 343 501 121 126
Interest and debt expense (320) (330) (110) (111)
-------------------------------------------------------------------------------
Earnings before income taxes $ 2,369 $ 2,371 $ 876 $ 683
Income taxes 722 724 267 206
-------------------------------------------------------------------------------
Net earnings $ 1,647 $ 1,647 $ 609 $ 477
===============================================================================
Research and development:
Commercial Airplanes $ 394 $ 496 $ 131 $ 130
Military Aircraft and Missiles 190 175 65 56
Space and Communications 440 355 165 129
-------------------------------------------------------------------------------
Total research and development expense $ 1,024 $ 1,026 $ 361 $ 315
===============================================================================
For internal reporting purposes, the Company records Commercial Airplanes
segment revenues and operating profits for airplanes transferred to other
segments, and such transfers may include airplanes accounted for as operating
leases that are considered transferred to the Customer and Commercial
Financing/Other segment. The revenues for these transfers are eliminated in
the 'Accounting differences/eliminations' caption. In the event an airplane
accounted for as an operating lease is subsequently sold, the 'Accounting
differences/eliminations' caption would reflect the recognition of revenue and
operating profit for the consolidated financial statements. For the nine months
ended September 30, 2000 and 1999, the 'Accounting differences/eliminations'
caption of net earnings included $19 and $62 identified to eliminations, and the
1999 balance was principally attributed to the sale of leased airplanes.
14
<PAGE> 15
The Company records cost of sales for 7-series commercial airplane programs
under the program method of accounting described in Note 1 to the audited
consolidated financial statements included in the Company's 1999 Annual Report.
For internal measurement purposes, the Commercial Airplanes segment records cost
of sales based on the cost of specific units delivered, and to the extent that
inventoriable costs exceed estimated revenues, a loss is not recognized until
delivery is made, which is not in accordance with generally accepted accounting
principles. For the 717 program, the cost of the specific units delivered is
reduced, on a per-unit basis, by the amount previously recognized for forward
losses. Proceeds from certain Commercial Airplanes segment suppliers
attributable to participation in development efforts are accounted for as a
reduction in the cost of inventory received from the supplier under the program
accounting method, and as an expense reduction in the period the proceeds are
received for internal measurement purposes. These adjustments between the
internal measurement method and the program accounting method are included in
the 'Accounting differences/eliminations' caption of net earnings. These
adjustments totaled $(545) and $(62) for the nine months ended September 30,
2000 and 1999.
Customer advance payments prior to delivery may be delayed or contractually
deferred from a baseline schedule, resulting in the recognition of interest
income. Beginning in first quarter 2000, revenues and income resulting from
deferred customer advances were identified to the Commercial Airplanes segment,
and had previously been identified to the Customer and Commercial
Financing/Other segment. For the first nine months of 1999, $60 of revenues and
operating income had been reclassified from the Customer and Commercial
Financing/Other segment to the Commercial Airplanes segment to conform with the
2000 presentation.
The 'Accounting differences/eliminations' caption of net earnings also includes
the impact of cost measurement differences between generally accepted accounting
principles and federal cost accounting standards. This includes the following:
the differences between pension costs recognized under SFAS No. 87, Employers'
Accounting for Pensions, and under federal cost accounting standards,
principally on a funding basis; the differences between retiree health care
costs recognized under SFAS No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions, and under federal cost accounting standards,
principally on a cash basis; and the differences in timing of cost recognition
related to certain activities, such as facilities consolidation, undertaken as a
result of mergers and acquisitions whereby such costs are expensed under
generally accepted accounting principles and deferred under federal cost
accounting standards. Additionally, the amortization of costs capitalized in
accordance with SFAS No. 34, Capitalization of Interest Cost, is included in the
'Accounting differences/eliminations' caption.
The costs attributable to share-based plans are not allocated. Other unallocated
costs include corporate costs not allocated to the operating segments, including
goodwill amortization resulting from the acquisition of Rockwell's aerospace and
defense business in 1996.
15
<PAGE> 16
-------------------------------------------------------------------------------
| Forward-Looking Information Is Subject to Risk and Uncertainty |
| |
| Certain statements in this report contain "forward-looking" information |
| that involves risk and uncertainty, including projections for deliveries, |
| revenues, research and development expense, delivery of new products, |
| stability of product lines, expansion of business, facilities and operations|
| consolidation, construction of new facilities, sale of existing facilities |
| and operations, financial exposure to commercial satellite launch market, |
| internally generated liquidity, backlog, exposure to interest rate risk and |
| foreign currency risk, and other trend projections. This forward-looking |
| information is based upon a number of assumptions including assumptions |
| regarding demand; current and future markets for the Company's products and |
| services; internal performance; product performance; customer financing; |
| customer, supplier and subcontractor performance; customer model selections;|
| favorable outcomes of certain pending sales campaigns; supplier contract |
| negotiations; price escalation; government policies and actions; successful |
| negotiation of contracts with the Company's labor unions; regulatory |
| approvals; and successful execution of acquisition and divestiture plans. |
| Actual future results and trends may differ materially depending on a |
| variety of factors, including the Company's successful execution of internal|
| performance plans, including continued research and development, production |
| recovery, production rate increases and decreases, production system |
| initiatives, timing of product deliveries and launches, supplier contract |
| negotiations, asset management plans, acquisition and divestiture plans, |
| procurement plans, and other cost-reduction efforts; acceptance of new |
| products and services; product performance risks; the cyclical nature of |
| some of the Company's businesses; volatility of the market for certain |
| products and services; domestic and international competition in the |
| defense, space and commercial areas; continued integration of acquired |
| businesses; uncertainties associated with regulatory certifications of the |
| Company's commercial aircraft by the U.S. Government and foreign |
| governments; other regulatory uncertainties; collective bargaining labor |
| disputes; performance issues with key suppliers, subcontractors and |
| customers; governmental export and import policies; factors that result in |
| significant and prolonged disruption to air travel worldwide; global trade |
| policies; worldwide political stability and economic conditions, |
| particularly in Asia; price escalation trends; the outcome of political and |
| legal processes, including uncertainty regarding government funding of |
| certain programs; changing priorities or reductions in the U.S. Government |
| or foreign government defense and space budgets; termination of government |
| contracts due to unilateral government action or failure to perform; legal, |
| financial and governmental risks related to international transactions; |
| legal proceedings; and other economic, political and technological risks and|
| uncertainties. Additional information regarding these factors is contained |
| in the Company's SEC filings, including, without limitation, the Company's |
| Annual Report on Form 10-K for the year ended 1999 and the Company's |
| Quarterly Report on Form 10-Q for the quarter ended June 30, 2000. |
-------------------------------------------------------------------------------
16
<PAGE> 17
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Revenues
--------
Sales of $36.6 billion for the first nine months of 2000 were 14% lower than
sales for the comparable period of 1999. Sales of $11.9 billion in third quarter
2000 were 11% lower than sales for the comparable period of 1999. For the first
nine months, a total of 359 commercial aircraft were delivered in 2000
(including one Airborne Laser 747 and one C-40 737), compared with 455 for the
same period in 1999. In third quarter 2000, 117 commercial airplanes were
delivered, compared with 142 in third quarter 1999. Approximately 490 commercial
aircraft deliveries are currently projected for the full year 2000, compared
with 620 in 1999. Total sales for 2000 are projected to be in the $51 billion
range, compared with $58 billion in 1999.
Commercial jet aircraft deliveries were as follows:
Nine months ended Three months ended
September 30 September 30
--------------------------------------------------------------------
Model 2000 1999 2000 1999
--------------------------------------------------------------------
717 20 (12) 2 (2) 9 (6) 2 (2)
737 Classic 2 34 - 9
737 Next-Generation 209* 207 68* 68
747 19** 38 7 12
757 37 51 9 15
767 30 33 (1) 12 8 (1)
777 38 61 11 16
MD-80 - 17 (14) - 9 (6)
MD-90 - 6 - -
MD-11 4 6 1 3
--------------------------------------------------------------------
Total 359 455 117 142
====================================================================
*Includes one C-40 737 aircraft
**Includes one Airborne Laser 747
Commercial jet aircraft deliveries included deliveries under operating lease,
which are identified by parentheses in the table above. Aircraft accounted for
as operating leases have minimal revenues recorded at the time of delivery.
17
<PAGE> 18
Military Aircraft and Missiles segment deliveries included the following:
Nine months ended Three months ended
September 30 September 30
-------------------------------------------------------------------
Model 2000 1999 2000 1999
-------------------------------------------------------------------
C-17 10 8 4 3
F-15 5 27 - 6
F/A-18C/D 16 20 2 6
F/A-18E/F 17 10 6 4
T-45TS 13 9 4 3
CH-47 5 10 1 3
AH-64 Intl (New Builds) 6 9 2 3
Space and Communications segment deliveries included the following:
Nine months ended Three months ended
September 30 September 30
-------------------------------------------------------------------
Model 2000 1999 2000 1999
-------------------------------------------------------------------
767 AWACS - 2 - -
Delta II 2 8 - 3
Delta III - * 1 - -
* Excludes 3Q 2000 demonstration launch
Earnings
--------
Net earnings for the third quarter of 2000 were $609 million, compared with $477
million for the same period in 1999.
Net earnings for the first nine months of 2000 and 1999 were $1,647 million.
Earnings for the first nine months of 2000 included a pretax gain of $41
million, or $26 million on an after-tax basis, on a sale of a long-held equity
instrument, and interest income of $53 million, or $33 million on an after-tax
basis, related to interest income from a federal income tax audit settlement.
Net earnings for the first nine months of 1999 included net interest income of
$289 million, or $181 million after tax, associated with a partial agreement
between the Company and the Internal Revenue Service on an IRS examination of
the years 1988 through 1991. Net earnings for the first nine months of 1999
also included a pretax gain of $66 million included in other income associated
with receipt and subsequent sale of shares resulting from an inital public
offering of an insurer.
Research and development expense of $1,024 million for the first nine months of
2000 was substantially unchanged from the 1999 level. Research and development
expense totaled $361 million for the quarter, compared with $315 million for the
same period of 1999. Commercial Airplanes research and development expense of
$131 million for third quarter 2000 was comparable to the third quarter 1999
level, but reflects reduced spending attributable to the 767-400ER and 717
programs, and increased spending attributable to development of two longer-range
777 models. Space and Communications segment research and development expense of
$165 million for third quarter 2000 was higher than the $129 million expense for
18
<PAGE> 19
the third quarter of 1999, and principally reflects continued spending on the
Delta IV program and development for Connexion by Boeing, a mobile, high-speed,
broad-band, two-way data communications service for global travelers.
Income taxes have been settled with the Internal Revenue Service (IRS) for all
years through 1978, and all IRS examinations have been completed through 1991.
Issues not resolved at the IRS examination stage are either in appeals with the
IRS or are being litigated. The Company has filed refund claims for additional
research and development tax credits, primarily in relation to its fixed-price
government development programs. Successful resolutions will result in increased
income to the Company.
In December 1996, The Boeing Company filed suit in the U.S. District Court for
the Western District of Washington for the refund of over $400 million in
federal income taxes and related interest. The suit challenged the IRS method of
allocating research and development costs for the purpose of determining tax
incentive benefits on export sales through the Company's Domestic International
Sales Corporation (DISC) and its Foreign Sales Corporation (FSC) for the years
1979 through 1987. In September 1998, the Company's position prevailed when the
District Court granted the Company's motion for summary judgment. The U.S.
Department of Justice has appealed this decision. If the Company were to
prevail, the refund would include interest computed to the payment date. The
issue could affect tax computations for subsequent years; however, the financial
impact would depend on the final resolution of audits for those years.
For the last several years, Foreign Sales Corporation tax benefits have reduced
the Company's effective tax rate below the statutory rate. The European Union
filed a challenge to U.S. Foreign Sales Corporation tax provisions with the
World Trade Organization (WTO). On February 25, 2000, the WTO issued a final
decision upholding this challenge. Officials representing the United States on
trade issues continue to seek resolution through a negotiated settlement. It
is not possible to predict what impact, if any, this issue will have on future
earnings pending final determination of the manner and scope of the U.S.
Government response.
The Company has significant financing assets and off-balance-sheet commitments
that are impacted by the market value of various jet aircraft. The Company
believes that it has appropriately assessed the impact of aircraft market values
on accounting for such commitments and financing assets. A significant
deterioration in the market value, however, could result in the requirement to
adjust related reserves. The Company will continue to monitor this market.
Operating Earnings
------------------
Commercial Airplanes
Third quarter 2000 commercial jet aircraft deliveries totaled 117 compared with
142 during the same period in 1999. Commercial Airplanes segment third quarter
2000 operating earnings, based on the unit cost of airplanes delivered, were
$739 million, compared with $534 million for the same period in 1999. The
overall Commercial Airplanes segment operating profit margin was approximately
9.9% for the third quarter of 2000, compared with 6.2% for the same period in
1999. The third quarter 2000 margin increase over the same period in 1999
primarily reflects improvements in the production process.
19
<PAGE> 20
Commercial Airplanes segment earnings, as determined under generally accepted
accounting principles (GAAP), reflect the program method of accounting and
incorporate a portion of the 'Accounting differences/eliminations' caption as
discussed in Note 16. Commercial Airplanes segment earnings under GAAP were
$1,335 million and $1,316 million for the nine-months ended September 30, 2000
and 1999, and $514 million and $481 million for the third quarter 2000 and 1999.
The GAAP determined segment margin of 5.9% for the nine-month period in 2000
compares with 4.6% for the same nine-month period in 1999. The increase in
segment margin is principally due to increased program accounting margins
resulting from improvements in the production process, an increase in estimated
revenue for airplanes within the program accounting quantities, and for the 737
Next-Generation program, an increase in the accounting quantity. Additionally,
research and development expense was lower by $102 million for the nine months
ended September 30, 2000.
The GAAP determined segment margin of 6.9% for third quarter 2000 compares with
5.6% for the same period in 1999. The increase in segment margin is due to
reasons similar to those discussed above, except that research and development
expense for third quarter 2000 and 1999 were the same.
As of September 30, 2000, the Company had cumulatively delivered 32 717 program
aircraft. The 717 program is accounted for under the program method of
accounting described in Note 1 to the audited consolidated financial statements
in the Company's 1999 Annual Report. The Company has established the program
accounting quantity at 200 units. The Company will record 717 deliveries on a
break-even basis until such time as program reviews indicate positive gross
profit within the program accounting quantity. Such program reviews could
include revised assumptions of revenues and costs, or an increase in the program
quantity if warranted by additional program orders.
Current firm contracts for the 717 program include a contract for 50 airplanes
with Trans World Airlines (TWA) of which nine have delivered. In April 1999,
Moody's rating agency lowered TWA's outlook from Stable to Negative.
The first 767-400ER was delivered to Delta Airlines in the third quarter of
2000. The Company also committed to produce a longer-range 767-400ER, scheduled
to enter service in the spring of 2004. Like the current 767-400ER, the new
aircraft will seat 245 passengers but will have a range of 7,080 miles, which is
600 miles longer than the current version and matches the range of the smaller
767-300ER.
The 737-900 made its initial flight in the third quarter of 2000. It can carry
up to 177 passengers in a two-class configuration, 15 more than the 737-800. The
first 737-900 is scheduled to be delivered in April 2001.
During the third quarter of 2000, the Company announced enhancements to the 737
twinjet's rudder control system in response to concerns raised by the National
Transportation Safety Board and Federal Aviation Administration (FAA). The
enhancements were announced as the FAA released the final report on its
Engineering Test Evaluation Board, after a year-long review of the 737 flight
control system. The Company does not believe that there will be a significant
impact to the results of operations as a result of these enhancements to the
rudder control system.
During the quarter, the Company acquired Continental Graphics Corp., a provider
of technical information to the aviation industry, and AeroInfo Systems, Inc.,
a provider of advanced maintenance software applications for the airline
industry.
20
<PAGE> 21
The Company announced it had agreed to acquire Jeppesen Sanderson, Inc., a
provider of flight information services. Jeppesen provides a full range of
print and electronic flight information services, including navigation data,
computerized flight planning, aviation software products, aviation weather
services, maintenance information, and pilot training systems and supplies.
The acquisition closed October 4, 2000.
Military Aircraft and Missiles
Military Aircraft and Missiles segment third quarter 2000 operating earnings
were $374 million, compared with $102 million for the same period in 1999. The
operating margin of 12.9% for third quarter 2000 compares with a third quarter
1999 margin of 3.7%. During the third quarter 1999, there was a non-recurring
charge for the F-15 write-off of $225 million related to long-lead inventory.
Excluding this non-recurring item, third quarter 1999 earnings and operating
margins were $327 million and 11.8% respectively. The higher earnings in third
quarter 2000 reflect the delivery of additional C-17s and F/A-18 E/Fs, as well
as a settlement of various contractual issues, offset slightly by fewer F-15
deliveries.
In late September, the U.S. Army signed a five-year, $2.3 billion contract
authorizing Boeing to remanufacture 269 additional U.S. Army AH-64A Apaches into
next-generation AH-64D Apache Longbow helicopters. This is the second five-year
Apache remanufacture contract. The first, for 232 Apaches, is in its fourth
year. Nearly 150 remanufactured Apache Longbows have been delivered under this
contract. The multiyear procurements will provide stability for the Boeing
Apache assembly line through 2006.
The Boeing X-32A Joint Strike Fighter entered a five-month flight test program
on September 18, 2000. During the flight-test program, Boeing will validate the
JSF's flying quality and performance for aircraft carrier operations. The
aircraft has successfully completed approximately 15% of the test program.
Australia selected the Company to provide up to $300 million of support and
upgrade services for its F-111 jets. Under the two contracts awarded in August,
Boeing will provide maintenance services, associated integrated logistic support
and upgrade work. The award significantly expands Boeing's global military
aerospace support business.
On September 27, 2000, the Unmanned Combat Air Vehicle (UCAV) advanced
technology demonstrator was rolled out. This program will pursue the
technological feasibility of using autonomous UCAVs to perform dangerous, high-
priority combat missions to augment manned fighter strike forces. The system is
being developed by the Company's Phantom Works R&D division under a $131
million, 42-month cost-share agreement with the Defense Advanced Research
Projects Agency (DARPA) and the U.S. Air Force. Flight testing of the first air
vehicle is scheduled to begin in spring 2001.
Space and Communications
The Space and Communications segment had an operating loss of $14 million for
the third quarter of 2000, compared with operating earnings of $137 million in
the same period in 1999. The 1999 third quarter results included a $95 million
gain from the sale of Boeing Information Systems. Third quarter 2000 results
were reduced $23 million pretax due to costs incurred for a company-funded
Delta III demonstration rocket. On August 23, 2000, the Boeing Delta III
successfully
21
<PAGE> 22
lifted off from Cape Canaveral Air Force Station, Florida, carrying a simulated
payload on a dual data gathering mission. The payload was prepared to assist in
the calibration and testing of electro-optical space imaging systems.
A Delta II rocket successfully placed a Global Positioning System (GPS)
satellite for the U.S. Air Force into orbit on July 16, 2000. Every GPS
satellite launched to date has been sent into transfer orbit on Delta rockets.
On July 28, 2000, the Sea Launch Zenit-3SL rocket lifted off from the Odyssey
Launch Platform. The launch was successful, as all systems performed nominally
during the flight. The mission carried the PAS-9 satellite for customer
PanAmSat. Space Systems/Loral signed an agreement with Sea Launch on July 26,
2000, to launch the Telstar-8 satellite in 2002. Telstar-8 will be the
heaviest payload in the current Sea Launch manifest. The Company holds a 40%
partnership interest in the Sea Launch venture.
The Company continues to monitor the impact of the softening satellite launch
market on the Delta III program and the Sea Launch venture. Additionally, the
Company continues to monitor potential exposures for the Delta III program by
assessing the estimated revenues attributable to future Delta III launches,
including revenue for launch positions that are currently unsold, along with
assessing inventory and supplier commitments.
In the third quarter, the Company closed on its acquisition of Autometric Inc.,
a geospatial information technology company in the United States. The
acquisition helps to position the Company as a leader in the areas of space
imagery visualization and geospatial information. The Company also purchased
SVS, Inc., which specializes in electro-optical systems.
The purchase of Hughes space and communications businesses and related
operations closed on October 6, 2000. The new entity will be operated as a
wholly owned subsidiary called Boeing Satellite Systems, Inc. (BSS). BSS
provides space-based communications, reconnaissance, surveillance
and imaging systems. It is also a manufacturer of commercial communications
satellites. The acquisition of Hughes represents a strategic fit for the Space
and Communications organization which will provide substantial synergies for
future growth. Also included in the acquisition are Hughes Electron Dynamics, a
supplier of electronic components for satellites; Spectrolab, a provider of
solar cells and panels for satellites; and a 50% share of HRL Laboratories, a
premier research center owned jointly with Raytheon.
Customer and Commercial Financing/Other
Revenues consist principally of interest from financing receivables and lease
income from operating lease equipment. Segment earnings additionally reflect
depreciation on leased equipment and expenses recorded against the valuation
allowance. No interest expense on debt is included in Customer and Commercial
Financing/Other segment earnings.
Liquidity and Capital Resources
-------------------------------
The Company's financial liquidity position as of September 30, 2000, included
cash and short-term investments totaling $6.3 billion at September 30, 2000,
after repurchasing 19.3 million shares for $894 million during the first nine
months of 2000. As of September 30, 2000, the Company has repurchased 123
million shares for $5.1 billion under a share repurchase plan approved by the
Board of Directors. Excluding Boeing Capital Corporation (BCC), a financing
22
<PAGE> 23
subsidiary wholly owned by the Company, total long-term debt is at 28% of
total shareholders' equity plus debt. The consolidated long-term debt,
including BCC, is at 39% of total shareholders' equity plus debt. Revolving
credit line agreements with a group of major banks, totaling $3.0 billion,
remain available but unused. Also, BCC has an unused balance of $1,140 million
on its $2,640 million shelf registration.
The Company believes its internally generated liquidity, together with access to
external capital resources, will be sufficient to satisfy existing commitments
and plans, and also to provide adequate financial flexibility to take advantage
of potential strategic business opportunities should they arise. In early
October 2000, the cash and short-term investment balance was reduced by
approximately $5.5 billion as a result of the acquisitions of Hughes space and
communications businesses and Jeppesen Sanderson, Inc., as described in Note 2
of the third quarter 2000 financial statements.
Backlog
-------
Contractual backlog of unfilled orders (which excludes purchase options and
announced orders for which definitive contracts have not been executed, and
unobligated U.S. Government contract funding) was as follows (dollars in
billions):
Sept 30 June 30 Dec 31
----------------------------------------------------------------
2000 2000 1999
----------------------------------------------------------------
Commercial Airplanes $ 82.8 $ 77.1 $73.0
Military Aircraft and Missiles 19.1 18.8 15.6
Space and Communications 9.2 9.1 10.6
----------------------------------------------------------------
Total contractual backlog $111.1 $105.0 $99.2
================================================================
Unobligated U.S. Government contract funding not included in backlog totaled
$25.1 billion at September 30, 2000, compared with $24.4 billion at December 31,
1999.
Derivative Instruments and Hedging Activities
---------------------------------------------
The Company will be required to adopt Statement of Financial Accounting
Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging
Activities, at the beginning of 2001. This standard requires that the
statement of financial position reflect the current market price of
derivatives. If the Company had adopted SFAS No. 133 at the beginning of the
fourth quarter of 2000, it would have recognized a pretax transition loss of
approximately $75 million as of October 1, 2000. It is not possible to
estimate the actual transition effect because of uncertainty of both the
market value of the Company's derivatives (impacted principally by interest
rates) and the actual derivatives in place as of January 1, 2001.
23
<PAGE> 24
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company has financial instruments that are subject to interest rate risk,
principally short-term investments, fixed-rate notes receivable attributable to
customer financing, and debt obligations issued at a fixed rate. Historically,
the Company has not experienced material gains or losses due to interest rate
changes when selling short-term investments or fixed-rate notes receivable.
Additionally, the Company uses interest rate swaps to manage exposure to
interest rate changes. Based on the current holdings of short-term investments
and fixed-rate notes, as well as underlying swaps, the exposure to interest rate
risk is not material. Fixed-rate debt obligations issued by the Company are
generally not callable until maturity.
The Company is subject to foreign currency exchange rate risk relating to
receipts from customers and payments to suppliers in foreign currencies. As a
general policy, the Company substantially hedges foreign currency commitments of
future payments and receipts by purchasing foreign currency-forward contracts.
As of September 30, 2000, the notional value of such derivatives was $418
million, with a net unrealized loss of $41 million. The Company believes that a
significant portion of these currency-forward contracts will qualify for hedge
treatment under the guidelines prescribed by SFAS No. 133 when the standard is
adopted. Less than two percent of receipts and expenditures are contracted in
foreign currencies, and the market risk exposure relating to currency exchange
is not material.
24
<PAGE> 25
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Various legal proceedings, claims and investigations related to products,
contracts and other matters are pending against the Company. Most significant
legal proceedings are related to matters covered by insurance. Major
contingencies are discussed below.
The Company is subject to U.S. Government investigations of its practices from
which civil, criminal or administrative proceedings could result. Such
proceedings could involve claims by the Government for fines, penalties,
compensatory and treble damages, restitution and/or forfeitures. Under
government regulations, a company, or one or more of its operating divisions or
subdivisions, can also be suspended or debarred from government contracts, or
lose its export privileges, based on the results of investigations. The Company
believes, based upon all available information, that the outcome of any such
government disputes and investigations will not have a material adverse effect
on its financial position or continuing operations.
In 1991, the U.S. Navy notified the Company and General Dynamics Corporation
(the Team) that it was terminating for default the Team's contract for
development and initial production of the A-12 aircraft. The Team filed a legal
action to contest the Navy's default termination, to assert its rights to
convert the termination to one for "the convenience of the Government," and to
obtain payment for work done and costs incurred on the A-12 contract but not
paid to date. As of September 30, 2000, inventories included approximately $581
million of recorded costs on the A-12 contract, against which the Company has
established a loss provision of $350 million. The amount of the provision, which
was established in 1990, was based on the Company's belief, supported by an
opinion of outside counsel, that the termination for default would be converted
to a termination for convenience, that the Team would establish a claim for
contract adjustments for a minimum of $250 million, that there was a range of
reasonably possible results on termination for convenience, and that it was
prudent to provide for what the Company then believed was the upper range of
possible loss on termination for convenience, which was $350 million.
On July 1, 1999, the United States Court of Appeals for the Federal Circuit
reversed a March 31, 1998, judgment of the United States Court of Federal Claims
for the Team. The 1998 judgment was based on a determination that the Government
had not exercised the required discretion before issuing a termination for
default. It converted the termination to a termination for convenience, and
determined the Team was entitled to be paid $1,200 million, plus statutory
interest from June 26, 1991, until paid. The Court of Appeals remanded the case
to the Court of Federal Claims for a determination as to whether the Government
is able to sustain the burden of showing a default was justified and other
proceedings. Final resolution of the A-12 litigation will depend on such
litigation and possible further appeals or negotiations with the Government.
In the Company's opinion, the loss provision continues to provide adequately for
the reasonably possible reduction in value of A-12 net contracts in process as
of September 30, 2000, as a result of a termination of the contract for the
convenience of the Government. The Company has been provided with an opinion of
outside counsel that (i) the Government's termination of the contract for
default was contrary to law and fact, (ii) the rights and obligations of the
Company are the same as if the termination had been issued for the convenience
of the Government, and (iii) subject to prevailing on the issue that the
termination is properly one for the convenience of the Government, the probable
recovery by the Company is not less than $250 million.
25
<PAGE> 26
On October 31, 1997, a federal securities lawsuit was filed against the Company
in the U.S. District Court for the Western District of Washington, in Seattle.
The lawsuit names as defendants the Company and three of its then executive
officers. Additional lawsuits of a similar nature have been filed in the same
court. These lawsuits were consolidated on February 24, 1998. The lawsuits
generally allege that the defendants desired to keep the Company's share price
as high as possible in order to ensure that the McDonnell Douglas shareholders
would approve the merger and, in the case of two of the individual defendants,
to benefit directly from the sale of Boeing stock during the period from April
7, 1997 through October 22, 1997. By order dated May 1, 2000, the Court
certified two subclasses of plaintiffs in the action: a. all persons or entities
who purchased Boeing stock or call options or who sold put options during the
period from July 21, 1997 through October 22, 1997, and b. all persons or
entities who purchased McDonnell Douglas stock on or after April 7, 1997 and who
held such stock until it converted to Boeing stock pursuant to the merger. The
plaintiffs seek compensatory damages and treble damages. The action is currently
set for trial on March 7, 2002. The Company believes that the allegations are
without merit and that the outcome of these lawsuits will not have a material
adverse effect on its earnings, cash flow or financial position.
On October 19, 1999, an indictment was returned by a federal grand jury sitting
in the District of Columbia charging that McDonnell Douglas Corporation (MDC), a
wholly owned subsidiary of the Company, and MDC's Douglas Aircraft Company
division, conspired to and made false statements and concealed material facts on
export license applications and in connection with export licenses, and
possessed and sold machine tools in violation of the Export Administration Act.
The indictment also charged one employee with participation in the alleged
conspiracy; the indictment has since been dismissed as against this employee.
The indictment relates to the sale and export to China in 1993-1995 of surplus,
used machine tools sold by Douglas Aircraft Company to China National Aero-
Technology Import and Export Corporation for use in connection with the MD-80/90
commercial aircraft Trunkliner Program in China.
As a result of the indictment, the Department of State has discretion to deny
defense-related export privileges to MDC or a division or subsidiary of MDC. The
agency exercised that discretion on January 5, 2000, by establishing a "denial
policy" with respect to defense-related exports of MDC and its subsidiaries.
Most of MDC's major existing defense programs were, however, excepted from that
policy due to overriding U.S. foreign policy and national security interests.
Other exceptions may be granted. There can, however, be no assurance as to how
the Department will exercise its discretion as to program or transaction
exceptions for other programs or future defense-related exports. In addition,
the Department of Commerce has authority to temporarily deny other export
privileges to, and the Department of Defense has authority to suspend or debar
from contracting with the military departments, MDC or a division or subsidiary
of MDC. Neither agency has taken action adverse to MDC or its divisions or
subsidiaries thus far. Based upon all available information, the Company does
not expect actions that would have a material adverse effect on its financial
position or continuing operations. In the unanticipated event of a conviction,
MDC would be subject to Department of State and Department of Commerce denials
or revocations of MDC export licenses. MDC also would be subject to Department
of Defense debarment proceedings.
26
<PAGE> 27
On February 25, 2000, a purported class action lawsuit alleging gender
discrimination and harassment was filed against The Boeing Company, Boeing North
American, Inc., and McDonnell Douglas Corporation. The complaint, filed with the
United States District Court in Seattle, alleges that the Company has engaged in
a pattern and practice of unlawful discrimination, harassment and retaliation
against females over the course of many years. The complaint, Beck v. Boeing,
names 28 women who have worked for Boeing in the Puget Sound area; Wichita,
Kansas; St. Louis, Missouri; and Tulsa, Oklahoma. On March 15, an amended
complaint was filed naming an additional 10 plaintiffs, including the first from
California. The lawsuit attempts to represent all women who currently work for
the Company, or who have worked for the Company in the past several years.
The Company has denied the allegation that it has engaged in any unlawful
"pattern and practice" and believes that the plaintiffs cannot satisfy the
rigorous requirements necessary to achieve the class action status they seek.
The deadline for filing plaintiffs' motion for class certification, originally
scheduled to be heard on August 25, 2000, has been deferred pending resolution
of several discovery disputes. The motion is anticipated to be filed by second
quarter 2001. The Company intends to vigorously contest this lawsuit.
27
<PAGE> 28
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Material Contracts
Management Contracts and Compensatory Plans
(i) Deferred Compensation Plan for Directors of The Boeing
Company, as Amended and Restated Effective August 29,
2000. Filed herewith.
The Boeing Company Bank Credit Agreements
(i) U.S. $1.5 Billion 364-Day Credit Agreement dated as of
September 27, 2000, among The Boeing Company, as
Borrower, the Lenders party thereto, Salomon Smith
Barney Inc. and Chase Securities, Inc., as Joint Lead
Arrangers and Joint Book Managers, The Chase Manhattan
Bank, as Syndication Agent, and Citibank, N.A., as
Administrative Agent for the Lenders. Filed herewith.
(ii) U.S. $700 Million Five-Year Credit Agreement dated as of
September 27, 2000, among The Boeing Company, as
Borrower, the Lenders party thereto, Salomon Smith
Barney Inc. and Chase Securities, Inc., as Joint Lead
Arrangers and Joint Book Managers, The Chase Manhattan
Bank, as Syndication Agent, and Citibank, N.A., as
Administrative Agent for the Lenders. Filed herewith.
(15) Letter from independent accountants regarding unaudited
interim financial information. Page 148.
(27) Financial Data Schedule for the nine-month period ending
September 30, 2000. Filed herewith.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter covered
by this report.
28
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REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS
The condensed consolidated statement of financial position as of September 30,
2000, the condensed consolidated statements of operations for the three- and
nine-month periods ended September 30, 2000 and 1999, and the condensed
consolidated statements of cash flows for the nine-month periods ended September
30, 2000 and 1999, have been reviewed by the registrant's independent
accountants, Deloitte & Touche LLP, whose report covering their review of the
financial statements follows.
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<PAGE> 30
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
November 3, 2000
Board of Directors and Shareholders
The Boeing Company
Seattle, Washington
We have reviewed the accompanying condensed consolidated statement of financial
position of The Boeing Company and subsidiaries (the "Company") as of September
30, 2000, and the related condensed consolidated statements of operations for
the three- and nine-month periods ended September 30, 2000 and 1999, and the
related condensed consolidated statements of cash flows for the nine-month
periods ended September 30, 2000 and 1999. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States of
America, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with accounting principles generally accepted in the United States of
America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated statement of
financial position of the Company as of December 31, 1999, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
the year then ended (not presented herein); and in our report dated January 28,
2000, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated statement of financial position as of December 31, 1999,
is fairly stated, in all material respects, in relation to the consolidated
statement of financial position from which it has been derived.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Seattle, Washington
November 3, 2000
30
<PAGE> 31
- - - - - - -
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE BOEING COMPANY
------------------------------
(Registrant)
November 3, 2000 /s/ Laurette T. Koellner
---------------- ------------------------------
(Date) Laurette T. Koellner
Vice President of Finance
& Corporate Controller
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<PAGE> 32
EXHIBIT (10)(i)
DEFERRED COMPENSATION PLAN FOR
DIRECTORS OF THE BOEING COMPANY
(As Amended and Restated Effective August 29, 2000)
1. Purpose. The purposes of the Deferred Compensation Plan for Directors of
The Boeing Company (the "Plan") are (i) to credit to members of the Board
of Directors of The Boeing Company (the "Company") any portions of
director retainers that are required to be paid in Boeing stock units,
(ii) to provide for elective deferral of payment of all or a portion of
any retainers otherwise payable in cash to such directors, and (iii) to
encourage elective deferral of payment of all or a portion of any
retainers otherwise payable in cash to such director, into Boeing stock
units.
2. Eligibility. Every member of the Company's Board of Directors entitled to
compensation as a director shall participate in the Plan (each, a
"Participant") and shall be eligible to elect cash deferrals under the Plan.
3. Plan Administration. The Plan shall be administered by the Compensation
Committee of the Board of Directors (the "Committee"), which shall have
full power and authority to construe and interpret the Plan.
4. Participation. Every Participant shall participate as to the amount of
compensation required to be paid in Boeing stock units.
4.1 Election to Defer. A Participant also may elect to defer all or a
specified percentage of his or her retainers that may be payable in
cash. Such election shall be made by executing and delivering to
the Company a notice which states the percentage of the retainers to
be deferred and the deferral account (dollar denominated or stock
units) to which such amounts are to be credited. An election or
change in election must be made by December 1 to be effective for
retainers to be paid in the following calendar year; provided, that
a Participant who is appointed or elected to the Board of Directors
for the first time may file an election with the Company within 60
days of such appointment or election; and provided, further, that
Participants as of September 1, 2000 may by September 15, 2000 file
elections with the Company which (subject to Committee approval)
shall be effective with respect to retainers paid after September
30, 2000. Any such election, if approved by the Committee, shall
supersede any election previously made.
4.2 Election Duration. An election to participate will remain in effect
until participation in the Plan terminates, or until the election is
changed by a notice from the Participant to the Company increasing
or decreasing the percentage of retainers to be deferred or changing
the account for future elective deferrals. If a Participant
terminates elective participation in the Plan, all amounts
accumulated in the Participant's account(s) prior to termination
will continue to be held subject to the Plan.
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<PAGE> 33
5. Accounts. All payments required to be made to a Participant in stock
units shall be credited to a "Stock Unit Account" for the Participant.
All retainers a Participant elects be deferred under the Plan shall be
credited to the Participant either in a dollar denominated, interest
bearing account (an "Interest Credit Account") or in the Participant's
Stock Unit Account, at the election of the Participant, such election once
made, to be irrevocable as to payments made in the following calendar
year. In the absence of an election, all retainers elected to be deferred
shall be credited to an Interest Credit account.
5.1 Company Matching Contributions. To the extent a Participant has
elected to defer all or a portion of the Participant's retainers
into a Stock Unit Account, the Company shall make a matching
contribution of an additional 25% of the amount so deferred. Each
such matching contribution shall be deferred together with the
Participant deferral to which it relates, and shall be subject to
all of the Participant elections (including default elections) with
respect to such deferral.
5.2 Stock Unit Accounts. Deferrals of retainers, including any matching
contributions with respect thereto, shall be credited at the time
the retainers otherwise are payable. At the time such amounts are
credited to a Participant's Stock Unit Account, the account shall be
credited with the number of shares of the Company's common stock
that could be purchased with the amount credited, based on the Fair
Market Value of such stock on the day as of which the account is so
credited (or on the next business day on which the New York Stock
Exchange is open, if the Exchange is closed on the day as of which
the account is credited), excluding commissions, taxes, and other
charges; and such number (carried to two decimal places) shall be
recorded as stock units in the Participant's account, for
bookkeeping purposes only. For purposes of the Plan, "Fair Market
Value" for a single trading day means the mean of the high and low
per share trading prices for the common stock of the Company for
that day as reported in The Wall Street Journal for the "New York
Stock Exchange - Composite Transactions." The number of stock units
in an account shall be appropriately adjusted to reflect stock
splits, stock dividends, and other like adjustments in the Company's
common stock.
5.3 Earnings on Accounts. Each Participant's account(s) shall be
credited with earnings thereon as follows:
Interest Credit Account. A Participant's Interest Credit
Account shall be credited monthly with interest on all amounts
in that account during the preceding month. Interest will be
computed during each calendar year at the mean between the
high and the low during the first eleven months of the
preceding year of yields on Aa-rated Industrial Bonds as
reported by Moody's Investors Service, Inc., rounded to the
nearest 1/4th of one percent. The Company will notify
Participants annually of the established interest rate and the
status of their respective Interest Credit Accounts.
Stock Unit Account. As of each of the Company's dividend
payment dates, each Participant's Stock Unit Account shall be
credited with the number of shares of the Company's common
stock that could be purchased, as set forth in paragraph 5.2,
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<PAGE> 34
by an amount equal to the cash dividends that would be payable
on the number of shares of the Company's common stock that
equals the number of stock units in the Participant's Stock
Unit Account. The Company will notify Participants annually
of the number of stock units, and the dividend equivalents,
credited to their respective Stock Unit Accounts.
6. Distribution. Distribution of amounts held under the Plan for a
Participant is intended to begin following the year in which the
Participant retires from the Board or otherwise terminates service from
the Board, and distribution must commence no later than the January 15
immediately following (a) the year in which the Participant reaches age
70 1/2 or (b) if the Participant continues service on the Board beyond such
age, the year the Participant retires from the Board or otherwise
terminates service from the Board. The exact timing and manner of
distribution of a Participant's account(s) shall be determined by the
Committee in its sole discretion.
6.1 Distribution Elections. A Participant may submit elections to the
Committee, stating the following:
i. the number of years (which shall be between one and 15 years)
over which the Participant requests that distributions are to
be made,
ii. the initial year of distribution, (i and ii together, the
"distribution schedule"), and
iii. in the case of payments to be made over two or more years, the
method of calculating the payment amount (the "payment
option") as described below.
Participants may defer making distribution elections but elections
must be submitted to the Committee not later than December 1 of the
year in which the Participant retires from the Board or otherwise
terminates service from the Board. Distribution shall be made in
accordance with the Participant's elections unless the Committee
determines that distributions should be made at some different times
or in some different manner.
6.2 Payment Options. The payment options (in the case of payments to be
made over two or more years) shall be as follows:
Approximately Equal Option. The amount payable to a
Participant each year shall be computed so that the aggregate
amount in the Participant's account(s) under the Plan shall be
distributed in approximately equal installments in each year
for which distributions are to be made; or
Fractional Option. The amount payable to a Participant each
year shall be computed by multiplying a fraction, the
numerator of which is one and the denominator of which is the
number of years remaining in the distribution period, by the
balance in the account(s) on January 1 of such year.
Under either option, the Participant's account(s) shall be debited
at the time of payment, which shall be on or before January 15 of
each year, unless otherwise authorized by the Committee.
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<PAGE> 35
6.3 Approved Elections. A Participant's approved distribution elections
shall be applicable to the Participant's total aggregate deferred
compensation account(s) under the Plan, including any accounts
previously maintained that have been combined into an account under
this Plan.
6.4 Stock Unit Account Distribution. Distributions from a Participant's
Stock Unit Account shall be made in whole shares of the Company's
common stock based on the number of shares equal to the whole number
of stock units credited to the participant's Stock Unit Account. No
fractional shares shall be distributed and any account balance
remaining after a stock distribution shall be paid in cash.
6.5 Early Distributions; Change in Distribution Elections.
Distributions during a Participant's term of office as a director of
the Company shall not be permitted under the Plan except as approved
by the Committee in the case of the Participant's disability or as
described below.
A Participant may request that amounts (except for any amounts, and
any interest credited thereon, which were deferred in the calendar
year in which the request for distribution is submitted) credited to
the Participant's account(s) be distributed during the Participant's
term of office as a director of the Company, or that approved
distribution elections be changed. Any such request must be
submitted to the Committee no later than December 1 of the year
prior to the year in which the distribution or the change is
requested to be made, must set forth the reason therefor, and is
subject to approval by the Committee in its sole and absolute discretion.
6.6 Committee Discretion. The Committee may establish guidelines for
its own use in considering any such request or any other request or
election under the Plan, but such guidelines shall not in any way
limit the Committee's discretion in acting upon a request or
election, or in determining the timing and manner of any
distributions to be made under the Plan.
7. Beneficiaries. A Participant may designate one or more beneficiaries to
receive distributions from the Plan upon the Participant's death. If no
beneficiary has been designated, all distributions shall be made to the
Participant's personal representative. Except as provided in the
following paragraph, the death of a Participant shall not affect the
timing or manner of distributions from the Participant's account(s).
A Participant may elect that, following the Participant's death, one or
more fixed distributions be made from the Participant's account(s) under
the Plan to the Participant's personal representative or designated
beneficiary. Such distributions, if approved by the Committee, shall be
made within 15 months after the Participant's death. Any amounts
thereafter remaining in the Participant's account(s) will be distributed
at the time and in the manner approved by the Committee.
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<PAGE> 36
8. Participant's Rights. Amounts accumulated and deferred under the Plan
remain the property of the Company, and no Participant or other person
shall acquire any property interest in the account(s) or any other assets
of the Company on account of participation in the Plan, a Participant's
rights being limited to receiving from the Company the payments provided
for in the Plan. The Plan is unfunded, and to the extent that any
Participant acquires a right to receive payments from the Plan, such right
shall be no greater than the right of a general unsecured creditor of the
Company.
Except to the extent provided in the final paragraph of Section 6.6 of the
Plan, the right of a Participant or the Participant's legal representative
or beneficiary to receive payments from the Plan shall not be subject to
anticipation, sale, assignment, pledge, encumbrance or charge, nor shall
such right be liable for or subject to the debts, contracts, liabilities
or torts of the Participant or the Participant's legal representative or
beneficiaries.
9. Powers of Compensation Committee. The Committee shall have full power and
authority to construe and interpret the Plan. Approval by the Committee
of any election or request made by a Participant pursuant to the Plan
shall be subject to the sole discretion of the Committee. No member of
the Committee shall act on any matter concerning such member's
participation in the Plan or such member's account(s) under the Plan.
Decisions of the Committee shall be final and binding upon the
Participants, their legal representatives and beneficiaries.
10.Termination or Amendment of the Plan. The Plan may be terminated,
modified, or amended from time to time by resolution of the Board of
Directors. If the Plan is terminated, all amounts accumulated prior to
termination will continue to remain subject to the provisions of the Plan
as if the Plan had not been terminated.
36
<PAGE> 37
EXHIBIT (10)(ii)
THE BOEING COMPANY
364-DAY
CREDIT AGREEMENT
among
THE BOEING COMPANY
for itself and on behalf of its Subsidiaries,
as a Borrower
THE LENDERS PARTY HERETO
CITIBANK, N.A.,
as Administrative Agent
THE CHASE MANHATTAN BANK,
as Syndication Agent
and
SALOMON SMITH BARNEY INC.
and
CHASE SECURITIES, INC.,
as Joint Lead Arrangers and Joint Book Managers
dated as of September 27, 2000
37
<PAGE> 38
TABLE OF CONTENTS
Article and Section Page
ARTICLE 1 DEFINITIONS
1.1 Definitions..........................................................1
1.2 Use of Defined Terms; References.....................................9
1.3 Accounting Terms.....................................................9
ARTICLE 2 AMOUNTS AND TERMS OF THE ADVANCES
2.1 Committed Advances...................................................9
2.2 Making Committed Advances............................................9
2.3 Conversion to Term Loans, Repayment.................................11
2.4 Interest Rate on Committed Advances.................................11
2.5 Bid Advances........................................................11
2.6 Lender Assignment or Sale...........................................15
2.7 Fees................................................................15
2.8 Reduction of the Commitments........................................16
2.9 Additional Interest on Eurodollar Rate Committed Advances...........16
2.10 Eurodollar Interest Rate Determination..............................16
2.11 Voluntary Conversion of Committed Advances..........................17
2.12 Prepayments.........................................................17
2.13 Increases in Costs..................................................18
2.14 Taxes...............................................................20
2.15 Illegality..........................................................21
2.16 Payments and Computations...........................................22
2.17 Sharing of Payments, Etc. ..........................................23
2.18 Evidence of Debt....................................................23
2.19 Alteration of Commitments and Addition of Lenders...................24
2.20 Assignments; Sales of Participations and Other Interests in
Advances...........................................................25
2.21 Extension of Termination Date.......................................27
2.22 Subsidiary Borrowers................................................29
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties by the Borrowers.....................30
ARTICLE 4 COVENANTS OF TBC
4.1 Affirmative Covenants of TBC........................................32
4.2 General Negative Covenants of TBC...................................33
4.3 Financial Statement Terms...........................................35
4.4 Waivers of Covenants................................................35
ARTICLE 5 CONDITIONS PRECEDENT TO BORROWINGS
5.1 Conditions Precedent to the Initial Borrowing of TBC................35
5.2 Conditions Precedent to Each Committed Borrowing of TBC.............36
5.3 Conditions Precedent to Each Bid Borrowing of TBC...................36
5.4 Conditions Precedent to the Initial Borrowing of a Subsidiary
Borrower...........................................................37
5.5 Conditions Precedent to Each Committed Borrowing of a Subsidiary
Borrower...........................................................38
5.6 Conditions Precedent to Each Bid Borrowing of a Subsidiary
Borrower...........................................................38
ARTICLE 6 EVENTS OF DEFAULT
6.1 Events of Default...................................................39
6.2 Lenders' Rights upon Borrower Default...............................40
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ARTICLE 7 THE AGENT
7.1 Authorization and Action............................................41
7.2 Agent's Reliance, Etc. .............................................41
7.3 Citibank, N.A. and its Affiliates...................................42
7.4 Lender Credit Decision..............................................42
7.5 Indemnification.....................................................42
7.6 Successor Agent.....................................................43
7.7 Certain Obligations May Be Performed by Affiliates..................43
ARTICLE 8 MISCELLANEOUS
8.1 Modification, Consents and Waivers..................................43
8.2 Notices.............................................................44
8.3 Costs, Expenses and Taxes...........................................45
8.4 Binding Effect......................................................45
8.5 Severability........................................................45
8.6 Governing Law.......................................................46
8.7 Headings............................................................46
8.8 Execution in Counterparts...........................................46
8.9 Right of Set-Off....................................................46
8.10 Confidentiality.....................................................46
8.11 Agreement in Effect.................................................47
Exhibit A-1 - Committed Note
Exhibit A-2 - Bid Note
Exhibit B-1 - Notice of Committed Borrowing
Exhibit B-2 - Notice of Bid Borrowing
Exhibit C - Request for Alteration
Exhibit D - Borrower Subsidiary Letter
Exhibit E - Extension Request
Exhibit F - Continuation Notice
Exhibit G - Opinion of Counsel of the Company
Exhibit H - Opinion of Counsel for Agent
Exhibit I - Opinion of in-house counsel to Subsidiary Borrower
Exhibit J - Guaranty of TBC
Exhibit K - Opinion of Counsel to TBC
Schedule I - Commitments
39
<PAGE> 40
CREDIT AGREEMENT
Dated as of September 27, 2000
THE BOEING COMPANY, a Delaware corporation ("TBC" or the "Company"), for itself
and on behalf of the other BORROWERS (as defined below), the LENDERS (as defined
below), SALOMON SMITH BARNEY INC. and CHASE SECURITIES INC., as joint lead
arrangers and joint book managers, THE CHASE MANHATTAN BANK, as syndication
agent, and CITIBANK, N.A., in its capacity as administrative agent for the
Lenders (in such capacity, the "Agent"), agree as follows:
ARTICLE 1
Definitions
1.1 Definitions. As used in this Agreement, the following terms have the
respective meanings set out below:
"1999 Credit Agreement" means the Bank Credit Agreement, dated as of September
29, 1999, by and among TBC, Citibank, N.A., as administrative agent, and
certain other banks as lenders.
"Advance" means a Committed Advance or a Bid Advance.
"Agent" means Citibank, N.A. acting in its capacity as administrative agent for
the Lenders, or any successor administrative agent appointed pursuant to
Section 7.6.
"Agent's Account" means the account of the Agent maintained by the Agent with
Citibank, N.A., at its office at 399 Park Avenue, New York, New York
10043, Account 36852248, Attention: Mr. Drew Tuminello.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person. (For purposes of
this definition, the term "controls", "controlling", "controlled by" and
"under common control with" mean, with respect to a Person, the
possession, direct or indirect, of the power to vote 5% or more of the
Voting Stock of such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
Voting Stock, by contract, or otherwise.)
"Agreement" means this agreement, as it may be amended or otherwise modified
from time to time, and any written additions or supplements hereto.
"Applicable Lending Office" means, with respect to each Lender, such Lender's
Domestic Lending Office, in the case of a Base Rate Advance, and such
Lender's Eurodollar Lending Office, in the case of a Eurodollar Rate
Advance, and, in the case of a Bid Advance, the office of such Lender
specified by such Lender in a notice to the Agent as its Applicable
Lending Office with respect to such Bid Advance.
"Applicable Margin" means,
(i) with respect to Base Rate Advances, 0% per annum; and
(ii) with respect to Eurodollar Rate Advances for any date prior to the
Termination Date, 0.11% per annum; and
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<PAGE> 41
(iii) with respect to Eurodollar Rate Advances for any date after the
Termination Date, a fluctuating per annum rate equal to the then-
applicable rate set forth in the pricing grid below, depending upon
the rating of the long-term senior unsecured debt of TBC then in
effect:
-------------------------------------------------------------------------------
| Level | Public Debt Rating: S&P and Moody's | Applicable Margin |
|-----------------------------------------------------------------------------|
| Level I | A by S&P or A2 by Moody's or above | 0.15% |
|-----------------------------------------------------------------------------|
| Level II | less than Level I | |
| | but at least A- by S&P or A3 by Moody's | 0.20% |
|-----------------------------------------------------------------------------|
| Level III | less than Level II |
| | but at least BBB+ by S&P or Baa1 by Moody's | 0.25% |
|-----------------------------------------------------------------------------|
| Level IV | less than Level III | 0.375% |
-------------------------------------------------------------------------------
provided, however, that if the ratings from S&P and Moody's fall within
different levels, then the Applicable Margin shall be based on the higher
of the two ratings except that, if the lower of such ratings is more than
one level below the higher of such ratings, the Applicable Margin shall be
determined based on the level above the lower of such ratings, and
provided further that if, at any time, no rating is available from S&P and
Moody's or any other nationally recognized statistical rating organization
designated by TBC and approved in writing by the Majority Lenders, the
Applicable Margin for each Interest Period or each other period commencing
during the thirty days following such ratings becoming unavailable shall
be the Applicable Margin in effect immediately prior to such ratings
becoming unavailable. Thereafter, the rating to be used until ratings
from S&P and Moody's become available shall be as agreed between TBC and
the Agent, and TBC and the Agent shall use good faith efforts to reach
such agreement within such thirty-day period, provided, however, that if
no such agreement is reached within such thirty-day period the Applicable
Margin thereafter, until such agreement is reached, shall be (a) if any
such rating has become unavailable as a result of S&P or Moody's ceasing
its business as a rating agency, the Applicable Margin in effect
immediately prior to such cessation or (b) otherwise, the Applicable
Margin as set forth under Level IV above; and
provided further that in the event and during the continuance of an Event
of Default, the Applicable Margin shall immediately increase by 1.0% above
the Applicable Margin then in effect, and, in the case of a Eurodollar
Rate Advance, such Advance shall automatically convert to a Base Rate
Advance at the end of the Interest Period then in effect for such
Eurodollar Rate Advance.
"Available Commitments" means, as of any date of determination, (a) the
aggregate Commitments of the Lenders, as such amount may be reduced,
changed or terminated in accordance with the terms of this Agreement,
reduced by (b) the aggregate Advances outstanding on such date of
determination.
"Base Rate" means the rate of interest announced publicly by Citibank, N.A., in
New York City, from time to time, as Citibank's "base" rate.
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"Base Rate Advance" means a Committed Advance which bears interest at the Base
Rate.
"Bid Advance" means an advance by a Lender to a Borrower as part of a Bid
Borrowing resulting from the auction bidding procedure described in
Section 2.5, and refers to a Fixed Rate Advance or a Eurodollar Rate Bid
Advance, each of which shall be a "Type" of Bid Advance.
"Bid Borrowing" means a borrowing consisting of simultaneous Bid Advances from
each of the Lenders whose offers to make one or more Bid Advances as part
of such borrowing has been accepted by a Borrower under the auction
bidding procedure described in Section 2.5.
"Bid Note" means a promissory note of a Borrower payable to the order of a
Lender, in substantially the form of Exhibit A-2, evidencing the
indebtedness of that Borrower to such Lender resulting from a Bid Advance
made by such Lender to such Borrower.
"Bid Reduction" has the meaning specified in Section 2.1(a).
"Borrower" means, individually and collectively, as the context requires, TBC
and each Subsidiary Borrower (unless and until it becomes a "Terminated
Subsidiary Borrower" pursuant to Section 2.22).
"Borrower Subsidiary Letter" means, with respect to any Subsidiary Borrower, a
letter in the form of Exhibit D, signed by such Subsidiary Borrower and
TBC.
"Borrowing" means a Committed Borrowing or a Bid Borrowing.
"Business Day" means a day of the year on which banks are not required or
authorized to close in New York City and, if the applicable Business Day
relates to any Eurodollar Rate Advance, on which dealings are carried on
in the London interbank market.
"Commitment" means, for each Lender, the full amount set forth opposite the name
of such Lender in Schedule I or, if such Lender is a Replacement Lender or
a Lender that has entered into one or more assignments pursuant to Section
2.20 or Section 2.21, the amount set forth for such Lender in the Register
maintained by the Agent pursuant to Section 2.20(d), as such amount may be
reduced pursuant to Section 2.3, Section 2.8 or Section 2.19 or increased
pursuant to Section 2.19.
"Committed Advance" means an advance made by a Lender to a Borrower as part of a
Committed Borrowing and refers to a Base Rate Advance or a Eurodollar Rate
Committed Advance, each of which is a "Type" of Committed Advance.
"Committed Borrowing" means a borrowing consisting of simultaneous Committed
Advances of the same Type made by each of the Lenders pursuant to Section
2.1.
"Committed Note" means a promissory note of a Borrower payable to the order of
any Lender, in substantially the form of Exhibit A-1, evidencing the
indebtedness of that Borrower to such Lender resulting from the Committed
Advances made by such Lender to that Borrower.
"Company" means The Boeing Company, a Delaware corporation (usually referred to
herein as "TBC").
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"Confidential Information" means information that a Borrower furnishes to the
Agent or any Lender in a writing designated as confidential, but does not
include any such information that is or becomes generally available to the
public or that is or becomes available to the Agent or such Lender from a
source other than a Borrower.
"Consolidated" refers to the consolidation of accounts in accordance with
generally accepted accounting principles.
"Continuing Lender" has the meaning specified in Section 2.21(a).
"Convert", "Conversion" and "Converted" each means a conversion of Committed
Advances of one Type into Committed Advances of another Type pursuant to
Section 2.10, 2.11 or 2.15.
"Debt" of a Person means
(i) indebtedness for borrowed money or for the deferred purchase price
of property or services;
(ii) financial obligations evidenced by bonds, debentures, notes or other
similar instruments,
(iii) financial obligations as lessee under leases which have been or
should be, in accordance with generally accepted accounting
principles, recorded as capital leases; and
(iv) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or financial obligations of others of the kind
referred to in clauses (i) through (iii) above.
"Default" means any Event of Default or any event that would constitute an Event
of Default but for the requirement that notice be given or time elapse or
both.
"Domestic Lending Office" means with respect to any Lender, the office of such
Lender specified as its "Domestic Lending Office" opposite its name on
Schedule I, or in the assignment or other agreement pursuant to which it
became a Lender or such other office of such Lender as such Lender may
from time to time specify to TBC and the Agent.
"Effective Date" has the meaning specified in Section 2.19.
"Eligible Assignee" means
(i) a commercial bank organized under the laws of the United States, or
any state thereof, and having a combined capital and surplus in
excess of $3,000,000,000;
(ii) a commercial bank organized under the laws of any other country
which is a member of the OECD, or a political subdivision of any
such country, and having a combined capital and surplus in excess of
$3,000,000,000, provided that such bank is acting through a branch
or agency located in either (a) the country in which it is organized
or (b) another country which is also a member of the OECD or the
Cayman Islands;
(iii) the central bank of any country which is a member of the OECD;
(iv) any Lender;
(v) an Affiliate of any Lender; and
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(vi) so long as no Default has occurred and is continuing, any other
Person approved in writing by TBC, which approval has been
communicated in writing to the Agent, provided that neither TBC nor
an Affiliate of TBC shall qualify as an Eligible Assignee.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and the regulations promulgated and rulings
issued thereunder.
"Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D
of the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"Eurodollar Lending Office" means, with respect to any Lender, (a) the office of
such Lender specified as its "Eurodollar Lending Office" opposite its name
on Schedule I (or, if no such office is specified, its Domestic Lending
Office) or in the assignment or other agreement pursuant to which it
became a Lender or (b) such other office of such Lender as such Lender may
from time to time specify to TBC and the Agent.
"Eurodollar Rate" means, for an Interest Period for a Eurodollar Rate Committed
Advance constituting part of a Committed Borrowing, and for the relevant
period specified in the applicable Notice of Bid Borrowing for a
Eurodollar Rate Bid Advance, an interest rate per annum equal to either
(a) the offered rate (rounded to the nearest whole multiple of 1/16 of
1% per annum, if such average is not such a multiple) for deposits
in U.S. dollars for a period substantially equal to such Interest
Period (if a Committed Advance) or such relevant period specified in
the applicable Notice of Bid Borrowing (if a Bid Advance), appearing
on Telerate Markets Page 3750 (or any successor page or, if
unavailable for any reason by Telerate, then by reference to Reuters
Screen) as of 11:00 a.m. (London time) two business days before the
first day of such Interest Period or the first day of the relevant
period specified in such Notice of Bid Borrowing; or
(b) if the foregoing rate is unavailable from Telerate or the Reuters
Screen for any reason, the average (rounded to the nearest whole
multiple of 1/16 of 1% per annum, if such average is not such a
multiple) of the rates per annum are offered by the principal office
of each of the Reference Banks to prime banks in the London
interbank market at 11:00 a.m. (London time) on deposits in U.S.
dollars two Business Days before the first day of such Interest
Period or the first day of such relevant period specified in the
Notice of Bid Borrowing
(i) for such Eurodollar Committed Advance, on an amount
substantially equal to such Reference Bank's Eurodollar Rate
Advance constituting part of such Committed Borrowing and for a
period equal to such Interest Period, or
(ii) for such Eurodollar Rate Bid Advance, on an amount
substantially equal to the amount of the Eurodollar Rate Bid
Borrowing which includes such Bid Advance multiplied by a
fraction equal to such Reference Bank's ratable portion of the
Commitments and for a period equal to the relevant period
specified in such Notice of Bid Borrowing.
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The Eurodollar Rate for any Interest Period for each Eurodollar Rate
Committed Advance constituting part of the same Borrowing and for the
relevant period specified in a Notice of Bid Borrowing for each Eurodollar
Rate Bid Advance shall be determined by the Agent on the basis of
applicable rates furnished to and received by the Agent from the Reference
Banks two Business Days before the first day of such Interest Period or
period, as the case may be, subject, however, to the provisions of Section
2.10.
"Eurodollar Rate Advance" means a Committed Advance (a "Eurodollar Rate
Committed Advance") or a Bid Advance (a "Eurodollar Rate Bid Advance")
which bears interest at a rate of interest quoted as a margin (which shall
be the Applicable Margin in the case of a Committed Advance or as offered
by a Lender and accepted by a Borrower in the case of a Bid Advance) over
the Eurodollar Rate.
"Eurodollar Rate Bid Borrowing" has the meaning specified in Section 2.5(b).
"Eurodollar Rate Reserve Percentage" means the reserve percentage applicable to
a Lender for any Interest Period for a Eurodollar Rate Advance during such
Interest Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable)
under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for such Lender with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities that
includes deposits by reference to which the interest rate on Eurodollar
Rate Advances is determined) having a term equal to such Interest Period.
"Event of Default" means any of the events described in Section 6.1.
"Extension Request" has the meaning specified in Section 2.21.
"Facility Fee" has the meaning specified in Section 2.7.
"Federal Funds Rate" means, for each day during a period, an interest rate per
annum equal to the weighted average of the fluctuating rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the immediately preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for
such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by it.
"Fixed Rate Advance" means an Advance made by a Lender to a Borrower as part of
a Fixed Rate Borrowing.
"Fixed Rate Borrowing" has the meaning specified in Section 2.5(b).
"Guaranty" means each Guaranty Agreement executed by TBC in favor of the Agent
and the Lenders, unconditionally guaranteeing the payment of all
obligations of a Subsidiary Borrower hereunder and under any Notes
executed or to be executed by it.
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"Indemnified Costs" has the meaning specified in Section 7.5.
"Indemnified Parties" has the meaning specified in Section 8.3(b).
"Interest Period" means, for each Eurodollar Rate Committed Advance constituting
part of the same Borrowing, the period commencing on the date of such
Committed Advance or the date of the Conversion of a Base Rate Advance
into such a Eurodollar Rate Committed Advance and ending on the last day
of the period selected by the applicable Borrower pursuant to the
provisions below and, thereafter, each subsequent period commencing on the
last day of the immediately preceding Interest Period and ending on the
last day of the period selected by such Borrower pursuant to the
provisions below. The duration of each such Interest Period shall be one,
two, three, or six months (or nine months, with the consent of all Lenders
funding those particular Advances), as the applicable Borrower may, upon
notice received by the Agent not later than 11:00 a.m. (New York City
time) on the third Business Day prior to the first day of such Interest
Period, select, provided, however, that:
(i) no Interest Period shall end on a date later than the Termination
Date (or in the case of a Committed Advance which is converted to a
Term Loan pursuant to Section 2.3, the Maturity Date);
(ii) Interest Periods commencing on the same date for Committed Advances
constituting part of the same Committed Borrowing shall be of the
same duration; and
(iii) whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest
Period shall be extended to occur on the next succeeding Business
Day, provided that, if such extension would cause the last day of
such Interest Period to occur in the next following calendar month,
the last day of the Interest Period shall occur on the immediately
preceding Business Day.
"Lender", subject to Section 2.20, means any of the institutions that is a
signatory hereto or that, pursuant to Section 2.13, 2.19, 2.20 or 2.21,
becomes a "Lender" hereunder.
"Majority Lenders" means Lenders having greater than 50% of the total
Commitments or, if the Commitments have been terminated in full, Lenders
holding greater than 50% of the then aggregate unpaid principal amount of
the Advances.
"Maturity Date" means the Termination Date or, if the Term Loan Conversion
Option described in Section 2.3 has been exercised, the date that is the
one-year anniversary of the Termination Date.
"Moody's" means Moody's Investor Services, Inc.
"Non-Extending Lender" has the meaning specified in Section 2.21(a).
"Note" means a Committed Note or a Bid Note.
"Notice of Bid Borrowing" has the meaning specified in Section 2.5(b).
"Notice of Borrowing" means a Notice of Committed Borrowing or a Notice of Bid
Borrowing.
"Notice of Committed Borrowing" has the meaning specified in Section 2.2(a).
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"OECD" means the Organization for Economic Cooperation and Development.
"Person" means an individual, partnership, corporation (including a business
trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government
or any political subdivision or agency thereof.
"Property, Plant and Equipment" means any item of real property, or any interest
therein, buildings, improvements and machinery.
"Proposed Increased Commitment" has the meaning specified in Section 2.19(a).
"Reference Banks" means The Chase Manhattan Bank, Citibank, N.A., Bank of
America, N.A., and Deutsche Bank AG.
"Register" has the meaning specified in Section 2.20(d).
"Replacement Lenders" has the meaning specified in Section 2.21(c).
"Request for Alteration" means a document substantially in the form of Exhibit
C, duly executed by TBC, pursuant to Section 2.19.
"Required Assignment" has the meaning specified in Section 2.20(a).
"S&P" means Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
"Subsidiary" means any corporation in which more than 50% of the Voting Stock is
owned by TBC, by TBC and any one or more other Subsidiaries, or by any one
or more other Subsidiaries.
"Subsidiary Borrower" means, individually and collectively, as the context
requires, each Subsidiary that is or becomes a "Borrower" in accordance
with Section 2.22; in each case, unless and until it becomes a "Terminated
Subsidiary Borrower".
"TBC" means The Boeing Company, a Delaware corporation.
"Term Loan" means a term loan resulting from the conversion of Committed
Advances on the Termination Date pursuant to Section 2.3.
"Term Loan Conversion Option" means the option under Section 2.3 for the
Borrowers to convert, as of the Termination Date, all Committed Advances
then outstanding into Term Loans.
"Terminated Subsidiary Borrower" means, individually and collectively, as the
context requires, a Subsidiary Borrower that has ceased to be a "Borrower"
in accordance with Section 2.22.
"Termination Date" means the earlier to occur of (i) September 26, 2001, as such
date may be extended from time to time pursuant to Section 2.21, and (ii)
the date of termination in whole of the Commitments pursuant to Section
2.8 or Section 6.2.
"Total Capital" has the meaning specified in Section 4.2(b).
"Type", as to Committed Borrowings, means either Base Rate Advances or
Eurodollar Rate Committed Advances and, as to Bid Borrowings, means either
Fixed Rate Advances or Eurodollar Rate Bid Advances.
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"Voting Stock" means, as to a corporation, all the issued and outstanding
capital stock of such corporation having general voting power, under
ordinary circumstances, to elect a majority of the Board of Directors of
such corporation (irrespective of whether or not any capital stock of any
other class or classes shall or might have voting power upon the
occurrence of any contingency).
1.2 Use of Defined Terms; References. Any defined term used in the plural
preceded by the definite article encompasses all members of the relevant
class. Any defined term used in the singular preceded by "a", "an" or
"any" indicates any number of the members of the relevant class. All
references in this Agreement to a Section, Article, Schedule or Exhibit
are to a Section, Article, Schedule or Exhibit of or to this Agreement,
unless otherwise indicated.
1.3 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting
principles consistently applied.
ARTICLE 2
Amounts and Terms of the Advances
2.1 Committed Advances.
(a) Obligation to Make Committed Advances. Each Lender severally agrees, on
the terms and conditions hereinafter set forth, to make Committed Advances
to the Borrowers from time to time on any Business Day during the period
from the date hereof until the Termination Date in an aggregate principal
amount at any time outstanding not to exceed such Lender's Commitment,
provided that the aggregate amount of the Commitments of the Lenders shall
be deemed used from time to time to the extent of the aggregate amount of
the Bid Advances then outstanding and such deemed use of the aggregate
amount of the Commitments shall be applied to the Lenders ratably
according to their respective Commitments (such deemed use of the
aggregate amount of the Commitments being a "Bid Reduction").
(b) Amount of Committed Advances. Each Committed Borrowing shall be in an
aggregate amount not less than $10,000,000 or an integral multiple of
$1,000,000 in excess thereof.
(c) Type of Committed Advances. Each Committed Borrowing shall consist of
Committed Advances of the same Type made on the same day by the Lenders
ratably according to their respective Commitments. Within the limits of
each Lender's Commitment, the Borrowers may from time to time borrow,
prepay pursuant to Section 2.12, and reborrow under this Section 2.1 and
Section 2.2.
2.2 Making Committed Advances.
(a) Notice of Committed Borrowing. Each Committed Borrowing shall be made on
notice, given by a Borrower to the Agent not later than 11:00 a.m. (New
York City time) on the day of the proposed Committed Borrowing in the case
of a Base Rate Borrowing and on the third Business Day prior to the date
of the proposed Committed Borrowing in the case of a Eurodollar Rate
Borrowing (a "Notice of Committed Borrowing"). Each such Notice of
Committed Borrowing shall be in substantially the form of Exhibit B-l,
specifying the requested
(i) date of such Committed Borrowing,
(ii) Type of Committed Advances constituting such Committed Borrowing,
(iii) aggregate amount of such Committed Borrowing, and
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(iv) in the case of a Committed Borrowing composed of Eurodollar Rate
Advances, the initial Interest Period for each such Committed
Advance, which Interest Period may be 1, 2, 3 or 6 months, at the
option of the Borrower, or, if acceptable to all the Lenders, 9
months.
Every Notice of Committed Borrowing given by a Subsidiary Borrower must be
countersigned by an authorized representative of TBC, in order to evidence
the consent of TBC, in its sole discretion, to that proposed Committed
Borrowing. Upon receipt of a Notice of Committed Borrowing, the Agent
shall promptly give notice to each Lender thereof.
(b) Funding Committed Advances. Each Lender shall, before 1:00 p.m. (New York
City time) on the date of such Committed Borrowing, make available for the
account of its Applicable Lending Office to the Agent at the Agent's
Account, in same day funds, such Lender's ratable portion of such
Committed Borrowing. After the Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article 5, the Agent
will make such funds available to the relevant Borrower at an account
specified by such Borrower.
(c) Irrevocable Notice. Each Notice of Committed Borrowing shall be
irrevocable and binding. In the case of any Committed Borrowing that the
related Notice of Committed Borrowing specifies is to be composed of
Eurodollar Rate Advances, the Borrower requesting such Committed Borrowing
shall indemnify each Lender against any loss, cost or expense incurred by
such Lender on account of any failure to fulfill on or before the date
specified for such Committed Borrowing in such Notice of Committed
Borrowing the applicable conditions set forth in Article 5, including,
without limitation, any loss (but excluding loss of anticipated profits),
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Committed
Advance to be made by such Lender as part of such Committed Borrowing when
such Committed Advance, as a result of such failure, is not made on such
date.
(d) Lender's Ratable Portion. Unless the Agent has received notice from a
Lender prior to 1:00 p.m. (New York City time) on the day of any Committed
Borrowing that such Lender will not make available to the Agent such
Lender's ratable portion of such Committed Borrowing, the Agent may assume
that such Lender has made such portion available to the Agent on the date
of such Committed Borrowing in accordance with subsection (b) of this
Section 2.2 and the Agent may, in reliance upon such assumption, make
available to the requesting Borrower on such date a corresponding amount.
If and to the extent that a Lender has not so made such ratable portion
available to the Agent, such Lender and such Borrower shall severally
repay to the Agent forthwith on demand an amount that in the aggregate
equals such corresponding amount together with interest thereon for each
day from the date such amount is made available by the Agent to such
Borrower until the date such amount is repaid to the Agent, at
(i) in the case of such Borrower, the interest rate applicable at the
time to Committed Advances constituting such Committed Borrowing,
and
(ii) in the case of such Lender, the Federal Funds Rate.
If such Lender shall repay to the Agent such corresponding amount, such
amount so repaid shall constitute such Lender's Committed Advance as
part of such Committed Borrowing for purposes of this Agreement.
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(e) Independent Lender Obligations. The failure of any Lender to make the
Committed Advance to be made by it as part of any Committed Borrowing
shall not relieve any other Lender of its obligation, if any, hereunder to
make its Committed Advance on the date of such Committed Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make
the Committed Advance to be made by such other Lender on the date of any
Committed Borrowing.
2.3 Conversion to Term Loans, Repayment. The Borrowers shall, subject to the
next succeeding sentence, repay to the Agent for the ratable account of
the Lenders on the Termination Date the aggregate principal amount of the
Committed Advances then outstanding. The Borrowers may, upon notice given
to the Agent not later than 11:00 a.m. (New York City time) on the
Termination Date, convert all or a part of the unpaid principal amount of
the Committed Advances outstanding as of the Termination Date into Term
Loans. If this Term Loan Conversion Option is exercised, then, on the
Termination Date, immediately prior to the time when the unpaid principal
amount of the Committed Advances would otherwise be due, the Committed
Advances shall automatically convert into Term Loans which the respective
Borrowers shall repay to the Agent for the ratable accounts of the Lenders
on the Maturity Date. The amounts so converted shall be treated for all
purposes of this Agreement as Committed Advances except that after the
Termination Date:
(i) the Borrowers may not make any additional borrowings;
(ii) any amounts paid or prepaid may not be reborrowed;
(iii) the amount of each Lender's Commitment shall be equal at all times
to the principal amount of the Term Loans payable to such Lender
from time to time;
(iv) the provisions of Section 2.19 shall not be effective;
(v) no Lender shall have the right to assign its rights in any
outstanding Term Loan; and
(vi) no Facility Fees shall accrue or be payable after the Termination
Date.
2.4 Interest Rate on Committed Advances. Each Borrower shall pay interest on
the unpaid principal amount of each of its Committed Advances from the
date of such Committed Advance until such principal amount is paid in
full, at the following rates per annum:
(i) during each period in which such Committed Advance is a Base Rate
Advance, at a rate per annum equal at all times to the Base Rate in
effect from time to time plus the Applicable Margin, payable
quarterly in arrears on the first day of each January, April, July
and October and on the Termination Date, or, if such Borrower has
exercised the Term Loan Conversion Option, the Maturity Date, and
(ii) during each period in which such Committed Advance is a Eurodollar
Rate Advance, at a rate per annum equal at all times during each
relevant Interest Period for such Committed Advance to the
Eurodollar Rate for such Interest Period plus the Applicable Margin,
payable on the last day of each such Interest Period, and if such
Interest Period has a duration of more than three months, quarterly
on each day during such Interest Period that is three months from
either (A) the first day of such Interest Period or (B) the last
such interest payment date and on the date such Committed Advance is
Converted or paid in full.
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2.5 Bid Advances.
(a) Bid Advances Impact on Commitments. The Borrowers may make Bid Borrowings
from time to time on any Business Day during the period from the date
hereof until the Termination Date in the manner set forth below, provided
that, following the making of each Bid Borrowing, the aggregate amount of
the Advances then outstanding shall not exceed the aggregate amount of the
Commitments of the Lenders (computed without regard to the Bid Reduction).
As provided in Section 2.1 above, the aggregate amount of the Commitments
of the Lenders shall be deemed used from time to time to the extent of the
aggregate amount of the Bid Advances then outstanding, and such deemed use
of the aggregate amount of the Commitments shall be applied to the Lenders
ratably according to their respective Commitments; provided, however, that
any Lender's Bid Advances shall not otherwise reduce that Lender's
obligation to lend its pro rata share of the remaining Available
Commitments.
(b) Notice of Bid Borrowing. Any Borrower may request a Bid Borrowing by
delivering to the Agent a notice of a Bid Borrowing (a "Notice of Bid
Borrowing"), in substantially the form of Exhibit B-2, specifying the
following:
(i) the date and aggregate amount of the proposed Bid Borrowing,
(ii) the maturity date for repayment of each Bid Advance to be made as
part of such Bid Borrowing, which maturity date
(A) may not be later than 5 Business Days prior to the Termination
Date, but may otherwise be 7 days or more from the date of
such requested Bid Advance if the Borrower specifies in the
Notice of Bid Borrowing that the rates of interest to be
offered by the Lenders will be fixed rates per annum (a "Fixed
Rate Borrowing"), and
(B) shall be either 1, 2, 3, 6 or 9 months from the date of such
Bid Borrowing if the Borrower specifies in the Notice of Bid
Borrowing that such Bid Borrowing is to consist of Eurodollar
Rate Bid Advances (a "Eurodollar Rate Bid Borrowing"),
(iii) the interest payment date or dates relating thereto, and
(iv) any other terms to be applicable to such Bid Borrowing.
A Borrower requesting a Bid Borrowing shall deliver a Notice of Bid
Borrowing to the Agent not later than 11:00 a.m. (New York City time) (A)
at least one Business Day prior to the date of the proposed Bid Borrowing
if the proposed Bid Borrowing is to be a Fixed Rate Borrowing, and (B) at
least four Business Days prior to the date of the proposed Bid Borrowing,
if the proposed Bid Borrowing is to be a Eurodollar Rate Bid Borrowing.
Every Notice of Bid Borrowing given by a Subsidiary Borrower must be
countersigned by an authorized representative of TBC, in order to evidence
the consent of TBC, in its sole discretion, to that proposed Bid
Borrowing. The Agent shall in turn promptly notify each Lender of each
request for a Bid Borrowing by sending such Lender a copy of the related
Notice of Bid Borrowing.
(c) Discretion as to Bid Advances. Each Lender may, in its sole discretion,
elect to irrevocably offer to make one or more Bid Advances to the
applicable Borrower as part of such proposed Bid Borrowing at a rate or
rates of interest specified by such Lender in its sole discretion (each
such rate of interest to be a fixed rate if the Borrower requested Fixed
Rate Advances or a margin over the Eurodollar Rate if the Borrower
requested Eurodollar Rate Bid Advances), by notifying the Agent (which
shall give prompt notice thereof to the Company and such Borrower), before
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10:00 a.m. (New York City time) (A) on the date of such proposed Bid
Borrowing, if the proposed Bid Borrowing is to be a Fixed Rate Borrowing
and (B) three Business Days before the date of such proposed Bid
Borrowing, in the case of a Notice of Bid Borrowing is to be a Eurodollar
Rate Bid Borrowing. In such notice the Lender shall specify the
following:
(i) the minimum amount and maximum amount of each Bid Advance which such
Lender would be willing to make as part of such proposed Bid
Borrowing (which amounts may, subject to the first proviso in this
Section 2.5(a), exceed such Lender's Commitment),
(ii) the rate or rates of interest therefor (specified as stated in this
paragraph (c)), and
(iii) such Lender's Applicable Lending Office with respect to such Bid
Advance;
provided that if the Agent in its capacity as a Lender, in its sole
discretion, elects to make any such offer, it shall notify such Borrower
and the Company of such offer before 9:30 a.m. (New York City time) on the
date on which notice of such election is to be given to the Agent by the
other Lenders. If, by 10:00 a.m. (New York City time) on the date on
which notice of a Lender's election under this Section 2.5(c) is to be
made, the Agent fails to receive, at its address specified in Section 8.2,
a notice from a Lender provided for in this Section 2.5(c), the Agent may
conclusively presume that such Lender has elected not to offer to make any
Bid Advances to such Borrower with respect to the related Notice of Bid
Borrowing.
(d) Borrower Selection of Lender Bids. The Borrower proposing the Bid
Borrowing shall, in turn, (A) before 11:00 a.m. (New York City time) on
the date of such proposed Bid Borrowing, in the case of a proposed Bid
Borrowing to be a Fixed Rate Borrowing, and (B) before 12:00 noon (New
York City time) three Business Days before the date of such proposed Bid
Borrowing, in the case of a proposed Bid Borrowing to be a Eurodollar Rate
Bid Borrowing, either:
(i) cancel such Bid Borrowing by giving the Agent notice to that effect, or
(ii) accept, in its sole discretion, one or more of the offers made by a
Lender or Lenders pursuant to Section 2.5(c), by giving notice to
the Agent of the amount of each Bid Advance (which amount shall be
equal to or greater than the minimum amount and equal to or less
than the maximum amount, notified to such Borrower by the Agent on
behalf of such Lender for such Bid Advance pursuant to Section
2.5(c)) to be made by each Lender as part of such Bid Borrowing, and
reject any remaining offers made by Lenders pursuant to Section
2.5(c) by giving the Agent notice to that effect; provided that
offers will be accepted, if at all, in order of lowest to highest
interest rates, and, if two or more Lenders bid at the same rate,
the Bid Borrowing with respect to such rate will be allocated among
such Lenders in proportion to the amount bid by each such Lender.
If the Borrower proposing the Bid Borrowing notifies the Agent that
such Bid Borrowing is canceled pursuant to Section 2.5(d)(i), the
Agent shall give prompt notice thereof to the Lenders and such Bid Borrowing
shall not be made.
(e) Bid Borrowing. If the Borrower proposing the Bid Borrowing accepts one
or more of the offers made by a Lender or Lenders pursuant to Section 2.5(d)
(ii), the Agent shall in turn promptly
(i) notify each Lender that has made an offer as described in Section 2.5
(c), of the date and aggregate amount of such Bid Borrowing and whether
or not any offer or offers made by such Lender pursuant to Section
2.5(c) have been accepted by such Borrower,
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(ii) notify each Lender that is to make a Bid Advance, as part of such Bid
Borrowing, of the amount of each Bid Advance to be made by such Lender
as part of such Bid Borrowing, and
(iii) upon satisfaction of the conditions set forth in 5.3 or 5.6, as
applicable, notify each Lender that is to make a Bid Advance as part
of such Bid Borrowing that the applicable conditions set forth in
Article 5 appear to have been satisfied.
When each Lender that is to make a Bid Advance as part of such Bid
Borrowing has received notice from the Agent pursuant to clause (iii) of
the preceding sentence, such Lender shall, before 1:00 p.m. (New York City
time) on the date of such Bid Borrowing specified in the notice received
from the Agent pursuant to clause (i) of the preceding sentence, make
available for the account of its Applicable Lending Office to the Agent at
the Agent's Account such Lender's portion of such Bid Borrowing, in same
day funds. Upon fulfillment of the applicable conditions set forth in
Article 5 and after receipt by the Agent of such funds, the Agent will
make such funds available to the relevant Borrower at an account specified
by such Borrower. Promptly after each Bid Borrowing the Agent shall
notify each Lender of the amount of the Bid Borrowing, the consequent Bid
Reduction, and the dates upon which such Bid Reduction commenced and will
terminate.
(f) If the Borrower proposing such Bid Borrowing notifies the Agent pursuant
to Section 2.5(d)(ii) above that it accepts one or more of the offers made
by any Lender or Lenders, such notice of acceptance shall be irrevocable
and binding on such Borrower. Such Borrower shall indemnify each Lender
against any loss, cost or expense incurred by such Lender as a result of
any failure to fulfill on or before the date specified in the related
Notice of Bid Borrowing for such Bid Borrowing the applicable conditions
set forth in Article 5, including, without limitation, any loss (but
excluding loss of anticipated profits), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund the Bid Advance to be made by such Lender as part of
such Bid Borrowing when such Bid Advance, as a result of such failure, is
not made on such date.
(g) Amount of Bid Borrowings. Each Notice of Bid Borrowing shall request an
aggregate amount of Bid Advances not less than $10,000,000 or an integral
multiple of $1,000,000 in excess thereof, provided that a Borrower may
accept offers aggregating less than $10,000,000 and offers which are not
an integral multiple of $1,000,000, and provided further that, as provided
in Section 2.5(a), following the making of each Bid Borrowing, the
aggregate amount of the Advances then outstanding shall not exceed the
aggregate amount of the Commitments of the Lenders (computed without
regard to the Bid Reduction). Within the limits and on the conditions set
forth in this Section 2.5, the Borrowers may from time to time borrow
under this Section 2.5, repay pursuant to Section 2.5(g), and reborrow
under this Section 2.5, provided that a Bid Borrowing shall not be made
within three Business Days of the date of any other Bid Borrowing.
(h) Repayment of Bid Advances. On the maturity date of each Bid Advance
specified by the relevant Borrower for repayment of such Bid Advance in
the related Notice of Bid Borrowing, the Borrower shall repay to the Agent
for the account of the Lender which has made such Bid Advance the then
unpaid principal amount of such Bid Advance. The Borrowers shall have no
right to prepay any principal amount of any Bid Advance.
(i) Interest on Bid Advances; Bid Notes. The relevant Borrower shall pay
interest on the unpaid principal amount of each Bid Advance, from the date
of such Bid Advance to the date the principal amount of such Bid Advance
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is repaid in full, at the fixed rate of interest specified by the Lender
making such Fixed Rate Advance in its notice with respect thereto
delivered pursuant to Section 2.5(c) or, in the case of a Eurodollar Rate
Bid Advance, the margin specified by the Lender making such Bid Advance in
its notice with respect thereto plus the Eurodollar Rate determined with
respect to such Bid Borrowing pursuant to Section 2.10, payable on the
interest payment date or dates specified by the Borrower for such Bid
Advance in the related Notice of Bid Borrowing. Upon the occurrence and
during the continuance of an Event of Default, the applicable Borrower
shall pay interest on the amount of unpaid principal of and interest on
each Bid Advance owing to a Lender, payable in arrears on the date or
dates interest is payable thereon, at a rate per annum equal at all times
to 1% per annum above the rate per annum required to be paid on such Bid
Advance under the terms of the Bid Note evidencing such Bid Advance unless
otherwise agreed in such Bid Note. The indebtedness of the applicable
Borrower resulting from each Bid Advance made to the Borrower as part of a
Bid Borrowing shall be evidenced by a separate Bid Note of such Borrower
payable to the order of the Lender making such Bid Advance, which Bid Note
shall be returned to the Borrower upon payment in full of such Bid
Advance.
2.6 Lender Assignment or Sale. Any Lender may, without the prior written
consent of the Borrowers, sell or assign all or any part of such Lender's
rights in any or all of the Bid Advances made by such Lender or in the Bid
Notes in connection with such Bid Advances as a participation, provided,
however, that
(i) any such sale or assignment shall not require any Borrower to file a
registration statement with the Securities and Exchange Commission
or apply to qualify the Advances or the Notes under the blue sky
laws of any state, and the selling or assigning Lender shall
otherwise comply with all federal and state securities laws
applicable to such transaction,
(ii) no purchaser or assignee in such a transaction shall thereby become
a "Lender" for any purpose under this Agreement,
(iii) such Lender's obligations under this Agreement (including, without
limitation, its Commitment to the Borrowers) shall remain unchanged,
(iv) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, and
(v) the Borrowers, the Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement.
2.7 Fees. TBC agrees to pay to the Agent for the account of each Lender a
facility fee ("Facility Fee") on such Lender's Commitment, without regard
to usage. The Facility Fee shall be payable for the periods from the date
hereof in the case of each Lender named in Schedule I, and from the
effective date on which any other Lender becomes party hereto, until the
Termination Date (or such earlier date on which such Lender ceases to be a
party hereto) at the rate of .04% per annum. Facility Fees shall be
payable in arrears on each January 1, April 1, July 1 and October 1 during
the term of this Agreement until and on the Termination Date. The amount
of the Facility Fee payable on October 1, 2000 and on the Termination Date
shall be prorated based on the actual number of days elapsed either since
the date hereof (in the case of the October 1, 2000 payment) or since the
date on which the last payment in respect of the Facility Fee was made (in
the case of the payment made on the Termination Date).
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2.8 Reduction of the Commitments.
(a) Optional Reductions. TBC shall have the right, upon at least 3 Business
Days' notice to the Agent, to terminate in whole or reduce ratably in part
the unused portions of the Commitments, provided that each partial
reduction shall be in a minimum amount of $10,000,000 or an integral
multiple of $1,000,000 in excess thereof, and provided further that the
aggregate amount of the Commitments shall not be reduced to an amount
which is less than the aggregate principal amount of the Bid Advances then
outstanding.
(b) Mandatory Reduction. At the close of business on the Termination Date,
the aggregate Commitments shall be automatically and permanently reduced,
on a pro rata basis, by an amount equal to the amount by which the
aggregate Commitments immediately prior to giving effect to such reduction
exceed the aggregate unpaid principal amount of the Committed Advances
then outstanding.
2.9 Additional Interest on Eurodollar Rate Committed Advances. Each Borrower
shall pay to each Lender, so long as such Lender is required under
regulations of the Board of Governors of the Federal Reserve System to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities, additional interest on the unpaid
principal amount of each Eurodollar Rate Committed Advance of such Lender
to such Borrower, from the date of such Committed Advance until such
principal amount is paid in full, at an interest rate per annum for each
Interest Period equal to the remainder obtained by subtracting (i) the
Eurodollar Rate for such Interest Period for such Committed Advance from
(ii) the rate obtained by dividing such Eurodollar Rate by a percentage
equal to 100% minus the Eurodollar Rate Reserve Percentage of such Lender
for such Interest Period, payable on each date on which interest is
payable on such Committed Advance. Such additional interest shall be
determined by such Lender and notified to the relevant Borrowers through
the Agent.
2.10 Eurodollar Interest Rate Determination.
(a) Methods to Determine Eurodollar Rate. The Agent shall determine the
Eurodollar Rate for each Eurodollar Rate Advance by using the methods
described in the definition of the term "Eurodollar Rate," and shall give
prompt notice to the relevant Borrowers and the Lenders of each such
Eurodollar Rate.
(b) Role of Reference Banks. In the event the Eurodollar Rate cannot be
determined by the first method described in the definition of "Eurodollar
Rate," each Reference Bank shall furnish to the Agent timely information
for the purpose of determining the Eurodollar Rate in accordance with the
second method described therein. If any one or more of the Reference
Banks does not furnish such timely information to the Agent for the
purpose of determining a Eurodollar Rate, the Agent shall determine such
interest rate on the basis of timely information furnished by the
remaining Reference Banks. In the event the rate cannot be determined by
either of the methods described in the definition of "Eurodollar Rate,"
then:
(i) the Agent shall forthwith notify the Borrowers and the Lenders that
the interest rate cannot be determined for such Eurodollar Rate
Advances,
(ii) each such Advance, if a Committed Advance, will automatically, on
the last day of the then existing Interest Period therefor, Convert
into a Base Rate Advance (or if the Borrower was attempting to
Convert a Base Rate Advance into a Eurodollar Rate Committed
Advance, such Advance will continue as a Base Rate Advance), and
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(iii) the obligation of the Lenders to make Eurodollar Rate Bid Advances,
or to make, or to Convert Base Rate Advances into, Eurodollar Rate
Committed Advances shall be suspended until the Agent notifies the
Borrowers and the Lenders that the circumstances causing such
suspension no longer exist.
(c) Inadequate Eurodollar Rate. If, with respect to any Eurodollar Rate
Committed Advances, the Majority Lenders notify the Agent that the
Eurodollar Rate for any Interest Period for such Committed Advances will
not adequately reflect the cost to such Majority Lenders of making,
funding or maintaining their respective Eurodollar Rate Committed Advances
for such Interest Period, the Agent shall forthwith so notify the relevant
Borrowers and the Lenders, whereupon
(i) each such Eurodollar Rate Committed Advance will automatically, on
the last day of the then existing Interest Period therefor, Convert
into a Base Rate Advance, and
(ii) the obligation of the Lenders to make, or to Convert Base Rate
Advances into, Eurodollar Rate Committed Advances shall be suspended
until the Agent notifies the Borrowers and the Lenders that the
circumstances causing such suspension no longer exist.
(d) Absence of an Interest Period on a Eurodollar Rate Committed Advance. If
a Borrower fails to select the duration of an Interest Period for a
Eurodollar Rate Committed Advance in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.1, the Agent
will forthwith so notify the Borrower and the Lenders and such Committed
Advances will automatically, on the last day of the then existing Interest
Period therefor, Convert into Base Rate Advances.
2.11 Voluntary Conversion of Committed Advances. Subject to the
provisions of Sections 2.10 and 2.15, any Borrower may Convert all such
Borrower's Committed Advances of one Type constituting the same Committed
Borrowing into Advances of the other Type on any Business Day, upon notice
given to the Agent not later than 11:00 a.m. (New York City time) on the
third Business Day prior to the date of the proposed Conversion; provided,
however, that the Conversion of a Eurodollar Rate Committed Advance into a
Base Rate Advance may be made on, and only on, the last day of an Interest
Period for such Eurodollar Rate Committed Advance. Each such notice of a
Conversion shall, within the restrictions specified above, specify
(i) the date of such Conversion,
(ii) the Committed Advances to be Converted, and
(iii) if such Conversion is into Eurodollar Rate Committed Advances, the
duration of the Interest Period for each such Committed Advance.
2.12 Prepayments. Any Borrower shall have the right at any time and from
time to time, upon prior written notice from such Borrower to the Agent,
to prepay its outstanding principal obligations with respect to its
Committed Advances in whole or ratably in part (except as provided in
Section 2.15 or 2.19), provided that every notice of prepayment given by a
Subsidiary Borrower must be countersigned by an authorized representative
of TBC, in order to evidence the consent of TBC, in its sole discretion,
to that prepayment. Such prepaying Borrower may be obligated to make
certain prepayments of obligations with respect to one or more Committed
Advances subject to and in accordance with this Section 2.12.
(a) Base Rate Borrowings Prepayments. With respect to Base Rate Borrowings,
such prepayment shall be without premium or penalty, upon notice given to
the Agent, and shall be made not later than 11:00 a.m. (New York City
time) on the date of such prepayment. The Borrower shall designate in
such notice the amount and date of such prepayment. Accrued interest on
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the amount so prepaid shall be payable on the first Business Day of the
calendar quarter next following the prepayment. The minimum amount of
Base Rate Borrowings which may be prepaid on any occasion shall be
$10,000,000 or an integral multiple of $1,000,000 in excess thereof or, if
less, the total amount of Base Rate Advances then outstanding for that
Borrower.
(b) Eurodollar Rate Committed Borrowings Prepayments. With respect to
Eurodollar Rate Committed Borrowings, such prepayment shall be made on at
least 3 Business Days' prior written notice to the Agent not later than
11:00 a.m. (New York City time), and if such notice is given the
applicable Borrower shall prepay the outstanding principal amount of the
Committed Advances constituting part of the same Committed Borrowing in
whole or ratably in part, together with accrued interest to the date of
such prepayment on the principal amount prepaid. The minimum amount of
Eurodollar Rate Committed Borrowings which may be prepaid on any occasion
shall be $10,000,000 or an integral multiple of $1,000,000 in excess
thereof or, if less, the total amount of Eurodollar Rate Committed
Advances then outstanding for that Borrower.
(c) Additional Prepayment Payments. The prepaying Borrower shall, on the date
of the prepayment, pay to the Agent for the account of each Lender
interest accrued to such date of prepayment on the principal amount
prepaid plus, in the case only of a prepayment on any date which is not
the last day of an applicable Eurodollar Interest Period, any amounts
which may be required to compensate such Lender for any losses or out-of-
pocket costs or expenses (including any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds, but
excluding loss of anticipated profits) incurred by such Lender as a result
of such prepayment, provided that such Lender shall exercise reasonable
efforts to minimize any such losses, costs and expenses.
(d) Eurodollar Rate Committed Advance Prepayment Expense. If, due to the
acceleration of any of the Committed Advances pursuant to Section 6.2(b),
an assignment, repayment or prepayment under Section 2.19 or 2.20 or
otherwise, any Lender receives payment of its portion of, or is subject to
any Conversion from, any Eurodollar Rate Committed Advance on any day
other than the last day of an Interest Period with respect to such
Committed Advance, the relevant Borrowers shall pay to the Agent for the
account of such Lender any amounts which may be payable to such Lender by
such Borrower by reason of payment on such day as provided in Section
2.12(c).
2.13 Increases in Costs.
(a) Costs from Law or Authorities. If, due to either
(1) the introduction of, or any change (other than, in the case of
Eurodollar Rate Borrowings, a change by way of imposition or an
increase of reserve requirements described in Section 2.9) in, or
new interpretation of, any law or regulation effective at any time
and from time to time on or after the date hereof, or
(2) the compliance with any guideline or the request from or by any
central bank or other governmental authority (whether or not having
the force of law),
there is an increase in the cost incurred by a Lender in agreeing to make
or making, funding or maintaining any Eurodollar Rate Committed Advance or
Eurodollar Rate Bid Advance then or at any time thereafter outstanding
(excluding for purposes of this Section 2.13 any such increased costs
resulting from (i) Taxes or Other Taxes (as to which Section 2.14 shall
govern) and (ii) changes in the basis of taxation of overall net income or
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overall gross income by the United States or by the foreign jurisdiction
or state under the laws of which such Lender is organized or has its
Applicable Lending Office (or any political subdivision thereof), then TBC
shall from time to time, upon demand of such Lender (with a copy of such
demand to the Agent), pay to the Agent for the account of such Lender such
amounts as are required to compensate such Lender for such increased cost,
provided that such Lender shall exercise reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to
minimize any such increased cost and provided further that the Borrowers
shall not be required to pay any such compensation with respect to any
period prior to the 90th day before the date of any such demand, unless
such introduction, change, compliance or request shall have retroactive
effect to a date prior to such 90th day. A certificate as to the amount of
such increase in cost, submitted to the relevant Borrowers and the Agent
by such Lender, shall be conclusive and binding for all purposes under
this Section 2.13(a), absent manifest error.
(b) Increased Capital Requirements. If any Lender determines that compliance
with any law or regulation or any guidelines or request from any central
bank or other governmental authority (whether or not having the force of
law) which is enacted, adopted or issued at any time and from time to time
after the date hereof affects or would affect the amount of capital
required or expected to be maintained by such Lender (or any corporation
controlling such Lender) and that the amount of such capital is increased
by or based upon the existence of such Lender's Commitment and other
commitments of this type, then, upon demand by such Lender (with a copy of
such demand to the Agent), the Borrowers shall immediately pay to the
Agent for the account of such Lender, from time to time as specified by
such Lender, additional amounts sufficient to compensate such Lender in
the light of such circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable to the existence of
such Lender's Commitment, provided that such Lender shall exercise
reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to minimize any such compensation payable by the
Borrowers hereunder and provided further that the Borrowers shall not be
required to pay any such compensation with respect to any period prior to
the 90th day before the date of any such demand, unless such introduction,
change, compliance or request shall have retroactive effect to a date
prior to such 90th day. A certificate as to such amounts submitted to the
relevant Borrowers and the Agent by such Lender, shall be conclusive and
binding for all purposes, absent manifest error.
(c) Borrower Rights Upon Cost Increases. Upon receipt of notice from any
Lender claiming compensation pursuant to this Section 2.13 or Section 2.14
and as long as no Default has occurred and is continuing, TBC shall have
the right, on or before the 30th day after the date of receipt of any such
notice,
(i) to arrange for one or more Lenders or other commercial banks to
assume the Commitment of such Lender; subject, however, to payment
to the Agent by the assignor or the assignee of a processing and
recording fee of $3,500, in the event the assuming lender is not a
Lender; or
(ii) to arrange for the Commitment of such Lender to be terminated and
all Committed Advances owed to such Lender to be prepaid;
and, in either case, subject to payment in full of all principal,
accrued and unpaid interest, fees and other amounts payable under this
Agreement and then owing to such Lender immediately prior to the
assignment or termination of the Commitment of such Lender.
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2.14 Taxes.
(a) Exclusion and Inclusion of Taxes. Any and all payments by each Borrower
hereunder or with respect to any Advances or under any Notes shall be
made, in accordance with Section 2.16, free and clear of and without
deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, taxes that
are imposed on its overall net income by the United States and taxes that
are imposed on its overall net income (and franchise taxes imposed in lieu
thereof) by the state or foreign jurisdiction under the laws of which
such Lender or the Agent (as the case may be) is organized or any
political subdivision thereof and, in the case of each Lender, taxes that
are imposed on its overall net income ( and franchise taxes imposed in
lieu thereof) by the state or foreign jurisdiction of such Lender's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities in respect of payments hereunder or with respect to any
Advances or under any Notes, hereinafter referred to as "Taxes"). If any
Borrower shall be required by law to deduct any Taxes from or in respect
to any sum payable hereunder or with respect to any Advances or under any
Note to any Lender or the Agent, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.14)
such Lender or the Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) such
Borrower shall make such deductions and (iii) such Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.
(b) Payment of Other Taxes. In addition, each Borrower shall pay any present
or future stamp, documentary, excise, property or similar taxes, charges,
or levies that arise from any payment made hereunder or with respect to
any Advances and under any Notes or from the execution, delivery or
registration of, performance under, or otherwise with respect to, this
Agreement or any Notes ( "Other Taxes").
(c) Indemnification as to Taxes. Each Borrower shall indemnify each Lender
and the Agent for and hold it harmless against the full amount of Taxes
and Other Taxes, and for the full amount of taxes of any kind imposed by
any jurisdiction on amounts payable under this Section 2.14, imposed on or
paid by such Lender or the Agent (as the case may be) and any liability (
including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 30 days from
the date such Lender or the Agent (as the case may be) makes written
demand therefor.
(d) Evidence of or Exemption from Taxes. Within 30 days after the date of any
payment of Taxes, the Borrower which paid such Taxes shall furnish to the
Agent, at its address referred to in Section 8.2, the original or a
certified copy of a receipt evidencing such payment. In the case of any
payment hereunder or with respect to the Advances or under any Notes by or
on behalf of any Borrower through an account or branch outside the United
States or by or on behalf of any Borrower by a payor that is not a United
States person, if the Borrower determines that no taxes are payable in
respect thereof, such Borrower shall furnish, or shall cause such payor to
furnish, to the Agent, at such address, an opinion of counsel acceptable
to the Agent stating that such payment is exempt from Taxes. For purposes
of this subsection (d) and subsection (e), the terms "United States" and
"United States person" have the meanings specified in Section 7701 of the
Internal Revenue Code.
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(e) Non-U.S. Lenders. Each Lender organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution
and delivery of this Agreement (in the case of each Lender listed in
Schedule I), and from the date on which any other Lender becomes a party
hereto (in the case of each other Lender), and from time to time
thereafter as requested in writing by TBC (but only so long thereafter as
such Lender remains lawfully able to do so), provide each of the Agent and
TBC with two original Internal Revenue Service forms W-8BEN or W-8EC1, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, to establish that such Lender is not subject to, or is entitled
to a reduced rate of, United States withholding tax on payments pursuant
to this Agreement or with respect to any Advances or any Notes. If the
forms provided by a Lender at the time such Lender first becomes a party
to this Agreement indicates a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be considered
excluded from Taxes unless and until such Lender provides the appropriate
form certifying that a lower rate applies, whereupon withholding tax at
such lower rate only shall be considered excluded from Taxes for periods
governed by such form; provided, however, that, if at the date on which a
Lender becomes a party to this Agreement, the Lender assignor was entitled
to payments under subsection 2.14(a) in respect of United States
withholding tax with respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to withholding taxes
that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to
the Lender assignee on such date. If any form or document referred to in
this subsection 2.14(e) requires the disclosure of information, other than
information necessary to compute the tax payable and information required
on the date hereof by Internal Revenue Service form W-8BEN or W-8EC1, that
the Lender reasonably considers to be confidential, the Lender shall give
notice thereof to the relevant Borrowers and shall not be obligated to
include in such form or document confidential information.
(f) Lender Failure to Provide IRS Forms. For any period with respect to which
any Lender has failed to provide TBC with the appropriate form described
in subsection 2.14(e) (other than if such failure is due to a change in
law occurring after the date on which a form originally was required to be
provided or if such form otherwise is not required under subsection
2.14(e)), such Lender shall not be entitled to indemnification under
subsection (a) or (c) with respect to Taxes imposed by the United States
by reason of such failure; provided, however, that should a Lender become
subject to Taxes because of its failure to deliver a form required
hereunder, TBC shall take such steps as such Lender shall reasonably
request to assist such Lender to recover such Taxes.
2.15 Illegality. If any Lender shall notify the Agent that either
(a) there is any introduction of, or change in or in the interpretation
of, any law or regulation that in the opinion of counsel for such
Lender in the relevant jurisdiction makes it unlawful, or
(b) any central bank or other governmental authority asserts that it is
unlawful
for such Lender to continue to fund or maintain any Eurodollar Rate
Advances or to perform its obligations hereunder with respect to
Eurodollar Rate Advances hereunder, then, upon the issuance of such
opinion of counsel or such assertion by a central bank or other
governmental authority, the Agent shall give notice of such opinion or
assertion to the Borrowers (accompanied by such opinion, if applicable).
The Borrowers shall forthwith either
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(i) prepay in full all Eurodollar Rate Committed Advances and all
Eurodollar Rate Bid Advances made by such Lender, with accrued
interest thereon or
(ii) Convert each such Eurodollar Rate Committed Advance made by such
Lender into a Base Rate Advance.
Upon such prepayment or Conversion, the obligation of such Lender to make
Eurodollar Rate Committed Advances or Eurodollar Rate Bid Advances, or to
Convert Committed Advances into Eurodollar Rate Committed Advances, shall
be suspended until the Agent shall notify the Borrowers that the
circumstances causing such suspension no longer exists.
2.16 Payments and Computations.
(a) Time and Distribution of Payments. The Borrowers shall make each payment
hereunder and with respect to any Advances or under any Notes not later
than 11:00 a.m. (New York City time) on the day when due in U.S. dollars
to the Agent at the Agent's Account in same day funds. The Agent shall
promptly thereafter cause to be distributed like funds relating to the
payment of principal or interest or fees ratably (other than amounts
payable pursuant to Section 2.5, 2.9, 2.13, 2.14, 2.15 or 2.19) to the
Lenders for the account of their respective Applicable Lending Offices,
and like funds relating to the payment of any other amount payable to any
Lender to such Lender for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement.
From and after the effective date of an assignment pursuant to Section
2.20, the Agent shall make all payments hereunder and with respect to any
Advances or under any Notes in respect of the interest assigned thereby to
the Lender assignee thereunder, and the parties to such assignment shall
make all appropriate adjustments in such payments for the periods prior to
such effective date directly between themselves.
(b) Computation of Interest and Fees. All computations of interest based on
the Base Rate shall be made by the Agent on the basis of a year of 365 or
366 days, as the case may be. All computations of interest based on the
Eurodollar Rate or the Federal Funds Rate and of Facility Fees shall be
made by the Agent, and all computations of interest pursuant to Section
2.9 shall be made by a Lender, on the basis of a year of 360 days, in each
case for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest or fees are
payable. Each determination by the Agent (or, in the case of Section 2.9,
by a Lender) of an interest rate hereunder shall be conclusive and binding
for all purposes, absent manifest error.
(c) Payment Due Dates. Whenever any payment hereunder or with respect to any
Advances or under any Notes shall be stated to be due on a day other than
a Business Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of payment of interest or fee, as the case may be; provided,
however, if such extension would cause payment of interest on or principal
of Eurodollar Rate Advances to be made in the next following calendar
month, such payment shall be made on the immediately preceding Business
Day.
(d) Presumption of Borrower Payment. Unless the Agent receives notice from a
Borrower prior to the date on which any payment is due to any Lenders
hereunder that such Borrower will not make such payment in full, the Agent
may assume that the Borrower has made such payment in full to the Agent on
such date and the Agent may, in reliance upon such assumption, cause to be
distributed to each such Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent that such Borrower has
not made such payment in full to the Agent, each such Lender shall repay
to the Agent forthwith on demand such amount distributed to such Lender
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together with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount
to the Agent, at the Federal Funds Rate.
2.17 Sharing of Payments, Etc. If any Lender obtains any payment
(whether voluntary, involuntary, through the exercise of any right of set-
off, or otherwise) on account of the Committed Advances made by it (other
than pursuant to Sections 2.9, 2.13, 2.14, 2.15 or 2.19), in excess of its
ratable share of payments on account of the Committed Advances obtained by
all the Lenders, such Lender shall forthwith purchase from the other
Lenders such participations in the Committed Advances made by them as
shall be necessary to cause such purchasing Lender to share the excess
payment ratably with each of them, provided, however, that if all or any
portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each other Lender shall be rescinded
and each such other Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount
equal to such Lender's ratable share (according to the proportion of (i)
the amount of such Lender's required repayment to (ii) the total amount so
recovered from the purchasing Lender) of any interest or other amount paid
or payable by the purchasing Lender in respect of the total amount so
recovered. The Borrowers agree that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.17 may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as
fully as if such Lender were a creditor of the Borrowers in the amount of
such participation.
2.18 Evidence of Debt.
(a) Lender Records; If Notes Required. Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of each Borrower to such Lender resulting from each Committed
Advance owing to such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder in respect of Committed Advances. Each Borrower shall, upon
notice by any Lender to such Borrower (with a copy of such notice to the
Agent) to the effect that a Committed Note is required or appropriate in
order for such Lender to evidence (whether for purposes of pledge,
enforcement or otherwise) the Committed Advances owing to, or to be made
by, such Lender, such Borrower shall promptly execute and deliver to such
Lender a Committed Note payable to the order of such Lender in a principal
amount up to the Commitment of such Lender.
(b) Record of Borrowings, Payables and Payments. The Register maintained by
the Agent pursuant to Section 2.20(d) shall include a control account, and
a subsidiary account for each Lender, in which accounts (taken together)
shall be recorded
(i) the date and amount of each Borrowing made hereunder to each
Borrower, the Type of Advances constituting such Borrowing and, if
appropriate, the Interest Period applicable thereto,
(ii) the terms of each assignment pursuant to Section 2.20,
(iii) the amount of any principal or interest due and payable or to become
due and payable from each Borrower to each Lender hereunder, and
(iv) the amount of any sum received by the Agent from a Borrower
hereunder and each Lender's share thereof.
(c) Evidence of Payment Obligations. Entries made in good faith by the Agent
in the Register pursuant to subsection (b) above, and by each Lender in
its account or accounts pursuant to subsection (a) above, shall be prima
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facie evidence of the amount of principal and interest due and payable or
to become due and payable from a Borrower to, in the case of the Register,
each Lender and, in the case of such account or accounts, such Lender,
under this Agreement, absent manifest error; provided, however, that the
failure of the Agent or such Lender to make an entry, or any finding that
an entry is incorrect, in the Register or such account or accounts shall
not limit or otherwise affect the obligations of the Borrowers under this
Agreement.
2.19 Alteration of Commitments and Addition of Lenders.
(a) Alter Lender Commitment. By a written agreement executed only by TBC, the
Agent and the affected Lender and any non-party lender involved,
(i) the Commitment of such affected Lender may be increased to the
amount set forth in such agreement;
(ii) such non-party lender may be added as a Lender with a Commitment as
set forth in such agreement, provided that such lender agrees to be
bound by all the terms and provisions of this Agreement; and
(iii) the unused portion of the Commitment of such affected Lender may be
reduced or terminated and the Committed Advances owing to such
Lender may be prepaid in whole or in part, all as set forth in such
agreement.
(b) Conditions to Alteration. The Agent may execute any such agreement
without the prior consent of any Lender other than the Lender affected,
provided, however, that if at the time the Agent proposes to execute such
agreement either (A) TBC's long-term senior unsecured debt is rated lower
than A- by S&P or lower than A3 by Moody's or (B) a Default has occurred
and is continuing, then the Agent shall not execute any such agreement
unless it has first obtained the prior written consent of the Majority
Lenders, and provided further that the Agent shall not execute any such
agreement without the prior written consent of the Majority Lenders if
such agreement would increase the total of the Commitments to an amount in
excess of $1,500,000,000 or, pursuant to Section 2.19(c), $1,700,000,000.
(c) Increase Total Commitment. The Company has the right, once prior to the
initial Termination Date (and, if the Termination Date is extended
pursuant to Section 2.21, once following such extension), to increase the
total of the Commitments through a Request for Alteration, in minimum
increments of $50,000,000, up to a maximum aggregate of Commitments of
$1,700,000,000, provided that, in addition to the requirements specified
in Section 2.19(b), at the time of and after giving effect to an increase,
TBC's long-term senior unsecured non-credit-enhanced debt ratings from
Moody's and S&P are better than or equal to A3 and A-, respectively. The
Company may offer the increases to
(i) the Lenders, and each Lender shall have the right, but no
obligation, to increase its Commitment, by giving notice thereof to
the Agent, to all or a portion of the proposed increase (the
"Proposed Increased Commitment"), allocations to be based on the
ratio of each Lender's Proposed Increased Commitment, if any, to the
aggregate of all Proposed Increased Commitments, and
(ii) third party financial institutions acceptable to the Agent, provided
that the minimum commitment of each such institution equals or
exceeds $50,000,000.
(d) Request for Alteration. The Agent shall give each Lender prompt notice of
any such agreement becoming effective. All requests for Lender consent
under the provisions of this Section 2.19 shall specify the date upon
which any such increase, addition, reduction, termination, or prepayment
shall become effective (the "Effective Date") and shall be made by means
of a Request for Alteration substantially in the form as set forth in
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Exhibit C. On the Effective Date on which the Commitment of any Lender is
increased, decreased, terminated or created or on which prepayment is
made, all as described in such Request for Alteration, the Borrowers or
such Lender, as the case may be, shall make available to the Agent not
later than 12:30 p.m. (New York City time) on such date, in same day
funds, the amount, if any, which may be required (and the Agent shall
distribute such funds received by it to the Borrowers or to such Lenders,
as the case may be) so that at the close of business on such date the sum
of the Committed Advances of each Lender then outstanding shall be in the
same proportion to the total of the Committed Advances of all the Lenders
then outstanding as the Commitment of such Lender is to the total of the
Commitments. The Agent shall give each Lender notice of the amount to be
made available by, or to be distributed to, such Lender at least 3
Business Days before such payment is made.
2.20 Assignments; Sales of Participations and Other Interests in
Advances.
(a) Assignment of Lender Obligations. From time to time each Lender may, with
the prior written consent of TBC and subject to the qualifications set
forth below, assign to one or more Lenders or an Eligible Assignee all or
any portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment, the Committed
Advances owing to it and the Committed Note, if any, held by it) and will,
at any time, if arranged by the Company pursuant to clause (i)(A) below
upon at least 30 days' notice to such Lender and the Agent, assign to one
or more Eligible Assignees all of its rights and obligations under this
Agreement (including without limitation, all of its Commitment, the
Committed Advances owing to it and the Committed Note, if any, held by
it); subject to the following:
(i) If such Lender notifies TBC and the Agent of its intent to request
the consent of TBC to an assignment, TBC shall have the right, for
30 days after receipt of such notice and so long as no Event of
Default has occurred and is continuing, in its sole discretion
either (A) to arrange for one or more Eligible Assignees to accept
such assignment (a "Required Assignment") or (B) to arrange for the
rights and obligations of such Lender (including, without
limitation, such Lender's Commitment), and the total Commitments, to
be reduced by an amount equal to the amount of such Lender's
Commitment proposed to be assigned and, in connection with such
reduction, to prepay that portion of the Committed Advances owing to
such Lender which it proposes to assign;
(ii) If TBC fails to notify such Lender within 30 days of TBC's receipt
of such Lender's request for consent to assignment that TBC has
arranged for an assumption or reduction of the portion of Commitment
to be assigned, the Borrowers shall be deemed to consent to the
proposed assignment;
(iii) Any such assignment shall not require any Borrower to file a
registration statement with the Securities and Exchange Commission
or apply to qualify the interests in the Committed Advances under
the blue sky laws of any state and the assigning Lender shall
otherwise comply with all federal and state securities laws
applicable to such assignment;
(iv) The amount of the Commitment of the assigning Lender being assigned
pursuant to any such assignment (determined as of the date of the
assignment) shall either (A) equal 50% of all such rights and
obligations (or 100% in the case of a Required Assignment) or (B)
not be less than $10,000,000 or an integral multiple of $1,000,000
in excess thereof;
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(v) The aggregate amount of the Commitment assigned pursuant to all such
assignments of such Lender (after giving effect to such assignment)
shall in no event exceed 50% (except in the case of a Required
Assignment) of all such Lender's Commitment (as set forth in
Schedule I, in the case of each Lender that is a party hereto as of
September 27, 2000, or as set forth in the Register as the aggregate
Commitment assigned to such Lender pursuant to one or more
assignments, in the case of any assignee); and
(vi) No Lender shall be obligated to make a Required Assignment unless
such Lender has received payments in an aggregate amount at least
equal to the outstanding principal amount of all Committed Advances
being assigned, together with accrued interest thereon to the date
of payment of such principal amount and all other amounts payable to
such Lender under this Agreement (including without limitation
Section 2.12(b), provided that such Lender shall receive its pro
rata share of the Facility Fee on the next date on which the
Facility Fee is payable).
(b) Effect of Lender Assignment. From and after the effective date of any
assignment pursuant to Section 2.20(a), (i) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such assignment, it shall have the
rights and obligations of a Lender hereunder except that such assignee may
not elect to assign any of its rights and obligations under this Agreement
acquired by such assignment for a period of nine months following the
effective date specified in such assignment and (ii) the Lender assignor
thereunder shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such assignment, relinquish its rights
(other than its rights under Section 2.13, 2.14 or 2.19 to the extent any
claim thereunder relates to an event arising prior to such assignment) and
be released from its obligations under this Agreement (and, in the case of
an assignment covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall
cease to be a party hereto).
(c) Security Interest; Assignment to Lender Affiliate. Notwithstanding any
other provision in this Agreement, any Lender may, upon prior or
contemporaneous notice to TBC and the Agent, at any time (i) create a
security interest in all or any portion of its rights under this Agreement
(including without limitation, the Advances owing to it and the Notes held
by it, if any) in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System, and
(ii) assign all or any portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its
Commitment, the Committed Advances owing to it and the Committed Note held
by it, if any) to an Affiliate of such Lender unless the result of such an
assignment would be to increase the cost to any Borrowers of requesting,
borrowing, continuing, maintaining, paying or converting any Advances.
(d) Agent's Register. The Agent shall maintain at its address referred to in
Section 8.2 a copy of each assignment delivered to and accepted by it and
a register for the recordation of the names and addresses of the Lenders
and the Commitment of, and principal amount of the Committed Advances of
each Borrower owing to, each Lender from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrowers, the Agent and the
Lenders may treat each entity whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall
be available for inspection by the Borrowers or any Lender at any
reasonable time and from time to time upon reasonable prior notice. Upon
receipt by the Agent from the assigning Lender of an assignment in form
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and substance satisfactory to the Agent executed by an assigning Lender
and an assignee representing that it is an Eligible Assignee, together
with evidence of each Committed Advance subject to such assignment, and a
processing and recording fee of $3,500 (payable by either the assignor or
the assignee), the Agent shall, if such assignment is a Required
Assignment or has been consented to by the Borrowers to the extent
required by Section 2.20(a) or has been effected pursuant to Section
2.21(c), (i) accept such assignment, (ii) record the information contained
therein in the Register, and (iii) give prompt notice thereof to TBC.
(e) Lender Sale of Participations. Each Lender may sell participations in all
or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments, the
Advances owing to it and the Notes held by it, if any) to one or more
Affiliates of such Lender or to one or more other commercial banks;
provided, however, that
(i) any such participation shall not require any Borrowers to file a
registration statement with the Securities and Exchange Commission
or apply to qualify any interests in the Advances or any Notes under
the blue sky laws of any state and the Lender selling or granting
such participation shall otherwise comply with all federal and state
securities laws applicable to such transaction,
(ii) no purchaser of such a participation shall be considered to be a
"Lender" for any purpose under the Agreement,
(iii) such Lender's obligations under this Agreement (including, without
limitation, its Commitment to the Borrowers) shall remain unchanged,
(iv) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations,
(v) such Lender shall remain the holder of any Notes issued with respect
to its Advances for all purposes of this Agreement, and
(vi) the Borrowers, the Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement.
(f) Confidential Borrower Information. Any Lender may, in connection with any
assignment or participation or proposed assignment or participation
pursuant to this Section 2.20, disclose to the assignee or participant or
proposed assignee or participant, any information relating to the
Borrowers furnished to such Lender by or on behalf of the Borrowers;
provided, however, that, prior to any such disclosure of Confidential
Information, such Lender shall obtain the written consent of the
Borrowers, and the assignee or participant or proposed assignee or
participant shall agree to preserve the confidentiality of any such
Confidential Information received by it from such Lender except as
disclosure may be required or appropriate to governmental authorities,
pursuant to legal process, or by law or governmental regulation or
authority.
2.21 Extension of Termination Date.
(a) Extension Request. TBC may, on behalf of itself and the Subsidiary
Borrowers, by written notice to the Agent in the form of Exhibit E (each
such notice being an "Extension Request") given no earlier than 60 days
and no later than 45 days prior to the then applicable Termination Date,
request that the then applicable Termination Date be extended to a date
364 days after the then applicable Termination Date; provided, however,
that the Borrowers shall not have exercised the Term Loan Conversion
Option for Committed Advances outstanding on such Termination Date prior
to such time. Such extension shall be effective with respect to each
Lender which, by a written notice in the form of Exhibit F (a
"Continuation Notice") to TBC and the Agent given no earlier than 30 days
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and no later than 20 days prior to the then applicable Termination Date,
consents, in its sole discretion, to such extension (each Lender giving a
Continuation Notice being referred to sometimes as a "Continuing Lender"
and each Lender other than a Continuing Lender being a "Non-Extending
Lender"), provided, however, that such extension shall be effective only
if the aggregate Commitments of the Continuing Lenders are not less than
51% of the aggregate Commitments of the Lenders on the date of the
Extension Request. No Lender shall have any obligation to consent to any
such extension of the Termination Date. The Agent shall notify each
Lender of the receipt of an Extension Request within three (3) Business
Days after receipt thereof. The Agent shall notify the Company and the
Lenders no later than 15 days prior to the then applicable Termination
Date whether the Agent has received Continuation Notices from Lenders
holding at least 51% of the aggregate Commitments on the date of the
Extension Request.
(b) Non-Extending Lenders. The Commitment of each Non-Extending Lender shall
terminate at the close of business on the Termination Date in effect prior
to the delivery of such Extension Request without giving any effect to
such proposed extension, and on such Termination Date TBC shall take one
of the following three actions:
(i) Replace the Non-Extending Lenders pursuant to Section 2.21(c); or
(ii) Pay or cause to be paid to the Agent, for the account of the Non-
Extending Lenders, an amount equal to the Non-Extending Lenders'
Committed Advances, together with accrued but unpaid interest and
fees thereon and all other amounts then payable hereunder to the
Non-Extending Lenders; or
(iii) By giving notice to the Agent no later than three days prior to the
Termination Date in effect prior to the delivery of such Extension
Request, elect not to extend the Termination Date beyond the then
applicable Termination Date, and in this event the Borrowers may in
their sole discretion repay any amount of the Committed Advances
then outstanding or exercise the Term Loan Conversion Option with
respect to the Committed Advances outstanding on the Termination
Date in accordance with Section 2.3.
(c) Replacement Lenders. A Non-Extending Lender shall be obligated, at the
request of TBC, to assign at any time prior to the close of business on
the Termination Date applicable to such Non-Extending Lender all of its
rights (other than rights that would survive the termination of the
Agreement pursuant to Section 8.3) and obligations hereunder to one or
more Lenders or other commercial banks nominated by TBC and willing to
become Lenders in place of such Non-Extending Lender (the "Replacement
Lenders"). In order to qualify as a Replacement Lender, a Lender or
lender must satisfy all of the requirements of this Agreement (including
without limitation the terms of Section 2.20 relating to Required
Assignments). Such obligation of each Non-Extending Lenders is subject to
such Non-Extending Lender's receiving (i) payment in full from the
Replacement Lenders of the principal amount of all Advances owing to such
Non-Extending Lender immediately prior to an assignment to the Replacement
Lenders and (ii) payment in full from the relevant Borrowers of all
accrued interest and fees and other amounts payable hereunder and then
owing to such Non-Extending Lender immediately prior to the assignment to
the Replacement Lenders. Upon such assignment, the Non-Extending Lender
shall no longer be a Lender, such Replacement Lender shall become a
Continuing Lender, and the Agent shall make appropriate entries in the
Register to reflect the foregoing.
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2.22 Subsidiary Borrowers.
(a) Subsidiary Borrower Designation. TBC may at any time, and from time to
time, by delivery to the Agent of a Borrower Subsidiary Letter
substantially in the form of Exhibit D, duly executed by TBC and the
respective Subsidiary, designate such Subsidiary as a "Subsidiary
Borrower" for purposes of this Agreement, and such Subsidiary shall
thereupon become a "Subsidiary Borrower" for purposes of this Agreement
and, as such, shall have all of the rights and obligations of a Borrower
hereunder. The Agent shall promptly notify each Lender of each such
designation by TBC and the identity of the designated Subsidiary.
(b) TBC Consent to Subsidiary Borrower Borrowings and Notices. No Advances
shall be made to a Subsidiary Borrower, and no Conversion of any Advances
at the request of a Subsidiary Borrower shall be effective, without, in
each and every instance, the prior consent of TBC, in its sole discretion,
which shall be evidenced by the countersignature of TBC to the relevant
Notice of Borrowing or notice of Conversion. In addition, no notices
which are to be delivered by a Borrower hereunder shall be effective, with
respect to any Subsidiary Borrower, unless the notice is countersigned by
TBC.
(c) Subsidiary Borrower Termination Event. The occurrence of any of the
following events with respect to any Subsidiary Borrower shall constitute
a "Subsidiary Borrower Termination Event" with respect to such Subsidiary
Borrower:
(i) such Subsidiary Borrower ceases to be a Subsidiary;
(ii) such Subsidiary Borrower is liquidated or dissolved;
(iii) such Subsidiary Borrower fails to preserve and maintain its
existence or makes any material change in the nature of its business
as carried out on the date such Subsidiary Borrower became a
Borrower hereunder;
(iv) such Subsidiary Borrower merges or consolidates with or into another
Person, or conveys, transfers, leases, or otherwise disposes of
(whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter
acquired) to any Person (except that a Subsidiary Borrower may merge
into or dispose of assets to another Borrower);
(v) any of the "Events of Default" described in Section 6.1(a) through
(f) occurs to or with respect to such Subsidiary Borrower as if such
Subsidiary Borrower were "TBC"; or
(vi) the Guaranty with respect to such Subsidiary Borrower ceases, for
any reason, to be valid and binding on TBC or TBC so states in
writing.
(d) Terminated Subsidiary Borrower. Upon the occurrence of a Subsidiary
Borrower Termination Event with respect to any Subsidiary Borrower, such
Subsidiary Borrower (a "Terminated Subsidiary Borrower") shall cease to be
a Borrower for purposes of this Agreement and shall no longer be entitled
to request or borrow Advances hereunder. All outstanding Advances of a
Terminated Subsidiary Borrower shall be automatically due and payable as
of the date on which the Subsidiary Borrower Termination Event of such
Terminated Subsidiary Borrower occurred, together with accrued interest
thereon and any other amounts then due and payable by that Borrower
hereunder, unless, in the case of a Subsidiary Borrower Termination Event
described in paragraph (iv) of Section 2.22(c), the other Person party to
the transaction is a Borrower and such other Borrower has assumed in
writing all of the outstanding Advances and other obligations under this
Agreement and under the Notes, if any, of the Terminated Subsidiary
Borrower.
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(e) TBC as Subsidiary Borrowers' Agent. Each of the Subsidiary Borrowers
hereby appoints and authorizes TBC to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated
to TBC by the terms hereof, together with such powers as are reasonably
incidental thereto.
(f) Subsidiaries' Several Liabilities. Notwithstanding anything in this
Agreement to the contrary, each of the Subsidiary Borrowers shall be
severally liable for the liabilities and obligations of such Subsidiary
Borrower under this Agreement and its Borrowings, and Notes, if any. No
Subsidiary Borrower shall be liable for the obligations of any other
Borrower under this Agreement or any Borrowings of any other Borrower or
any other Borrower's Notes, if any. Each Subsidiary Borrower shall be
severally liable for all payments of the principal of and interest on
Advances to such Subsidiary Borrower, and any other amounts due hereunder
that are specifically allocable to such Subsidiary Borrower or the
Advances to such Subsidiary Borrower. With respect to any amounts due
hereunder, including fees, that are not specifically allocable to a
particular Borrower, each Borrower shall be liable for such amount pro
rata in the same proportion as such Borrower's outstanding Advances bear
to the total of then-outstanding Advances to all Borrowers.
ARTICLE 3
Representations and Warranties
3.1 Representations and Warranties by the Borrowers. Each of the Borrowers
represents and warrants as follows:
(a) Corporate Standing. TBC is a duly organized corporation existing in good
standing under the laws of the State of Delaware. Each Subsidiary
Borrower is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, and each of TBC and each
Subsidiary Borrower is qualified to do business in every jurisdiction
where such qualification is required, except where the failure to so
qualify would not have a material adverse effect on the financial
condition of TBC and the Subsidiary Borrowers as a whole.
(b) Corporate Powers; Governmental Approvals. The execution and delivery and
the performance of the terms of this Agreement are, and the execution and
delivery and the performance of the terms of any Notes and of each
Guaranty will be, within the corporate powers of each Borrower party
thereto, have been or will have been (as appropriate) duly authorized by
all necessary corporate action, have, or will have, received (as
appropriate) all necessary governmental approval, if any (which approval,
if any, remains in full force and effect), and do not contravene any law,
any provision of the Certificate of Incorporation or By-Laws of any
Borrower party thereto or any contractual restriction binding on any
Borrower party thereto.
(c) Enforceability. This Agreement and the Notes, if any, when duly executed
and delivered by each Borrower party thereto, will constitute legal, valid
and binding obligations of such Borrower, enforceable against such
Borrower in accordance with their respective terms, and each Guaranty,
when duly executed and delivered by TBC, will constitute a legal, valid
and binding obligation of TBC, enforceable against TBC in accordance with
its terms, subject to general equitable principles and except as the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general
application relating to creditors' rights.
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(d) No Material Pending or Threatened Actions. In TBC's opinion, there are no
pending or threatened actions or proceedings before any court or
administrative agency that are reasonably likely to have a material
adverse affect on the financial condition or operations of the Company
which is likely to impair the ability of the Company to repay the Advances
or which would affect the legality, validity or enforceability of this
Agreement or the Advances.
(e) Consolidated Statements. The Consolidated statement of financial position
as of December 31, 1999 and the related Consolidated statement of earnings
and retained earnings for the year then ended (copies of which have been
furnished to each Lender) correctly set forth the Consolidated financial
condition of TBC and its Subsidiaries as of such date and the result of
the Consolidated operations for such year. The Consolidated statement of
financial position as of June 30, 2000 and the related Consolidated
statement of earnings and retained earnings for the six month period then
ended (copies of which have been furnished to each Lender) correctly set
forth, subject to year-end audit adjustments, the Consolidated financial
condition of TBC and its Subsidiaries as of such date and the result of
the Consolidated operations for such six month period.
(f) Regulation U. No Borrower is engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock within the meaning
of Regulation U issued by the Board of Governors of the Federal Reserve
System, and no proceeds of any Advance will be used to purchase or carry
any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock. Following application of the
proceeds of each Advance, not more than 25 percent of the value of the
assets (either of any Borrower only or of each Borrower and its
subsidiaries on a Consolidated basis) subject to the provisions of Section
4.2(a) or subject to any restriction contained in any agreement or
instrument between any Borrower and any Lender or any Affiliate of a
Lender relating to Debt within the scope of Section 6.1(d) will be margin
stock (within the meaning of Regulation U issued by the Board of Governors
of the Federal Reserve System).
(g) Investment Company Act. No Borrower is an "investment company," or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company
Act of 1940, as amended. Neither the making of any Advances, nor the
application of the proceeds or repayment thereof by any Borrower, nor the
consummation of the other transactions contemplated hereby, will violate
any provision of such Act or any rule, regulation or order of the
Securities and Exchange Commission thereunder.
(h) No Material Adverse Change. There has been no material adverse change in
the Company's financial condition or results of operations since December
31, 1999 that is likely to impair the ability of the Company to repay the
Advances.
ARTICLE 4
Covenants of TBC
4.1 Affirmative Covenants of TBC. From the date of this Agreement and so long
as any amount is payable by a Borrower to any Lender hereunder or any
Commitment is outstanding, TBC will:
(a) Periodic Reports. Furnish to the Lenders:
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(1) within 60 days after the close of each of the first three quarters
of each of TBC's fiscal years, a Consolidated statement of financial
position of TBC and the Subsidiaries as of the end of such quarter
and a Consolidated comparative statement of earnings and retained
earnings of TBC and the Subsidiaries for the period commencing at
the end of the previous fiscal year and ending with the end of such
quarter, each certified by an authorized officer of TBC,
(2) within 120 days after the close of each of TBC's fiscal years, and
if requested by the Agent, within 60 days after the close of each of
the first three quarters thereof, a statement certified by an
authorized officer of TBC showing in detail the computations
required by the provisions of Sections 4.2(a), 4.2(b), 4.2(c) and
4.2(d), based on the figures which appear on the books of account of
TBC and the Subsidiaries at the close of such quarters,
(3) within 120 days after the close of each of TBC's fiscal years, a
copy of the annual audit report of TBC, certified by independent
public accountants of recognized standing acceptable to the Agent,
together with financial statements consisting of a Consolidated
statement of financial position of TBC and the Subsidiaries as of
the end of such fiscal year and a Consolidated statement of earnings
and retained earnings of TBC and the Subsidiaries for such fiscal
year,
(4) within 120 days after the close of each of TBC's fiscal years, a
statement certified by the independent public accountants who shall
have prepared the corresponding audit report furnished to the
Lenders pursuant to the provisions of clause (3) of this subsection
(a), to the effect that, in the course of preparing such audit
report, such accountants had obtained no knowledge, except as
specifically stated, that TBC had been in violation of the
provisions of any one of Sections 4.2(a), 4.2(b), 4.2(c) and 4.2(d),
at any time during such fiscal year,
(5) promptly upon their becoming available, all financial statements,
reports and proxy statements which TBC sends to its stockholders,
(6) promptly upon their becoming available, all regular and periodic
financial reports which TBC or any Subsidiary files with the
Securities and Exchange Commission or any national securities
exchange,
(7) within 3 Business Days after the discovery of the occurrence of any
event which constitutes a Default, notice of such occurrence
together with a detailed statement by a responsible officer of TBC
of the steps being taken by TBC or the appropriate Subsidiary to
cure the effect of such event, and
(8) such other information respecting the financial condition and
operations of TBC or the Subsidiaries as the Agent may from time to
time reasonably request.
In lieu of furnishing the Lenders the items referred to in clauses (1),
(3), (5) and (6) above, TBC may notify the Lenders that such items are
available on TBC's website at www.boeing.com or at such other website as
notified to the Agent and the Lenders.
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(b) Payment of Taxes, Etc. Duly pay and discharge, and cause each Subsidiary
duly to pay and discharge, all material taxes, assessments and
governmental charges upon it or against its properties prior to a date
which is 5 Business Days after the date on which penalties are attached
thereto, except and to the extent only that the same shall be contested in
good faith and by appropriate proceedings by TBC or the appropriate
Subsidiary.
(c) Insurance. Maintain, and cause each Subsidiary to maintain, with
financially sound and reputable insurance companies or associations,
insurance of the kinds, covering the risks and in the relative
proportionate amounts usually carried by companies engaged in businesses
similar to that of TBC or such Subsidiary, except, to the extent
consistent with good business practices, such insurance may be provided by
TBC through its program of self insurance.
(d) Corporate Existence. Preserve and maintain its corporate existence.
4.2 General Negative Covenants of TBC. From the date of this Agreement and so
long as any amount shall be payable by TBC or any other Borrower to any
Lender hereunder or any Commitment shall be outstanding, TBC will not:
(a) Mortgages, Liens, Etc. Create, incur, assume or suffer to exist any
mortgage, pledge, lien, security interest or other charge or encumbrance
(including the lien or retained security title of a conditional vendor)
upon or with respect to any of its Property, Plant and Equipment, or upon
or with respect to the Property, Plant and Equipment of any Subsidiary, or
assign or otherwise convey, or permit any Subsidiary to assign or
otherwise convey, any right to receive income from or with respect to its
Property, Plant and Equipment, except
(1) liens in connection with workmen's compensation, unemployment
insurance or other social security obligations;
(2) liens securing the performance of bids, tenders, contracts (other
than for the repayment of borrowed money), leases, statutory
obligations, surety and appeal bonds, liens to secure progress or
partial payments made to TBC or such Subsidiary and other liens of
like nature made in the ordinary course of business;
(3) mechanics', workmen's, materialmen's or other like liens arising in
the ordinary course of business in respect of obligations which are
not due or which are being contested in good faith;
(4) liens for taxes not yet due or being contested in good faith and by
appropriate proceedings by TBC or the affected Subsidiary;
(5) liens which arise in connection with the leasing of equipment in the
ordinary course of business;
(6) liens on Property, Plant and Equipment owned by TBC or any
Subsidiary of TBC existing on the date of this Agreement;
(7) liens on assets of a Person existing at the time such Person is
merged into or consolidated with TBC or a Subsidiary of TBC or at
the time of purchase, lease, or acquisition of the property of
Voting Stock of such Person as an entirety or substantially as an
entirety by TBC or a Subsidiary of TBC, whether or not any Debt
secured by such liens is assumed by TBC or such Subsidiary, provided
that such liens are not created in anticipation of such purchase,
lease, acquisition or merger;
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(8) liens securing Debt of a Subsidiary of TBC owing to TBC or to
another Subsidiary;
(9) liens on assets existing at the time of acquisition of such property
by TBC or a Subsidiary of TBC or purchase money liens to secure the
payment of all or part of the purchase price of property upon
acquisition of such assets by TBC or such Subsidiary or to secure
any Debt incurred or guaranteed by TBC or a Subsidiary prior to, at
the time of, or within one year after the later of the acquisition,
completion or construction (including any improvements on existing
property), or commencement of full operation, of such property,
which Debt is incurred or guaranteed solely for the purpose of
financing all or any part of the purchase price thereof or
construction or improvements thereon; provided, however, that in the
case of any such acquisition, construction or improvement, the lien
shall not apply to any property theretofore owned by TBC or such
Subsidiary other than, in the case of such construction or
improvement, any theretofore unimproved real property on which the
property so constructed or the improvement made is located;
(10) any extension, renewal or replacement (or successive extensions,
renewals or replacements in whole or in part of any lien referred to
in the foregoing; provided, however, that the principal amount of
Debt secured thereby shall not exceed the principal amount of Debt
so secured at the time of such extension, renewal or replacement and
that such extension, renewal or replacement shall be limited to all
or any part of the property that secured the lien so extended,
renewed or replace (plus improvements and construction on such
property); and
(11) other liens, charges and encumbrances, so long as the aggregate
amount of the Consolidated Debt for which all such liens, charges
and encumbrances serve as security does not exceed 15% of
Consolidated net Property, Plant and Equipment.
(b) Consolidated Debt. Permit Consolidated Debt (subject to Section 4.3) to
be at any time more than 60% of Total Capital, where "Total Capital" means
the sum of Shareholders' Equity and Consolidated Debt.
(c) Payment in Violation of an Agreement. Make any payment, or permit any
Subsidiary to make any payment, of principal or interest, on any Debt
which payment would constitute a violation of the terms of this Agreement
or of the terms of any indenture or agreement binding on such corporation
or to which such corporation is a party except, in the case of any payment
made by a Subsidiary, to the extent such payment is not likely to impair
the ability of TBC to repay the Advances.
(d) Merger or Consolidation. Merge or consolidate with or into, or convey,
transfer, lease, or otherwise dispose of (whether in one transaction or in
a series of transactions) all or substantially all of its assets (whether
now owned or hereafter acquired) to any Person except that a Borrower may
merge or consolidate with any Person so long as such Borrower is the
surviving corporation and no Default has occurred and is continuing or
would result therefrom, and except that any direct or indirect Subsidiary
of TBC may merge or consolidate with or into, or dispose of assets to, TBC
or any other direct or indirect Subsidiary of TBC, provided, in each case,
that no Event of Default has occurred and is continuing at the time of
such proposed transaction or would result therefrom.
(e) Material Change in Business. Make any material change in the nature of
its business as carried out on the date hereof.
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4.3 Financial Statement Terms. For purposes of Section 4.2(b), all
capitalized terms not defined in this Agreement shall have the respective
meanings used in TBC's published Consolidated financial statements and
calculated under the generally accepted accounting principles and
practices applied by TBC on the date hereof in the preparation of such
financial statements. However, notwithstanding the foregoing, (a) such
terms shall exclude amounts attributable to Boeing Capital Services
Corporation and its Subsidiaries and Boeing Financial Corporation, a
Delaware corporation; and (b) Total Capital shall exclude the effects of
any repurchase by TBC of its common stock and any merger-related
accounting adjustments which are attributable to the merger with or
acquisition of McDonnell Douglas Corporation by TBC.
4.4 Waivers of Covenants. The departure by TBC or any Subsidiary from the
requirements of any of the provisions of this Article 4 shall be permitted
only if such departure has been consented to in advance in a writing
signed by the Majority Lenders, and such writing shall be effective as a
consent only to the specific departure described in such writing. Such
departure by TBC or any Subsidiary when properly consented to by the
Majority Lenders shall not constitute an Event of Default under Section
6.1(c).
ARTICLE 5
Conditions Precedent to Borrowings
5.1 Conditions Precedent to the Initial Borrowing of TBC. The obligation of
each Lender to make its initial Advance to TBC is subject to receipt by
the Agent on or before the day of the initial Borrowing of all of the
following, each dated as of the day hereof, in form and substance
satisfactory to the Agent and its counsel:
(a) Documentation. Copies of all documents, certified by an officer of
TBC, evidencing necessary corporate action by TBC and governmental
approvals, if any, with respect to this Agreement, to the Notes, if
any, and to Guaranties to be delivered by TBC pursuant to Section
5.4(e);
(b) Officer's Certificate. A certificate of the Secretary or an
Assistant Secretary of TBC which certifies the names of the officers
of TBC authorized to sign the Notes, if any, and the other documents
to be delivered hereunder, together with true specimen signatures of
such officers and facsimile signatures of officers authorized to
sign by facsimile signature (on which certificate each Lender may
conclusively rely until it receives a further certificate of the
Secretary or an Assistant Secretary of TBC canceling or amending the
prior certificate and submitting specimen signatures of the officers
named in such further certificate);
(c) Opinion of Company Counsel. A favorable opinion of counsel for TBC
substantially in the form of Exhibit G and as to such other matters
as the Agent may reasonably request, which opinion TBC hereby
expressly instructs such counsel to prepare and deliver;
(d) Opinion of Agent's Counsel. A favorable opinion of Shearman &
Sterling, counsel for the Agent, substantially in the form of
Exhibit H;
(e) Termination of 1999 Agreement. TBC shall have terminated in whole
the commitments of the banks parties to the 1999 Credit Agreement;
and
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(f) Satisfaction of 1999 Agreement Obligations. TBC and its
Subsidiaries shall have satisfied all of their respective
obligations under the 1999 Credit Agreement including, without
limitation, the payment of all fees under such agreement.
5.2 Conditions Precedent to Each Committed Borrowing of TBC. The obligation
of each Lender to make a Committed Advance on the occasion of each
Committed Borrowing (including the initial Borrowing) is subject to the
further conditions precedent that on the date of the request for a
Committed Borrowing and on the date of such Borrowing, the following
statements shall be true, and both the giving of the applicable Notice of
Committed Borrowing and the acceptance by TBC of the proceeds of such
Committed Borrowing shall be a representation by TBC that:
(a) the representations and warranties contained in subsections (a)
through (g) of Section 3.1 are true and accurate on and as of each
such date as though made on and as of each such date (except to the
extent that such representations and warranties relate solely to an
earlier date); and
(b) as of each such date no event has occurred and is continuing, or
would result from the proposed Committed Borrowing, which
constitutes a Default.
5.3 Conditions Precedent to Each Bid Borrowing of TBC. The obligation of any
Lender to make a Bid Advance on the occasion of a Bid Borrowing (including
the initial Borrowing) is subject to the further conditions precedent
that:
(a) Notice of Bid Borrowing. The Agent shall have received the written
confirmatory Notice of Bid Borrowing with respect thereto;
(b) Bid Notes. On or before the date of such Bid Borrowing, but prior
to such Bid Borrowing, the Agent shall have received a Bid Note
payable to the order of such Lender for each of the one or more Bid
Advances to be made by such Lender as part of such Bid Borrowing, in
a principal amount equal to the principal amount of the Bid Advance
to be evidenced thereby and otherwise on such terms as were agreed
to for such Bid Advance in accordance with Section 2.5;
(c) Periodic Reports. Each Lender intending to make a Bid Advance shall
have received the statements provided by TBC pursuant to Section
4.1(a)(1), (2) and (3) or shall have received notice that such
statements are available on TBC's website www.boeing.com or any
successor website notified to the Agent and the Lenders; and
(d) Representations. On the date of such request and the date of such
Borrowing, the following statements shall be true, and each of the
giving of the applicable Notice of Borrowing and the acceptance by
TBC of the proceeds of such Bid Borrowing shall be a representation
by TBC that:
(i) the representations and warranties contained in subsections
(a) through (g) of Section 3.1 are true and accurate on and as
of each such date as though made on and as of each such date
(except to the extent that such representations and warranties
relate solely to an earlier date);
(ii) as of each such date no event has occurred and is continuing,
or would result from the proposed Bid Borrowing, which
constitutes a Default; and
(iii) no event has occurred and no circumstance exists as a result
of which any information concerning TBC that has been provided
by TBC to the Agent or the Lenders in connection with such Bid
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Borrowing would include an untrue statement of a material fact
or omit to state any material fact or any fact necessary to
make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
5.4 Conditions Precedent to the Initial Borrowing of a Subsidiary Borrower.
The obligation of each Lender to make its initial Advance to any
particular Subsidiary Borrower is subject to the receipt by the Agent, on
or before the day of the initial Borrowing by such Subsidiary Borrower, of
all of the following, each dated on or prior to the day of the initial
Borrowing, in form and substance satisfactory to the Agent and its
counsel:
(a) Borrower Subsidiary Letter. A Borrower Subsidiary Letter,
substantially in the form of Exhibit D, executed by such Subsidiary
Borrower and TBC;
(b) Documentation. Copies of all documents, certified by an officer of
the Subsidiary Borrower, evidencing necessary corporate action by
the Subsidiary Borrower and governmental approvals, if any, with
respect to this Agreement and any Notes;
(c) Officer's Certificate. A certificate of the Secretary or an
Assistant Secretary of TBC or the Subsidiary Borrower which
certifies the names of the officers of the Subsidiary Borrower
authorized to sign the Notes and the other documents to be delivered
hereunder, together with true specimen signatures of such officers
and facsimile signatures of officers authorized to sign by facsimile
signature (on which certificate each Lender may conclusively rely
until it receives a further certificate of the Secretary or an
Assistant Secretary of TBC or the Subsidiary Borrower canceling or
amending the prior certificate and submitting signatures of the
officers named in such further certificate);
(d) Opinion of Subsidiary Counsel. A favorable opinion of in-house
counsel to the Subsidiary Borrower, substantially in the form of
Exhibit I and as to such other matters as the Agent may reasonably request; and
(e) TBC Guaranty. A Guaranty of TBC that unconditionally guarantees the
payment of all obligations of such Subsidiary Borrower hereunder and
under the Notes of such Subsidiary Borrower, substantially in the
form of Exhibit J, executed and delivered by TBC to the Agent; and
(f) Opinion of Subsidiary Counsel. A favorable opinion of in-house
counsel to TBC, substantially in the form of Exhibit K and as to
such other matters as the Agent may reasonably request.
5.5 Conditions Precedent to Each Committed Borrowing of a Subsidiary Borrower.
The obligation of each Lender to make a Committed Advance to a Subsidiary
Borrower on the occasion of each Committed Borrowing (including the
initial Borrowing) is subject to the further conditions precedent that on
the date of the request for such Committed Borrowing and the date of such
Borrowing, the following statements shall be true, and each of the giving
of the applicable Notice of Committed Borrowing and the acceptance by such
Subsidiary Borrower of the proceeds of such Committed Borrowing shall be
(a) a representation by such Subsidiary Borrower that:
(i) the representations and warranties of that Subsidiary Borrower
contained (A) in subsections (a) through (g) of Section 3.1 are true
and accurate on and as of each such date as though made on and as of
each such date (except to the extent that such representations and
warranties relate solely to an earlier date), and (B) in its
Borrower Subsidiary Letter are true and correct on and as of the
date of such Borrowing, before and after giving effect to such
Borrowing; and
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(ii) as of each such date no event has occurred and is continuing, or
would result from the proposed Committed Borrowing, which
constitutes a Default;
and (b) a representation by TBC that the representations and warranties of
TBC contained in subsections (a) through (g) of Section 3.1 are true and
accurate on and as of each such date as though made on and as of each such
date (except to the extent that such representations and warranties relate
solely to an earlier date), and that, as of each such date, no event has
occurred and is continuing, or would result from the proposed Committed
Borrowing, which constitutes a Default.
5.6 Conditions Precedent to Each Bid Borrowing of a Subsidiary Borrower. The
obligation of any Lender to make a Bid Advance to any particular
Subsidiary Borrower on the occasion of each Bid Borrowing (including the
initial Borrowing) is subject to the further conditions precedent that:
(a) Notice of Bid Borrowing. The Agent shall have received the written
confirmatory Notice of Bid Borrowing with respect thereto;
(b) Bid Notes. On or before the date of such Bid Borrowing, but prior
to such Bid Borrowing, the Agent shall have received a Bid Note
payable to the order of such Lender for each of the one or more Bid
Advances to be made by such Lender as part of such Bid Borrowing, in
a principal amount equal to the principal amount of the Bid Advance
to be evidenced thereby and otherwise on such terms as were agreed
to for such Bid Advance in accordance with Section 2.5;
(c) Periodic Reports. Each Lender intending to make a Bid Advance shall
have received the statements provided by TBC pursuant to Section
4.1(a)(1), (2) and (3) or shall have received notice that such
statements are available on TBC's website; and
(d) Subsidiary Representations. On the date of such request and the
date of such Borrowing, the following statements shall be true, and
each of the giving of the applicable Notice of Bid Borrowing and the
acceptance by the Subsidiary of the proceeds of such Bid Borrowing
shall be (a) a representation by such Subsidiary Borrower that:
(i) the representations and warranties contained (A) in
subsections (a) through (g) of Section 3.1 hereof with respect
to such Subsidiary Borrower are true and accurate on and as of
each such date as though made on and as of each such date
(except to the extent that such representations and warranties
relate solely to an earlier date), and (B) in its Borrower
Subsidiary Letter are true and correct on and as of the date
of such Borrowing, before and after giving effect to such
Borrowing;
(ii) as of each such date no event has occurred and is continuing,
or would result from the proposed Bid Borrowing which
constitutes a Default; and
(iii) no event has occurred and no circumstance exists as a result
of which any information concerning TBC or the Subsidiary
Borrower that has been provided by TBC or the Subsidiary
Borrower to the Agent or the Lenders in connection with such
Bid Borrowing would include an untrue statement of a material
fact or omit to state any material fact or any fact necessary
to make the statements contained therein, in light of the
circumstances under which they were made, not misleading; and
(e) TBC Representation. A representation by TBC that the
representations and warranties of TBC contained in subsections (a)
through (g) of Section 3.1 are true and accurate on and as of each
such date as though made on and as of each such date (except to the
extent that such representations and warranties relate solely to an
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earlier date), and that, as of each such date, no event has occurred
and is continuing, or would result from the proposed Committed
Borrowing which constitutes a Default.
ARTICLE 6
Events of Default
6.1 Events of Default. Each of the following shall constitute an Event of
Default:
(a) Failure by TBC to make when due any payment of principal of or interest on
any Advance or under a Guaranty when the same becomes due and payable and
such failure is not remedied within 5 Business Days thereafter;
(b) Any representation or warranty made by TBC in connection with the
execution and delivery of this Agreement, the Borrowings or any Guaranty,
or otherwise furnished pursuant hereto proves to have been incorrect when
made in any material respect;
(c) Failure by TBC to perform any other term, covenant or agreement contained
in this Agreement, and such failure is not remedied within 30 days after
written notice thereof has been given to TBC by the Agent, at the request,
or with the consent, of the Majority Lenders.
(d) Failure by TBC to pay when due (i) any obligation for the payment of
borrowed money on any regularly scheduled payment date or following
acceleration thereof or (ii) any other monetary obligation if the
aggregate unpaid principal amount of the obligations with respect to which
such failure to pay or acceleration occurred equals or exceeds $50,000,000
and such failure is not remedied within 5 Business Days after TBC receives
notice thereof from the Agent or the creditor on such obligation.
(e) TBC or any of its Subsidiaries
(1) incurs liability with respect to any employee pension benefit plan
in excess of $150,000,000 in the aggregate under
(A) Sections 4062, 4063, 4064 or 4201 of ERISA; or
(B) otherwise under Title IV of ERISA as a result of any
reportable event within the meaning of ERISA (other than a
reportable event as to which the provision of 30 days' notice
is waived under applicable regulations);
(2) has a lien imposed on its property and rights to property under
Section 4068 of ERISA on account of a liability in excess of
$50,000,000 in the aggregate; or
(3) incurs liability under Title IV of ERISA
(A) in excess of $50,000,000 in the aggregate as a result of the
Company or any Subsidiary or any Person that is a member of
the "controlled group" (as defined in Section 4001(a)(14) of
ERISA) of the Company or any Subsidiary having filed a notice
of intent to terminate any employee pension benefit plan under
the "distress termination" provision of Section 4041 of ERISA
or
(B) in excess of $50,000,000 in the aggregate as a result of the
Pension Benefit Guaranty Corporation having instituted
proceedings to terminate, or to have a trustee appointed to
administer, any such plan.
(f) The happening of any of the following events, provided such event has not
then been cured or stayed:
(1) the insolvency or bankruptcy of TBC,
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<PAGE> 79
(2) the cessation by TBC of the payment of its Debts as they mature,
(3) the making of an assignment for the benefit of the creditors of TBC,
(4) the appointment of a trustee or receiver or liquidator for TBC or
for a substantial part of its property, or
(5) the institution of bankruptcy, reorganization, arrangement,
insolvency or similar proceedings by or against TBC under the laws
of any jurisdiction in which TBC is organized or has material
business, operations or assets.
(g) So long as any Subsidiary is a Borrower hereunder, the Guaranty with
respect to such Subsidiary Borrower for any reason ceases to be valid and
binding on TBC or TBC so states in writing.
6.2 Lenders' Rights upon Borrower Default. If an Event of Default occurs or
is continuing, then the Agent shall at the request, or may with the
consent, of the Majority Lenders, by notice to TBC,
(a) declare the obligation of each Lender to make further Advances to be
terminated, whereupon the same shall forthwith terminate, and
(b) declare the Advances, all interest thereon, and all other amounts
payable under this Agreement to be forthwith due and payable,
whereupon the Advances, all such interest, and all such other
amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of
which are hereby expressly waived by the Borrowers, provided,
however, that in the event of an actual or deemed entry of an order
for relief with respect to any Borrower under the Federal Bankruptcy
Code (whether in connection with a voluntary or an involuntary
case), (i) the obligation of each Lender to make Advances shall
automatically be terminated and (ii) the payment obligations of the
Borrowers with respect to Advances, all such interest, and all such
amounts shall automatically become and be due and payable, without
presentment, demand, protest, or any notice of any kind, all of
which are hereby expressly waived by the Borrowers.
ARTICLE 7
The Agent
7.1 Authorization and Action. Each Lender hereby appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto.
As to any matters not expressly provided for by this Agreement (including
without limitation, enforcement or collection of any Notes), the Agent
shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of
the Majority Lenders and such instructions shall be binding upon all
Lenders and all holders of interests in Advances; provided, however, that
the Agent shall not be required to take any action which exposes the Agent
to personal liability or which is contrary to this Agreement or applicable
law. The Agent agrees to give to each Lender prompt notice of each notice
given to it by the Borrowers pursuant to the terms of this Agreement.
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<PAGE> 80
7.2 Agent's Reliance, Etc. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this
Agreement, except for its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the Agent:
(a) may treat the Lender that made any Advance as the payee thereof
until the Agent receives and accepts an assignment entered into by
such Lender, as assignor, and an Eligible Assignee, as assignee, as
provided in Section 2.20;
(b) may consult with legal counsel (including counsel for the
Borrowers), independent public accountants and other experts
selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or other experts;
(c) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection
with this Agreement;
(d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of any Borrower or to
inspect the property (including the books and records) of any
Borrower;
(e) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document
furnished pursuant hereto; and
(f) shall incur no liability under or in respect of this Agreement by
acting upon any notice, consent, certificate or other instrument or
writing (which may be by telecopier, cable or telex) believed by it
to be genuine and signed or sent by the proper party or parties.
7.3 Citibank, N.A. and its Affiliates. With respect to its Commitment, the
Advances made by it, and any Notes issued to it, Citibank, N.A. shall have
the same rights and powers under this Agreement as any other Lender and
may exercise the same as though it were not the Agent hereunder; and the
term "Lender" or "Lenders" shall, unless otherwise expressly indicated,
include Citibank, N.A., in its individual capacity. Citibank, N.A. and
its Affiliates may accept deposits from, lend money to, accept drafts
drawn by, act as trustee under indentures of, and generally engage in any
kind of business with, the Company, any of its Subsidiaries and any person
or entity who may do business with or own securities of the Company or any
Subsidiary, all as if Citibank, N.A. were not the Agent hereunder and
without any duty to account therefor to the other Lenders.
7.4 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and
based on the financial statements referred to in Section 3.1(e) and the
representations and warranties contained in Sections 3.1 and 3.2 and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance upon
the Agent or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement.
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<PAGE> 81
7.5 Indemnification. The Lenders agree to indemnify the Agent (to the extent
not reimbursed by TBC or any other Borrower), ratably according to the
respective principal amounts of the Committed Advances then made by each
of them (or if no Committed Advances are at the time outstanding or if
interests in any Committed Advances are held by persons which are not
Lenders, ratably according to the respective amounts of their
Commitments), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against the Agent in any way relating to or
arising out of this Agreement or any action taken or omitted by the Agent
under this Agreement (collectively, the "Indemnified Costs"), provided
that no Lender shall be liable for any portion of the Indemnified Costs
resulting from the Agent's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender agrees to reimburse the
Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including counsel fees) incurred by the Agent in connection with
the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings
or otherwise) of, or legal advice in respect of rights or responsibilities
under, this Agreement to the extent that the Agent is not reimbursed for
such expenses by TBC or any other Borrower. In the case of any
investigation, litigation or proceeding giving rise to any Indemnified
Costs, this Section 7.5 applies whether any such investigation, litigation
or proceeding is brought by the Agent, any Lender or a third party.
7.6 Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Lenders and TBC and may be removed at any time with
or without cause by the Majority Lenders. Upon any such resignation or
removal, the Majority Lenders shall have the right, with the consent of
TBC (if no Event of Default has occurred and is continuing), which shall
not be unreasonably withheld, to appoint a successor Agent, which shall be
a commercial bank organized or licensed under the laws of the United
States of America or of any state thereof and having a combined capital
and surplus of at least $50,000,000. If no successor Agent has been so
appointed by the Majority Lenders, and has accepted such appointment,
within 30 days after the retiring Agent's giving of notice of resignation
or the removal of the retiring Agent as provided herein, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent which meets
the requirements set out in the previous sentence. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article 7 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under
this Agreement.
7.7 Certain Obligations May Be Performed by Affiliates. The Agent may appoint
any of its Affiliates to perform its obligations hereunder other than any
obligation requiring the Agent to receive, pay, or otherwise handle funds
or Notes, and provided that the Agent shall continue to be responsible to
the Borrowers and the Lenders for the due performance of the Agent's
obligations under this Agreement.
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<PAGE> 82
ARTICLE 8
Miscellaneous
8.1 Modification, Consents and Waivers.
(a) Waiver. No failure or delay on the part of any Lender in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power preclude any other
or further exercise thereof or the exercise of any other right or power
hereunder. No notice to or demand on the Borrowers in any case shall
entitle the Borrowers to any other or further notice or demand in similar
or other circumstances.
(b) Amendment. No amendment or waiver of any provision of this Agreement or
of any Committed Notes, nor consent to any departure by the Borrowers
therefrom, shall in any event be effective unless such amendment, waiver
or consent is in writing and signed by the Majority Lenders, and then such
amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however,
that no amendment, waiver or consent shall, unless in writing and signed
by all the Lenders, do any of the following:
(i) waive any of the conditions specified in Section 5.1, 5.2, or 5.3,
(ii) except as provided in Section 2.19 or Section 2.21, increase the
Commitments of the Lenders or subject the Lenders to any additional
obligations,
(iii) reduce the principal of, or interest on, the Committed Advances or
any fees or other amounts payable hereunder,
(iv) except as provided in Section 2.21, postpone any date fixed for any
payment of principal of, or interest on, the Committed Advances or
any fees or other amounts payable hereunder,
(v) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Committed Advances or the number of Lenders
required for the Lenders or any of them to take any action
hereunder,
(vi) amend this Section 8.1, or
(vii) release TBC from any of its obligations under any Guaranty or limit
the liability of TBC as guarantor thereunder;
and provided further that no amendment, waiver, or consent shall, unless
in writing and signed by the Agent in addition to the Lenders required
above to take such action, affect the rights or duties of the Agent
under this Agreement or any Note.
(c) Majority Lenders. Notwithstanding the foregoing, this Section 8.1 shall
not affect the provisions of Section 4.4, "Waivers of Covenants", or
Article 6, "Events of Default".
8.2 Notices.
(a) Addresses. All communications and notices provided for hereunder shall be
in writing and mailed, telecopied, telexed or delivered and,
if to the Agent,
Citibank, N.A.
Two Penns Way, Suite _____
New Castle, Delaware 19720
Attention: Lender Loans Syndications Department
facsimile number (___) ________;
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<PAGE> 83
if to any Borrower,
care of The Boeing Company
7755 East Marginal Way South
Seattle, Washington 98108
Attention: Treasurer
facsimile number (206) 655-0799
if to any Lender, to its office at the address given on the signature
pages of this Agreement; or,
as to each party, at such other address as designated by such party in a
written notice to each other party referring specifically to this
Agreement.
(b) Effectiveness of Notices. All communications and notices shall, when
mailed, telecopied, or telexed, be effective when deposited in the mail,
telecopied, or confirmed by telex answerback, respectively. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Agreement or any Notes or of any Exhibit to be executed
and delivered hereunder shall be effective as delivery of a manually
executed counterpart thereof.
(c) Electronic Mail. Electronic mail may be used to distribute routine
communications, such as financial statements and other information, and
documents to be signed by the parties hereto; provided, however, that no
Notice of Borrowing, signature, or other notice or document intended to be
legally binding shall be effective if sent by electronic mail.
8.3 Costs, Expenses and Taxes.
(a) TBC shall pay upon written request all reasonable costs and expenses in
connection with the preparation, execution, delivery, modification and
amendment requested by any of the Borrowers of this Agreement, any Notes
and the Guaranties (including, without limitation, printing costs and the
reasonable fees and out-of-pocket expenses of counsel for the Agent) and
costs and expenses, if any, in connection with the enforcement of this
Agreement, any Notes and the Guaranties (whether through negotiations,
legal proceedings or otherwise and including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel), as well as any and
all stamp and other taxes, and to save the Lenders and other holders of
interests in the Advances or any Notes harmless from any and all
liabilities with respect to or resulting from any delay by or omission of
the Borrowers to pay such taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of
this Agreement, any Notes and the Guaranties.
(b) TBC agrees to indemnify the Agent and each Lender and each of their
Affiliates and their officers, directors, employees, agents and advisors
(each, an "Indemnified Party") from and against any and all claims,
damages, losses, liabilities and expenses (including, without limitation,
reasonable fees and expenses of counsel) incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in
connection with any investigation, litigation or proceeding or preparation
of a defense in connection therewith) the Advances, this Agreement, the
Notes, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Advances, except to the extent such
claim, damage, loss, liability or expense resulted from such Indemnified
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<PAGE> 84
Party's gross negligence or willful misconduct and except that no
Indemnified Party shall have the right to be indemnified hereunder to the
extent such indemnification relates to relationships of, between or among
each of, or any of, the Agent, the Lenders, any assignee of a Lender or
any participant. In the case of any investigation, litigation or other
proceeding to which this Section 8.3 applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is
brought by TBC, its directors, shareholders or creditors or an Indemnified
Party or any other Person or an Indemnified Party is otherwise a party
thereto and whether or not the transactions contemplated hereby are
consummated. The Borrowers also agree not to assert any claim on any
theory of liability for special, indirect, consequential or punitive
damages against the Agent, and Lender, any of their Affiliates, or any of
their respective directors, officers, employees, attorneys and agents,
arising out of or otherwise relating to the Notes, this Agreement, any of
the transactions contemplated herein or the actual or proposed use of the
proceeds of Advances.
8.4 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Borrowers, the Lenders and the Agent, and their respective
successors and assigns, except that the Borrowers may not assign or
transfer their rights hereunder without the prior written consent of the
Lenders.
8.5 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.6 Governing Law. This Agreement, any Notes, the Guaranties and each
Borrower Subsidiary Letter shall be deemed to be contracts under the laws
of the State of New York and for all purposes shall be construed in
accordance with the laws of such State.
8.7 Headings. The Table of Contents and Article and Section headings used in
this Agreement are for convenience only and shall not affect the
construction of this Agreement.
8.8 Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different 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.
Delivery of an executed counterpart of a signature page to this Agreement
by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
8.9 Right of Set-Off. Each Lender and each of its Affiliates that is or was
at one time a Lender hereunder is authorized at any time and from time to
time, upon
(i) the occurrence and during the continuance of any Event of Default
and
(ii) the making of the request or the granting of the consent specified
by Section 6.1 to authorize the Agent to declare any Advances due
and payable pursuant to the provisions of Section 6.1,
to the fullest extent permitted by law, without notice to any Borrower
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<PAGE> 85
(any such notice being expressly waived by each Borrower), to set off
and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time
owing by such Lender or such Affiliate to or for the credit or the account
of any Borrower against any and all of the obligations to such Lender or
such Affiliate of such Borrower now or hereafter existing under this
Agreement and any Notes held by such Lender, whether or not such Lender
has made a demand under this Agreement or such Notes and although such
obligations may be unmatured. Each Lender shall promptly notify any
Borrower after any such setoff and application made by such Lender,
provided that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each Lender under
this Section are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which such Lender and its
Affiliates may have.
8.10 Confidentiality. Neither the Agent nor any Lender shall disclose
any Confidential Information to any other Person without the consent of a
Borrower, other than
(a) to the Agent's or such Lender's Affiliates and their officers,
directors, employees, agents and advisors and, as contemplated by
Section 2.20(f), to actual or prospective assignees and
participants, and then only on a confidential basis,
(b) as required by any law, rule or regulation or judicial process, and
(c) as requested or required by any state, federal or foreign authority
or examiner regulating banks or banking.
8.11 Agreement in Effect. This Agreement shall become effective upon its
execution and delivery, respectively, to the Agent and TBC by TBC and the
Agent, and when the Agent shall have been notified by each Lender listed
on Schedule I that such Lender has executed it.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers thereunto duly authorized as of the day and year first above
written.
THE BOEING COMPANY
By___________________________________
Title: Assistant Treasurer
CITIBANK, N.A., Individually and
as Agent
By____________________________________
Name:
Title:
THE CHASE MANHATTAN BANK
By____________________________________
Name:
Title:
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<PAGE> 86
Senior Managing Agents
BANK OF AMERICA, N.A.
By___________________________________
Name:
Title:
DEUTSCHE BANK AG NEW YORK AND/OR CAYMAN
ISLAND BRANCHES
By___________________________________
Name:
Title:
By___________________________________
Name:
Title:
THE BANK OF TOKYO-MITSUBISHI, LIMITED
By___________________________________
Name:
Title:
MITSUBISHI TRUST & BANKING
By___________________________________
Name:
Title:
Managing Agents
THE BANK OF NEW YORK
By___________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON
By___________________________________
Name:
Title:
FLEET NATIONAL BANK
By___________________________________
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By___________________________________
Name:
Title:
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<PAGE> 87
SUMITOMO BANK
By___________________________________
Name:
Title:
WACHOVIA BANK
By___________________________________
Name:
Title:
Co-Agents
BANK ONE N.A.
By___________________________________
Name:
Title:
CREDIT LYONNAIS
By___________________________________
Name:
Title:
PNC BANK, N.A.
By___________________________________
Name:
Title:
Lender
ABN AMRO BANK, N.V.
By___________________________________
Name:
Title:
AUSTRALIA & NEW ZEALAND BANK
By___________________________________
Name:
Title:
BANCO BILBAO VIZCAYA ARGENTARIA
By___________________________________
Name:
Title:
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<PAGE> 88
BAYERISCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By___________________________________
Name:
Title:
DEUTSCHE VERKEHRSBANK AG
By___________________________________
Name:
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By___________________________________
Name:
Title:
ROYAL BANK OF CANADA
By___________________________________
Name:
Title:
ROYAL BANK OF SCOTLAND
By___________________________________
Name:
Title:
STANDARD CHARTERED BANK
By___________________________________
Name:
Title:
U.S. BANKCORP
By___________________________________
Name:
Title:
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By___________________________________
Name:
Title:
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<PAGE> 89
SCHEDULE I
APPLICABLE LENDING OFFICES
------------------------------------------------------------------------------
| Name of Initial | Commitment | Domestic Lending | Eurodollar Lending |
| Lender | | Office | Office |
------------------------------------------------------------------------------
| ABN Amro Bank, N.V. |$23,800,000 | 208 South LaSalle | 208 South LaSalle |
| | | Suite 1500 | Suite 1500 |
| | | Chicago, IL 60604 | Chicago, IL 60604 |
| | | Attn: Loan | Attn: Loan |
| | | Administration | Administration |
| | | T: 312 992-5153 | T: 312 992-5153 |
| | | F: 312 992-5158 | F: 312 992-5158 |
------------------------------------------------------------------------------
| Australia & New |$23,800,000 | 1177 Avenue of the | 1177 Avenue of the |
| Zealand Bank | | Americas | Americas |
| | | 6th Floor | 6th Floor |
| | | New York, NY 10036| New York, NY 10036|
| | | Attn: Peter Gray | Attn: Peter Gray |
| | | T: 212 801-9739 | T: 212 801-9739 |
| | | F: 212 556-4839 | F: 212 556-4839 |
------------------------------------------------------------------------------
| Banco Bilbao Vizcaya|$23,800,000 | 1345 Avenue of the | 1345 Avenue of the |
| | | Americas | Americas |
| | | 45th Floor | 45th Floor |
| | | New York, NY 10105| New York, NY 10105|
| | | Attn: Santiago | Attn: Santiago |
| | | Hernandez | Hernandez |
| | | T: 212 728-1677 | T: 212 728-1677 |
| | | F: 212 333-2904 | F: 212 333-2904 |
------------------------------------------------------------------------------
| Bank One N.A. |$54,400,000 | One Bank One Plaza | One Bank One Plaza |
| | | Chicago, IL 60670 | Chicago, IL 60670 |
| | | Attn: Jamie Leung | Attn: Jamie Leung |
| | | T: 312 732-1707 | T: 312 732-1707 |
| | | F: 312 732-3537 | F: 312 732-3537 |
------------------------------------------------------------------------------
| Bank of America,N.A.|$91,800,000 | 1850 Gateway Blvd. | 1850 Gateway Blvd. |
| | | CA4-707-05-11 | CA4-707-05-11 |
| | | Concord, CA 94520 | Concord, CA 94520 |
| | | Attn: Vilma Tang | Attn: Vilma Tang |
| | | T: 925 675-7336 | T: 925 675-7336 |
| | | F: 925 969-2865 | F: 925 969-2865 |
------------------------------------------------------------------------------
| The Bank of New York|$78,200,000 | One Wall Street, | One Wall Street, |
| | | 22nd Floor | 22nd Floor |
| | | New York, NY 10005| New York, NY 10005|
| | | Attn: Dawn Hertling| Attn: Dawn Hertling|
| | | T: 212 635-6742 | T: 212 635-6742 |
| | | F: 212 635-6399 | F: 212 635-6399 |
------------------------------------------------------------------------------
| The Bank of Tokyo- |$91,800,000 | 1201 3rd Avenue | 1201 3rd Avenue |
| Mitsubishi, Ltd. | | Suite 1100 | Suite 1100 |
| | | Seattle, WA 98101 | Seattle, WA 98101 |
| | |Attn:KosukeTakahashi|Attn:KosukeTakahashi|
| | | T: 206 382-6049 | T: 206 382-6049 |
| | | F: 206 382-6067 | F: 206 382-6067 |
------------------------------------------------------------------------------
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<PAGE> 90
------------------------------------------------------------------------------
| Bayerische |$23,800,000 |560 Lexington Avenue|560 Lexington Avenue|
| Landesbank | | New York, NY 10022| New York, NY 10022|
| Girozantrale, New | | Attn: James Fox | Attn: James Fox |
| York Branch | | T: 212 310-9986 | T: 212 310-9986 |
| | | F: 212 310-9868 | F: 212 310-9868 |
------------------------------------------------------------------------------
| The Chase Manhattan |$115,900,000| 270 Park Avenue | 270 Park Avenue |
| Bank | | New York, NY 10019| New York, NY 10019|
| | | Attn:Matthew Massie| Attn:Matthew Massie|
| | | T: 212 270-5432 | T: 212 270-5432 |
| | | F: 212 270-5100 | F: 212 270-5100 |
------------------------------------------------------------------------------
| Citibank, N.A. |$115,900,000| 399 Park Avenue | 399 Park Avenue |
| | | 12th Floor, Zone 2 | 12th Floor, Zone 2 |
| | | New York, NY 10043| New York, NY 10043|
| | |Attn:PhilippaPortnoy|Attn:PhilippaPortnoy|
| | | T: 212 559-5812 | T: 212 559-5812 |
| | | F: 212 793-1246 | F: 212 793-1246 |
------------------------------------------------------------------------------
| Credit Lyonnais |$54,400,000 | 1301 Avenue of the | 1301 Avenue of the |
| | | Americas | Americas |
| | | New York, NY 10019| New York, NY 10019|
| | |Attn:Bertrand Cousin|Attn:Bertrand Cousin|
| | | T: 212 261-7363 | T: 212 261-7363 |
| | | F: 212 261-7368 | F: 212 261-7368 |
------------------------------------------------------------------------------
| Credit Suisse First |$78,200,000 | 11 Madison Avenue | 11 Madison Avenue |
| Boston | | New York, NY 10010| New York, NY 10010|
| | | Attn: Robert Finney| Attn: Robert Finney|
| | | T: 212 325-9038 | T: 212 325-9038 |
| | | F: 212 325-8319 | F: 212 325-8319 |
------------------------------------------------------------------------------
| Deutsche Bank AG |$98,600,000 | 31 West 52nd Street| 31 West 52nd Street|
| New York and/or | | New York, NY 10019| New York, NY 10019|
| Cayman Island | |Attn:JosephGyurindak|Attn:JosephGyurindak|
| Branches | | T: 212 469-4107 | T: 212 469-4107 |
| | | F: 212 469-4139 | F: 212 469-4139 |
------------------------------------------------------------------------------
| Deutsche |$23,800,000 | 609 Fifth Avenue | 609 Fifth Avenue |
| VerkehrsBank AG | | 10th Floor | 10th Floor |
| | | New York, NY 10017| New York, NY 10017|
| | | Attn: Volker Fabian| Attn: Volker Fabian|
| | | T: 212 588-8864 | T: 212 588-8864 |
| | | F: 212 588-8936 | F: 212 588-8936 |
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| Fleet National Bank |$78,200,000 | 100 Federal Street | 100 Federal Street |
| | | Mailstop: | Mailstop: |
| | | MABOS 01-10-01 | MABOS 01-10-01 |
| | | Boston, MA 02110 | Boston, MA 02110 |
| | | Attn: Roger Boucher| Attn: Roger Boucher|
| | | T: 617 434-3951 | T: 617 434-3951 |
| | | F: 617 434-0601 | F: 617 434-0601 |
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90
<PAGE> 91
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| The Industrial Bank |$78,200,000 | 1251 Avenue of the | 1251 Avenue of the |
| of Japan, Limited | | Americas | Americas |
| | | New York, NY 10020| New York, NY 10020|
| | |Attn:Joe Mitarotondo|Attn:Joe Mitarotondo|
| | | T: 212 282-4088 | T: 212 282-4088 |
| | | F: 212 282-4494 | F: 212 282-4494 |
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| Morgan Guaranty |$23,800,000 | 60 Wall Street | 60 Wall Street |
| Trust Company of | | New York, NY 10260| New York, NY 10260|
| New York | | Attn: Bob O'sieski| Attn: Bob O'sieski|
| | | T: 212 648-0342 | T: 212 648-0342 |
| | | F: 212 648-5939 | F: 212 648-5939 |
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| Mitsubishi Trust & |$91,800,000 | 520 Madison Avenue | 520 Madison Avenue |
| Banking | | New York, NY 10022| New York, NY 10022|
| | | Attn: Joe Shammas | Attn: Joe Shammas |
| | | T: 212 891-8451 | T: 212 891-8451 |
| | | F: 212 644-6825 | F: 212 644-6825 |
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| PNC Bank, N.A. |$54,400,000 | 620 Liberty Avenue | 620 Liberty Avenue |
| | | Two PNC Plaza, | Two PNC Plaza, |
| | | 3rd Floor | 3rd Floor |
| | | Pittsburgh,PA 15222| Pittsburgh,PA 15222|
| | |Attn:Jack Caracciolo|Attn:Jack Caracciolo|
| | | T: 412 768-9973 | T: 412 768-9973 |
| | | F: 412 768-4586 | F: 412 768-4586 |
------------------------------------------------------------------------------
| Royal Bank of Canada|$23,800,000 | Royal Bank of | Royal Bank of |
| | | Canada Centre | Canada Centre |
| | | 71 Queen Victoria | 71 Queen Victoria |
| | | Street | Street |
| | | London EC4V 4DE | London EC4V 4DE |
| | | Attn: Stephan Sayre| Attn: Stephan Sayre|
| | | T: 44 207 653-4625 | T: 44 207 653-4625 |
| | | F: 44 207 329-0247 | F: 44 207 329-0247 |
------------------------------------------------------------------------------
| Royal Bank of |$23,800,000 | Waterhouse Square | Waterhouse Square |
| Scotland | | 138-142 Holborn | 138-142 Holborn |
| | | London England | London England |
| | | EC1N 2TH | EC1N 2TH |
| | | Attn: Andrew | Attn: Andrew |
| | | Waddington | Waddington |
| | | T: 44 207 375-8504 | T: 44 207 375-8504 |
| | | F: 44 207 375-8282 | F: 44 207 375-8282 |
------------------------------------------------------------------------------
| Standard Chartered |$23,800,000 |7 World Trade Center|7 World Trade Center|
| Bank | | New York, NY 10048| New York, NY 10048|
| | | Attn:LarryFitzerald| Attn:LarryFitzerald|
| | | T: 212 667-0107 | T: 212 667-0107 |
| | | F: 212 667-0568 | F: 212 667-0568 |
------------------------------------------------------------------------------
91
<PAGE> 92
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| Sumitomo Bank |$78,200,000 | 777 South Figueroa | 777 South Figueroa |
| | | Suite 2600 | Suite 2600 |
| | | Los Angeles, CA | Los Angeles, CA |
| | | 90017 | 90017 |
| | | Attn:Miriam Delgado| Attn:Miriam Delgado|
| | | T: 213 955-0883 | T: 213 955-0883 |
| | | F: 213 623-6832 | F: 213 623-6832 |
------------------------------------------------------------------------------
| U.S. BankCorp |$23,800,000 | 1420 Fifth Avenue, | 1420 Fifth Avenue, |
| | | 11th Floor | 11th Floor |
| | | Seattle, WA 98101 | Seattle, WA 98101 |
| | | Attn: James Farmer| Attn: James Farmer|
| | | T: 206 587-5237 | T: 206 587-5237 |
| | | F: 206 344-3654 | F: 206 344-3654 |
------------------------------------------------------------------------------
| Wachovia Bank |$78,200,000 | 191 Peachtree | 191 Peachtree |
| | | Street NE | Street NE |
| | | Atlanta, GA 30303 | Atlanta, GA 30303 |
| | | Attn: Joe Baschuite| Attn: Joe Baschuite|
| | | T: 404 332-5178 | T: 404 332-5178 |
| | | F: 404 332-4136 | F: 404 332-4136 |
------------------------------------------------------------------------------
|Westdeutsche |$23,800,000 | 1211 Avenue of the | 1211 Avenue of the |
| Landesbank | | Americas | Americas |
| | | New York, NY 10036| New York, NY 10036|
| | | Attn: Phil Green | Attn: Phil Green |
| | | T: 212 852-6113 | T: 212 852-6113 |
| | | F: 212 302-7946 | F: 212 302-7946 |
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92
<PAGE> 93
EXHIBIT (10)(iii)
THE BOEING COMPANY
FIVE-YEAR
CREDIT AGREEMENT
among
THE BOEING COMPANY
for itself and on behalf of its Subsidiaries,
as a Borrower
THE LENDERS PARTY HERETO
CITIBANK, N.A.,
as Administrative Agent
THE CHASE MANHATTAN BANK,
as Syndication Agent
and
SALOMON SMITH BARNEY INC.
and
CHASE SECURITIES, INC.,
as Joint Lead Arrangers and Joint Book Managers
dated as of September 27, 2000
93
<PAGE> 94
TABLE OF CONTENTS
Article and Section Page
ARTICLE 1 DEFINITIONS
1.1 Definitions......................................................1
1.2 Use of Defined Terms; References.................................9
1.3 Accounting Terms.................................................9
ARTICLE 2 AMOUNTS AND TERMS OF THE ADVANCES
2.1 Committed Advances...............................................9
2.2 Making Committed Advances........................................9
2.3 Repayment.......................................................11
2.4 Interest Rate on Committed Advances.............................11
2.5 Bid Advances....................................................11
2.6 Lender Assignment or Sale.......................................15
2.7 Fees............................................................15
2.8 Reduction of the Commitments....................................15
2.9 Additional Interest on Eurodollar Rate Committed Advances.......15
2.10 Eurodollar Interest Rate Determination..........................16
2.11 Voluntary Conversion of Committed Advances......................17
2.12 Prepayments.....................................................17
2.13 Increases in Costs..............................................18
2.14 Taxes...........................................................19
2.15 Illegality......................................................21
2.16 Payments and Computations.......................................21
2.17 Sharing of Payments, Etc. ......................................22
2.18 Evidence of Debt................................................23
2.19 Alteration of Commitments and Addition of Lenders...............23
2.20 Assignments; Sales of Participations and Other
Interests in Advances..........................................25
2.21 Subsidiary Borrowers............................................27
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties by the Borrowers.................29
ARTICLE 4 COVENANTS OF TBC
4.1 Affirmative Covenants of TBC....................................30
4.2 General Negative Covenants of TBC...............................31
4.3 Financial Statement Terms.......................................33
4.4 Waivers of Covenants............................................33
ARTICLE 5 CONDITIONS PRECEDENT TO BORROWINGS
5.1 Conditions Precedent to the Initial Borrowing of TBC............34
5.2 Conditions Precedent to Each Committed Borrowing of TBC.........34
5.3 Conditions Precedent to Each Bid Borrowing of TBC...............35
5.4 Conditions Precedent to the Initial Borrowing of a
Subsidiary Borrower............................................35
5.5 Conditions Precedent to Each Committed Borrowing of a Subsidiary
Subsidiary Borrower............................................36
5.6 Conditions Precedent to Each Bid Borrowing of a Subsidiary
Subsidiary Borrower............................................36
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<PAGE> 95
ARTICLE 6 EVENTS OF DEFAULT
6.1 Events of Default...............................................37
6.2 Lenders' Rights upon Borrower Default...........................39
ARTICLE 7 THE AGENT
7.1 Authorization and Action........................................39
7.2 Agent's Reliance, Etc. .........................................40
7.3 Citibank, N.A. and its Affiliates...............................38
7.4 Lender Credit Decision..........................................38
7.5 Indemnification.................................................38
7.6 Successor Agent.................................................39
7.7 Certain Obligations May Be Performed by Affiliates..............39
ARTICLE 8 MISCELLANEOUS
8.1 Modification, Consents and Waivers..............................39
8.2 Notices.........................................................40
8.3 Costs, Expenses and Taxes.......................................41
8.4 Binding Effect..................................................41
8.5 Severability....................................................42
8.6 Governing Law...................................................42
8.7 Headings........................................................42
8.8 Execution in Counterparts.......................................42
8.9 Right of Set-Off................................................42
8.10 Confidentiality.................................................42
8.11 Agreement in Effect.............................................43
Exhibit A-1 - Committed Note
Exhibit A-2 - Bid Note
Exhibit B-1 - Notice of Committed Borrowing
Exhibit B-2 - Notice of Bid Borrowing
Exhibit C - Request for Alteration
Exhibit D - Borrower Subsidiary Letter
Exhibit E - Opinion of Counsel of the Company
Exhibit F - Opinion of Counsel for Agent
Exhibit G - Opinion of in-house counsel to Subsidiary Borrower
Exhibit H - Guaranty of TBC
Exhibit I - Opinion of Counsel of TBC
Schedule I - Commitments
95
<PAGE> 96
CREDIT AGREEMENT
Dated as of September 27, 2000
THE BOEING COMPANY, a Delaware corporation ("TBC" or the "Company"), for itself
and on behalf of the other BORROWERS (as defined below), the LENDERS (as defined
below), SALOMON SMITH BARNEY INC. and CHASE SECURITIES INC., as joint lead
arrangers and joint book managers, THE CHASE MANHATTAN BANK, as syndication
agent, and CITIBANK, N.A., in its capacity as administrative agent for the
Lenders (in such capacity, the "Agent"), agree as follows:
ARTICLE 1
Definitions
1.1 Definitions. As used in this Agreement, the following terms have the
respective meanings set out below:
"1999 Credit Agreement" means the Bank Credit Agreement, dated as of September
29, 1999, by and among TBC, Citibank, N.A., as administrative agent, and
certain other banks as lenders.
"Advance" means a Committed Advance or a Bid Advance.
"Agent" means Citibank, N.A. acting in its capacity as administrative agent for
the Lenders, or any successor administrative agent appointed pursuant to
Section 7.6.
"Agent's Account" means the account of the Agent maintained by the Agent with
Citibank, N.A., at its office at 399 Park Avenue, New York, New York
10043, Account 36852248, Attention: Mr. Drew Tuminello.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person. (For purposes of
this definition, the term "controls", "controlling", "controlled by" and
"under common control with" mean, with respect to a Person, the
possession, direct or indirect, of the power to vote 5% or more of the
Voting Stock of such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
Voting Stock, by contract, or otherwise.)
"Agreement" means this agreement, as it may be amended or otherwise modified
from time to time, and any written additions or supplements hereto.
"Applicable Lending Office" means, with respect to each Lender, such Lender's
Domestic Lending Office, in the case of a Base Rate Advance, and such
Lender's Eurodollar Lending Office, in the case of a Eurodollar Rate
Advance, and, in the case of a Bid Advance, the office of such Lender
specified by such Lender in a notice to the Agent as its Applicable
Lending Office with respect to such Bid Advance.
"Applicable Facility Fee" means a fluctuating per annum rate equal to the then-
applicable rate set forth in the pricing grid below, depending upon the
rating of the long-term senior unsecured debt of TBC then in effect:
96
<PAGE> 97
-------------------------------------------------------------------------------
| Level | Public Debt Rating: S&P and Moody's | Applicable Margin |
|-----------------------------------------------------------------------------|
| Level I | A by S&P or A2 by Moody's or above | 0.06% |
|-----------------------------------------------------------------------------|
| Level II | less than Level I | |
| | but at least A- by S&P or A3 by Moody's | 0.07% |
|-----------------------------------------------------------------------------|
| Level III | less than Level II |
| | but at least BBB+ by S&P or Baa1 by Moody's | 0.08% |
|-----------------------------------------------------------------------------|
| Level IV | less than Level III | 0.125% |
-------------------------------------------------------------------------------
provided, however, that if the ratings from S&P and Moody's fall within
different levels, then the Applicable Facility Fee shall be based on the
higher of the two ratings except that, if the lower of such ratings is
more than one level below the higher of such ratings, the Applicable
Facility Fee shall be determined based on the level above the lower of
such ratings, and
provided further that if, at any time, no rating is available from S&P and
Moody's or any other nationally recognized statistical rating organization
designated by TBC and approved in writing by the Majority Lenders, the
Applicable Facility Fee for thirty days following such ratings becoming
unavailable shall be the Applicable Facility Fee in effect immediately
prior to such ratings becoming unavailable. Thereafter, the rating to be
used until ratings from S&P and Moody's become available shall be as
agreed between TBC and the Agent, and TBC and the Agent shall use good
faith efforts to reach such agreement within such thirty-day period,
provided, however, that if no such agreement is reached within such
thirty-day period the Applicable Facility Fee thereafter, until such
agreement is reached, shall be (a) if any such rating has become
unavailable as a result of S&P or Moody's ceasing its business as a rating
agency, the Applicable Facility Fee in effect immediately prior to such
cessation or (b) otherwise, the Applicable Facility Fee as set forth under
Level IV above.
"Applicable Margin" means,
(i) with respect to Base Rate Advances, 0% per annum; and
(ii) with respect to Eurodollar Rate Advances, a fluctuating per annum
rate equal to the then-applicable rate set forth in the pricing grid
below, depending upon the rating of the long-term senior unsecured
debt of TBC then in effect:
-------------------------------------------------------------------------------
| Level | Public Debt Rating: S&P and Moody's | Applicable Margin |
|-----------------------------------------------------------------------------|
| Level I | A by S&P or A2 by Moody's or above | 0.09% |
|-----------------------------------------------------------------------------|
| Level II | less than Level I | |
| | but at least A- by S&P or A3 by Moody's | 0.13% |
|-----------------------------------------------------------------------------|
| Level III | less than Level II |
| | but at least BBB+ by S&P or Baa1 by Moody's | 0.17% |
|-----------------------------------------------------------------------------|
| Level IV | less than Level III | 0.25% |
-------------------------------------------------------------------------------
97
<PAGE> 98
provided, however, that if the ratings from S&P and Moody's fall within
different levels, then the Applicable Margin shall be based on the higher
of the two ratings except that, if the lower of such ratings is more than
one level below the higher of such ratings, the Applicable Margin shall be
determined based on the level above the lower of such ratings, and
provided further that if, at any time, no rating is available from S&P and
Moody's or any other nationally recognized statistical rating organization
designated by TBC and approved in writing by the Majority Lenders, the
Applicable Margin for each Interest Period or each other period commencing
during the thirty days following such ratings becoming unavailable shall
be the Applicable Margin in effect immediately prior to such ratings
becoming unavailable. Thereafter, the rating to be used until ratings
from S&P and Moody's become available shall be as agreed between TBC and
the Agent, and TBC and the Agent shall use good faith efforts to reach
such agreement within such thirty-day period, provided, however, that if
no such agreement is reached within such thirty-day period the Applicable
Margin thereafter, until such agreement is reached, shall be (a) if any
such rating has become unavailable as a result of S&P or Moody's ceasing
its business as a rating agency, the Applicable Margin in effect
immediately prior to such cessation or (b) otherwise, the Applicable
Margin as set forth under Level IV above; and
provided further that in the event and during the continuance of an Event
of Default, the Applicable Margin shall immediately increase by 1.0% above
the Applicable Margin then in effect, and, in the case of a Eurodollar
Rate Advance, such Advance shall automatically convert to a Base Rate
Advance at the end of the Interest Period then in effect for such
Eurodollar Rate Advance.
"Available Commitments" means, as of any date of determination, (a) the
aggregate Commitments of the Lenders, as such amount may be reduced,
changed or terminated in accordance with the terms of this Agreement,
reduced by (b) the aggregate Advances outstanding on such date of
determination.
"Base Rate" means the rate of interest announced publicly by Citibank, N.A., in
New York City, from time to time, as Citibank's "base" rate.
"Base Rate Advance" means a Committed Advance which bears interest at the Base
Rate.
"Bid Advance" means an advance by a Lender to a Borrower as part of a Bid
Borrowing resulting from the auction bidding procedure described in
Section 2.5, and refers to a Fixed Rate Advance or a Eurodollar Rate Bid
Advance, each of which shall be a "Type" of Bid Advance.
"Bid Borrowing" means a borrowing consisting of simultaneous Bid Advances from
each of the Lenders whose offers to make one or more Bid Advances as part
of such borrowing has been accepted by a Borrower under the auction
bidding procedure described in Section 2.5.
"Bid Note" means a promissory note of a Borrower payable to the order of a
Lender, in substantially the form of Exhibit A-2, evidencing the
indebtedness of that Borrower to such Lender resulting from a Bid Advance
made by such Lender to such Borrower.
"Bid Reduction" has the meaning specified in Section 2.1(a).
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<PAGE> 99
"Borrower" means, individually and collectively, as the context requires, TBC
and each Subsidiary Borrower (unless and until it becomes a "Terminated
Subsidiary Borrower" pursuant to Section 2.22).
"Borrower Subsidiary Letter" means, with respect to any Subsidiary Borrower, a
letter in the form of Exhibit D, signed by such Subsidiary Borrower and TBC.
"Borrowing" means a Committed Borrowing or a Bid Borrowing.
"Business Day" means a day of the year on which banks are not required or
authorized to close in New York City and, if the applicable Business Day
relates to any Eurodollar Rate Advance, on which dealings are carried on
in the London interbank market.
"Commitment" means, for each Lender, the full amount set forth opposite the name
of such Lender in Schedule I or, if such Lender is a Replacement Lender or
a Lender that has entered into one or more assignments pursuant to Section
2.20, the amount set forth for such Lender in the Register maintained by
the Agent pursuant to Section 2.20(d), as such amount may be reduced
pursuant to Section 2.3, Section 2.8 or Section 2.19 or increased pursuant
to Section 2.19.
"Committed Advance" means an advance made by a Lender to a Borrower as part of a
Committed Borrowing and refers to a Base Rate Advance or a Eurodollar Rate
Committed Advance, each of which is a "Type" of Committed Advance.
"Committed Borrowing" means a borrowing consisting of simultaneous Committed
Advances of the same Type made by each of the Lenders pursuant to Section 2.1.
"Committed Note" means a promissory note of a Borrower payable to the order of
any Lender, in substantially the form of Exhibit A-1, evidencing the
indebtedness of that Borrower to such Lender resulting from the Committed
Advances made by such Lender to that Borrower.
"Company" means The Boeing Company, a Delaware corporation (usually referred to
herein as "TBC").
"Confidential Information" means information that a Borrower furnishes to the
Agent or any Lender in a writing designated as confidential, but does not
include any such information that is or becomes generally available to the
public or that is or becomes available to the Agent or such Lender from a
source other than a Borrower.
"Consolidated" refers to the consolidation of accounts in accordance with
generally accepted accounting principles.
"Convert", "Conversion" and "Converted" each means a conversion of Committed
Advances of one Type into Committed Advances of another Type pursuant to
Section 2.10, 2.11 or 2.15.
"Debt" of a Person means
(i) indebtedness for borrowed money or for the deferred purchase price
of property or services;
(ii) financial obligations evidenced by bonds, debentures, notes or other
similar instruments,
(iii) financial obligations as lessee under leases which have been or
should be, in accordance with generally accepted accounting
principles, recorded as capital leases; and
99
<PAGE> 100
(iv) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or financial obligations of others of the kind
referred to in clauses (i) through (iii) above.
"Default" means any Event of Default or any event that would constitute an Event
of Default but for the requirement that notice be given or time elapse or
both.
"Domestic Lending Office" means with respect to any Lender, the office of such
Lender specified as its "Domestic Lending Office" opposite its name on
Schedule I, or in the assignment or other agreement pursuant to which it
became a Lender or such other office of such Lender as such Lender may
from time to time specify to TBC and the Agent.
"Effective Date" has the meaning specified in Section 2.19.
"Eligible Assignee" means
(i) a commercial bank organized under the laws of the United States, or
any state thereof, and having a combined capital and surplus in
excess of $3,000,000,000;
(ii) a commercial bank organized under the laws of any other country
which is a member of the OECD, or a political subdivision of any
such country, and having a combined capital and surplus in excess of
$3,000,000,000, provided that such bank is acting through a branch
or agency located in either (a) the country in which it is organized
or (b) another country which is also a member of the OECD or the
Cayman Islands;
(iii) the central bank of any country which is a member of the OECD;
(iv) any Lender;
(v) an Affiliate of any Lender; and
(vi) so long as no Default has occurred and is continuing, any other
Person approved in writing by TBC, which approval has been
communicated in writing to the Agent, provided that neither TBC nor
an Affiliate of TBC shall qualify as an Eligible Assignee.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time and the regulations promulgated and rulings issued
thereunder.
"Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D
of the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"Eurodollar Lending Office" means, with respect to any Lender, (a) the office of
such Lender specified as its "Eurodollar Lending Office" opposite its name
on Schedule I (or, if no such office is specified, its Domestic Lending
Office) or in the assignment or other agreement pursuant to which it
became a Lender or (b) such other office of such Lender as such Lender may
from time to time specify to TBC and the Agent.
"Eurodollar Rate" means, for an Interest Period for a Eurodollar Rate Committed
Advance constituting part of a Committed Borrowing, and for the relevant
period specified in the applicable Notice of Bid Borrowing for a
Eurodollar Rate Bid Advance, an interest rate per annum equal to either
100
<PAGE> 101
(a) the offered rate (rounded to the nearest whole multiple of 1/16 of
1% per annum, if such average is not such a multiple) for deposits
in U.S. dollars for a period substantially equal to such Interest
Period (if a Committed Advance) or such relevant period specified in
the applicable Notice of Bid Borrowing (if a Bid Advance), appearing
on Telerate Markets Page 3750 (or any successor page or, if
unavailable for any reason by Telerate, then by reference to Reuters
Screen) as of 11:00 a.m. (London time) two business days before the
first day of such Interest Period or the first day of the relevant
period specified in such Notice of Bid Borrowing; or
(b) if the foregoing rate is unavailable from Telerate or the Reuters Screen
for any reason, the average (rounded to the nearest whole multiple of
1/16 of 1% per annum, if such average is not such a multiple) of the
rates per annum are offered by the principal office of each of the
Reference Banks to prime banks in the London interbank market at 11:00
a.m. (London time) on deposits in U.S. dollars two Business Days before
the first day of such Interest Period or the first day of such relevant
period specified in the Notice of Bid Borrowing
(i) for such Eurodollar Committed Advance, on an amount
substantially equal to such Reference Bank's Eurodollar Rate
Advance constituting part of such Committed Borrowing and for a
period equal to such Interest Period, or
(ii) for such Eurodollar Rate Bid Advance, on an amount
substantially equal to the amount of the Eurodollar Rate Bid
Borrowing which includes such Bid Advance multiplied by a
fraction equal to such Reference Bank's ratable portion of the
Commitments and for a period equal to the relevant period
specified in such Notice of Bid Borrowing.
The Eurodollar Rate for any Interest Period for each Eurodollar Rate
Committed Advance constituting part of the same Borrowing and for the
relevant period specified in a Notice of Bid Borrowing for each Eurodollar
Rate Bid Advance shall be determined by the Agent on the basis of
applicable rates furnished to and received by the Agent from the Reference
Banks two Business Days before the first day of such Interest Period or
period, as the case may be, subject, however, to the provisions of Section 2.10.
"Eurodollar Rate Advance" means a Committed Advance (a "Eurodollar Rate
Committed Advance") or a Bid Advance (a "Eurodollar Rate Bid Advance")
which bears interest at a rate of interest quoted as a margin (which shall
be the Applicable Margin in the case of a Committed Advance or as offered
by a Lender and accepted by a Borrower in the case of a Bid Advance) over
the Eurodollar Rate.
"Eurodollar Rate Bid Borrowing" has the meaning specified in Section 2.5(b).
"Eurodollar Rate Reserve Percentage" means the reserve percentage applicable to
a Lender for any Interest Period for a Eurodollar Rate Advance during such
Interest Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable)
under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for such Lender with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities that
includes deposits by reference to which the interest rate on Eurodollar
Rate Advances is determined) having a term equal to such Interest Period.
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<PAGE> 102
"Event of Default" means any of the events described in Section 6.1.
"Facility Fee" has the meaning specified in Section 2.7.
"Federal Funds Rate" means, for each day during a period, an interest rate per
annum equal to the weighted average of the fluctuating rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the immediately preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for
such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by it.
"Fixed Rate Advance" means an Advance made by a Lender to a Borrower as part of
a Fixed Rate Borrowing.
"Fixed Rate Borrowing" has the meaning specified in Section 2.5(b).
"Guaranty" means each Guaranty Agreement executed by TBC in favor of the Agent
and the Lenders, unconditionally guaranteeing the payment of all
obligations of a Subsidiary Borrower hereunder and under any Notes
executed or to be executed by it.
"Indemnified Costs" has the meaning specified in Section 7.5.
"Indemnified Parties" has the meaning specified in Section 8.3(b).
"Interest Period" means, for each Eurodollar Rate Committed Advance constituting
part of the same Borrowing, the period commencing on the date of such
Committed Advance or the date of the Conversion of a Base Rate Advance
into such a Eurodollar Rate Committed Advance and ending on the last day
of the period selected by the applicable Borrower pursuant to the
provisions below and, thereafter, each subsequent period commencing on the
last day of the immediately preceding Interest Period and ending on the
last day of the period selected by such Borrower pursuant to the
provisions below. The duration of each such Interest Period shall be one,
two, three, or six months (or nine months, with the consent of all Lenders
funding those particular Advances), as the applicable Borrower may, upon
notice received by the Agent not later than 11:00 a.m. (New York City
time) on the third Business Day prior to the first day of such Interest
Period, select, provided, however, that:
(i) no Interest Period shall end on a date later than the
Termination Date;
(ii) Interest Periods commencing on the same date for Committed
Advances constituting part of the same Committed Borrowing
shall be of the same duration; and
(iii) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next
succeeding Business Day, provided that, if such extension would
cause the last day of such Interest Period to occur in the next
following calendar month, the last day of the Interest Period
shall occur on the immediately preceding Business Day.
"Lender", subject to Section 2.20, means any of the
institutions that is a signatory hereto or that, pursuant to Section 2.13,
2.19 or 2.20, becomes a "Lender" hereunder.
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"Majority Lenders" means Lenders having greater than 50% of the total
Commitments or, if the Commitments have been terminated in full, Lenders
holding greater than 50% of the then aggregate unpaid principal amount of
the Advances.
"Moody's" means Moody's Investor Services, Inc.
"Note" means a Committed Note or a Bid Note.
"Notice of Bid Borrowing" has the meaning specified in Section 2.5(b).
"Notice of Borrowing" means a Notice of Committed Borrowing or a Notice of Bid
Borrowing.
"Notice of Committed Borrowing" has the meaning specified in Section 2.2(a).
"OECD" means the Organization for Economic Cooperation and Development.
"Person" means an individual, partnership, corporation (including a business
trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government
or any political subdivision or agency thereof.
"Property, Plant and Equipment" means any item of real property, or any interest
therein, buildings, improvements and machinery.
"Proposed Increased Commitment" has the meaning specified in Section 2.19(a).
"Reference Banks" means The Chase Manhattan Bank, Citibank, N.A., Bank of
America, N.A., and Deutsche Bank AG.
"Register" has the meaning specified in Section 2.20(d).
"Request for Alteration" means a document substantially in the form of Exhibit
C, duly executed by TBC, pursuant to Section 2.19.
"Required Assignment" has the meaning specified in Section 2.20(a).
"S&P" means Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
"Subsidiary" means any corporation in which more than 50% of the Voting Stock is
owned by TBC, by TBC and any one or more other Subsidiaries, or by any one
or more other Subsidiaries.
"Subsidiary Borrower" means, individually and collectively, as the context
requires, each Subsidiary that is or becomes a "Borrower" in accordance
with Section 2.21; in each case, unless and until it becomes a "Terminated
Subsidiary Borrower".
"TBC" means The Boeing Company, a Delaware corporation.
"Terminated Subsidiary Borrower" means, individually and collectively, as the
context requires, a Subsidiary Borrower that has ceased to be a "Borrower"
in accordance with Section 2.21.
"Termination Date" means the earlier to occur of (i) September 27, 2005, and
(ii) the date of termination in whole of the Commitments pursuant to
Section 2.8 or Section 6.2.
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"Total Capital" has the meaning specified in Section 4.2(b).
"Type", as to Committed Borrowings, means either Base Rate Advances or
Eurodollar Rate Committed Advances and, as to Bid Borrowings, means either
Fixed Rate Advances or Eurodollar Rate Bid Advances.
"Voting Stock" means, as to a corporation, all the issued and outstanding
capital stock of such corporation having general voting power, under
ordinary circumstances, to elect a majority of the Board of Directors of
such corporation (irrespective of whether or not any capital stock of any
other class or classes shall or might have voting power upon the
occurrence of any contingency).
1.2 Use of Defined Terms; References. Any defined term used in the plural
preceded by the definite article encompasses all members of the relevant
class. Any defined term used in the singular preceded by "a", "an" or
"any" indicates any number of the members of the relevant class. All
references in this Agreement to a Section, Article, Schedule or Exhibit
are to a Section, Article, Schedule or Exhibit of or to this Agreement,
unless otherwise indicated.
1.3 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting
principles consistently applied.
ARTICLE 2
Amounts and Terms of the Advances
2.1 Committed Advances.
(a) Obligation to Make Committed Advances. Each Lender severally agrees, on
the terms and conditions hereinafter set forth, to make Committed Advances
to the Borrowers from time to time on any Business Day during the period
from the date hereof until the Termination Date in an aggregate principal
amount at any time outstanding not to exceed such Lender's Commitment,
provided that the aggregate amount of the Commitments of the Lenders shall
be deemed used from time to time to the extent of the aggregate amount of
the Bid Advances then outstanding and such deemed use of the aggregate
amount of the Commitments shall be applied to the Lenders ratably
according to their respective Commitments (such deemed use of the
aggregate amount of the Commitments being a "Bid Reduction").
(b) Amount of Committed Advances. Each Committed Borrowing shall be in an
aggregate amount not less than $10,000,000 or an integral multiple of
$1,000,000 in excess thereof.
(c) Type of Committed Advances. Each Committed Borrowing shall consist of
Committed Advances of the same Type made on the same day by the Lenders
ratably according to their respective Commitments. Within the limits of
each Lender's Commitment, the Borrowers may from time to time borrow,
prepay pursuant to Section 2.12, and reborrow under this Section 2.1 and
Section 2.2.
2.2 Making Committed Advances.
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(a) Notice of Committed Borrowing. Each Committed Borrowing shall be made on
notice, given by a Borrower to the Agent not later than 11:00 a.m. (New
York City time) on the day of the proposed Committed Borrowing in the case
of a Base Rate Borrowing and on the third Business Day prior to the date
of the proposed Committed Borrowing in the case of a Eurodollar Rate Borrowing
(a "Notice of Committed Borrowing"). Each such Notice of Committed Borrowing
shall be in substantially the form of Exhibit B-l, specifying the requested
(i) date of such Committed Borrowing,
(ii) Type of Committed Advances constituting such Committed Borrowing,
(iii) aggregate amount of such Committed Borrowing, and
(iv) in the case of a Committed Borrowing composed of Eurodollar Rate
Advances, the initial Interest Period for each such Committed
Advance, which Interest Period may be 1, 2, 3 or 6 months, at the
option of the Borrower, or, if acceptable to all the Lenders, 9 months.
Every Notice of Committed Borrowing given by a Subsidiary Borrower must be
countersigned by an authorized representative of TBC, in order to evidence
the consent of TBC, in its sole discretion, to that proposed Committed
Borrowing. Upon receipt of a Notice of Committed Borrowing, the Agent
shall promptly give notice to each Lender thereof.
(b) Funding Committed Advances. Each Lender shall, before 1:00 p.m. (New York
City time) on the date of such Committed Borrowing, make available for the
account of its Applicable Lending Office to the Agent at the Agent's
Account, in same day funds, such Lender's ratable portion of such
Committed Borrowing. After the Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article 5, the Agent
will make such funds available to the relevant Borrower at an account
specified by such Borrower.
(c) Irrevocable Notice. Each Notice of Committed Borrowing shall be
irrevocable and binding. In the case of any Committed Borrowing that the
related Notice of Committed Borrowing specifies is to be composed of
Eurodollar Rate Advances, the Borrower requesting such Committed Borrowing
shall indemnify each Lender against any loss, cost or expense incurred by
such Lender on account of any failure to fulfill on or before the date
specified for such Committed Borrowing in such Notice of Committed
Borrowing the applicable conditions set forth in Article 5, including,
without limitation, any loss (but excluding loss of anticipated profits),
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Committed
Advance to be made by such Lender as part of such Committed Borrowing when
such Committed Advance, as a result of such failure, is not made on such date.
(d) Lender's Ratable Portion. Unless the Agent has received notice from a
Lender prior to 1:00 p.m. (New York City time) on the day of any Committed
Borrowing that such Lender will not make available to the Agent such
Lender's ratable portion of such Committed Borrowing, the Agent may assume
that such Lender has made such portion available to the Agent on the date
of such Committed Borrowing in accordance with subsection (b) of this
Section 2.2 and the Agent may, in reliance upon such assumption, make
available to the requesting Borrower on such date a corresponding amount.
If and to the extent that a Lender has not so made such ratable portion
available to the Agent, such Lender and such Borrower shall severally
repay to the Agent forthwith on demand an amount that in the aggregate
equals such corresponding amount together with interest thereon for each
day from the date such amount is made available by the Agent to such
Borrower until the date such amount is repaid to the Agent, at
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(i) in the case of such Borrower, the interest rate applicable at the
time to Committed Advances constituting such Committed Borrowing, and
(ii) in the case of such Lender, the Federal Funds Rate.
If such Lender shall repay to the Agent such corresponding amount, such
amount so repaid shall constitute such Lender's Committed Advance as part
of such Committed Borrowing for purposes of this Agreement.
(e) Independent Lender Obligations. The failure of any Lender to make the
Committed Advance to be made by it as part of any Committed Borrowing
shall not relieve any other Lender of its obligation, if any, hereunder to
make its Committed Advance on the date of such Committed Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make
the Committed Advance to be made by such other Lender on the date of any
Committed Borrowing.
2.3 Repayment. The Borrowers shall repay to the Agent for the ratable
accounts of the Lenders on the Termination Date the unpaid principal
amount of the Committed Advances outstanding as of the Termination Date.
2.4 Interest Rate on Committed Advances. Each Borrower shall pay interest on
the unpaid principal amount of each of its Committed Advances from the
date of such Committed Advance until such principal amount is paid in
full, at the following rates per annum:
(i) during each period in which such Committed Advance is a Base Rate
Advance, at a rate per annum equal at all times to the Base Rate in
effect from time to time plus the Applicable Margin, payable
quarterly in arrears on the first day of each January, April, July
and October and on the Termination Date, and
(ii) during each period in which such Committed Advance is a Eurodollar
Rate Advance, at a rate per annum equal at all times during each
relevant Interest Period for such Committed Advance to the
Eurodollar Rate for such Interest Period plus the Applicable Margin,
payable on the last day of each such Interest Period, and if such
Interest Period has a duration of more than three months, quarterly
on each day during such Interest Period that is three months from
either (A) the first day of such Interest Period or (B) the last
such interest payment date and on the date such Committed Advance is
Converted or paid in full.
2.5 Bid Advances.
(a) Bid Advances Impact on Commitments. The Borrowers may make Bid Borrowings
from time to time on any Business Day during the period from the date
hereof until the Termination Date in the manner set forth below, provided
that, following the making of each Bid Borrowing, the aggregate amount of
the Advances then outstanding shall not exceed the aggregate amount of the
Commitments of the Lenders (computed without regard to the Bid Reduction).
As provided in Section 2.1 above, the aggregate amount of the Commitments
of the Lenders shall be deemed used from time to time to the extent of the
aggregate amount of the Bid Advances then outstanding, and such deemed use
of the aggregate amount of the Commitments shall be applied to the Lenders
ratably according to their respective Commitments; provided, however, that
any Lender's Bid Advances shall not otherwise reduce that Lender's
obligation to lend its pro rata share of the remaining Available Commitments.
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(b) Notice of Bid Borrowing. Any Borrower may request a Bid Borrowing by
delivering to the Agent a notice of a Bid Borrowing (a "Notice of Bid
Borrowing"), in substantially the form of Exhibit B-2, specifying the
following:
(i) the date and aggregate amount of the proposed Bid Borrowing,
(ii) the maturity date for repayment of each Bid Advance to be made as
part of such Bid Borrowing, which maturity date
(A) may not be later than 5 Business Days prior to the Termination
Date, but may otherwise be 7 days or more from the date of
such requested Bid Advance if the Borrower specifies in the
Notice of Bid Borrowing that the rates of interest to be
offered by the Lenders will be fixed rates per annum (a "Fixed
Rate Borrowing"), and
(B) shall be either 1, 2, 3, 6 or 9 months from the date of such
Bid Borrowing if the Borrower specifies in the Notice of Bid
Borrowing that such Bid Borrowing is to consist of Eurodollar
Rate Bid Advances (a "Eurodollar Rate Bid Borrowing"),
(iii) the interest payment date or dates relating thereto, and
(iv) any other terms to be applicable to such Bid Borrowing.
A Borrower requesting a Bid Borrowing shall deliver a Notice of Bid
Borrowing to the Agent not later than 11:00 a.m. (New York City time) (A)
at least one Business Day prior to the date of the proposed Bid Borrowing
if the proposed Bid Borrowing is to be a Fixed Rate Borrowing, and (B) at
least four Business Days prior to the date of the proposed Bid Borrowing,
if the proposed Bid Borrowing is to be a Eurodollar Rate Bid Borrowing.
Every Notice of Bid Borrowing given by a Subsidiary Borrower must be
countersigned by an authorized representative of TBC, in order to evidence
the consent of TBC, in its sole discretion, to that proposed Bid
Borrowing. The Agent shall in turn promptly notify each Lender of each
request for a Bid Borrowing by sending such Lender a copy of the related
Notice of Bid Borrowing.
(c) Discretion as to Bid Advances. Each Lender may, in its sole discretion,
elect to irrevocably offer to make one or more Bid Advances to the
applicable Borrower as part of such proposed Bid Borrowing at a rate or
rates of interest specified by such Lender in its sole discretion (each
such rate of interest to be a fixed rate if the Borrower requested Fixed
Rate Advances or a margin over the Eurodollar Rate if the Borrower
requested Eurodollar Rate Bid Advances), by notifying the Agent (which
shall give prompt notice thereof to the Company and such Borrower), before
10:00 a.m. (New York City time) (A) on the date of such proposed Bid
Borrowing, if the proposed Bid Borrowing is to be a Fixed Rate Borrowing
and (B) three Business Days before the date of such proposed Bid
Borrowing, in the case of a Notice of Bid Borrowing is to be a Eurodollar
Rate Bid Borrowing. In such notice the Lender shall specify the
following:
(i) the minimum amount and maximum amount of each Bid Advance which such
Lender would be willing to make as part of such proposed Bid
Borrowing (which amounts may, subject to the first proviso in this
Section 2.5(a), exceed such Lender's Commitment),
(ii) the rate or rates of interest therefor (specified as stated in this
paragraph (c)), and
(iii) such Lender's Applicable Lending Office with respect to such Bid
Advance; provided that if the Agent in its capacity as a Lender, in
its sole discretion, elects to make any such offer, it shall notify
such Borrower and the Company of such offer before 9:30 a.m. (New York
City time) on the date on which notice of such election is to be given
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to the Agent by the other Lenders. If, by 10:00 a.m. (New York City
time) on the date on which notice of a Lender's election under this
Section 2.5(c) is to be made, the Agent fails to receive, at its address
specified in Section 8.2, a notice from a Lender provided for in this
Section 2.5(c), the Agent may conclusively presume that such Lender has
elected not to offer to make any Bid Advances to such Borrower with
respect to the related Notice of Bid Borrowing.
(d) Borrower Selection of Lender Bids. The Borrower proposing the Bid
Borrowing shall, in turn, (A) before 11:00 a.m. (New York City time) on
the date of such proposed Bid Borrowing, in the case of a proposed Bid
Borrowing to be a Fixed Rate Borrowing, and (B) before 12:00 noon (New
York City time) three Business Days before the date of such proposed Bid
Borrowing, in the case of a proposed Bid Borrowing to be a Eurodollar Rate
Bid Borrowing, either:
(i) cancel such Bid Borrowing by giving the Agent notice to that effect, or
(ii) accept, in its sole discretion, one or more of the offers made by a
Lender or Lenders pursuant to Section 2.5(c), by giving notice to
the Agent of the amount of each Bid Advance (which amount shall be
equal to or greater than the minimum amount and equal to or less
than the maximum amount, notified to such Borrower by the Agent on
behalf of such Lender for such Bid Advance pursuant to Section
2.5(c)) to be made by each Lender as part of such Bid Borrowing, and
reject any remaining offers made by Lenders pursuant to Section
2.5(c) by giving the Agent notice to that effect; provided that
offers will be accepted, if at all, in order of lowest to highest
interest rates, and, if two or more Lenders bid at the same rate,
the Bid Borrowing with respect to such rate will be allocated among
such Lenders in proportion to the amount bid by each such Lender.
If the Borrower proposing the Bid Borrowing notifies the Agent that such
Bid Borrowing is canceled pursuant to Section 2.5(d)(i), the Agent shall
give prompt notice thereof to the Lenders and such Bid Borrowing shall not
be made.
(e) Bid Borrowing. If the Borrower proposing the Bid Borrowing accepts one or
more of the offers made by a Lender or Lenders pursuant to Section
2.5(d)(ii), the Agent shall in turn promptly
(i) notify each Lender that has made an offer as described in Section
2.5(c), of the date and aggregate amount of such Bid Borrowing and
whether or not any offer or offers made by such Lender pursuant to
Section 2.5(c) have been accepted by such Borrower,
(ii) notify each Lender that is to make a Bid Advance, as part of such
Bid Borrowing, of the amount of each Bid Advance to be made by such
Lender as part of such Bid Borrowing, and
(iii) upon satisfaction of the conditions set forth in 5.3 or 5.6, as
applicable, notify each Lender that is to make a Bid Advance as part
of such Bid Borrowing that the applicable conditions set forth in
Article 5 appear to have been satisfied.
When each Lender that is to make a Bid Advance as part of such Bid
Borrowing has received notice from the Agent pursuant to clause (iii) of
the preceding sentence, such Lender shall, before 1:00 p.m. (New York City
time) on the date of such Bid Borrowing specified in the notice received
from the Agent pursuant to clause (i) of the preceding sentence, make
available for the account of its Applicable Lending Office to the Agent at
the Agent's Account such Lender's portion of such Bid Borrowing, in same
day funds. Upon fulfillment of the applicable conditions set forth in
Article 5 and after receipt by the Agent of such funds, the Agent will
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make such funds available to the relevant Borrower at an account specified
by such Borrower. Promptly after each Bid Borrowing the Agent shall
notify each Lender of the amount of the Bid Borrowing, the consequent Bid
Reduction, and the dates upon which such Bid Reduction commenced and will
terminate.
(f) If the Borrower proposing such Bid Borrowing notifies the Agent pursuant
to Section 2.5(d)(ii) above that it accepts one or more of the offers made
by any Lender or Lenders, such notice of acceptance shall be irrevocable
and binding on such Borrower. Such Borrower shall indemnify each Lender
against any loss, cost or expense incurred by such Lender as a result of
any failure to fulfill on or before the date specified in the related
Notice of Bid Borrowing for such Bid Borrowing the applicable conditions
set forth in Article 5, including, without limitation, any loss (but
excluding loss of anticipated profits), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund the Bid Advance to be made by such Lender as part of
such Bid Borrowing when such Bid Advance, as a result of such failure, is
not made on such date.
(g) Amount of Bid Borrowings. Each Notice of Bid Borrowing shall request an
aggregate amount of Bid Advances not less than $10,000,000 or an integral
multiple of $1,000,000 in excess thereof, provided that a Borrower may
accept offers aggregating less than $10,000,000 and offers which are not
an integral multiple of $1,000,000, and provided further that, as provided
in Section 2.5(a), following the making of each Bid Borrowing, the
aggregate amount of the Advances then outstanding shall not exceed the
aggregate amount of the Commitments of the Lenders (computed without
regard to the Bid Reduction). Within the limits and on the conditions set
forth in this Section 2.5, the Borrowers may from time to time borrow
under this Section 2.5, repay pursuant to Section 2.5(g), and reborrow
under this Section 2.5, provided that a Bid Borrowing shall not be made
within three Business Days of the date of any other Bid Borrowing.
(h) Repayment of Bid Advances. On the maturity date of each Bid Advance
specified by the relevant Borrower for repayment of such Bid Advance in
the related Notice of Bid Borrowing, the Borrower shall repay to the Agent
for the account of the Lender which has made such Bid Advance the then
unpaid principal amount of such Bid Advance. The Borrowers shall have no
right to prepay any principal amount of any Bid Advance.
(i) Interest on Bid Advances; Bid Notes. The relevant Borrower shall pay
interest on the unpaid principal amount of each Bid Advance, from the date
of such Bid Advance to the date the principal amount of such Bid Advance
is repaid in full, at the fixed rate of interest specified by the Lender
making such Fixed Rate Advance in its notice with respect thereto
delivered pursuant to Section 2.5(c) or, in the case of a Eurodollar Rate
Bid Advance, the margin specified by the Lender making such Bid Advance in
its notice with respect thereto plus the Eurodollar Rate determined with
respect to such Bid Borrowing pursuant to Section 2.10, payable on the
interest payment date or dates specified by the Borrower for such Bid
Advance in the related Notice of Bid Borrowing. Upon the occurrence and
during the continuance of an Event of Default, the applicable Borrower
shall pay interest on the amount of unpaid principal of and interest on
each Bid Advance owing to a Lender, payable in arrears on the date or
dates interest is payable thereon, at a rate per annum equal at all times
to 1% per annum above the rate per annum required to be paid on such Bid
Advance under the terms of the Bid Note evidencing such Bid Advance unless
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otherwise agreed in such Bid Note. The indebtedness of the applicable
Borrower resulting from each Bid Advance made to the Borrower as part of a
Bid Borrowing shall be evidenced by a separate Bid Note of such Borrower
payable to the order of the Lender making such Bid Advance, which Bid Note
shall be returned to the Borrower upon payment if full of such Bid
Advance.
2.6 Lender Assignment or Sale. Any Lender may, without the prior written
consent of the Borrowers, sell or assign all or any part of such Lender's
rights in any or all of the Bid Advances made by such Lender or in the Bid
Notes in connection with such Bid Advances as a participation, provided,
however, that
(i) any such sale or assignment shall not require any Borrower to file a
registration statement with the Securities and Exchange Commission
or apply to qualify the Advances or the Notes under the blue sky
laws of any state, and the selling or assigning Lender shall
otherwise comply with all federal and state securities laws
applicable to such transaction,
(ii) no purchaser or assignee in such a transaction shall thereby become
a "Lender" for any purpose under this Agreement,
(iii) such Lender's obligations under this Agreement (including, without
limitation, its Commitment to the Borrowers) shall remain unchanged,
(iv) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, and
(v) the Borrowers, the Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement.
2.7 Fees. TBC agrees to pay to the Agent for the account of each Lender a
facility fee ("Facility Fee") on such Lender's Commitment, without regard
to usage. The Facility Fee shall be payable for the periods from the date
hereof in the case of each Lender named in Schedule I, and from the
effective date on which any other Lender becomes party hereto, until the
Termination Date (or such earlier date on which such Lender ceases to be a
party hereto) at the rate per annum equal to the Applicable Facility Fee.
Facility Fees shall be payable in arrears on each January 1, April 1, July
1 and October 1 during the term of this Agreement and on the Termination
Date. The amount of the Facility Fee payable on October 1, 2000 and on
the Termination Date shall be prorated based on the actual number of days
elapsed either since the date hereof (in the case of the October 1, 2000
payment) or since the date on which the last payment in respect of the
Facility Fee was made (in the case of the payment made on the Termination
Date).
2.8 Reduction of the Commitments. TBC shall have the right, upon at least 3
Business Days' notice to the Agent, to terminate in whole or reduce
ratably in part the unused portions of the Commitments, provided that each
partial reduction shall be in a minimum amount of $10,000,000 or an
integral multiple of $1,000,000 in excess thereof, and provided further
that the aggregate amount of the Commitments shall not be reduced to an
amount which is less than the aggregate principal amount of the Bid
Advances then outstanding.
2.9 Additional Interest on Eurodollar Rate Committed Advances. Each Borrower
shall pay to each Lender, so long as such Lender is required under
regulations of the Board of Governors of the Federal Reserve System to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities, additional interest on the unpaid
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principal amount of each Eurodollar Rate Committed Advance of such Lender
to such Borrower, from the date of such Committed Advance until such
principal amount is paid in full, at an interest rate per annum for each
Interest Period equal to the remainder obtained by subtracting (i) the
Eurodollar Rate for such Interest Period for such Committed Advance from
(ii) the rate obtained by dividing such Eurodollar Rate by a percentage
equal to 100% minus the Eurodollar Rate Reserve Percentage of such Lender
for such Interest Period, payable on each date on which interest is
payable on such Committed Advance. Such additional interest shall be
determined by such Lender and notified to the relevant Borrowers through
the Agent.
2.10 Eurodollar Interest Rate Determination
(a) Methods to Determine Eurodollar Rate. The Agent shall determine the
Eurodollar Rate for each Eurodollar Rate Advance by using the methods
described in the definition of the term "Eurodollar Rate," and shall give
prompt notice to the relevant Borrowers and the Lenders of each such
Eurodollar Rate.
(b) Role of Reference Banks. In the event the Eurodollar Rate cannot be
determined by the first method described in the definition of "Eurodollar
Rate," each Reference Bank shall furnish to the Agent timely information
for the purpose of determining the Eurodollar Rate in accordance with the
second method described therein. If any one or more of the Reference
Banks does not furnish such timely information to the Agent for the
purpose of determining a Eurodollar Rate, the Agent shall determine such
interest rate on the basis of timely information furnished by the
remaining Reference Banks. In the event the rate cannot be determined by
either of the methods described in the definition of "Eurodollar Rate,"
then:
(i) the Agent shall forthwith notify the Borrowers and the Lenders that
the interest rate cannot be determined for such Eurodollar Rate Advances
(ii) each such Advance, if a Committed Advance, will automatically, on
the last day of the then existing Interest Period therefor, Convert
into a Base Rate Advance (or if the Borrower was attempting to
Convert a Base Rate Advance into a Eurodollar Rate Committed
Advance, such Advance will continue as a Base Rate Advance), and
(iii) the obligation of the Lenders to make Eurodollar Rate Bid Advances,
or to make, or to Convert Base Rate Advances into, Eurodollar Rate
Committed Advances shall be suspended until the Agent notifies the
Borrowers and the Lenders that the circumstances causing such
suspension no longer exist.
(c) Inadequate Eurodollar Rate. If, with respect to any Eurodollar Rate
Committed Advances, the Majority Lenders notify the Agent that the
Eurodollar Rate for any Interest Period for such Committed Advances will
not adequately reflect the cost to such Majority Lenders of making,
funding or maintaining their respective Eurodollar Rate Committed Advances
for such Interest Period, the Agent shall forthwith so notify the relevant
Borrowers and the Lenders, whereupon
(i) each such Eurodollar Rate Committed Advance will automatically, on
the last day of the then existing Interest Period therefor, Convert
into a Base Rate Advance, and
(ii) the obligation of the Lenders to make, or to Convert Base Rate
Advances into, Eurodollar Rate Committed Advances shall be suspended
until the Agent notifies the Borrowers and the Lenders that the
circumstances causing such suspension no longer exist.
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(d) Absence of an Interest Period on a Eurodollar Rate Committed Advance. If
a Borrower fails to select the duration of an Interest Period for a
Eurodollar Rate Committed Advance in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.1, the Agent
will forthwith so notify the Borrower and the Lenders and such Committed
Advances will automatically, on the last day of the then existing Interest
Period therefor, Convert into Base Rate Advances.
2.11 Voluntary Conversion of Committed Advances. Subject to the
provisions of Sections 2.10 and 2.15, any Borrower may Convert all such
Borrower's Committed Advances of one Type constituting the same Committed
Borrowing into Advances of the other Type on any Business Day, upon notice
given to the Agent not later than 11:00 a.m. (New York City time) on the
third Business Day prior to the date of the proposed Conversion; provided,
however, that the Conversion of a Eurodollar Rate Committed Advance into a
Base Rate Advance may be made on, and only on, the last day of an Interest
Period for such Eurodollar Rate Committed Advance. Each such notice of a
Conversion shall, within the restrictions specified above, specify
(i) the date of such Conversion,
(ii) the Committed Advances to be Converted, and
(iii) if such Conversion is into Eurodollar Rate Committed Advances, the
duration of the Interest Period for each such Committed Advance.
2.12 Prepayments. Any Borrower shall have the right at any time and from
time to time, upon prior written notice from such Borrower to the Agent,
to prepay its outstanding principal obligations with respect to its
Committed Advances in whole or ratably in part (except as provided in
Section 2.15 or 2.19), provided that every notice of prepayment given by a
Subsidiary Borrower must be countersigned by an authorized representative
of TBC, in order to evidence the consent of TBC, in its sole discretion,
to that prepayment. Such prepaying Borrower may be obligated to make
certain prepayments of obligations with respect to one or more Committed
Advances subject to and in accordance with this Section 2.12.
(a) Base Rate Borrowings Prepayments. With respect to Base Rate Borrowings,
such prepayment shall be without premium or penalty, upon notice given to
the Agent, and shall be made not later than 11:00 a.m. (New York City
time) on the date of such prepayment. The Borrower shall designate in
such notice the amount and date of such prepayment. Accrued interest on
the amount so prepaid shall be payable on the first Business Day of the
calendar quarter next following the prepayment. The minimum amount of
Base Rate Borrowings which may be prepaid on any occasion shall be
$10,000,000 or an integral multiple of $1,000,000 in excess thereof or, if
less, the total amount of Base Rate Advances then outstanding for that
Borrower.
(b) Eurodollar Rate Committed Borrowings Prepayments. With respect to
Eurodollar Rate Committed Borrowings, such prepayment shall be made on at
least 3 Business Days' prior written notice to the Agent not later than
11:00 a.m. (New York City time), and if such notice is given the
applicable Borrower shall prepay the outstanding principal amount of the
Committed Advances constituting part of the same Committed Borrowing in
whole or ratably in part, together with accrued interest to the date of
such prepayment on the principal amount prepaid. The minimum amount of
Eurodollar Rate Committed Borrowings which may be prepaid on any occasion
shall be $10,000,000 or an integral multiple of $1,000,000 in excess
thereof or, if less, the total amount of Eurodollar Rate Committed
Advances then outstanding for that Borrower.
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(c) Additional Prepayment Payments. The prepaying Borrower shall, on the date
of the prepayment, pay to the Agent for the account of each Lender
interest accrued to such date of prepayment on the principal amount
prepaid plus, in the case only of a prepayment on any date which is not
the last day of an applicable Eurodollar Interest Period, any amounts
which may be required to compensate such Lender for any losses or out-of-
pocket costs or expenses (including any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds, but
excluding loss of anticipated profits) incurred by such Lender as a result
of such prepayment, provided that such Lender shall exercise reasonable
efforts to minimize any such losses, costs and expenses.
(d) Eurodollar Rate Committed Advance Prepayment Expense. If, due to the
acceleration of any of the Committed Advances pursuant to Section 6.2(b),
an assignment, repayment or prepayment under Section 2.19 or 2.20 or
otherwise, any Lender receives payment of its portion of, or is subject to
any Conversion from, any Eurodollar Rate Committed Advance on any day
other than the last day of an Interest Period with respect to such
Committed Advance, the relevant Borrowers shall pay to the Agent for the
account of such Lender any amounts which may be payable to such Lender by
such Borrower by reason of payment on such day as provided in Section 2.12(c).
2.13 Increases in Costs.
(a) Costs from Law or Authorities. If, due to either
(1) the introduction of, or any change (other than, in the case of
Eurodollar Rate Borrowings, a change by way of imposition or an
increase of reserve requirements described in Section 2.9) in, or
new interpretation of, any law or regulation effective at any time
and from time to time on or after the date hereof, or
(2) the compliance with any guideline or the request from or by any
central bank or other governmental authority (whether or not having
the force of law),
there is an increase in the cost incurred by a Lender in agreeing to make
or making, funding or maintaining any Eurodollar Rate Committed Advance or
Eurodollar Rate Bid Advance then or at any time thereafter outstanding
(excluding for purposes of this Section 2.13 any such increased costs
resulting from (i) Taxes or Other Taxes (as to which Section 2.14 shall
govern) and (ii) changes in the basis of taxation of overall net income or
overall gross income by the United States or by the foreign jurisdiction
or state under the laws of which such Lender is organized or has its
Applicable Lending Office (or any political subdivision thereof), then TBC
shall from time to time, upon demand of such Lender (with a copy of such
demand to the Agent), pay to the Agent for the account of such Lender such
amounts as are required to compensate such Lender for such increased cost,
provided that such Lender shall exercise reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to
minimize any such increased cost and provided further that the Borrowers
shall not be required to pay any such compensation with respect to any
period prior to the 90th day before the date of any such demand, unless
such introduction, change, compliance or request shall have retroactive
effect to a date prior to such 90th day. A certificate as to the amount of
such increase in cost, submitted to the relevant Borrowers and the Agent
by such Lender, shall be conclusive and binding for all purposes under
this Section 2.13(a), absent manifest error.
(b) Increased Capital Requirements. If any Lender determines that
compliance with any law or regulation or any guidelines or request from any
central bank or other governmental authority (whether or not having the force
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of law) which is enacted, adopted or issued at any time and from time to time
after the date hereof affects or would affect the amount of capital
required or expected to be maintained by such Lender (or any corporation
controlling such Lender) and that the amount of such capital is increased
by or based upon the existence of such Lender's Commitment and other
commitments of this type, then, upon demand by such Lender (with a copy of
such demand to the Agent), the Borrowers shall immediately pay to the
Agent for the account of such Lender, from time to time as specified by
such Lender, additional amounts sufficient to compensate such Lender in
the light of such circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable to the existence of
such Lender's Commitment, provided that such Lender shall exercise
reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to minimize any such compensation payable by the
Borrowers hereunder and provided further that the Borrowers shall not be
required to pay any such compensation with respect to any period prior to
the 90th day before the date of any such demand, unless such introduction,
change, compliance or request shall have retroactive effect to a date
prior to such 90th day. A certificate as to such amounts submitted to the
relevant Borrowers and the Agent by such Lender, shall be conclusive and
binding for all purposes, absent manifest error.
(c) Borrower Rights Upon Cost Increases. Upon receipt of notice from any
Lender claiming compensation pursuant to this Section 2.13 or Section 2.14
and as long as no Default has occurred and is continuing, TBC shall have
the right, on or before the 30th day after the date of receipt of any such
notice,
(i) to arrange for one or more Lenders or other commercial banks to
assume the Commitment of such Lender; subject, however, to payment
to the Agent by the assignor or the assignee of a processing and
recording fee of $3,500, in the event the assuming lender is not a
Lender; or
(ii) to arrange for the Commitment of such Lender to be terminated and
all Committed Advances owed to such Lender to be prepaid;
and, in either case, subject to payment in full of all principal,
accrued and unpaid interest, fees and other amounts payable under this
Agreement and then owing to such Lender immediately prior to the
assignment or termination of the Commitment of such Lender.
2.14 Taxes
(a) Exclusion and Inclusion of Taxes. Any and all payments by each Borrower
hereunder or with respect to any Advances or under any Notes shall be
made, in accordance with Section 2.16, free and clear of and without
deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, taxes that
are imposed on its overall net income by the United States and taxes that
are imposed on its overall net income (and franchise taxes imposed in lieu
thereof) by the state or foreign jurisdiction under the laws of which
such Lender or the Agent (as the case may be) is organized or any
political subdivision thereof and, in the case of each Lender, taxes that
are imposed on its overall net income ( and franchise taxes imposed in
lieu thereof) by the state or foreign jurisdiction of such Lender's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities in respect of payments hereunder or with respect to any
Advances or under any Notes, hereinafter referred to as "Taxes"). If any
Borrower shall be required by law to deduct any Taxes from or in respect
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to any sum payable hereunder or with respect to any Advances or under any
Note to any Lender or the Agent, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.14)
such Lender or the Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) such
Borrower shall make such deductions and (iii) such Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.
(b) Payment of Other Taxes. In addition, each Borrower shall pay any present
or future stamp, documentary, excise, property or similar taxes, charges,
or levies that arise from any payment made hereunder or with respect to
any Advances and under any Notes or from the execution, delivery or
registration of, performance under, or otherwise with respect to, this
Agreement or any Notes ( "Other Taxes").
(c) Indemnification as to Taxes. Each Borrower shall indemnify each Lender
and the Agent for and hold it harmless against the full amount of Taxes
and Other Taxes, and for the full amount of taxes of any kind imposed by
any jurisdiction on amounts payable under this Section 2.14, imposed on or
paid by such Lender or the Agent (as the case may be) and any liability (
including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 30 days from
the date such Lender or the Agent (as the case may be) makes written
demand therefor.
(d) Evidence of or Exemption from Taxes. Within 30 days after the date of any
payment of Taxes, the Borrower which paid such Taxes shall furnish to the
Agent, at its address referred to in Section 8.2, the original or a
certified copy of a receipt evidencing such payment. In the case of any
payment hereunder or with respect to the Advances or under any Notes by or
on behalf of any Borrower through an account or branch outside the United
States or by or on behalf of any Borrower by a payor that is not a United
States person, if the Borrower determines that no taxes are payable in
respect thereof, such Borrower shall furnish, or shall cause such payor to
furnish, to the Agent, at such address, an opinion of counsel acceptable
to the Agent stating that such payment is exempt from Taxes. For purposes
of this subsection (d) and subsection (e), the terms "United States" and
"United States person" have the meanings specified in Section 7701 of the
Internal Revenue Code.
(e) Non-U.S. Lenders. Each Lender organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution
and delivery of this Agreement (in the case of each Lender listed in
Schedule I), and from the date on which any other Lender becomes a party
hereto (in the case of each other Lender), and from time to time
thereafter as requested in writing by TBC (but only so long thereafter as
such Lender remains lawfully able to do so), provide each of the Agent and
TBC with two original Internal Revenue Service forms W-8BEN or W-8EC1, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, to establish that such Lender is not subject to, or is entitled
to a reduced rate of, United States withholding tax on payments pursuant
to this Agreement or with respect to any Advances or any Notes. If the
forms provided by a Lender at the time such Lender first becomes a party
to this Agreement indicates a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be considered
excluded from Taxes unless and until such Lender provides the appropriate
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form certifying that a lower rate applies, whereupon withholding tax at
such lower rate only shall be considered excluded from Taxes for periods
governed by such form; provided, however, that, if at the date on which a
Lender becomes a party to this Agreement, the Lender assignor was entitled
to payments under subsection 2.14(a) in respect of United States
withholding tax with respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to withholding taxes
that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to
the Lender assignee on such date. If any form or document referred to in
this subsection 2.14(e) requires the disclosure of information, other than
information necessary to compute the tax payable and information required
on the date hereof by Internal Revenue Service form W-8BEN or W-8EC1, that
the Lender reasonably considers to be confidential, the Lender shall give
notice thereof to the relevant Borrowers and shall not be obligated to
include in such form or document confidential information.
(f) Lender Failure to Provide IRS Forms. For any period with respect to which
any Lender has failed to provide TBC with the appropriate form described
in subsection 2.14(e) (other than if such failure is due to a change in
law occurring after the date on which a form originally was required to be
provided or if such form otherwise is not required under subsection
2.14(e)), such Lender shall not be entitled to indemnification under
subsection (a) or (c) with respect to Taxes imposed by the United States
by reason of such failure; provided, however, that should a Lender become
subject to Taxes because of its failure to deliver a form required
hereunder, TBC shall take such steps as such Lender shall reasonably
request to assist such Lender to recover such Taxes.
2.15 Illegality. If any Lender shall notify the Agent that either
(a) there is any introduction of, or change in or in the interpretation
of, any law or regulation that in the opinion of counsel for such
Lender in the relevant jurisdiction makes it unlawful, or
(b) any central bank or other governmental authority asserts that it is
unlawful
for such Lender to continue to fund or maintain any Eurodollar Rate
Advances or to perform its obligations hereunder with respect to
Eurodollar Rate Advances hereunder, then, upon the issuance of such
opinion of counsel or such assertion by a central bank or other
governmental authority, the Agent shall give notice of such opinion or
assertion to the Borrowers (accompanied by such opinion, if applicable).
The Borrowers shall forthwith either
(i) prepay in full all Eurodollar Rate Committed Advances and all
Eurodollar Rate Bid Advances made by such Lender, with accrued
interest thereon or
(ii) Convert each such Eurodollar Rate Committed Advance made by such
Lender into a Base Rate Advance.
Upon such prepayment or Conversion, the obligation of such Lender to make
Eurodollar Rate Committed Advances or Eurodollar Rate Bid Advances, or to
Convert Committed Advances into Eurodollar Rate Committed Advances, shall
be suspended until the Agent shall notify the Borrowers that the
circumstances causing such suspension no longer exists.
2.16 Payments and Computations.
(a) Time and Distribution of Payments. The Borrowers shall make each payment
hereunder and with respect to any Advances or under any Notes not later
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than 11:00 a.m. (New York City time) on the day when due in U.S. dollars
to the Agent at the Agent's Account in same day funds. The Agent shall
promptly thereafter cause to be distributed like funds relating to the
payment of principal or interest or fees ratably (other than amounts
payable pursuant to Section 2.5, 2.9, 2.13, 2.14, 2.15 or 2.19) to the
Lenders for the account of their respective Applicable Lending Offices,
and like funds relating to the payment of any other amount payable to any
Lender to such Lender for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement.
From and after the effective date of an assignment pursuant to Section
2.20, the Agent shall make all payments hereunder and with respect to any
Advances or under any Notes in respect of the interest assigned thereby to
the Lender assignee thereunder, and the parties to such assignment shall
make all appropriate adjustments in such payments for the periods prior to
such effective date directly between themselves.
(b) Computation of Interest and Fees. All computations of interest based on
the Base Rate shall be made by the Agent on the basis of a year of 365 or
366 days, as the case may be. All computations of interest based on the
Eurodollar Rate or the Federal Funds Rate and of Facility Fees shall be
made by the Agent, and all computations of interest pursuant to Section
2.9 shall be made by a Lender, on the basis of a year of 360 days, in each
case for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest or fees are
payable. Each determination by the Agent (or, in the case of Section 2.9,
by a Lender) of an interest rate hereunder shall be conclusive and binding
for all purposes, absent manifest error.
(c) Payment Due Dates. Whenever any payment hereunder or with respect to any
Advances or under any Notes shall be stated to be due on a day other than
a Business Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of payment of interest or fee, as the case may be; provided,
however, if such extension would cause payment of interest on or principal
of Eurodollar Rate Advances to be made in the next following calendar
month, such payment shall be made on the immediately preceding Business
Day.
(d) Presumption of Borrower Payment. Unless the Agent receives notice from a
Borrower prior to the date on which any payment is due to any Lenders
hereunder that such Borrower will not make such payment in full, the Agent
may assume that the Borrower has made such payment in full to the Agent on
such date and the Agent may, in reliance upon such assumption, cause to be
distributed to each such Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent that such Borrower has
not made such payment in full to the Agent, each such Lender shall repay
to the Agent forthwith on demand such amount distributed to such Lender
together with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount
to the Agent, at the Federal Funds Rate.
2.17 Sharing of Payments, Etc. If any Lender obtains any payment
(whether voluntary, involuntary, through the exercise of any right of set-
off, or otherwise) on account of the Committed Advances made by it (other
than pursuant to Sections 2.9, 2.13, 2.14, 2.15 or 2.19), in excess of its
ratable share of payments on account of the Committed Advances obtained by
all the Lenders, such Lender shall forthwith purchase from the other
Lenders such participations in the Committed Advances made by them as
shall be necessary to cause such purchasing Lender to share the excess
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payment ratably with each of them, provided, however, that if all or any
portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each other Lender shall be rescinded
and each such other Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount
equal to such Lender's ratable share (according to the proportion of (i)
the amount of such Lender's required repayment to (ii) the total amount so
recovered from the purchasing Lender) of any interest or other amount paid
or payable by the purchasing Lender in respect of the total amount so
recovered. The Borrowers agree that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.17 may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as
fully as if such Lender were a creditor of the Borrowers in the amount of
such participation.
2.18 Evidence of Debt.
(a) Lender Records; If Notes Required. Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of each Borrower to such Lender resulting from each Committed
Advance owing to such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder in respect of Committed Advances. Each Borrower shall, upon
notice by any Lender to such Borrower (with a copy of such notice to the
Agent) to the effect that a Committed Note is required or appropriate in
order for such Lender to evidence (whether for purposes of pledge,
enforcement or otherwise) the Committed Advances owing to, or to be made
by, such Lender, such Borrower shall promptly execute and deliver to such
Lender a Committed Note payable to the order of such Lender in a principal
amount up to the Commitment of such Lender.
(b) Record of Borrowings, Payables and Payments. The Register maintained by
the Agent pursuant to Section 2.20(d) shall include a control account, and
a subsidiary account for each Lender, in which accounts (taken together)
shall be recorded
(i) the date and amount of each Borrowing made hereunder to each
Borrower, the Type of Advances constituting such Borrowing and, if
appropriate, the Interest Period applicable thereto,
(ii) the terms of each assignment pursuant to Section 2.20,
(iii) the amount of any principal or interest due and payable or to become
due and payable from each Borrower to each Lender hereunder, and
(iv) the amount of any sum received by the Agent from a Borrower
hereunder and each Lender's share thereof.
(c) Evidence of Payment Obligations. Entries made in good faith by the Agent
in the Register pursuant to subsection (b) above, and by each Lender in
its account or accounts pursuant to subsection (a) above, shall be prima
facie evidence of the amount of principal and interest due and payable or
to become due and payable from a Borrower to, in the case of the Register,
each Lender and, in the case of such account or accounts, such Lender,
under this Agreement, absent manifest error; provided, however, that the
failure of the Agent or such Lender to make an entry, or any finding that
an entry is incorrect, in the Register or such account or accounts shall
not limit or otherwise affect the obligations of the Borrowers under this
Agreement.
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2.19 Alteration of Commitments and Addition of Lenders.
(a) Alter Lender Commitment. By a written agreement executed only by TBC, the
Agent and the affected Lender and any non-party lender involved,
(i) the Commitment of such affected Lender may be increased to the
amount set forth in such agreement;
(ii) such non-party lender may be added as a Lender with a Commitment as
set forth in such agreement, provided that such lender agrees to be
bound by all the terms and provisions of this Agreement; and
(iii) the unused portion of the Commitment of such affected Lender may be
reduced or terminated and the Committed Advances owing to such
Lender may be prepaid in whole or in part, all as set forth in such
agreement.
(b) Conditions to Alteration. The Agent may execute any such agreement
without the prior consent of any Lender other than the Lender affected,
provided, however, that if at the time the Agent proposes to execute such
agreement either (A) TBC's long-term senior unsecured debt is rated lower
than A- by S&P or lower than A3 by Moody's or (B) a Default has occurred
and is continuing, then the Agent shall not execute any such agreement
unless it has first obtained the prior written consent of the Majority
Lenders, and provided further that the Agent shall not execute any such
agreement without the prior written consent of the Majority Lenders if
such agreement would increase the total of the Commitments to an amount in
excess of $700,000,000 or, pursuant to Section 2.19(c), $900,000,000.
(c) Increase Total Commitment. The Company has the right, once a year, to
increase the total of the Commitments through a Request for Alteration, in
minimum increments of $50,000,000, up to a maximum aggregate of
Commitments of $900,000,000, provided that, in addition to the
requirements specified in Section 2.19(b), at the time of and after giving
effect to an increase, TBC's long-term senior unsecured non-credit-
enhanced debt ratings from Moody's and S&P are better than or equal to A3
and A-, respectively. The Company may offer the increases to
(i) the Lenders, and each Lender shall have the right, but no
obligation, to increase its Commitment, by giving notice thereof to
the Agent, to all or a portion of the proposed increase (the
"Proposed Increased Commitment"), allocations to be based on the
ratio of each Lender's Proposed Increased Commitment, if any, to the
aggregate of all Proposed Increased Commitments, and
(ii) third party financial institutions acceptable to the Agent, provided
that the minimum commitment of each such institution equals or
exceeds $50,000,000.
(d) Request for Alteration. The Agent shall give each Lender prompt notice of
any such agreement becoming effective. All requests for Lender consent
under the provisions of this Section 2.19 shall specify the date upon
which any such increase, addition, reduction, termination, or prepayment
shall become effective (the "Effective Date") and shall be made by means
of a Request for Alteration substantially in the form as set forth in
Exhibit C. On the Effective Date on which the Commitment of any Lender is
increased, decreased, terminated or created or on which prepayment is
made, all as described in such Request for Alteration, the Borrowers or
such Lender, as the case may be, shall make available to the Agent not
later than 12:30 p.m. (New York City time) on such date, in same day
funds, the amount, if any, which may be required (and the Agent shall
distribute such funds received by it to the Borrowers or to such Lenders,
as the case may be) so that at the close of business on such date the sum
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of the Committed Advances of each Lender then outstanding shall be in the
same proportion to the total of the Committed Advances of all the Lenders
then outstanding as the Commitment of such Lender is to the total of the
Commitments. The Agent shall give each Lender notice of the amount to be
made available by, or to be distributed to, such Lender at least 3
Business Days before such payment is made.
2.20 Assignments; Sales of Participations and Other Interests in Advances.
(a) Assignment of Lender Obligations. From time to time each Lender may, with
the prior written consent of TBC and subject to the qualifications set
forth below, assign to one or more Lenders or an Eligible Assignee all or
any portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment, the Committed
Advances owing to it and the Committed Note, if any, held by it) and will,
at any time, if arranged by the Company pursuant to clause (i)(A) below
upon at least 30 days' notice to such Lender and the Agent, assign to one
or more Eligible Assignees all of its rights and obligations under this
Agreement (including without limitation, all of its Commitment, the
Committed Advances owing to it and the Committed Note, if any, held by
it); subject to the following:
(i) If such Lender notifies TBC and the Agent of its intent to request
the consent of TBC to an assignment, TBC shall have the right, for
30 days after receipt of such notice and so long as no Event of
Default has occurred and is continuing, in its sole discretion
either (A) to arrange for one or more Eligible Assignees to accept
such assignment (a "Required Assignment") or (B) to arrange for the
rights and obligations of such Lender (including, without
limitation, such Lender's Commitment), and the total Commitments, to
be reduced by an amount equal to the amount of such Lender's
Commitment proposed to be assigned and, in connection with such
reduction, to prepay that portion of the Committed Advances owing to
such Lender which it proposes to assign;
(ii) If TBC fails to notify such Lender within 30 days of TBC's receipt
of such Lender's request for consent to assignment that TBC has
arranged for an assumption or reduction of the portion of Commitment
to be assigned, the Borrowers shall be deemed to consent to the
proposed assignment;
(iii) Any such assignment shall not require any Borrower to file a
registration statement with the Securities and Exchange Commission
or apply to qualify the interests in the Committed Advances under
the blue sky laws of any state and the assigning Lender shall
otherwise comply with all federal and state securities laws
applicable to such assignment;
(iv) The amount of the Commitment of the assigning Lender being assigned
pursuant to any such assignment (determined as of the date of the
assignment) shall either (A) equal 50% of all such rights and
obligations (or 100% in the case of a Required Assignment) or (B)
not be less than $10,000,000 or an integral multiple of $1,000,000
in excess thereof;
(v) The aggregate amount of the Commitment assigned pursuant to all such
assignments of such Lender (after giving effect to such assignment)
shall in no event exceed 50% (except in the case of a Required
Assignment) of all such Lender's Commitment (as set forth in
Schedule I, in the case of each Lender that is a party hereto as of
September 27, 2000, or as set forth in the Register as the aggregate
Commitment assigned to such Lender pursuant to one or more
assignments, in the case of any assignee); and
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(vi) No Lender shall be obligated to make a Required Assignment unless
such Lender has received payments in an aggregate amount at least
equal to the outstanding principal amount of all Committed Advances
being assigned, together with accrued interest thereon to the date
of payment of such principal amount and all other amounts payable to
such Lender under this Agreement (including without limitation
Section 2.12(b), provided that such Lender shall receive its pro
rata share of the Facility Fee on the next date on which the
Facility Fee is payable).
(b) Effect of Lender Assignment. From and after the effective date of any
assignment pursuant to Section 2.20(a), (i) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such assignment, it shall have the
rights and obligations of a Lender hereunder except that such assignee may
not elect to assign any of its rights and obligations under this Agreement
acquired by such assignment for a period of nine months following the
effective date specified in such assignment and (ii) the Lender assignor
thereunder shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such assignment, relinquish its rights
(other than its rights under Section 2.13, 2.14 or 2.19 to the extent any
claim thereunder relates to an event arising prior to such assignment) and
be released from its obligations under this Agreement (and, in the case of
an assignment covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall
cease to be a party hereto).
(c) Security Interest; Assignment to Lender Affiliate. Notwithstanding any
other provision in this Agreement, any Lender may, upon prior or
contemporaneous notice to TBC and the Agent, at any time (i) create a
security interest in all or any portion of its rights under this Agreement
(including without limitation, the Advances owing to it and the Notes held
by it, if any) in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System, and
(ii) assign all or any portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its
Commitment, the Committed Advances owing to it and the Committed Note held
by it, if any) to an Affiliate of such Lender unless the result of such an
assignment would be to increase the cost to any Borrowers of requesting,
borrowing, continuing, maintaining, paying or converting any Advances.
(d) Agent's Register. The Agent shall maintain at its address referred to in
Section 8.2 a copy of each assignment delivered to and accepted by it and
a register for the recordation of the names and addresses of the Lenders
and the Commitment of, and principal amount of the Committed Advances of
each Borrower owing to, each Lender from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrowers, the Agent and the
Lenders may treat each entity whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall
be available for inspection by the Borrowers or any Lender at any
reasonable time and from time to time upon reasonable prior notice. Upon
receipt by the Agent from the assigning Lender of an assignment in form
and substance satisfactory to the Agent executed by an assigning Lender
and an assignee representing that it is an Eligible Assignee, together
with evidence of each Committed Advance subject to such assignment, and a
processing and recording fee of $3,500 (payable by either the assignor or
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the assignee), the Agent shall, if such assignment is a Required
Assignment or has been consented to by the Borrowers to the extent
required by Section 2.20(a), (i) accept such assignment, (ii) record the
information contained therein in the Register, and (iii) give prompt
notice thereof to TBC.
(e) Lender Sale of Participations. Each Lender may sell participations in all
or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments, the
Advances owing to it and the Notes held by it, if any) to one or more
Affiliates of such Lender or to one or more other commercial banks;
provided, however, that
(i) any such participation shall not require any Borrowers to file a
registration statement with the Securities and Exchange Commission
or apply to qualify any interests in the Advances or any Notes under
the blue sky laws of any state and the Lender selling or granting
such participation shall otherwise comply with all federal and state
securities laws applicable to such transaction,
(ii) no purchaser of such a participation shall be considered to be a
"Lender" for any purpose under the Agreement,
(iii) such Lender's obligations under this Agreement (including, without
limitation, its Commitment to the Borrowers) shall remain unchanged,
(iv) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations,
(v) such Lender shall remain the holder of any Notes issued with respect
to its Advances for all purposes of this Agreement, and
(vi) the Borrowers, the Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement.
(f) Confidential Borrower Information. Any Lender may, in connection with any
assignment or participation or proposed assignment or participation
pursuant to this Section 2.20, disclose to the assignee or participant or
proposed assignee or participant, any information relating to the
Borrowers furnished to such Lender by or on behalf of the Borrowers;
provided, however, that, prior to any such disclosure of Confidential
Information, such Lender shall obtain the written consent of the
Borrowers, and the assignee or participant or proposed assignee or
participant shall agree to preserve the confidentiality of any such
Confidential Information received by it from such Lender except as
disclosure may be required or appropriate to governmental authorities,
pursuant to legal process, or by law or governmental regulation or
authority.
2.21 Subsidiary Borrowers.
(a) Subsidiary Borrower Designation. TBC may at any time, and from time to
time, by delivery to the Agent of a Borrower Subsidiary Letter
substantially in the form of Exhibit D, duly executed by TBC and the
respective Subsidiary, designate such Subsidiary as a "Subsidiary
Borrower" for purposes of this Agreement, and such Subsidiary shall
thereupon become a "Subsidiary Borrower" for purposes of this Agreement
and, as such, shall have all of the rights and obligations of a Borrower
hereunder. The Agent shall promptly notify each Lender of each such
designation by TBC and the identity of the designated Subsidiary.
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(b) TBC Consent to Subsidiary Borrower Borrowings and Notices. No Advances
shall be made to a Subsidiary Borrower, and no Conversion of any Advances
at the request of a Subsidiary Borrower shall be effective, without, in
each and every instance, the prior consent of TBC, in its sole discretion,
which shall be evidenced by the countersignature of TBC to the relevant
Notice of Borrowing or notice of Conversion. In addition, no notices
which are to be delivered by a Borrower hereunder shall be effective, with
respect to any Subsidiary Borrower, unless the notice is countersigned by TBC.
(c) Subsidiary Borrower Termination Event. The occurrence of any of the
following events with respect to any Subsidiary Borrower shall constitute
a "Subsidiary Borrower Termination Event" with respect to such Subsidiary
Borrower:
(i) such Subsidiary Borrower ceases to be a Subsidiary;
(ii) such Subsidiary Borrower is liquidated or dissolved;
(iii) such Subsidiary Borrower fails to preserve and maintain its
existence or makes any material change in the nature of its business
as carried out on the date such Subsidiary Borrower became a
Borrower hereunder;
(iv) such Subsidiary Borrower merges or consolidates with or into another
Person, or conveys, transfers, leases, or otherwise disposes of
(whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter
acquired) to any Person (except that a Subsidiary Borrower may merge
into or dispose of assets to another Borrower);
(v) any of the "Events of Default" described in Section 6.1(a) through
(f) occurs to or with respect to such Subsidiary Borrower as if such
Subsidiary Borrower were "TBC"; or
(vi) the Guaranty with respect to such Subsidiary Borrower ceases, for
any reason, to be valid and binding on TBC or TBC so states in
writing.
(d) Terminated Subsidiary Borrower. Upon the occurrence of a Subsidiary
Borrower Termination Event with respect to any Subsidiary Borrower, such
Subsidiary Borrower (a "Terminated Subsidiary Borrower") shall cease to be
a Borrower for purposes of this Agreement and shall no longer be entitled
to request or borrow Advances hereunder. All outstanding Advances of a
Terminated Subsidiary Borrower shall be automatically due and payable as
of the date on which the Subsidiary Borrower Termination Event of such
Terminated Subsidiary Borrower occurred, together with accrued interest
thereon and any other amounts then due and payable by that Borrower
hereunder, unless, in the case of a Subsidiary Borrower Termination Event
described in paragraph (iv) of Section 2.21(c), the other Person party to
the transaction is a Borrower and such other Borrower has assumed in
writing all of the outstanding Advances and other obligations under this
Agreement and under the Notes, if any, of the Terminated Subsidiary Borrower.
(e) TBC as Subsidiary Borrowers' Agent. Each of the Subsidiary Borrowers
hereby appoints and authorizes TBC to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated
to TBC by the terms hereof, together with such powers as are reasonably
incidental thereto.
(f) Subsidiaries' Several Liabilities. Notwithstanding anything in this
Agreement to the contrary, each of the Subsidiary Borrowers shall be
severally liable for the liabilities and obligations of such Subsidiary
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Borrower under this Agreement and its Borrowings, and Notes, if any. No
Subsidiary Borrower shall be liable for the obligations of any other
Borrower under this Agreement or any Borrowings of any other Borrower or
any other Borrower's Notes, if any. Each Subsidiary Borrower shall be
severally liable for all payments of the principal of and interest on
Advances to such Subsidiary Borrower, and any other amounts due hereunder
that are specifically allocable to such Subsidiary Borrower or the
Advances to such Subsidiary Borrower. With respect to any amounts due
hereunder, including fees, that are not specifically allocable to a
particular Borrower, each Borrower shall be liable for such amount pro
rata in the same proportion as such Borrower's outstanding Advances bear
to the total of then-outstanding Advances to all Borrowers.
ARTICLE 3
Representations and Warranties
3.1 Representations and Warranties by the Borrowers. Each of the Borrowers
represents and warrants as follows:
(a) Corporate Standing. TBC is a duly organized corporation existing in good
standing under the laws of the State of Delaware. Each Subsidiary
Borrower is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, and each of TBC and each
Subsidiary Borrower is qualified to do business in every jurisdiction
where such qualification is required, except where the failure to so
qualify would not have a material adverse effect on the financial
condition of TBC and the Subsidiary Borrowers as a whole.
(b) Corporate Powers; Governmental Approvals. The execution and delivery and
the performance of the terms of this Agreement are, and the execution and
delivery and the performance of the terms of any Notes and of each
Guaranty will be, within the corporate powers of each Borrower party
thereto, have been or will have been (as appropriate) duly authorized by
all necessary corporate action, have, or will have, received (as
appropriate) all necessary governmental approval, if any (which approval,
if any, remains in full force and effect), and do not contravene any law,
any provision of the Certificate of Incorporation or By-Laws of any
Borrower party thereto or any contractual restriction binding on any
Borrower party thereto.
(c) Enforceability. This Agreement and the Notes, if any, when duly executed
and delivered by each Borrower party thereto, will constitute legal, valid
and binding obligations of such Borrower, enforceable against such
Borrower in accordance with their respective terms, and each Guaranty,
when duly executed and delivered by TBC, will constitute a legal, valid
and binding obligation of TBC, enforceable against TBC in accordance with
its terms, subject to general equitable principles and except as the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general
application relating to creditors' rights.
(d) No Material Pending or Threatened Actions. In TBC's opinion, there are no
pending or threatened actions or proceedings before any court or
administrative agency that are reasonably likely to have a material
adverse affect on the financial condition or operations of the Company
which is likely to impair the ability of the Company to repay the Advances
or which would affect the legality, validity or enforceability of this
Agreement or the Advances.
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(e) Consolidated Statements. The Consolidated statement of financial position
as of December 31, 1999 and the related Consolidated statement of earnings
and retained earnings for the year then ended (copies of which have been
furnished to each Lender) correctly set forth the Consolidated financial
condition of TBC and its Subsidiaries as of such date and the result of
the Consolidated operations for such year. The Consolidated statement of
financial position as of June 30, 2000 and the related Consolidated
statement of earnings and retained earnings for the six month period then
ended (copies of which have been furnished to each Lender) correctly set
forth, subject to year-end audit adjustments, the Consolidated financial
condition of TBC and its Subsidiaries as of such date and the result of
the Consolidated operations for such six month period.
(f) Regulation U. No Borrower is engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock within the meaning
of Regulation U issued by the Board of Governors of the Federal Reserve
System, and no proceeds of any Advance will be used to purchase or carry
any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock. Following application of the
proceeds of each Advance, not more than 25 percent of the value of the
assets (either of any Borrower only or of each Borrower and its
subsidiaries on a Consolidated basis) subject to the provisions of Section
4.2(a) or subject to any restriction contained in any agreement or
instrument between any Borrower and any Lender or any Affiliate of a
Lender relating to Debt within the scope of Section 6.1(d) will be margin
stock (within the meaning of Regulation U issued by the Board of Governors
of the Federal Reserve System).
(g) Investment Company Act. No Borrower is an "investment company," or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company
Act of 1940, as amended. Neither the making of any Advances, nor the
application of the proceeds or repayment thereof by any Borrower, nor the
consummation of the other transactions contemplated hereby, will violate
any provision of such Act or any rule, regulation or order of the
Securities and Exchange Commission thereunder.
(h) No Material Adverse Change. There has been no material adverse change in
the Company's financial condition or results of operations since December
31, 1999 that is likely to impair the ability of the Company to repay the
Advances.
ARTICLE 4
Covenants of TBC
4.1 Affirmative Covenants of TBC. From the date of this Agreement and so long
as any amount is payable by a Borrower to any Lender hereunder or any
Commitment is outstanding, TBC will:
(a) Periodic Reports. Furnish to the Lenders:
(1) within 60 days after the close of each of the first three quarters
of each of TBC's fiscal years, a Consolidated statement of financial
position of TBC and the Subsidiaries as of the end of such quarter
and a Consolidated comparative statement of earnings and retained
earnings of TBC and the Subsidiaries for the period commencing at
the end of the previous fiscal year and ending with the end of such
quarter, each certified by an authorized officer of TBC,
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(2) within 120 days after the close of each of TBC's fiscal years, and
if requested by the Agent, within 60 days after the close of each of
the first three quarters thereof, a statement certified by an
authorized officer of TBC showing in detail the computations
required by the provisions of Sections 4.2(a), 4.2(b), 4.2(c) and
4.2(d), based on the figures which appear on the books of account of
TBC and the Subsidiaries at the close of such quarters,
(3) within 120 days after the close of each of TBC's fiscal years, a
copy of the annual audit report of TBC, certified by independent
public accountants of recognized standing acceptable to the Agent,
together with financial statements consisting of a Consolidated
statement of financial position of TBC and the Subsidiaries as of
the end of such fiscal year and a Consolidated statement of earnings
and retained earnings of TBC and the Subsidiaries for such fiscal year,
(4) within 120 days after the close of each of TBC's fiscal years, a
statement certified by the independent public accountants who shall
have prepared the corresponding audit report furnished to the
Lenders pursuant to the provisions of clause (3) of this subsection
(a), to the effect that, in the course of preparing such audit
report, such accountants had obtained no knowledge, except as
specifically stated, that TBC had been in violation of the
provisions of any one of the Sections 4.2(a), 4.2(b), 4.2(c) and
4.2(d), at any time during such fiscal year,
(5) promptly upon their becoming available, all financial statements,
reports and proxy statements which TBC sends to its stockholders,
(6) promptly upon their becoming available, all regular and periodic
financial reports which TBC or any Subsidiary files with the
Securities and Exchange Commission or any national securities exchange,
(7) within 3 Business Days after the discovery of the occurrence of any
event which constitutes a Default, notice of such occurrence
together with a detailed statement by a responsible officer of TBC
of the steps being taken by TBC or the appropriate Subsidiary to
cure the effect of such event, and
(8) such other information respecting the financial condition and
operations of TBC or the Subsidiaries as the Agent may from time to
time reasonably request.
In lieu of furnishing the Lenders the items referred to in clauses (1),
(3), (5) and (6) above, TBC may notify the Lenders that such items are
available on TBC's website at www.boeing.com or at such other website as
notified to the Agent and the Lenders.
(b) Payment of Taxes, Etc. Duly pay and discharge, and cause each Subsidiary
duly to pay and discharge, all material taxes, assessments and
governmental charges upon it or against its properties prior to a date
which is 5 Business Days after the date on which penalties are attached
thereto, except and to the extent only that the same shall be contested in
good faith and by appropriate proceedings by TBC or the appropriate
Subsidiary.
(c) Insurance. Maintain, and cause each Subsidiary to maintain, with
financially sound and reputable insurance companies or associations,
insurance of the kinds, covering the risks and in the relative
proportionate amounts usually carried by companies engaged in businesses
similar to that of TBC or such Subsidiary, except, to the extent
consistent with good business practices, such insurance may be provided by
TBC through its program of self insurance.
(d) Corporate Existence. Preserve and maintain its corporate existence.
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4.2 General Negative Covenants of TBC. From the date of this Agreement and so
long as any amount shall be payable by TBC or any other Borrower to any
Lender hereunder or any Commitment shall be outstanding, TBC will not:
(a) Mortgages, Liens, Etc. Create, incur, assume or suffer to exist any
mortgage, pledge, lien, security interest or other charge or encumbrance
(including the lien or retained security title of a conditional vendor)
upon or with respect to any of its Property, Plant and Equipment, or upon
or with respect to the Property, Plant and Equipment of any Subsidiary, or
assign or otherwise convey, or permit any Subsidiary to assign or
otherwise convey, any right to receive income from or with respect to its
Property, Plant and Equipment, except
(1) liens in connection with workmen's compensation, unemployment
insurance or other social security obligations;
(2) liens securing the performance of bids, tenders, contracts (other
than for the repayment of borrowed money), leases, statutory
obligations, surety and appeal bonds, liens to secure progress or
partial payments made to TBC or such Subsidiary and other liens of
like nature made in the ordinary course of business;
(3) mechanics', workmen's, materialmen's or other like liens arising in
the ordinary course of business in respect of obligations which are
not due or which are being contested in good faith;
(4) liens for taxes not yet due or being contested in good faith and by
appropriate proceedings by TBC or the affected Subsidiary;
(5) liens which arise in connection with the leasing of equipment in the
ordinary course of business;
(6) liens on Property, Plant and Equipment owned by TBC or any
Subsidiary of TBC existing on the date of this Agreement;
(7) liens on assets of a Person existing at the time such Person is
merged into or consolidated with TBC or a Subsidiary of TBC or at
the time of purchase, lease, or acquisition of the property of
Voting Stock of such Person as an entirety or substantially as an
entirety by TBC or a Subsidiary of TBC, whether or not any Debt
secured by such liens is assumed by TBC or such Subsidiary, provided
that such liens are not created in anticipation of such purchase,
lease, acquisition or merger;
(8) liens securing Debt of a Subsidiary of TBC owing to TBC or to
another Subsidiary;
(9) liens on assets existing at the time of acquisition of such property
by TBC or a Subsidiary of TBC or purchase money liens to secure the
payment of all or part of the purchase price of property upon
acquisition of such assets by TBC or such Subsidiary or to secure
any Debt incurred or guaranteed by TBC or a Subsidiary prior to, at
the time of, or within one year after the later of the acquisition,
completion or construction (including any improvements on existing
property), or commencement of full operation, of such property,
which Debt is incurred or guaranteed solely for the purpose of
financing all or any part of the purchase price thereof or
construction or improvements thereon; provided, however, that in the
case of any such acquisition, construction or improvement, the lien
shall not apply to any property theretofore owned by TBC or such
Subsidiary other than, in the case of such construction or
improvement, any theretofore unimproved real property on which the
property so constructed or the improvement made is located;
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(10) any extension, renewal or replacement (or successive extensions,
renewals or replacements in whole or in part of any lien referred to
in the foregoing; provided, however, that the principal amount of
Debt secured thereby shall not exceed the principal amount of Debt
so secured at the time of such extension, renewal or replacement and
that such extension, renewal or replacement shall be limited to all
or any part of the property that secured the lien so extended,
renewed or replace (plus improvements and construction on such
property); and
(11) other liens, charges and encumbrances, so long as the aggregate
amount of the Consolidated Debt for which all such liens, charges
and encumbrances serve as security does not exceed 15% of
Consolidated net Property, Plant and Equipment.
(b) Consolidated Debt. Permit Consolidated Debt (subject to Section 4.3) to
be at any time more than 60% of Total Capital, where "Total Capital" means
the sum of Shareholders' Equity and Consolidated Debt.
(c) Payment in Violation of an Agreement. Make any payment, or permit any
Subsidiary to make any payment, of principal or interest, on any Debt
which payment would constitute a violation of the terms of this Agreement
or of the terms of any indenture or agreement binding on such corporation
or to which such corporation is a party except, in the case of any payment
made by a Subsidiary, to the extent such payment is not likely to impair
the ability of TBC to repay the Advances.
(d) Merger or Consolidation. Merge or consolidate with or into, or convey,
transfer, lease, or otherwise dispose of (whether in one transaction or in
a series of transactions) all or substantially all of its assets (whether
now owned or hereafter acquired) to any Person except that a Borrower may
merge or consolidate with any Person so long as such Borrower is the
surviving corporation and no Default has occurred and is continuing or
would result therefrom, and except that any direct or indirect Subsidiary
of TBC may merge or consolidate with or into, or dispose of assets to, TBC
or any other direct or indirect Subsidiary of TBC, provided, in each case,
that no Event of Default has occurred and is continuing at the time of
such proposed transaction or would result therefrom.
(e) Material Change in Business. Make any material change in the nature of
its business as carried out on the date hereof.
4.3 Financial Statement Terms. For purposes of Section 4.2(b), all
capitalized terms not defined in this Agreement shall have the respective
meanings used in TBC's published Consolidated financial statements and
calculated under the generally accepted accounting principles and
practices applied by TBC on the date hereof in the preparation of such
financial statements. However, notwithstanding the foregoing, (a) such
terms shall exclude amounts attributable to Boeing Capital Services
Corporation and its Subsidiaries and Boeing Financial Corporation, a
Delaware corporation; and (b) Total Capital shall exclude the effects of
any repurchase by TBC of its common stock and any merger-related
accounting adjustments which are attributable to the merger with or
acquisition of McDonnell Douglas Corporation by TBC.
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4.4 Waivers of Covenants. The departure by TBC or any Subsidiary from the
requirements of any of the provisions of this Article 4 shall be permitted
only if such departure has been consented to in advance in a writing
signed by the Majority Lenders, and such writing shall be effective as a
consent only to the specific departure described in such writing. Such
departure by TBC or any Subsidiary when properly consented to by the
Majority Lenders shall not constitute an Event of Default under Section
6.1(c).
ARTICLE 5
Conditions Precedent to Borrowings
5.1 Conditions Precedent to the Initial Borrowing of TBC. The obligation of
each Lender to make its initial Advance to TBC is subject to receipt by
the Agent on or before the day of the initial Borrowing of all of the
following, each dated as of the day hereof, in form and substance
satisfactory to the Agent and its counsel:
(a) Documentation. Copies of all documents, certified by an officer of
TBC, evidencing necessary corporate action by TBC and governmental
approvals, if any, with respect to this Agreement, to the Notes, if any,
and to Guaranties to be delivered by TBC pursuant to Section 5.4(e);
(b) Officer's Certificate. A certificate of the Secretary or an
Assistant Secretary of TBC which certifies the names of the officers
of TBC authorized to sign the Notes, if any, and the other documents
to be delivered hereunder, together with true specimen signatures of
such officers and facsimile signatures of officers authorized to
sign by facsimile signature (on which certificate each Lender may
conclusively rely until it receives a further certificate of the
Secretary or an Assistant Secretary of TBC canceling or amending the
prior certificate and submitting specimen signatures of the officers
named in such further certificate);
(c) Opinion of Company Counsel. A favorable opinion of counsel for TBC
substantially in the form of Exhibit E and as to such other matters
as the Agent may reasonably request, which opinion TBC hereby
expressly instructs such counsel to prepare and deliver;
(d) Opinion of Agent's Counsel. A favorable opinion of Shearman &
Sterling, counsel for the Agent, substantially in the form of Exhibit F;
(e) Termination of 1999 Agreement. TBC shall have terminated in whole
the commitments of the banks parties to the 1999 Credit Agreement; and
(f) Satisfaction of 1999 Agreement Obligations. TBC and its
Subsidiaries shall have satisfied all of their respective
obligations under the 1999 Credit Agreement including, without
limitation, the payment of all fees under such agreement.
5.2 Conditions Precedent to Each Committed Borrowing of TBC. The obligation
of each Lender to make a Committed Advance on the occasion of each
Committed Borrowing (including the initial Borrowing) is subject to the
further conditions precedent that on the date of the request for a
Committed Borrowing and on the date of such Borrowing, the following
statements shall be true, and both the giving of the applicable Notice of
Committed Borrowing and the acceptance by TBC of the proceeds of such
Committed Borrowing shall be a representation by TBC that:
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(a) the representations and warranties contained in subsections (a)
through (g) of Section 3.1 are true and accurate on and as of each
such date as though made on and as of each such date (except to the
extent that such representations and warranties relate solely to an
earlier date); and
(b) as of each such date no event has occurred and is continuing, or
would result from the proposed Committed Borrowing, which
constitutes a Default.
5.3 Conditions Precedent to Each Bid Borrowing of TBC. The obligation of any
Lender to make a Bid Advance on the occasion of a Bid Borrowing (including
the initial Borrowing) is subject to the further conditions precedent that:
(a) Notice of Bid Borrowing. The Agent shall have received the written
confirmatory Notice of Bid Borrowing with respect thereto;
(b) Bid Notes. On or before the date of such Bid Borrowing, but prior
to such Bid Borrowing, the Agent shall have received a Bid Note
payable to the order of such Lender for each of the one or more Bid
Advances to be made by such Lender as part of such Bid Borrowing, in
a principal amount equal to the principal amount of the Bid Advance
to be evidenced thereby and otherwise on such terms as were agreed
to for such Bid Advance in accordance with Section 2.5;
(c) Periodic Reports. Each Lender intending to make a Bid Advance shall
have received the statements provided by TBC pursuant to Section
4.1(a)(1), (2) and (3) or shall have received notice that such
statements are available on TBC's website www.boeing.com or any
successor website notified to the Agent and the Lenders; and
(d) Representations. On the date of such request and the date of such
Borrowing, the following statements shall be true, and each of the
giving of the applicable Notice of Borrowing and the acceptance by
TBC of the proceeds of such Bid Borrowing shall be a representation
by TBC that:
(i) the representations and warranties contained in subsections
(a) through (g) of Section 3.1 are true and accurate on and as
of each such date as though made on and as of each such date
(except to the extent that such representations and warranties
relate solely to an earlier date);
(ii) as of each such date no event has occurred and is continuing,
or would result from the proposed Bid Borrowing, which
constitutes a Default; and
(iii) no event has occurred and no circumstance exists as a result
of which any information concerning TBC that has been provided
by TBC to the Agent or the Lenders in connection with such Bid
Borrowing would include an untrue statement of a material fact
or omit to state any material fact or any fact necessary to
make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
5.4 Conditions Precedent to the Initial Borrowing of a Subsidiary Borrower.
The obligation of each Lender to make its initial Advance to any
particular Subsidiary Borrower is subject to the receipt by the Agent, on
or before the day of the initial Borrowing by such Subsidiary Borrower, of
all of the following, each dated on or prior to the day of the initial
Borrowing, in form and substance satisfactory to the Agent and its
counsel:
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(a) Borrower Subsidiary Letter. A Borrower Subsidiary Letter,
substantially in the form of Exhibit D, executed by such Subsidiary
Borrower and TBC;
(b) Documentation. Copies of all documents, certified by an officer of
the Subsidiary Borrower, evidencing necessary corporate action by
the Subsidiary Borrower and governmental approvals, if any, with
respect to this Agreement and any Notes;
(c) Officer's Certificate. A certificate of the Secretary or an
Assistant Secretary of TBC or the Subsidiary Borrower which
certifies the names of the officers of the Subsidiary Borrower
authorized to sign the Notes and the other documents to be delivered
hereunder, together with true specimen signatures of such officers
and facsimile signatures of officers authorized to sign by facsimile
signature (on which certificate each Lender may conclusively rely
until it receives a further certificate of the Secretary or an
Assistant Secretary of TBC or the Subsidiary Borrower canceling or
amending the prior certificate and submitting signatures of the
officers named in such further certificate);
(d) Opinion of Subsidiary Counsel. A favorable opinion of in-house
counsel to the Subsidiary Borrower, substantially in the form of
Exhibit G and as to such other matters as the Agent may reasonably
request;
(e) TBC Guaranty. A Guaranty of TBC that unconditionally guarantees the
payment of all obligations of such Subsidiary Borrower hereunder and
under the Notes of such Subsidiary Borrower, substantially in the
form of Exhibit H, executed and delivered by TBC to the Agent; and
(f) Opinion of TBC Counsel. A favorable opinion of in-house counsel to
TBC, substantially in the form of Exhibit I and as to such other
matters as the Agent may reasonably request.
5.5 Conditions Precedent to Each Committed Borrowing of a Subsidiary Borrower.
The obligation of each Lender to make a Committed Advance to a Subsidiary
Borrower on the occasion of each Committed Borrowing (including the
initial Borrowing) is subject to the further conditions precedent that on
the date of the request for such Committed Borrowing and the date of such
Borrowing, the following statements shall be true, and each of the giving
of the applicable Notice of Committed Borrowing and the acceptance by such
Subsidiary Borrower of the proceeds of such Committed Borrowing shall be
(a) a representation by such Subsidiary Borrower that:
(i) the representations and warranties of that Subsidiary Borrower
contained (A) in subsections (a) through (g) of Section 3.1 are
true and accurate on and as of each such date as though made on
and as of each such date (except to the extent that such
representations and warranties relate solely to an earlier
date), and (B) in its Borrower Subsidiary Letter are true and
correct on and as of the date of such Borrowing, before and
after giving effect to such Borrowing; and
(ii) as of each such date no event has occurred and is continuing, or
would result from the proposed Committed Borrowing, which
constitutes a Default;
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and (b) a representation by TBC that the representations and warranties of
TBC contained in subsections (a) through (g) of Section 3.1 are true and
accurate on and as of each such date as though made on and as of each such
date (except to the extent that such representations and warranties relate
solely to an earlier date), and that, as of each such date, no event has
occurred and is continuing, or would result from the proposed Committed
Borrowing, which constitutes a Default.
5.6 Conditions Precedent to Each Bid Borrowing of a Subsidiary Borrower. The
obligation of any Lender to make a Bid Advance to any particular
Subsidiary Borrower on the occasion of each Bid Borrowing (including the
initial Borrowing) is subject to the further conditions precedent that:
(a) Notice of Bid Borrowing. The Agent shall have received the written
confirmatory Notice of Bid Borrowing with respect thereto;
(b) Bid Notes. On or before the date of such Bid Borrowing, but prior
to such Bid Borrowing, the Agent shall have received a Bid Note
payable to the order of such Lender for each of the one or more Bid
Advances to be made by such Lender as part of such Bid Borrowing, in
a principal amount equal to the principal amount of the Bid Advance
to be evidenced thereby and otherwise on such terms as were agreed
to for such Bid Advance in accordance with Section 2.5;
(c) Periodic Reports. Each Lender intending to make a Bid Advance shall
have received the statements provided by TBC pursuant to Section
4.1(a)(1), (2) and (3) or shall have received notice that such
statements are available on TBC's website; and
(d) Subsidiary Representations. On the date of such request and the
date of such Borrowing, the following statements shall be true, and
each of the giving of the applicable Notice of Bid Borrowing and the
acceptance by the Subsidiary of the proceeds of such Bid Borrowing
shall be (a) a representation by such Subsidiary Borrower that:
(i) the representations and warranties contained (A) in
subsections (a) through (g) of Section 3.1 hereof with respect
to such Subsidiary Borrower are true and accurate on and as of
each such date as though made on and as of each such date
(except to the extent that such representations and warranties
relate solely to an earlier date), and (B) in its Borrower
Subsidiary Letter are true and correct on and as of the date
of such Borrowing, before and after giving effect to such
Borrowing;
(ii) as of each such date no event has occurred and is continuing,
or would result from the proposed Bid Borrowing which
constitutes a Default; and
(iii) no event has occurred and no circumstance exists as a result
of which any information concerning TBC or the Subsidiary
Borrower that has been provided by TBC or the Subsidiary
Borrower to the Agent or the Lenders in connection with such
Bid Borrowing would include an untrue statement of a material
fact or omit to state any material fact or any fact necessary
to make the statements contained therein, in light of the
circumstances under which they were made, not misleading; and
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(e) TBC Representation. A representation by TBC that the
representations and warranties of TBC contained in subsections (a)
through (g) of Section 3.1 are true and accurate on and as of each
such date as though made on and as of each such date (except to the
extent that such representations and warranties relate solely to an
earlier date), and that, as of each such date, no event has occurred
and is continuing, or would result from the proposed Committed
Borrowing which constitutes a Default.
ARTICLE 6
Events of Default
6.1 Events of Default. Each of the following shall constitute an Event of
Default:
(a) Failure by TBC to make when due any payment of principal of or interest on
any Advance or under a Guaranty when the same becomes due and payable and
such failure is not remedied within 5 Business Days thereafter;
(b) Any representation or warranty made by TBC in connection with the
execution and delivery of this Agreement, the Borrowings or any Guaranty,
or otherwise furnished pursuant hereto proves to have been incorrect when
made in any material respect;
(c) Failure by TBC to perform any other term, covenant or agreement contained
in this Agreement, and such failure is not remedied within 30 days after
written notice thereof has been given to TBC by the Agent, at the request,
or with the consent, of the Majority Lenders.
(d) Failure by TBC to pay when due (i) any obligation for the payment of
borrowed money on any regularly scheduled payment date or following
acceleration thereof or (ii) any other monetary obligation if the
aggregate unpaid principal amount of the obligations with respect to which
such failure to pay or acceleration occurred equals or exceeds $50,000,000
and such failure is not remedied within 5 Business Days after TBC receives
notice thereof from the Agent or the creditor on such obligation.
(e) TBC or any of its Subsidiaries
(1) incurs liability with respect to any employee pension benefit plan
in excess of $150,000,000 in the aggregate under
(A) Sections 4062, 4063, 4064 or 4201 of ERISA; or
(B) otherwise under Title IV of ERISA as a result of any
reportable event within the meaning of ERISA (other than a
reportable event as to which the provision of 30 days' notice
is waived under applicable regulations);
(2) has a lien imposed on its property and rights to property under
Section 4068 of ERISA on account of a liability in excess of
$50,000,000 in the aggregate; or
(3) incurs liability under Title IV of ERISA
(A) in excess of $50,000,000 in the aggregate as a result of the
Company or any Subsidiary or any Person that is a member of
the "controlled group" (as defined in Section 4001(a)(14) of
ERISA) of the Company or any Subsidiary having filed a notice
of intent to terminate any employee pension benefit plan under
the "distress termination" provision of Section 4041 of ERISA or
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(B) in excess of $50,000,000 in the aggregate as a result of the
Pension Benefit Guaranty Corporation having instituted
proceedings to terminate, or to have a trustee appointed to
administer, any such plan.
(f) The happening of any of the following events, provided such event has not
then been cured or stayed:
(1) the insolvency or bankruptcy of TBC,
(2) the cessation by TBC of the payment of its Debts as they mature,
(3) the making of an assignment for the benefit of the creditors
of TBC,
(4) the appointment of a trustee or receiver or liquidator for TBC or
for a substantial part of its property, or
(5) the institution of bankruptcy, reorganization, arrangement,
insolvency or similar proceedings by or against TBC under the laws
of any jurisdiction in which TBC is organized or has material
business, operations or assets.
(g) So long as any Subsidiary is a Borrower hereunder, the Guaranty with
respect to such Subsidiary Borrower for any reason ceases to be valid and
binding on TBC or TBC so states in writing.
6.2 Lenders' Rights upon Borrower Default. If an Event of Default occurs or
is continuing, then the Agent shall at the request, or may with the
consent, of the Majority Lenders, by notice to TBC,
(a) declare the obligation of each Lender to make further Advances to
be terminated, whereupon the same shall forthwith terminate, and
(b) declare the Advances, all interest thereon, and all other amounts
payable under this Agreement to be forthwith due and payable,
whereupon the Advances, all such interest, and all such other
amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrowers, provided,
however, that in the event of an actual or deemed entry of an
order for relief with respect to any Borrower under the Federal
Bankruptcy Code (whether in connection with a voluntary or an
involuntary case), (i) the obligation of each Lender to make
Advances shall automatically be terminated and (ii) the payment
obligations of the Borrowers with respect to Advances, all such
interest, and all such amounts shall automatically become and be
due and payable, without presentment, demand, protest, or any
notice of any kind, all of which are hereby expressly waived by
the Borrowers.
ARTICLE 7
The Agent
7.1 Authorization and Action. Each Lender hereby appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto.
As to any matters not expressly provided for by this Agreement (including
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without limitation, enforcement or collection of any Notes), the Agent
shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of
the Majority Lenders and such instructions shall be binding upon all
Lenders and all holders of interests in Advances; provided, however, that
the Agent shall not be required to take any action which exposes the Agent
to personal liability or which is contrary to this Agreement or applicable
law. The Agent agrees to give to each Lender prompt notice of each notice
given to it by the Borrowers pursuant to the terms of this Agreement.
7.2 Agent's Reliance, Etc. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this
Agreement, except for its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the Agent:
(a) may treat the Lender that made any Advance as the payee thereof
until the Agent receives and accepts an assignment entered into by
such Lender, as assignor, and an Eligible Assignee, as assignee, as
provided in Section 2.20;
(b) may consult with legal counsel (including counsel for the
Borrowers), independent public accountants and other experts
selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or other experts;
(c) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection
with this Agreement;
(d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of any Borrower or to
inspect the property (including the books and records) of any
Borrower;
(e) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document
furnished pursuant hereto; and
(f) shall incur no liability under or in respect of this Agreement by
acting upon any notice, consent, certificate or other instrument or
writing (which may be by telecopier, cable or telex) believed by it
to be genuine and signed or sent by the proper party or parties.
7.3 Citibank, N.A. and its Affiliates. With respect to its Commitment, the
Advances made by it, and any Notes issued to it, Citibank, N.A. shall have
the same rights and powers under this Agreement as any other Lender and
may exercise the same as though it were not the Agent hereunder; and the
term "Lender" or "Lenders" shall, unless otherwise expressly indicated,
include Citibank, N.A., in its individual capacity. Citibank, N.A. and
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its Affiliates may accept deposits from, lend money to, accept drafts
drawn by, act as trustee under indentures of, and generally engage in any
kind of business with, the Company, any of its Subsidiaries and any person
or entity who may do business with or own securities of the Company or any
Subsidiary, all as if Citibank, N.A. were not the Agent hereunder and
without any duty to account therefor to the other Lenders.
7.4 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and
based on the financial statements referred to in Section 3.1(e) and the
representations and warranties contained in Sections 3.1 and 3.2 and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance upon
the Agent or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement.
7.5 Indemnification. The Lenders agree to indemnify the Agent (to the extent
not reimbursed by TBC or any other Borrower), ratably according to the
respective principal amounts of the Committed Advances then made by each
of them (or if no Committed Advances are at the time outstanding or if
interests in any Committed Advances are held by persons which are not
Lenders, ratably according to the respective amounts of their
Commitments), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against the Agent in any way relating to or
arising out of this Agreement or any action taken or omitted by the Agent
under this Agreement (collectively, the "Indemnified Costs"), provided
that no Lender shall be liable for any portion of the Indemnified Costs
resulting from the Agent's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender agrees to reimburse the
Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including counsel fees) incurred by the Agent in connection with
the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings
or otherwise) of, or legal advice in respect of rights or responsibilities
under, this Agreement to the extent that the Agent is not reimbursed for
such expenses by TBC or any other Borrower. In the case of any
investigation, litigation or proceeding giving rise to any Indemnified
Costs, this Section 7.5 applies whether any such investigation, litigation
or proceeding is brought by the Agent, any Lender or a third party.
7.6 Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Lenders and TBC and may be removed at any time with
or without cause by the Majority Lenders. Upon any such resignation or
removal, the Majority Lenders shall have the right, with the consent of
TBC (if no Event of Default has occurred and is continuing), which shall
not be unreasonably withheld, to appoint a successor Agent, which shall be
a commercial bank organized or licensed under the laws of the United
States of America or of any state thereof and having a combined capital
and surplus of at least $50,000,000. If no successor Agent has been so
appointed by the Majority Lenders, and has accepted such appointment,
within 30 days after the retiring Agent's giving of notice of resignation
or the removal of the retiring Agent as provided herein, then the retiring
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Agent may, on behalf of the Lenders, appoint a successor Agent which meets
the requirements set out in the previous sentence. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article 7 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under
this Agreement.
7.7 Certain Obligations May Be Performed by Affiliates. The Agent may appoint
any of its Affiliates to perform its obligations hereunder other than any
obligation requiring the Agent to receive, pay, or otherwise handle funds
or Notes, and provided that the Agent shall continue to be responsible to
the Borrowers and the Lenders for the due performance of the Agent's
obligations under this Agreement.
ARTICLE 8
Miscellaneous
8.1 Modification, Consents and Waivers.
(a) Waiver. No failure or delay on the part of any Lender in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power preclude any other
or further exercise thereof or the exercise of any other right or power
hereunder. No notice to or demand on the Borrowers in any case shall
entitle the Borrowers to any other or further notice or demand in similar
or other circumstances.
(b) Amendment. No amendment or waiver of any provision of this Agreement or
of any Committed Notes, nor consent to any departure by the Borrowers
therefrom, shall in any event be effective unless such amendment, waiver
or consent is in writing and signed by the Majority Lenders, and then such
amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however,
that no amendment, waiver or consent shall, unless in writing and signed
by all the Lenders, do any of the following:
(i) waive any of the conditions specified in Section 5.1, 5.2, or 5.3,
(ii) except as provided in Section 2.19, increase the Commitments of
the Lenders or subject the Lenders to any additional obligations,
(iii) reduce the principal of, or interest on, the Committed Advances or
any fees or other amounts payable hereunder,
(iv) postpone any date fixed for any payment of principal of, or
interest on, the Committed Advances or any fees or other amounts
payable hereunder,
(v) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Committed Advances or the number
of Lenders required for the Lenders or any of them to take any
action hereunder,
(vi) amend this Section 8.1, or
(vii) release TBC from any of its obligations under any Guaranty or
limit the liability of TBC as guarantor thereunder; and provided
further that no amendment, waiver, or consent shall, unless in
writing and signed by the Agent in addition to the Lenders
required above to take such action, affect the rights or duties
of the Agent under this Agreement or any Note.
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(c) Majority Lenders. Notwithstanding the foregoing, this Section 8.1 shall
not affect the provisions of Section 4.4, "Waivers of Covenants", or
Article 6, "Events of Default".
8.2 Notices.
(a) Addresses. All communications and notices provided for hereunder shall be
in writing and mailed, telecopied, telexed or delivered and,
if to the Agent,
Citibank, N.A.
Two Penns Way, Suite _____
New Castle, Delaware 19720
Attention: Lender Loans Syndications Department
facsimile number (___) ________;
if to any Borrower,
care of The Boeing Company
7755 East Marginal Way South
Seattle, Washington 98108
Attention: Treasurer
facsimile number (206) 655-0799
if to any Lender, to its office at the address given on the signature
pages of this Agreement; or,
as to each party, at such other address as designated by such party in a
written notice to each other party referring specifically to this
Agreement.
(b) Effectiveness of Notices. All communications and notices shall, when
mailed, telecopied, or telexed, be effective when deposited in the mail,
telecopied, or confirmed by telex answerback, respectively. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Agreement or any Notes or of any Exhibit to be executed
and delivered hereunder shall be effective as delivery of a manually
executed counterpart thereof.
(c) Electronic Mail. Electronic mail may be used to distribute routine
communications, such as financial statements and other information, and
documents to be signed by the parties hereto; provided, however, that no
Notice of Borrowing, signature, or other notice or document intended to be
legally binding shall be effective if sent by electronic mail.
8.3 Costs, Expenses and Taxes.
(a) TBC shall pay upon written request all reasonable costs and expenses in
connection with the preparation, execution, delivery, modification and
amendment requested by any of the Borrowers of this Agreement, any Notes
and the Guaranties (including, without limitation, printing costs and the
reasonable fees and out-of-pocket expenses of counsel for the Agent) and
costs and expenses, if any, in connection with the enforcement of this
Agreement, any Notes and the Guaranties (whether through negotiations,
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legal proceedings or otherwise and including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel), as well as any and
all stamp and other taxes, and to save the Lenders and other holders of
interests in the Advances or any Notes harmless from any and all
liabilities with respect to or resulting from any delay by or omission of
the Borrowers to pay such taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of
this Agreement, any Notes and the Guaranties.
(b) TBC agrees to indemnify the Agent and each Lender and each of their
Affiliates and their officers, directors, employees, agents and advisors
(each, an "Indemnified Party") from and against any and all claims,
damages, losses, liabilities and expenses (including, without limitation,
reasonable fees and expenses of counsel) incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in
connection with any investigation, litigation or proceeding or preparation
of a defense in connection therewith) the Advances, this Agreement, the
Notes, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Advances, except to the extent such
claim, damage, loss, liability or expense resulted from such Indemnified
Party's gross negligence or willful misconduct and except that no
Indemnified Party shall have the right to be indemnified hereunder to the
extent such indemnification relates to relationships of, between or among
each of, or any of, the Agent, the Lenders, any assignee of a Lender or
any participant. In the case of any investigation, litigation or other
proceeding to which this Section 8.3 applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is
brought by TBC, its directors, shareholders or creditors or an Indemnified
Party or any other Person or an Indemnified Party is otherwise a party
thereto and whether or not the transactions contemplated hereby are
consummated. The Borrowers also agree not to assert any claim on any
theory of liability for special, indirect, consequential or punitive
damages against the Agent, and Lender, any of their Affiliates, or any of
their respective directors, officers, employees, attorneys and agents,
arising out of or otherwise relating to the Notes, this Agreement, any of
the transactions contemplated herein or the actual or proposed use of the
proceeds of Advances.
8.4 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Borrowers, the Lenders and the Agent, and their respective
successors and assigns, except that the Borrowers may not assign or
transfer their rights hereunder without the prior written consent of the
Lenders.
8.5 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.6 Governing Law. This Agreement, any Notes, the Guaranties and each
Borrower Subsidiary Letter shall be deemed to be contracts under the laws
of the State of New York and for all purposes shall be construed in
accordance with the laws of such State.
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8.7 Headings. The Table of Contents and Article and Section headings used in
this Agreement are for convenience only and shall not affect the
construction of this Agreement.
8.8 Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different 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.
Delivery of an executed counterpart of a signature page to this Agreement
by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
8.9 Right of Set-Off. Each Lender and each of its Affiliates that is or was
at one time a Lender hereunder is authorized at any time and from time to
time, upon
(i) the occurrence and during the continuance of any Event of Default and
(ii) the making of the request or the granting of the consent specified
by Section 6.1 to authorize the Agent to declare any Advances due
and payable pursuant to the provisions of Section 6.1,
to the fullest extent permitted by law, without notice to any Borrower
(any such notice being expressly waived by each Borrower), to set off and
apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time
owing by such Lender or such Affiliate to or for the credit or the
account of any Borrower against any and all of the obligations to such
Lender or such Affiliate of such Borrower now or hereafter existing
under this Agreement and any Notes held by such Lender, whether or not
such Lender has made a demand under this Agreement or such Notes and
although such obligations may be unmatured. Each Lender shall promptly
notify any Borrower after any such setoff and application made by such
Lender, provided that the failure to give such notice shall not affect
the validity of such setoff and application. The rights of each Lender
under this Section are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which such
Lender and its Affiliates may have.
8.10 Confidentiality. Neither the Agent nor any Lender shall disclose
any Confidential Information to any other Person without the consent of a
Borrower, other than
(a) to the Agent's or such Lender's Affiliates and their officers,
directors, employees, agents and advisors and, as contemplated by
Section 2.20(f), to actual or prospective assignees and
participants, and then only on a confidential basis,
(b) as required by any law, rule or regulation or judicial process, and
(c) as requested or required by any state, federal or foreign authority
or examiner regulating banks or banking.
8.11 Agreement in Effect. This Agreement shall become effective upon its
execution and delivery, respectively, to the Agent and TBC by TBC and the
Agent, and when the Agent shall have been notified by each Lender listed
on Schedule I that such Lender has executed it.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers thereunto duly authorized as of the day and year first above
written.
140
<PAGE> 141
THE BOEING COMPANY
By___________________________________
Title: Assistant Treasurer
CITIBANK, N.A., Individually and
as Agent
By____________________________________
Name:
Title:
THE CHASE MANHATTAN BANK
By____________________________________
Name:
Title:
Senior Managing Agents
BANK OF AMERICA, N.A.
By___________________________________
Name:
Title:
DEUTSCHE BANK AG NEW YORK AND/OR CAYMAN
ISLAND BRANCHES
By___________________________________
Name:
Title:
THE BANK OF TOKYO-MITSUBISHI, LIMITED
By___________________________________
Name:
Title:
MITSUBISHI TRUST & BANKING
By___________________________________
Name:
Title:
Managing Agents
THE BANK OF NEW YORK
By___________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON
By___________________________________
Name:
Title:
141
<PAGE> 142
FLEET NATIONAL BANK
By___________________________________
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By___________________________________
Name:
Title:
SUMITOMO BANK
By___________________________________
Name:
Title:
WACHOVIA BANK
By___________________________________
Name:
Title:
Co-Agents
BANK ONE N.A.
By___________________________________
Name:
Title:
CREDIT LYONNAIS
By___________________________________
Name:
Title:
PNC BANK, N.A.
By___________________________________
Name:
Title:
Lender
ABN AMRO BANK, N.V.
By___________________________________
Name:
Title:
AUSTRALIA & NEW ZEALAND BANK
By___________________________________
Name:
Title:
142
<PAGE> 143
BANCO BILBAO VIZCAYA ARGENTARIA
By___________________________________
Name:
Title:
BAYERISCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By___________________________________
Name:
Title:
DEUTSCHE VERKEHRSBANKAG
By___________________________________
Name:
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By___________________________________
Name:
Title:
ROYAL BANK OF CANADA
By___________________________________
Name:
Title:
ROYAL BANK OF SCOTLAND
By___________________________________
Name:
Title:
STANDARD CHARTERED BANK
By___________________________________
Name:
Title:
U.S. BANKCORP
By___________________________________
Name:
Title:
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By___________________________________
Name:
Title:
143
<PAGE> 144
SCHEDULE I
APPLICABLE LENDING OFFICES
------------------------------------------------------------------------------
| Name of Initial | Commitment | Domestic Lending | Eurodollar Lending |
| Lender | | Office | Office |
------------------------------------------------------------------------------
| ABN Amro Bank, N.V. |$11,200,000 | 208 South LaSalle | 208 South LaSalle |
| | | Suite 1500 | Suite 1500 |
| | | Chicago, IL 60604 | Chicago, IL 60604 |
| | | Attn: Loan | Attn: Loan |
| | | Administration | Administration |
| | | T: 312 992-5153 | T: 312 992-5153 |
| | | F: 312 992-5158 | F: 312 992-5158 |
------------------------------------------------------------------------------
| Australia & New |$11,200,000 | 1177 Avenue of the | 1177 Avenue of the |
| Zealand Bank | | Americas | Americas |
| | | 6th Floor | 6th Floor |
| | | New York, NY 10036| New York, NY 10036|
| | | Attn: Peter Gray | Attn: Peter Gray |
| | | T: 212 801-9739 | T: 212 801-9739 |
| | | F: 212 556-4839 | F: 212 556-4839 |
------------------------------------------------------------------------------
| Banco Bilbao Vizcaya|$11,200,000 | 1345 Avenue of the | 1345 Avenue of the |
| | | Americas | Americas |
| | | 45th Floor | 45th Floor |
| | | New York, NY 10105| New York, NY 10105|
| | | Attn: Santiago | Attn: Santiago |
| | | Hernandez | Hernandez |
| | | T: 212 728-1677 | T: 212 728-1677 |
| | | F: 212 333-2904 | F: 212 333-2904 |
------------------------------------------------------------------------------
| Bank One N.A. |$25,600,000 | One Bank One Plaza | One Bank One Plaza |
| | | Chicago, IL 60670 | Chicago, IL 60670 |
| | | Attn: Jamie Leung | Attn: Jamie Leung |
| | | T: 312 732-1707 | T: 312 732-1707 |
| | | F: 312 732-3537 | F: 312 732-3537 |
------------------------------------------------------------------------------
| Bank of America,N.A.|$43,200,000 | 1850 Gateway Blvd. | 1850 Gateway Blvd. |
| | | CA4-707-05-11 | CA4-707-05-11 |
| | | Concord, CA 94520 | Concord, CA 94520 |
| | | Attn: Vilma Tang | Attn: Vilma Tang |
| | | T: 925 675-7336 | T: 925 675-7336 |
| | | F: 925 969-2865 | F: 925 969-2865 |
------------------------------------------------------------------------------
| The Bank of New York|$36,800,000 | One Wall Street, | One Wall Street, |
| | | 22nd Floor | 22nd Floor |
| | | New York, NY 10005| New York, NY 10005|
| | | Attn: Dawn Hertling| Attn: Dawn Hertling|
| | | T: 212 635-6742 | T: 212 635-6742 |
| | | F: 212 635-6399 | F: 212 635-6399 |
------------------------------------------------------------------------------
| The Bank of Tokyo- |$46,200,000 | 1201 3rd Avenue | 1201 3rd Avenue |
| Mitsubishi, Ltd. | | Suite 1100 | Suite 1100 |
| | | Seattle, WA 98101 | Seattle, WA 98101 |
| | |Attn:KosukeTakahashi|Attn:KosukeTakahashi|
| | | T: 206 382-6049 | T: 206 382-6049 |
| | | F: 206 382-6067 | F: 206 382-6067 |
------------------------------------------------------------------------------
144
<PAGE> 145
------------------------------------------------------------------------------
| Bayerische |$11,200,000 |560 Lexington Avenue|560 Lexington Avenue|
| Landesbank | | New York, NY 10022| New York, NY 10022|
| Girozantrale, New | | Attn: James Fox | Attn: James Fox |
| York Branch | | T: 212 310-9986 | T: 212 310-9986 |
| | | F: 212 310-9868 | F: 212 310-9868 |
------------------------------------------------------------------------------
| The Chase Manhattan |$50,100,000 | 270 Park Avenue | 270 Park Avenue |
| Bank | | New York, NY 10019| New York, NY 10019|
| | | Attn:Matthew Massie| Attn:Matthew Massie|
| | | T: 212 270-5432 | T: 212 270-5432 |
| | | F: 212 270-5100 | F: 212 270-5100 |
------------------------------------------------------------------------------
| Citibank, N.A. |$50,100,000 | 399 Park Avenue | 399 Park Avenue |
| | | 12th Floor, Zone 2 | 12th Floor, Zone 2 |
| | | New York, NY 10043| New York, NY 10043|
| | |Attn:PhilippaPortnoy|Attn:PhilippaPortnoy|
| | | T: 212 559-5812 | T: 212 559-5812 |
| | | F: 212 793-1246 | F: 212 793-1246 |
------------------------------------------------------------------------------
| Credit Lyonnais |$25,600,000 | 1301 Avenue of the | 1301 Avenue of the |
| | | Americas | Americas |
| | | New York, NY 10019| New York, NY 10019|
| | |Attn:Bertrand Cousin|Attn:Bertrand Cousin|
| | | T: 212 261-7363 | T: 212 261-7363 |
| | | F: 212 261-7368 | F: 212 261-7368 |
------------------------------------------------------------------------------
| Credit Suisse First |$36,800,000 | 11 Madison Avenue | 11 Madison Avenue |
| Boston | | New York, NY 10010| New York, NY 10010|
| | | Attn: Robert Finney| Attn: Robert Finney|
| | | T: 212 325-9038 | T: 212 325-9038 |
| | | F: 212 325-8319 | F: 212 325-8319 |
------------------------------------------------------------------------------
| Deutsche Bank AG |$46,400,000 | 31 West 52nd Street| 31 West 52nd Street|
| New York and/or | | New York, NY 10019| New York, NY 10019|
| Cayman Island | |Attn:JosephGyurindak|Attn:JosephGyurindak|
| Branches | | T: 212 469-4107 | T: 212 469-4107 |
| | | F: 212 469-4139 | F: 212 469-4139 |
------------------------------------------------------------------------------
| Deutsche |$11,200,000 | 609 Fifth Avenue | 609 Fifth Avenue |
| VerkehrsBank AG | | 10th Floor | 10th Floor |
| | | New York, NY 10017| New York, NY 10017|
| | | Attn: Volker Fabian| Attn: Volker Fabian|
| | | T: 212 588-8864 | T: 212 588-8864 |
| | | F: 212 588-8936 | F: 212 588-8936 |
------------------------------------------------------------------------------
| Fleet National Bank |$36,800,000 | 100 Federal Street | 100 Federal Street |
| | | Mailstop: | Mailstop: |
| | | MABOS 01-10-01 | MABOS 01-10-01 |
| | | Boston, MA 02110 | Boston, MA 02110 |
| | | Attn: Roger Boucher| Attn: Roger Boucher|
| | | T: 617 434-3951 | T: 617 434-3951 |
| | | F: 617 434-0601 | F: 617 434-0601 |
------------------------------------------------------------------------------
145
<PAGE> 146
------------------------------------------------------------------------------
| The Industrial Bank |$36,800,000 | 1251 Avenue of the | 1251 Avenue of the |
| of Japan, Limited | | Americas | Americas |
| | | New York, NY 10020| New York, NY 10020|
| | |Attn:Joe Mitarotondo|Attn:Joe Mitarotondo|
| | | T: 212 282-4088 | T: 212 282-4088 |
| | | F: 212 282-4494 | F: 212 282-4494 |
------------------------------------------------------------------------------
| Morgan Guaranty |$11,200,000 | 60 Wall Street | 60 Wall Street |
| Trust Company of | | New York, NY 10260| New York, NY 10260|
| New York | | Attn: Bob O'sieski| Attn: Bob O'sieski|
| | | T: 212 648-0342 | T: 212 648-0342 |
| | | F: 212 648-5939 | F: 212 648-5939 |
------------------------------------------------------------------------------
| Mitsubishi Trust & |$43,200,000 | 520 Madison Avenue | 520 Madison Avenue |
| Banking | | New York, NY 10022| New York, NY 10022|
| | | Attn: Joe Shammas | Attn: Joe Shammas |
| | | T: 212 891-8451 | T: 212 891-8451 |
| | | F: 212 644-6825 | F: 212 644-6825 |
------------------------------------------------------------------------------
| PNC Bank, N.A. |$25,600,000 | 620 Liberty Avenue | 620 Liberty Avenue |
| | | Two PNC Plaza, | Two PNC Plaza, |
| | | 3rd Floor | 3rd Floor |
| | | Pittsburgh,PA 15222| Pittsburgh,PA 15222|
| | |Attn:Jack Caracciolo|Attn:Jack Caracciolo|
| | | T: 412 768-9973 | T: 412 768-9973 |
| | | F: 412 768-4586 | F: 412 768-4586 |
------------------------------------------------------------------------------
| Royal Bank of Canada|$11,200,000 | Royal Bank of | Royal Bank of |
| | | Canada Centre | Canada Centre |
| | | 71 Queen Victoria | 71 Queen Victoria |
| | | Street | Street |
| | | London EC4V 4DE | London EC4V 4DE |
| | | Attn: Stephan Sayre| Attn: Stephan Sayre|
| | | T: 44 207 653-4625 | T: 44 207 653-4625 |
| | | F: 44 207 329-0247 | F: 44 207 329-0247 |
------------------------------------------------------------------------------
| Royal Bank of |$11,200,000 | Waterhouse Square | Waterhouse Square |
| Scotland | | 138-142 Holborn | 138-142 Holborn |
| | | London England | London England |
| | | EC1N 2TH | EC1N 2TH |
| | | Attn: Andrew | Attn: Andrew |
| | | Waddington | Waddington |
| | | T: 44 207 375-8504 | T: 44 207 375-8504 |
| | | F: 44 207 375-8282 | F: 44 207 375-8282 |
------------------------------------------------------------------------------
| Standard Chartered |$11,200,000 |7 World Trade Center|7 World Trade Center|
| Bank | | New York, NY 10048| New York, NY 10048|
| | | Attn:LarryFitzerald| Attn:LarryFitzerald|
| | | T: 212 667-0107 | T: 212 667-0107 |
| | | F: 212 667-0568 | F: 212 667-0568 |
------------------------------------------------------------------------------
146
<PAGE> 147
------------------------------------------------------------------------------
| Sumitomo Bank |$36,800,000 | 777 South Figueroa | 777 South Figueroa |
| | | Suite 2600 | Suite 2600 |
| | | Los Angeles, CA | Los Angeles, CA |
| | | 90017 | 90017 |
| | | Attn:Miriam Delgado| Attn:Miriam Delgado|
| | | T: 213 955-0883 | T: 213 955-0883 |
| | | F: 213 623-6832 | F: 213 623-6832 |
------------------------------------------------------------------------------
| U.S. BankCorp |$11,200,000 | 1420 Fifth Avenue, | 1420 Fifth Avenue, |
| | | 11th Floor | 11th Floor |
| | | Seattle, WA 98101 | Seattle, WA 98101 |
| | | Attn: James Farmer| Attn: James Farmer|
| | | T: 206 587-5237 | T: 206 587-5237 |
| | | F: 206 344-3654 | F: 206 344-3654 |
------------------------------------------------------------------------------
| Wachovia Bank |$36,800,000 | 191 Peachtree | 191 Peachtree |
| | | Street NE | Street NE |
| | | Atlanta, GA 30303 | Atlanta, GA 30303 |
| | | Attn: Joe Baschuite| Attn: Joe Baschuite|
| | | T: 404 332-5178 | T: 404 332-5178 |
| | | F: 404 332-4136 | F: 404 332-4136 |
------------------------------------------------------------------------------
|Westdeutsche |$11,200,000 | 1211 Avenue of the | 1211 Avenue of the |
| Landesbank | | Americas | Americas |
| | | New York, NY 10036| New York, NY 10036|
| | | Attn: Phil Green | Attn: Phil Green |
| | | T: 212 852-6113 | T: 212 852-6113 |
| | | F: 212 302-7946 | F: 212 302-7946 |
------------------------------------------------------------------------------
147
<PAGE> 148
EXHIBIT (15)
Letter from Independent Accountants Regarding
Unaudited Interim Financial Information
The Boeing Company and Subsidiaries
See Deloitte & Touche LLP letter on page 149.
148
<PAGE> 149
November 3, 2000
The Boeing Company
Seattle, Washington
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of The Boeing Company and subsidiaries (the "Company") for the
three- and nine-month periods ended September 30, 2000 and 1999, as indicated
in our report dated October 27, 2000; because we did not perform an audit, we
expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, is
incorporated by reference in Registration Statement Nos. 2-48576, 33-25332,
33-31434, 33-43854, 33-52773, 33-58798, 333-03191, 333-16363, 333-26867,
333-32461, 333-32491, 333-32499, 333-32567, 333-35324, 333-41920, and
333-47450 of The Boeing Company on Form S-8.
We are also aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act of 1933, is not considered a part of any registration
statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Seattle, Washington
149
