- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
United States
Securities and Exchange Commission
Washington, DC 20549
- -------------------------------------------------------------------------------
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
- -------------------------------------------------------------------------------
Date of Report (Date of earliest event reported): March 31, 2000
- -------------------------------------------------------------------------------
BOEING CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-2564584 0-10795
(State or other jurisdiction of (I.R.S. Employer (Commission File No.)
Incorporation or Organization) Identification No.)
4060 Lakewood Boulevard, 6th Floor - Long Beach,
California 90808-1700 (Address of principal
executive offices)
(562) 627-3000
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
Table of Contents
- -------------------------------------------------------------------------------
Page
Item 2................................................................... 2
Item 7. Financial Statements and Exhibits............................... 3
a. Financial Statements of Business Acquired........................ 3
b. Pro Forma Financial Information..................................13
c. Exhibits.........................................................18
<PAGE>
Item 2.
On March 31, 2000, Boeing Capital Corporation (the "Company") agreed to acquire
(the "Acquisition") a portfolio ("Customer Financing" or the "Portfolio") of
leases, the related aircraft equipment and loans secured by aircraft and related
assets from its parent, The Boeing Company or its subsidiaries (collectively
referred to as "Boeing") for promissory notes in the aggregate principal amount
of $1,261.9 million, together with an equity contribution of $50.1 million. The
Acquisition is an integral part of the previously announced reorganization and
consolidation of Boeing's customer financing activities into the Company. The
Portfolio and related activities were acquired effective as of January 1, 2000.
The Portfolio consists of $1,223.2 million of leases and related aircraft
equipment and $371.7 million of loans secured by aircraft equipment, which as a
group, when considered together with guaranties from Boeing in favor of the
Company, meet the Company's investment criteria. For the year ended December 31,
1999, the Portfolio generated approximately $138.4 million in revenues and an
excess of revenues over direct and identified corporate expenses of $31.1
million. However, 1999 results are not predictive of future results as, among
other things, the financial statements for 1999 do not include a complete
allocation of expenses such as interest (other than interest on non-recourse
debt) and certain overhead expenses and income taxes. In particular, the
provisions for losses and write-downs are not necessarily predictive of future
provisions for losses or write-downs of equipment under operating leases.
The Portfolio is comprised primarily of leases and loans relating to
Boeing/McDonnell Douglas aircraft and includes leases and loans to 16 different
customers including Viacao Aerea Rio-Grandense ("VARIG"), Thai Airways ("Thai"),
United Airlines ("United") and City Bird S.A. ("City Bird"). A substantial
portion of the Portfolio is concentrated among these four largest Customer
Financing customers which, individually, each comprise 10% or greater of the
Portfolio. As of December 31, 1999, these four largest commercial aircraft
customers accounted for $1,234.3 million (77.4% of total Portfolio). After
giving effect to the Acquisition, no single customer accounts for 10% or greater
of the total Company portfolio.
VARIG, Customer Financing's largest customer, accounted for $472.6 million
(29.6% of total Portfolio) and $487.6 million (34.8% of total Portfolio) at
December 31, 1999 and 1998, respectively. VARIG has defaulted on its obligations
within the Portfolio in recent years, which has resulted in deferrals and
restructurings. Accordingly, Boeing has provided the Company with a first loss
deficiency guaranty covering the VARIG leases within the Portfolio subject to a
maximum coverage of 35% of the stipulated loss value of the leases.
Customer Financing's second largest customer, Thai, accounted for $359.9 million
(22.6% of total Portfolio) and $213.8 million (15.3% of total Portfolio) at
December 31, 1999 and 1998, respectively. See Note 13 of the Notes to the
Statements of Net Assets Acquired and Statements of Revenues, Direct Expenses
and Identified Corporate Expenses in Item 7a. for discussion of the subsequent
payoff by Thai.
United, Customer Financing's third largest customer, accounted for $236.4
million (14.8% of total Portfolio) and $237.0 million (16.9% of total Portfolio)
at December 31, 1999 and 1998, respectively.
City Bird, Customer Financing's fourth largest customer, accounted for $165.3
million (10.4% of total Portfolio) and $172.0 million (12.3% of total Portfolio)
at December 31, 1999 and 1998, respectively.
In addition to the Portfolio, 22 employees who supported the Portfolio and
Boeing's product financing activities became employees of the Company in January
2000.
The Acquisition was effected pursuant to a Term Sheet dated as of January 1,
2000, as well as various definitive transfer agreements (collectively referred
to as the "Transfer Agreements") between the Company and Boeing. Copies of the
forms of assignment agreement, stock purchase agreement, participation
agreement and promissory note used as part of the Transfer Agreements and the
Term Sheet are incorporated by reference as an exhibit to this Report. The
following description is qualified in its entirety by reference to the
provisions of such exhibits.
The Term Sheet provides that the Portfolio is being acquired effective as of
January 1, 2000. Accordingly, the promissory notes issued by the Company to pay
for the Portfolio are dated as of January 1, 2000 and bear interest at a rate of
7.7% per annum as of January 1, 2000. Likewise, all principal, interest and rent
received under the leases, loans or other agreements accrued since January 1,
2000 under the Portfolio will be paid or credited to the Company with interest
paid by Boeing at a rate of 7.7% per annum.
The promissory notes issued by the Company to Boeing in connection with the
Acquisition represent general unsecured obligations of the Company which mature
on January 15, 2007 (or earlier at Boeing's discretion). See Note 13 of the
Notes to the Statements of Net Assets Acquired and Statements of Revenues,
Direct Expenses and Identified Corporate Expenses in Item 7a. for discussion of
the subsequent paydowns on the promissory notes.
A portion of Boeing's unfunded commercial aircraft financing commitments
existing as of December 31, 1999 of approximately $4,500.0 million may be funded
by the Company, on a transaction by transaction basis, subject to approval of
each transaction by the Company's investment committee (which may require credit
enhancements from Boeing or other parties or other conditions the Company deems
necessary to meet the Company's investment requirements).
As of March 27, 2000, $1.0 billion of the 364-day revolving credit line of
Boeing has been made available to the Company. This new credit facility replaces
the Company's former $240.0 million credit line which was terminated March 30,
2000.
Item 7. Financial Statements and Exhibits.
a. Financial Statements of Business Acquired.
Based on the materiality of this acquisition to the Company, Rule 3-05(b)(2)(ii)
of Regulation S-X requires the Company to furnish full audited financial
statements for the business acquired as specified in Rule 3-01 and Rule 3-02.
However, the Company has been advised by Boeing that Customer Financing is not a
"stand-alone" division or subsidiary of Boeing and has not been historically
accounted for separately. As a result, the distinct and separate accounting
information necessary to present individual Customer Financing balance sheets as
of December 31, 1999 and 1998 and statements of operations for the years ended
December 31, 1999, 1998 and 1997 have not been maintained. Boeing does have,
however, accounting records as of those dates sufficient to prepare certain
financial information related to the acquired assets and assumed liabilities.
Based on the circumstances described above, the following audited financial
statements are hereby included in this Form 8-K. The Company believes the
inclusion of these financial statements to be in compliance with the
requirements of Rule 3-05 of Regulation S-X as the most appropriate presentation
under the circumstances:
- - Audited Statements of Net Assets Acquired as of December 31, 1999 and
1998.
- - Audited Statements of Revenues, Direct Expenses and Identified Corporate
Expenses for the Years Ended December 31, 1999, 1998 and 1997.
- - Notes to the Statements of Net Assets Acquired as of December 31, 1999 and
1998 and Statements of Revenues, Direct Expenses and Identified Corporate
Expenses for the Years Ended December 31, 1999, 1998 and 1997.
The aforementioned financial statements are not predictive of future results as,
among other things, the financial statements for 1999 do not include a complete
allocation of expenses such as interest (other than interest on non-recourse
debt) and certain overhead expenses and income taxes. Additionally, the
provisions and write-downs reflected in the Statements of Revenues, Direct
Expenses and Identified Corporate Expenses included in Item 7a. are not
necessarily predictive of future performance.
<PAGE>
Report of Independent Accountants
Shareholders and Board of Directors
The Boeing Company and Boeing Capital Corporation
We have audited the accompanying statements of net assets acquired of the
Customer Financing Business ("Customer Financing") of The Boeing Company
("Boeing") as of December 31, 1999 and 1998, and the related statements of
revenues, direct expenses and identified corporate expenses for each of the
three years in the period ended December 31, 1999. These financial statements
are the responsibility of Boeing's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
The accompanying financial statements were prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in Form 8-K of Boeing Capital Corporation) as described in Note 2 to
the financial statements and are not intended to be a complete presentation of
Customer Financing's financial position and results of operations.
In our opinion, such financial statements present fairly, in all material
respects, the net assets acquired as of December 31, 1999 and 1998 and the
revenues, direct expenses and identified corporate expenses for each of the
three years in the period ended December 31, 1999 of Customer Financing in
conformity with accounting principles generally accepted in the United States of
America.
Deloitte & Touche LLP
Seattle, Washington
April 12, 2000
<PAGE>
CUSTOMER FINANCING
STATEMENTS OF NET ASSETS ACQUIRED
<TABLE>
<CAPTION>
December 31,
----------------------------------
(Dollars in millions) 1999 1998
----------------------------------
ASSETS ACQUIRED:
Financing receivables:
<S> <C> <C> <C>
Investment in finance leases $ 530.0 $ 389.4
Notes receivable, including accrued interest 371.7 269.8
--------------------------------
901.7 659.2
Allowance for losses on financing receivables (176.6) (133.6)
--------------------------------
725.1 525.6
Equipment under operating leases, net 693.2 742.0
--------------------------------
Total assets acquired 1,418.3 1,267.6
--------------------------------
LIABILITIES ASSUMED:
Accrued liabilities 47.9 70.3
Non-recourse indebtedness 58.4 61.6
--------------------------------
Total liabilities assumed 106.3 131.9
--------------------------------
Net assets acquired $ 1,312.0 $ 1,135.7
================================
See accompanying Notes to the Statements of Net Assets Acquired and Statements
of Revenues, Direct Expenses and Identified Corporate Expenses.
</TABLE>
<PAGE>
CUSTOMER FINANCING
STATEMENTS OF REVENUES, DIRECT EXPENSES AND IDENTIFIED CORPORATE EXPENSES
<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------------------------
(Dollars in millions) 1999 1998 1997
--------------------------------------------------
REVENUES:
<S> <C> <C> <C> <C>
Finance lease income $ 32.2 $ 14.8 $ 14.8
Interest income on notes receivable 21.3 13.7 7.7
Operating lease income, net of depreciation
expense of $35.2, $27.8 and $9.9 in 1999,
1998 and 1997, respectively 84.9 20.2 9.7
-----------------------------------------------
138.4 48.7 32.2
-----------------------------------------------
DIRECT AND IDENTIFIED CORPORATE EXPENSES:
Interest expense 6.0 6.2 6.4
Provision for losses 11.3 62.0 8.4
Operating expenses 2.8 2.9 1.9
Write-downs of equipment under operating leases 80.0 74.0 13.2
Other 7.2 1.2 -
------------------------------------------------
107.3 146.3 29.9
------------------------------------------------
Excess (shortfall) of revenues over direct and identified
corporate expenses $ 31.1 $ (97.6) $ 2.3
================================================
See accompanying Notes to the Statements of Net Assets Acquired and Statements
of Revenues, Direct Expenses and Identified Corporate Expenses.
</TABLE>
<PAGE>
CUSTOMER FINANCING
NOTES TO THE STATEMENTS OF NET ASSETS ACQUIRED AND STATEMENTS OF REVENUES,
DIRECT EXPENSES AND IDENTIFIED CORPORATE EXPENSES
December 31, 1999, 1998 and 1997
Note 1. Description of Business Acquired
The Customer Financing portfolio and affiliated companies of The Boeing Company
("Boeing") acquired ("Customer Financing") by Boeing Capital Corporation ("the
Company") are engaged in providing lease and loan financing to certain of
Boeing's commercial aircraft customers (generally airlines).
On March 31, 2000, the Company agreed to acquire (the "Acquisition") Customer
Financing's portfolio from Boeing for promissory notes in the aggregate
principal amount of $1,261.9 million, together with an equity contribution of
$50.1 million. The Acquisition is an integral part of the previously announced
reorganization and consolidation of Boeing's customer financing activities into
the Company. The Customer Financing portfolio and related activities were
acquired effective as of January 1, 2000.
Note 2. Basis of Presentation
The accompanying Statements of Net Assets Acquired as of December 31, 1999 and
1998 and of Revenues, Direct Expenses and Identified Corporate Expenses for the
Years Ended December 31, 1999, 1998 and 1997 have been prepared for the purpose
of complying with the rules and regulations of the Securities and Exchange
Commission.
The Statements of Net Assets Acquired include the amounts of certain assets and
liabilities of Customer Financing as of the above dates. Net assets acquired
include lease and loan agreements and the related receivables, and equipment
subject to operating leases. Liabilities assumed consist of liabilities due to
third parties.
The Statements of Revenues, Direct Expenses and Identified Corporate Expenses
include direct expenses of Customer Financing for the origination of the lease
and loan agreements, interest expense on the non-recourse debt and allocations
of costs incurred by Boeing primarily for sales, administration and management
services that are directly attributed to the operations of Customer Financing.
The method for allocating identified corporate expenses was based on the
identified salary expenses of certain employees directly involved with Customer
Financing activities and estimated administrative support requirements.
Corporate overhead and income taxes incurred by Boeing have been excluded from
the Statements of Revenues, Direct Expenses and Identified Corporate Expenses.
These statements do not purport to represent all the costs and expenses
associated with a stand-alone separate company, or the costs which may be
incurred by an unaffiliated company to achieve similar results. Complete
historical financial statements were not prepared as Boeing did not maintain
Customer Financing as a separate division or subsidiary and has not segregated
indirect operating cost information or certain assets and liabilities in
Boeing's accounting records.
Note 3. Summary of Significant Policies
Use of Estimates The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make assumptions and estimates that directly affect the
amounts reported in the financial statements. Significant estimates for which
changes in the near term are considered reasonably possible and that may have a
material impact on the financial statements are addressed in these Notes to the
Statements of Net Assets Acquired and Statements of Revenues, Direct Expenses
and Identified Corporate Expenses.
Finance Leases At lease commencement, Customer Financing records the lease
receivable, estimated residual value of the leased equipment and unearned lease
income. Income from leases is recognized over the terms of the leases so as to
approximate a level rate of return on the net investment. Residual values, which
are reviewed periodically, represent the estimated amounts to be received at
lease termination from the disposition of leased equipment.
Notes Receivable Notes receivable includes both short and long-term customer
loans. Interest income is recognized over the terms of the loans at the stated
interest rate in the agreement.
Allowance for Losses on Financing Receivables The allowance for losses on
financing receivables includes consideration of such factors as the risk of
individual credits, economic and political conditions, guaranties, prior loss
experience, past-due amounts, collateral value of the underlying equipment and
results of periodic credit reviews.
Equipment Under Operating Leases Rental equipment subject to operating leases is
recorded at cost and depreciated over its useful life or lease term to an
estimated salvage value, primarily on a straight-line basis. Customer Financing
reviews these assets when events or circumstances indicate that the carrying
amount of these assets may not be recoverable. If recovery at carrying amounts
is deemed to be impaired, then the assets are written down to estimated fair
value.
Note 4. Investment in Finance Leases
The following lists the components of the investment in finance leases at
December 31:
<TABLE>
<CAPTION>
(Dollars in millions) 1999 1998
<S> <C> <C>
Minimum lease payments receivable $ 581.6 $ 466.1
Estimated residual value of leased assets 47.2 46.5
Unearned income (98.8) (123.2)
---------------------------------------
$ 530.0 $ 389.4
=======================================
</TABLE>
At December 31, 1999, finance lease receivables of $165.7 million serve as
collateral to non-recourse indebtedness.
At December 31, 1999, finance lease receivables are due in installments as
follows: 2000, $383.7 million; 2001, $20.8 million; 2002, $20.8 million; 2003,
$19.6 million; 2004, $20.7 million; 2005 and thereafter, $116.0 million.
Note 5. Notes Receivable
At December 31, 1999, notes receivables are due in installments as follows:
2000, $56.8 million; 2001, $40.2 million; 2002, $13.2 million; 2003, $9.3
million; 2004, $13.0 million; 2005 and thereafter, $234.2 million.
Note 6. Allowance and Provision for Losses on Financing Receivables
Changes in the allowance for losses on financing receivables were as follows for
the years ended December 31:
<TABLE>
<CAPTION>
(Dollars in millions) 1999 1998 1997
<S> <C> <C>
Allowance for losses on financing receivables at beginning of
year $ 133.6 $ 66.2 $ 4.2
Provision for losses 11.3 62.0 8.4
Recoveries (19.3) (4.3) -
Net transfer in from Boeing 51.0 9.7 53.6
-------------------------------------------------
Allowance for losses on financing receivables at end of year $ 176.6 $ 133.6 $ 66.2
=================================================
</TABLE>
Note 7. Equipment Under Operating Leases
Equipment under operating leases consisted of the following at December 31:
<TABLE>
<CAPTION>
(Dollars in millions) 1999 1998
<S> <C> <C>
Commercial aircraft $ 783.2 $ 798.6
Accumulated depreciation (90.6) (54.2)
Net rentals receivable (prepaid rents) 0.6 (2.4)
-------------------------------------
$ 693.2 $ 742.0
=====================================
</TABLE>
At December 31, 1999, future minimum rentals scheduled to be received under the
noncancelable portion of operating leases are as follows: 2000, $110.1 million;
2001, $106.7 million; 2002, $106.6 million; 2003, $105.6 million; 2004, $105.6
million; 2005 and thereafter, $419.1 million.
In conjunction with periodic reviews of the Customer Financing portfolio, during
the years ended December 31, 1999, 1998 and 1997, Customer Financing took
write-downs on aircraft subject to operating leases totaling $80.0 million,
$74.0 million and $13.2 million, respectively, which are included in the
Statements of Revenues, Direct Expenses and Identified Corporate Expenses.
Recovery at carrying amounts was deemed to be impaired, thus the assets were
written down to estimated fair value.
Note 8. Indebtedness
Boeing has entered into a series of agreements with one funding source to
provide non-recourse debt for the funding of certain of its finance leases. This
non-recourse debt totaling $58.4 million and $61.6 million at December 31, 1999
and 1998, respectively, has been assigned to the Company as part of the
Acquisition. These obligations are recourse only to the lessee and not to
Boeing. The non-recourse obligations all bear interest at a rate of 9.9% per
annum and are payable semi-annually.
Remaining principal payments required under the non-recourse obligations during
the years ending December 31 are as follows:
(Dollars in millions)
2000 $ 4.6
2001 3.0
2002 3.4
2003 3.2
2004 3.9
2005 and thereafter 40.3
------------------
$ 58.4
==================
The derivative financial instruments held by Customer Financing at December 31,
1999 are included in the Acquisition and consist of specifically tailored
interest rate swaps. Customer Financing does not trade in derivatives for
speculative purposes.
Customer Financing has used interest rate swap agreements to manage interest
costs and risks associated with changing interest rates. The differential to be
paid or received is accrued as interest rates change and is recognized in
interest expense over the life of the agreements. Counterparties to the interest
rate swap contracts are major financial institutions and credit loss from
counterparty non-performance is not anticipated. At December 31, 1999, Customer
Financing had interest rate swap agreements outstanding as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Contract Notional
<S> <C> <C> <C> <C> <C>
(Dollars in millions) Maturity Principal Pay Rate Receive Rate
- ------------------------------------------------------------------------------------------------------------------------
Floating rates are based
Non-recourse indebtedness 2009 - 2010 $ 58.4 9.9% on LIBOR
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note 9. Commitments
A portion of Boeing's unfunded commercial aircraft financing commitments
existing as of December 31, 1999 of approximately $4,500.0 million may be funded
by the Company, on a transaction by transaction basis, subject to approval of
each transaction by the Company's investment committee (which may require credit
enhancements from Boeing or other parties or other conditions the Company deems
necessary to meet the Company's investment requirements).
Note 10. Transactions with Boeing
In order to induce the Company to acquire certain of the assets in the Customer
Financing portfolio, Boeing has agreed to provide the Company with limited
guaranties related to repayment from two of the customers included in the
Acquisition. The guaranties are all limited, on a per customer basis, and do not
cover the entire book value of the acquired assets.
One of the two customers associated with the limited guaranties is the largest
customer in the acquired portfolio, Viacao Aerea Rio-Grandense ("VARIG"). Boeing
has provided the Company with a first loss deficiency guaranty covering 35% of
the aggregate stipulated loss value set forth in the transferred VARIG leases
which have a net asset value of $357.1 million as of December 31, 1999.
Additionally, Boeing has provided the Company with a first loss deficiency
guaranty covering the Linhas Aereas de Mocambique ("LAM") loan which has a net
asset value of $43.7 million as of December 31, 1999. The LAM guaranty covers
35% of the termination value, as set forth in the loan, for the first two years,
commencing March 31, 2000, with reducing coverage over time to a low of 10% of
the termination value after March 31, 2007.
Note 11. Fair Value of Financial Instruments
The estimated fair value amounts of Customer Financing's financial instruments
have been determined by Customer Financing and the Company, using appropriate
market information and valuation methodologies. The following methods and
assumptions were used to estimate the fair value of each class of financial
instruments:
Notes Receivable Fair values for variable rate notes that reprice frequently and
with no significant change in credit risk are based on carrying values. The fair
values of fixed rate notes are estimated in discounted cash flow analyses, with
the use of interest rates currently offered on loans with similar terms to
borrowers of similar credit quality.
Interest Rate Hedges The fair values of Customer Financing's interest rate swaps
are based on quoted market prices of comparable instruments.
Non-Recourse Indebtedness Carrying amounts of borrowings include accrued
interest. The fair value of the non-recourse indebtedness is estimated according
to public quotations or discounted cash flow analyses, which are based on
current incremental borrowing rates for similar types of borrowing arrangements.
The notional amounts, carrying amounts and estimated fair values of Customer
Financing's financial instruments at December 31 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------------------------------------------------------------
Assets (Liabilities) Assets (Liabilities)
--------------------------- --------------------------
Notional Carrying Fair Notional Carrying Fair
(Dollars in millions) Amount Amount Value Amount Amount Value
ASSETS
<S> <C> <C> <C> <C> <C> <C>
Notes receivable $ - $ 371.7 $ 413.7 $ - $ 269.8 $ 340.1
LIABILITIES
Non-recourse indebtedness - (59.8) (68.0) - (63.1) (79.0)
OFF-BALANCE SHEET INSTRUMENTS
Interest rate swaps 58.4 - (2.1) 61.6 - (8.4)
</TABLE>
Note 12. Concentration of Credit Risk
A substantial portion of Customer Financing's total portfolio is concentrated
among a small number of Customer Financing's largest customers. The single
largest customer, VARIG, accounted for $472.6 million (29.6% of total Customer
Financing portfolio) and $487.6 million (34.8% of total Customer Financing
portfolio) at December 31, 1999 and 1998, respectively. The second largest
customer, Thai Airways ("Thai"), accounted for $359.9 million (22.6% of total
Customer Financing portfolio) and $213.8 million (15.3% of total Customer
Financing portfolio), at December 31, 1999 and 1998, respectively. (See Note 13
below for discussion of the subsequent payoff by Thai.) The third largest
customer, United Airlines ("United"), accounted for $236.4 million (14.8% of
total Customer Financing portfolio) and $237.0 million (16.9% of total Customer
Financing portfolio) at December 31, 1999 and 1998, respectively. The fourth
largest customer, City Bird S.A. ("City Bird"), accounted for $165.3 million
(10.4% of total Customer Financing portfolio) and $172.0 million (12.3% of total
Customer Financing portfolio) at December 31, 1999 and 1998, respectively. No
other single customer accounted for 10% or greater of the total Customer
Financing portfolio.
Based on portfolio balances at December 31, 1999, the single largest customer
accounted for 40.6%, 7.6% and 4.4% in 1999, 1998 and 1997, respectively, of
Customer Financing's revenues. The second largest customer accounted for 12.3%,
0.5% and no revenue, in 1999, 1998 and 1997, respectively. The third largest
customer accounted for 16.6%, 45.5% and 64.4%, in 1999, 1998 and 1997,
respectively. The fourth largest customer accounted for 12.0%, 25.7% and no
revenue, in 1999, 1998 and 1997, respectively. No other single customer
accounted for 10% or greater of Customer Financing's revenues.
Customer Financing generally holds title to all leased equipment and generally
has a perfected security interest in the assets financed through note and loan
arrangements.
Revenues from financing of assets located outside the United States totaled
$114.5 million, $25.2 million and $10.2 million in 1999, 1998 and 1997,
respectively.
Note 13. Subsequent Events
In February 2000, a finance lease included in the net assets acquired was
terminated as a result of early termination payments received from Thai. The net
asset value of the terminated contract as of December 31, 1999 was $359.9
million. The early termination payments included normal lease payments to be
accrued on the books of the Company from January 1, 2000, through the date of
the termination. No additional gains or losses have been recorded by the Company
as a result of this transaction. In connection with this transaction, one of the
promissory notes issued in conjunction with the Portfolio acquisition was repaid
in part by $358.4 million.
As of March 31, 2000, the Company received an additional equity contribution of
$45.0 million and the proceeds were used to repay in part one of the promissory
notes.
As a result of the above transactions, the remaining aggregate balance on the
promissory notes at March 31, 2000 is $858.5 million.
In March 2000, an operating lease with LAM included in the net assets acquired
expired and was renewed by the original lessee. The terms of the renewal call
for payments over the course of ten years, followed by a guaranteed purchase of
the leased equipment. The Company has recorded the new agreement as a finance
lease, with no gain or loss recorded at the inception of the transaction. The
net asset value of the operating lease as of December 31, 1999 was $43.7
million.
b. Pro Forma Financial Information.
The following unaudited pro forma combined condensed balance sheet and statement
of income give effect to the acquisition by the Company of certain tangible
assets and assumption of certain liabilities of Customer Financing from Boeing.
As this acquisition represents a transaction between entities under common
control, the acquisition will be accounted for at historical cost. The unaudited
pro forma combined condensed balance sheet gives effect to the asset acquisition
as if it had occurred on December 31, 1999. The unaudited pro forma combined
condensed statement of income gives effect to the asset acquisition as if it had
occurred on January 1, 1999. The pro forma adjustments are based upon available
information and certain assumptions that management believes are reasonable
under the circumstances. In the opinion of management, all adjustments have been
made that are necessary to present fairly the pro forma data. The unaudited pro
forma combined condensed financial statements are not intended to be a
projection of future financial condition or results of operations. The 1999 pro
forma results are not predictive of future results as, among other things, the
unaudited pro forma combined condensed financial statements for 1999 do not
include a complete allocation of certain overhead expenses.
The unaudited pro forma combined condensed financial statements should be read
in conjunction with the notes thereto, the historical consolidated financial
statements of the Company appearing in the Company's Annual Report on Form 10-K
for the year ended December 31, 1999 as filed with the Securities and Exchange
Commission, and the financial data of Customer Financing appearing elsewhere in
this Form 8-K.
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Boeing Capital Customer Pro Forma Combined
(Dollars in millions) Corporation Financing Adjustments Pro Forma
ASSETS:
Financing receivables:
<S> <C> <C> <C> <C>
Investment in finance leases $ 1,372.8 $ 530.0 $ (356.1)(a) $ 1,546.7
Notes receivable 708.0 371.7 277.4 (a) 1,357.1
------------------------------------------------------------------------
2,080.8 901.7 (78.7) 2,903.8
Allowance for losses on financing
receivables (60.7) (176.6) 91.5 (a) (145.8)
------------------------------------------------------------------------
2,020.1 725.1 12.8 2,758.0
Cash and cash equivalents 26.9 - - 26.9
Equipment under operating lease, net 828.2 693.2 (26.8)(a) 1,494.6
Equipment held for sale or re-lease 66.0 - - 66.0
Accounts due from Boeing and BCSC 2.6 - 15.3 (a)(b) 17.9
Other assets 99.8 - - 99.8
------------------------------------------------------------------------
$ 3,043.6 $ 1,418.3 $ 1.3 $ 4,463.2
========================================================================
LIABILITIES AND SHAREHOLDER'S EQUITY
Short-term notes payable $ 271.0 $ - $ - $ 271.0
Accounts payable and accrued expenses 38.5 - - 38.5
Other liabilities 96.5 47.9 (16.0)(a) 128.4
Deferred income taxes 427.5 - 17.3 (b) 444.8
Long-term debt:
Senior 1,741.8 58.4 1,261.9 (c) 3,062.1
Subordinated 44.9 - - 44.9
------------------------------------------------------------------------
2,620.2 106.3 1,263.2 3,989.7
------------------------------------------------------------------------
Shareholder's equity:
Preferred stock 50.0 - - 50.0
Common stock 5.0 - - 5.0
Capital in excess of par value 89.5 - 50.1 (c) 139.6
Income retained for growth 278.9 - - 278.9
------------------------------------------------------------------------
423.4 - 50.1 473.5
------------------------------------------------------------------------
$ 3,043.6 $ 106.3 $ 1,313.3 $ 4,463.2
========================================================================
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Combined Condensed Balance
Sheet and Pro Forma Combined Condensed Statement of Income.
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Boeing Capital Customer Pro Forma Combined
(Dollars in millions) Corporation Financing Adjustments Pro Forma
REVENUES:
<S> <C> <C> <C> <C>
Finance lease income $ 114.9 $ 32.2 $ (17.0) (a) $ 130.1
Interest income on notes receivable 52.3 21.3 19.5 (a) 93.1
Operating lease income, net of
depreciation expense of $72.0 and
$35.2 for Boeing Capital
Corporation and Customer Financing,
respectively 64.2 84.9 (2.5) (a) 146.6
Net gain on disposal or re-lease of assets 51.7 - - 51.7
Other 2.1 - - 2.1
--------------------------------------------------------------------------
285.2 138.4 - 423.6
--------------------------------------------------------------------------
EXPENSES:
Interest expense 130.0 6.0 63.8 (b) 199.8
Provision for losses 7.4 11.3 - 18.7
Operating expenses 13.8 2.8 - 16.6
Write-downs of equipment under
operating leases - 80.0 - 80.0
Other 7.3 7.2 - 14.5
--------------------------------------------------------------------------
158.5 107.3 63.8 329.6
--------------------------------------------------------------------------
Income (loss) before provision for (benefit
from) income taxes 126.7 31.1 (63.8) 94.0
Provision (benefit from) for income taxes 48.5 - (14.8) (c) 33.7
--------------------------------------------------------------------------
Net income (loss) $ 78.2 $ 31.1 $ (49.0) $ 60.3
==========================================================================
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Combined Condensed Balance
Sheet and Pro Forma Combined Condensed Statement of Income.
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET AND PRO
FORMA COMBINED CONDENSED STATEMENT OF INCOME
Note 1. Basis of Presentation
As of March 31, 2000, the Company agreed to acquire certain tangible assets and
agreed to assume certain liabilities of Boeing and the customer financing
subsidiaries of Boeing (the parent company of the Company), pursuant to the Term
Sheet dated as of January 1, 2000 as well as the various definitive asset
transfer agreements dated as of March 31, 2000 (collectively referred to as the
"Transfer Agreements"). Under the terms of the Transfer Agreements, the Company
acquired effective as of January 1, 2000, a significant portion of Boeing's
customer financing portfolio, including lease and loan agreements and the
related receivables and assets. The purchase price was paid in the form of
promissory notes, dated January 1, 2000, in the aggregate principal amount of
$1,261.9 million, together with an equity contribution of $50.1 million. The
Company is expected to receive approximately $17.3 million from Boeing in
consideration for which the Company will assume Boeing's deferred taxes with
respect to the Portfolio.
Note 2. Customer Financing Presentation
The Customer Financing assets are accounted for at historical cost.
Note 3. Pro Forma Adjustments
The pro forma adjustments reflected in the Unaudited Pro Forma Combined
Condensed Balance Sheet give effect to the following:
(a) Represents adjustments or reclassifications to conform to the Company's
presentation, in accordance with financial services industry practices.
(b) To record the deferred taxes related to the financing assets transferred.
(c) To record the debt and equity contribution required to finance
the acquisition of the Customer Financing portfolio.
The following notes to the pro forma adjustments for the Unaudited Pro Forma
Combined Condensed Statement of Income represent the adjustments that would have
resulted from the Portfolio transfer had the transfer occurred on January 1,
1999:
(a) Represents adjustments or reclassifications to conform to the Company's
presentation, in accordance with financial services industry practices.
(b) To record interest expense on the intercompany debt required to finance
the Customer Financing portfolio during 1999, based on the Company's
normal leverage assumptions.
(c) To record benefit from taxes for the transferred portfolio that was
not separately allocated to Customer Financing.
<PAGE>
c. Exhibits.
2.1 Term Sheet, dated as of January 1, 2000 by and between the
Company and Boeing or its subsidiaries
2.2 Promissory Notes
23.1 Consent of Independent Accountants
Pursuant to Item 601(b)(2) of Regulation S-K, the schedules to the Term Sheet
have been omitted (other than the forms of transfer agreements referred to as
exhibits in Item 2). The Registrant agrees to supplementally furnish such
schedules upon request of the Securities and Exchange Commission.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BOEING CAPITAL CORPORATION
Dated: April 13, 2000 By: /s/ STEVEN W. VOGEDING
-----------------------------
Steven W. Vogeding
Vice President and Chief Financial Officer
EXHIBIT 2.1
TERM SHEET
This term sheet describes key terms of a contemplated acquisition of
assets by Boeing Capital Corporation and its affiliates ("BCC") from The Boeing
Company and its subsidiaries ("Boeing"). This term sheet is not exhaustive of
the issues presented by the proposed transactions and is subject in all respects
to the conditions precedent set forth below.
<TABLE>
<CAPTION>
I. Boeing Sale of Financings to BCC
<S> <C> <C>
1. Seller: The Seller will be Boeing.
2. Buyer: The Buyer will be BCC.
3. Lender: The lender will be Boeing Nevada, Inc. (or another
Boeing affiliate mutually agreed by the parties).
4. Assets: The Assets being acquired by BCC will consist of
certain Boeing loan and lease financings
(including participations therein) of
commercial aircraft and other assets related
to Seller's BCAG division, and the stock of
certain special purpose subsidiaries of
Seller ("Stock") which participate in loan
and lease financings of commercial aircraft
related to Seller's BCAG division (and which
have a net equity equal to the net book
values of the assets listed in Exhibit A
which they hold), all as further identified
on Exhibit A.
5. Consideration: Total consideration shall be equal to the net book value of the Assets as of the
Effective Date (as specified in Exhibit A). Consideration shall be given by a
combination of equity and payment in cash (using the proceeds of a loan from the
Lender).
One part of the equity portion shall consist
of the contribution by Boeing Leasing
Company, on behalf of Boeing, of the stock
of 757UA to the capital of MDC.
MDC shall promptly make the same contribution to capital in BCSC;
BCSC shall promptly make the same
contribution to capital in BCC as
evidenced in the form of Exhibit B.
6. Loan: BNI shall loan BCC the "cash" portion of the consideration, in an amount to be
agreed by the parties, on terms reflected in a Promissory Note.
7. Promissory Note: Promissory Note, substantially in the form of Exhibit C, shall be dated as of
January 1, 2000, payable by BCC to BNI.
8. Payment: BCC shall, within five (5) business days, pay Seller the cash portion of
consideration in immediately available funds.
9. Equity: All as recognized in the form of Exhibit D:
Boeing shall make a cash contribution to
capital to MDC, in an amount which is
the difference between the total
consideration (pursuant to item 5 above)
and the cash portion of the
consideration to be agreed by the
parties (as contemplated in item 6
above) reduced by the net book value of
the 757UA stock (item 5 above).
MDC shall promptly make an equal cash
contribution to capital in BCSC.
BCSC shall promptly make an equal cash
contribution to capital in BCC.
BCC shall pay such amount to BNI to be
applied against BCC's promissory note to BNI.
10. Net Receivables: The parties shall, as soon after the Closing as practicable, calculate the
following as to the Assets being transferred to BCC:
a) all amounts including any distributions, fees or other payments or
accounting transfers from or on behalf of the borrower or lessee or
otherwise with respect to the Assets and any capital account, and
b) less any payments including investments, fees or other payments or
accounting transfers from or on behalf of Boeing with respect to the Assets
from the Effective Date to the Closing.
The aggregate net, of (a) less (b), with
interest thereon computed in a reasonable
manner to be determined by the parties at
the same rate as set forth in the promissory
note (described in item 7) from the date of
receipt (in the case of (a)) or the date of
payment (in the case of (b)) to the Closing
or such other averaging method as the
parties may agree, minus any amount covered
under item 20 below, shall be paid by Boeing
to BCC in cash or accepted as a set off
against the promissory note (described in
item 7), or as the parties may otherwise
agree.
11. Sale: The sale and assignments will generally be effected by execution of Assignment
and Assumption Agreements substantially in the form of Exhibit E, with related
titleholding agreements.
The sale of Stock will generally be effected
by execution of Stock Purchase Agreements
substantially in the form of Exhibit G.
Special documentation may be required for
some Assets and will be mutually agreed by
the parties. Participations or
Subparticipations in certain Assets will be
transferred as described in more detail in
Part II.
</TABLE>
<TABLE>
<CAPTION>
II. Participations and Subparticipation by BCLC
<C> <C> <C>
12. Seller: The Sellers will be (a) BNI and (b) Boeing, RGL-1, RGL-3, and MDC and other
affiliates of Boeing as may be mutually agreed by the parties ("the Non-BNI
Participation Sellers").
13. Subparticipant: The Participant and Subparticipant will be BCLC or other affiliate of BCC as may
be mutually agreed.
14. Lender: The lender (as to any transfers by Non-BNI Participation Sellers) will be BNI (or
another Boeing affiliate mutually agreed by the parties).
15. Assets: The participations and subparticipations are in certain Assets as listed on
Exhibit A.
16. Consideration: Consideration shall be payment of the aggregate net book value of the
participations and subparticipations as set forth on Exhibit A and which is
included in the amount described in Section 5.
17. Loan: BNI shall loan BCLC an amount equal to the consideration owed to Non-BNI
Participation Sellers, which amount shall be determined by the parties consistent
with Exhibit A, on terms reflected in a Promissory Note.
18. Payment: BCLC shall, within five (5) business days, pay the Non-BNI Participation Sellers
the consideration due them in immediately available funds.
19. Promissory Note: A promissory note, substantially in the form of Exhibit C, dated as of January 1,
2000, payable by BCLC to BNI shall be in a principal amount equal to the
consideration due BNI plus the loan amount under item 17.
20. Net Receivables: The parties shall, as soon after the Closing as practicable, calculate the
following as to each subparticipation and participation:
(a) all amounts including any
distributions, fees or other payments
or accounting transfers from or on
behalf of the borrower or lessee or
otherwise with respect to the
participations and subparticipations
covered by this Part II,
(b) less any payments including
investments, fees or other payments or
accounting transfers from or on behalf
of Boeing with respect to the
participation and subparticipations
covered by this Part II from the
Effective Date to the Closing.
The aggregate net, of (a) less (b), with
interest thereon computed in a reasonable
manner to be determined by the parties at
the same rate as set forth in the promissory
note (described in item 7) from the date of
receipt (in the case of (a)) or the date of
payment (in the case of (b)) to the Closing
or such other averaging method as the
parties may agree, shall be paid by BNI to
BCLC in cash or accepted as a set off
against the promissory note (described in
item 16), or as the parties may otherwise
agree.
21. Sale: The participations and subparticipations shall be by execution of Participation
Agreements and Subparticipation Agreements, substantially in the forms of
Exhibits H and I.
</TABLE>
III. General
<TABLE>
<CAPTION>
<S> <C> <C>
22. Closing Date: With respect to a specific Asset, participation or subparticipation, the Closing
Date will be the date on which title or beneficial interest in the Asset is
transferred to BCC or BCLC, respectively, which is expected to be the date of
execution of the relevant transfer documents.
Boeing will transfer the Assets to BCC and
BCLC, respectively, in accordance with
prevailing generally accepted accounting
principles as of December 31, 1999, and
consistent with the terms hereof.
23. Effective Date: The Effective Date for these transactions shall be January 1, 2000. Payment of a
purchase price or delivery of evidence of such payment within five business days
of the purchase shall be deemed contemporaneous. It is the intent of the parties
that the financial activity associated with the Assets between the Effective Date
and the Closing Date shall be for the account of BCC.
24. Conditions Precedent: The contemplated Asset transfers are subject in all respects to the following conditions:
(a) Execution and delivery of mutually acceptable definitive documentation.
(b) Obtaining necessary approvals
of (i) the management of
Boeing, BCC and BNI and (ii)
the board of directors or
executive committee of BCC.
(c) Receipt by BCC and by BNI and
Boeing of any required
consents or approvals of
third parties, including
without limitation waivers
from BCC's lenders of any
debt covenants potentially
contravened by the subject
transaction, and any
necessary notices to lessees
or borrowers with respect to
the Assets being transferred.
(d) The Assets which consist of
lease financings shall be in
a jurisdiction at the time of
closing which shall be
mutually satisfactory to
Boeing and BCC from a tax
perspective; provided,
however, if any sales, use,
transfer or similar tax shall
be payable in connection with
the transfer of any of the
Assets, Buyer and Seller
shall each be responsible for
50% of such tax.
<PAGE>
(e) Receipt of any necessary regulatory approvals and compliance with all
applicable regulations.
</TABLE>
Dated as of January 1, 2000.
<TABLE>
<CAPTION>
<S> <C> <C>
The Boeing Company Boeing Capital Corporation Boeing Nevada, Inc.
By: /s/ WALTER E. SKOWRONSKI By: /s/ MICHAEL C. DRAFFIN By: /s/ MARK J. FROST
Its:____________________________ Its:_________________________ Its:__________________
</TABLE>
<PAGE>
EXHIBITS
Exhibit Subject
A TBC assets being acquired by BCC together with
net book value in the aggregate and for each asset
B Agreement re Stock Contribution to Capital
C Promissory Note (BCC to BNI and BCLC to BNI)
D Recognition of Cash Contribution to Capital
E Assignment Agreement
F Titleholding Agreement
G Stock Purchase Agreement
H Participation Agreement
I Subparticipation Agreement
<PAGE>
EXHIBIT C TO TERM SHEET
PROMISSORY NOTE
$______________________ January 1, 2000
For value received, [Boeing Capital Corporation], a Delaware corporation
("BCC"), hereby unconditionally promises to pay to the order of Boeing Nevada,
Inc., a Delaware corporation ("BNI"), the principal sum of
____________________________ United States Dollars (U.S. $_________________) or
such other sum on the register attached hereto that documents the principal
amount then outstanding under this Note, with all accrued interest thereon, on
January 15, 2007; provided, however, BCC shall earlier pay all or part of such
principal, with all accrued interest thereon, without premium or penalty, on
(1) the date 30 days (or such later date as may be agreed to by BNI)
following receipt by BCC of BNI's written request for payment in full
or in part of this Note, or
(2) the date 30 days following receipt by BCC of written consent by BNI
to BCC's prepayment of this Note in full or in part as proposed in a
written notice from BCC to BNI.
The unpaid principal amount of this Note shall bear interest until maturity
(whether by acceleration or otherwise) at a rate per annum of 7.70 per cent.
Interest shall accrue from and including the date hereof and shall be payable on
the last day of each Interest Period (as defined below) or on the date due in
accordance with (1) or (2) above. The initial Interest Period shall commence on
the date hereof and each Interest Period occurring thereafter shall commence on
the day on which the preceding Interest Period expires.
"Interest Period" shall be a period of six calendar months (except for the first
and last Interest Periods, which may be other than six months). Interest on the
principal amount of this Note will be payable semiannually on the 15th day of
January and July, commencing July 15, 2000. Such interest shall be computed on
the basis of a 360-day year of twelve 30-day months.
If any date that a payment of interest or principal is due falls on a day that
is not a business day for both BCC and BNI, the required payment will be made on
the next succeeding business day and will be deemed made on the date such
payment was due, and no interest will accrue on such payment for the period from
and after such original payment date to the date of payment on the next
succeeding business day.
In the event of a failure by BCC to pay within five business days of the due
date any sum of money to be paid under this Note, BCC shall pay BNI interest on
such unpaid sum at a rate equal to the Prime Rate (being the rate which Citibank
announces from time to time as its prime lending rate, such Prime Rate to change
from time to time when any such change is announced). All computations of
interest at the Prime Rate shall be made on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be or the maximum
contract rate permitted by applicable law, whichever is lower (the "Overdue
Rate"). Acceptance by BNI of interest at the Overdue Rate shall not constitute a
waiver of BCC's obligation to pay such overdue amount or prevent BNI from
exercising any legal remedy.
BNI shall, and is hereby authorized by BCC to, record on the register attached
hereto and made a part hereof (including additional pages, if any), the amount
of each advance by BNI hereunder and each payment of principal by or on behalf
of BCC, the date thereof, and the resulting principal balance then outstanding.
If action is instituted to collect or enforce this Note, or any portion thereof,
BCC shall immediately pay to BNI, in addition to the amounts due hereunder, the
costs, disbursements and reasonable attorneys' fees and other costs of
collection or enforcement hereof.
BCC waives presentment, demand for payment, notice of dishonor, and any and all
other notices and demands in connection with the delivery, acceptance,
performance, default or enforcement of this Note and consents to all renewals,
extensions of time, releases of liens, waivers or modifications that may be made
or granted to BNI.
All payments under this Note shall be made in immediately available funds in
United States Dollars. The laws of the State of New York shall govern this Note.
The obligations of BCC may not be pledged, transferred or assigned without the
prior written consent of BNI.
BOEING CAPITAL CORPORATION
By: ______________________________
Title: ___________________________
<PAGE>
<TABLE>
<CAPTION>
REGISTER
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
<S> <C> <C> <C>
Transaction Transaction Amount Outstanding Principal BNI Entry
Date (indicate advance or payment) Balance Made By
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
</TABLE>
<PAGE>
EXHIBIT E TO TERM SHEET
ASSIGNMENT AGREEMENT (______________ MSN ____)
Assignment Agreement dated as of January 1, 2000 by and between ________
_______________________________________________________________________________
________________ ("Assignor"), and Boeing Capital Corporation, a Delaware
corporation ("Assignee").
RECITALS
A. Assignor previously entered into that certain Lease Agreement dated as of
_____________, 19__ (together with all amendments and supplements thereto
to the date hereof, the "Lease Agreement") with ____________, an
____________________ (the "Lessee") whereby Assignor leased to the Lessee
that certain ______________ Model _____________ aircraft bearing
manufacturer serial number ___ and ___________ registration mark
__________ and two ____________ model ________ engines bearing
manufacturer serial numbers ___________ and ___________ (together with
all parts, accessories and records related thereto, the "Aircraft");
B. Assignor desires to sell, transfer and assign to Assignee all of its
right, title and interest in and to, and to transfer its liabilities,
duties and obligations with respect to and under, the Aircraft, the Lease
Agreement and each of the other agreements listed on Exhibit A hereto
(the "Related Agreements", and collectively with the Aircraft and the
Lease Agreement, the "Property"); and
C. Assignee desires to acquire from Assignor the Property on the terms and
conditions set forth below.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises hereinafter set forth,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Assignor and Assignee agree as follows:
1. Assignment. Assignor hereby sells, assigns, transfers, and sets over
unto Assignee all of Assignor's right, title and interest in and to the
Property, including without limitation all of its right, title and
interest in all payments and other monies due and to become due under the
Lease Agreement or in respect of the Related Agreements.
2. Acceptance and Assumption. Assignee hereby accepts the assignment of
all of Assignor's right, title and interest in and to the Property pursuant to
the terms of this Agreement and assumes all of Assignor's obligations in
respect of the Property from and after the execution of this Agreement.
3. Purchase Price. Contemporaneous with the execution of this
Agreement, Assignee shall deliver to Assignor evidence of payment of the
purchase price which (a) has been agreed to by the parties for the
assignment, sale and transfer effected by this Agreement and (b) is set
forth with respect thereto in Exhibit A to the Term Sheet dated as of
January 1, 2000 by and between the parties. Payment of such purchase
price shall be made in accordance with the payment provision in such Term
Sheet.
4. Effective Date.
4.1 The assignment and assumption effected by Sections 1 and 2 above,
respectively, shall be deemed effective as of January 1, 2000 (the
"Effective Date").
4.2 To the extent that Assignor has received or receives any distributions or
other payments or accounting transfers from or on behalf of the Lessee
or with respect to the Property effective on or after the Effective
Date, Assignor shall, subject to Section 4.3, transfer such amounts to
Assignee or, if mutually agreed by the parties, grant an equivalent
credit or debit on any intercompany indebtedness or make other similar
accounting entries so that Assignee shall receive the benefits and
burdens of the Property as if Assignee had been the owner of the
Property at all times on and after January 1, 2000.
4.3 As to any such distributions, payments or transfers received from or on
behalf of the Company prior to execution of this Agreement, the payment
by Assignor pursuant to Section 4.2 shall be made in accordance with
the pertinent payment provision of the Term Sheet.
4.4 As to any such distributions, payments or transfers received from or on
behalf of the Lessee after execution of this Agreement, payment by
Assignor pursuant to Section 4.2 shall be within ten (10) business days
of each such receipt.
5. Title to the Aircraft. The parties acknowledge that title to the Aircraft
covered under the Lease Agreement is being conveyed from Assignor to Assignee by
a separate bill of sale. Assignor shall execute and deliver a bill of sale in
respect of the Aircraft as soon as possible and in any event within ten (10)
business days of the execution of this Agreement and each of the parties shall
cooperate to cause such bill of sale to be delivered in a manner so as to reduce
transfer or other taxes that would otherwise be applicable. Pursuant to the bill
of sale, Assignor shall transfer to Assignee good and valid legal and beneficial
title in and to the Property free and clear of all liens, adverse claims,
charges or other encumbrances, other than those arising under the Lease
Agreement.
6. Assignor Representations.
6.1 Assignor represents and warrants that at the time of the execution of
this Agreement:
(a) Organization, Standing and Power. Assignor is a corporation duly
organized, validly existing and in good standing under the laws of
[Delaware][Bermuda], has all requisite power and authority to own its assets and
carry on its business as now being conducted, and the nature of the Assignor's
business is such that it is not required to qualify in order to do business in
any jurisdiction other than its jurisdiction of incorporation.
(b) Title to Property. Assignor has good and valid legal and beneficial
title to the Property, free and clear of all liens, encumbrances, equities,
security interests, restrictions on transfer, and any other claims whatsoever
(other than the rights of Lessee under the Lease Agreement and under the Related
Agreements and liens permitted under the Lease Agreement), with full right and
authority to transfer and deliver the same.
(c) Full Force. The Lease Agreement and the Related Agreements,
together with all agreements and documents delivered in connection therewith,
are genuine in all respects, in full force and effect and enforceable in
accordance with the terms thereof.
(d) No Disputes. There is no dispute between Assignor and the Lessee
under the Lease Agreement and there is no right or claim of set-off against
Assignor under the Lease Agreement or any Related Agreement, including, without
limitation, any credit memorandum issued or that may be issued by Assignor.
(e) Assignment. Assignor has not transferred, assigned, or pledged to
anyone other than Assignee, and hereby covenants that, so long as this Agreement
shall remain in effect, it will not transfer, assign or pledge the whole or any
part of the rights hereby assigned to anyone other than Assignee.
(f) No Default. The Lessee is not in default of any of its duties,
liabilities or obligations under the Lease Agreement or any Related Agreement.
6.2 [OTHER THAN IN ITS CAPACITY AS MANUFACTURER,] ASSIGNOR SHALL NOT BE
DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS
TO THE AIRWORTHINESS, CONDITION, VALUE, DESIGN, OPERATION, MERCHANTABILITY
OR FITNESS FOR USE OF THE AIRCRAFT, AS TO THE ABSENCE OF LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR AS TO THE QUALITY OF THE
MATERIAL OR WORKMANSHIP OF THE EQUIPMENT, OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT.
7. Survival of Representations. All of Assignor's representations and
warranties contained in this Agreement shall survive the assignment and
assumption provided for herein and shall continue in full force and effect
thereafter (subject to the applicable statutes of limitations).
8. Indemnification.
8.1 Assignor shall indemnify Assignee against, and agrees to protect, save
and keep harmless Assignee from, and to assume liability for, all actions,
suits, proceedings, investigations, claims, demands, injunctions, judgments,
orders, damages, penalties, fines, costs, settlements, liabilities, obligations,
taxes, liens, losses, expenses and fees, including reasonable attorneys' fees
and expenses, that may be imposed on or incurred by Assignee as a consequence
of (i) any misrepresentation or breach of warranty by Assignor in this
Agreement, (ii) any failure by Assignor to perform any agreement or covenant
contained herein, (iii) any act or omission by Assignor taken at any time
prior to the Effective Date in respect of the Property and (iv) any other
event or circumstance whether or not caused by any action or omission of
Assignor arising prior to the Effective Date in respect of the Property.
8.2 Assignee shall indemnify Assignor against, and agrees to protect,
save and keep harmless Assignor from, and to assume liability for, all
actions, suits, proceedings, investigations, claims, demands, injunctions,
judgments, orders, damages, penalties, fines, costs, settlements, liabilities,
obligations, taxes, liens, losses, expenses and fees, including reasonable
attorneys' fees and expenses, that may be imposed on or incurred by Assignor
as a consequence of (i) any misrepresentation or breach of warranty by Assignee
in this Agreement, (ii) any failure by Assignee to perform any agreement or
covenant contained herein, (iii) any act or omission by Assignee taken
at any time on or after the Effective Date in respect of the Property
and (iv) any other event or circumstance whether or not caused by any
action or omission of Assignee arising on or after the Effective Date in
respect of the Property.
8.3 The foregoing indemnities shall include all reasonable attorneys'
fees and expenses incurred by the indemnitee in connection with the
enforcement of this provision against the indemnitor.
8.4 The foregoing indemnities are subject to (i) the receipt by the
indemnitor of prompt notice of any claim under which the obligation to
indemnify may arise, (ii) the right of the indemnifying party to control
the defense and/or settlement of any such claim, and (iii) the reasonable
cooperation of the indemnitee in the defense and/or settlement of any such
claim.
9. Further Assurances. Assignor will promptly and duly execute and
deliver such further documents and assurances and take such further action as
may from time to time be necessary to carry out the intent and purpose of this
Agreement and to establish and protect the rights and remedies created or
intended to be created in favor of Assignee hereunder, including, if requested
by Assignee, any deregistration and/or reregistration of the Aircraft and/or
the Lease Agreement or Related Agreements, and, if requested by Assignee,
Assignor shall use its best reasonable efforts to cause the Lessee to amend
and reissue in the name of the Assignee any documentation originally issued
in the name of Assignor under the terms of the Lease Agreement or the Related
Agreements. Immediately after the execution of this Agreement, Assignor shall
deliver to Assignee complete and correct copies (or originals if available) of
(i) the Lease Agreement, (ii) each other Related Agreement and (iii) the
closing set in respect of the Aircraft.
10. Sharing Costs. Notwithstanding Section 8.2, each of Assignor and
Assignee shall share equally in all costs, expenses and liabilities
incurred by or on behalf of either party relating to the transfer of the
Property from Assignor to Assignee or in connection with the transaction
contemplated herein, including without limitation, any outside legal
expenses and any sales, transfer or other taxes (other than income taxes).
11. Successors and Assigns. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto. This
Agreement shall not be assigned in whole or in part by either party without
the prior written consent of the other party provided that Assignee may
assign this Agreement to any wholly-owned subsidiary of Assignee. This
Agreement may not be changed, discharged or terminated orally, but only by
an instrument in writing signed by the party against whom enforcement of any
change, discharge or termination is sought.
12. Entire Agreement. This Agreement supersedes all previous arrangements
and agreements, whether written or oral, and comprises the entire agreement
between the parties hereto, in respect of the subject matter hereof.
13. Amendment. This Agreement may be amended or modified only in writing,
signed by duly authorized officers of Assignee and Assignor.
14. Severability. If any provision hereof shall be held invalid or
unenforceable by any court or as a result of future administrative or
legislative action, such holding or action shall be strictly construed and
shall not affect the validity or effect of any other provision hereof.
15. Governing Law. This Agreement shall be governed by the laws of the
State of Washington.
16. Counterparts. This Agreement may be executed in separate counterparts,
each of which when so executed shall be an original, but all of which together
shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
_____________________________, as Assignor
By:
Its:
Date:
BOEING CAPITAL CORPORATION, as Assignee By:
Its:
Date:
<PAGE>
EXHIBIT A TO EXHIBIT E OF TERM SHEET
Property: One ______________ Model ____________ Aircraft (MSN ____)
And two __________________ Model __________ Engines (MSNs ______
and _______
Related Agreements:
- Lease Agreement dated as of ______________;
- Lease Supplement dated as of ______________;
Including cash security deposit in the amount of $__________.00;
Maintenance Reserves in the amount of $______________; and prepaid rents in
the amount of $____________.
<PAGE>
EXHIBIT G TO TERM SHEET
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of January
1, 2000, by and between [The Boeing Company][McDonnell Douglas Corporation]
("Seller"), and [Boeing Capital Corporation, formerly known as McDonnell Douglas
Finance Corporation][Boeing Capital Services Corporation] ("Purchaser").
RECITALS
<TABLE>
<CAPTION>
<S> <C>
A. Seller owns [one thousand (1,000)] shares of common stock, $1.00 par value, of [Name of Subsidiary], a [Delaware]
corporation (the "Company"), constituting all issued and outstanding shares of capital stock of the Company (the
"Shares");
B. Seller wishes to sell, and Purchaser wishes to purchase, the Shares subject to the terms and conditions of this
Agreement;
C. The Company is lessor under the lease agreement or lease agreements as more particularly described on Exhibit A
hereto (collectively, the "Lease") and certain other related agreements listed on Exhibit A hereto (the "Related
Agreements");
D. [[[The Lease relates to [one (1)] [Boeing][McDonnell Douglas] Model 747,777,767,757, 737, 717] [MD-11, 90, 80-
Airframe, _____________ Registration Mark ______, Manufacturer's Serial No. _________ (together with the engines
subject to the Lease, the "Equipment")]]];
</TABLE>
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Purchaser and Seller agree as
follows:
1. Purchase and Sale. Contemporaneous with the execution of this
Agreement, Seller shall sell to Purchaser, and Purchaser shall purchase from
Seller, all of the right, title and interest of Seller in and to the Shares on
the terms and subject to the conditions set forth in this Agreement.
2. Purchase Price. Contemporaneous with the execution of this
Agreement, Purchaser shall deliver to Seller evidence of payment of the purchase
price which (a) has been agreed to by the parties for the sale contemplated by
this Agreement and (b) is set forth with respect thereto in Exhibit A to the
Term Sheet dated as of January 1, 2000 by and between Seller and Purchaser (the
"Term Sheet"). Payment of such purchase price shall be made in accordance with
the payment provision in the Term Sheet.
3. Effective Date.
3.1 At the time of the payment of the purchase price, in accordance with Section
2, Seller will assign and transfer to Purchaser effective as of January 1, 2000
(the "Effective Date") good and valid legal and beneficial title in and to the
Shares, free and clear of all liens, adverse claims, charges or other
encumbrances, by delivering to Purchaser a certificate or certificates
representing the Shares, in genuine and unaltered form, duly endorsed to
Purchaser, or accompanied by an executed stock power duly endorsed in blank, in
proper form for transfer.
To the extent that Seller has received or receives any distributions or other
payments or accounting transfers from or on behalf of the Company effective on
or after the Effective Date, Seller shall, subject to Section 3.3, transfer such
amounts to Purchaser, or, if mutually agreed by the parties, grant an equivalent
credit or debit on any intercompany indebtedness or make other similar
accounting entries so that Purchaser shall receive the benefit and burdens of
the Company's operations as if Purchaser had been the owner of the Shares at all
times on and after the Effective Date.
As to any such distributions, payments or transfers received from or on behalf
of the Company prior to execution of this Agreement, the payment by Seller
pursuant to Section 3.2 shall be made in accordance with the pertinent payment
provision of the Term Sheet.
As to any such distributions, payments or transfers received from or on behalf
of the Company after execution of this Agreement, payment by Seller pursuant to
Section 3.2 shall be within ten (10) business days of each such receipt.
4. Seller's Representations and Warranties.
4.1 Seller represents and warrants to Purchaser as follows:
(a) Organization, Standing and Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of
[Delaware][Bermuda], has all requisite power and authority to own its assets and
carry on its business as now being conducted, and the nature of the Company's
business is such that it is not required to qualify in order to do business in
any jurisdiction other than its jurisdiction of incorporation.
(b) Capital Structure. The authorized capital stock of the Company
consists of [1,000] shares of common stock, of which [1,000] shares of common
stock are outstanding and no shares of common stock are held by the Company in
its treasury. The Shares are validly issued, nonassessable and not subject to
preemptive rights. There are no options, warrants, calls, rights, commitments or
agreements of any character to which Seller or the Company is a party or by
which either of them is bound obligating Seller or the Company to issue, deliver
or sell, or cause to be issued, delivered or sold, shares of capital stock of
the Company or obligating Seller or the Company to grant, extend or enter into
any such option, warrant, calls, right, commitment or agreement. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to the Company. There are no voting
trusts, proxies or other agreements or understandings to which Seller or the
Company is a party with respect to the voting of the capital stock of the
Company. [[[The Company has no subsidiaries other than [_____________].
(c) Title to Shares. Seller has good and valid legal and beneficial
title to the Shares, free and clear of all liens, encumbrances, equities,
security interests, restrictions on transfer, and any other claims whatsoever,
with full right and authority to transfer and deliver the same.
(d) Assets of the Company. The balance sheet of the Company attached
hereto as Exhibit B is true and correct as of January 1, 2000, was prepared in
accordance with generally accepted accounting principals and remains true and
correct as of the execution of this Agreement.
(e) Compliance with Applicable Laws. The business of the Company has
not been and is not being conducted with any material violation of any law,
rule, regulation, ordinance, permit, license, authorization, status, judgment,
decree or order of any governmental entity. No investigation or review by any
governmental entity with respect to the Company is pending or, to the knowledge
of Seller, threatened.
(f) Litigation. There is no suit, action or proceeding pending or, to
the knowledge of Seller, threatened against or affecting the Company, nor, to
the knowledge of Seller, is there any basis for any such suit, action or
proceeding. To the knowledge of Seller, there is no judgment, decree,
injunction, rule or order of any governmental entity or arbitrator outstanding
against the Company nor is there any basis for any such action or proceeding.
(g) No Employees; No Other Material Agreements. The Company does not
have, nor has it ever had since the date of incorporation, any employees. Except
for the Lease and the Related Agreements as set forth in Exhibit A hereto, the
Company is not a party to any oral or written (i) agreement, contract, indenture
or other instrument relating to the borrowing of money or the guarantee of any
obligation for the borrowing of money, or (ii) other material contract,
agreement or commitment.
(h) Absence of Certain Changes or Events. Since the date of its
incorporation, the Company has not engaged in any transactions other than the
issuance of the Shares, the acquisition of the Equipment, [[[and] the
acquisition of its subsidiary]]], and the execution of, and performance under,
the Lease and the Related Agreements.
(i) Official Notices, Consents, Etc. No authorization, consent
or approval of, notice to or filing with any governmental authority or third
party is required for the execution, delivery or performance by Seller of this
Agreement or for the conveyance of the Shares.
(j) Equipment. The Company is the lawful owner of good and marketable
title in and to the Equipment, free and clear of all claims, liens, encumbrances
and rights of others of any nature whatsoever, other than those arising under
the Lease.
4.2 [OTHER THAN IN ITS CAPACITY AS MANUFACTURER,] SELLER SHALL NOT BE DEEMED TO
HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE
AIRWORTHINESS, CONDITION, VALUE, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE OF THE EQUIPMENT, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER
OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT,
TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT
LIABILITY IN TORT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE
EQUIPMENT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE EQUIPMENT.
5. Survival of Representations. All of Seller's representations
and warranties contained in this Agreement shall survive the purchase and sale
contemplated by this Agreement and shall continue in full force and effect
thereafter (subject to the applicable statutes of limitations).
6. Indemnification.
6.1 Seller shall indemnify Purchaser against, and agrees to protect, save and
keep harmless Purchaser from, and to assume liability for, all actions, suits,
proceedings, investigations, claims, demands, injunctions, judgments, orders,
damages, penalties, fines, costs, settlements, liabilities, obligations, taxes,
liens, losses, expenses and fees, including reasonable attorneys' fees and
expenses, that may be imposed on or incurred by Purchaser as a consequence of
(i) any misrepresentation or breach of warranty by Seller in this Agreement,
(ii) any failure by Seller to perform any agreement or covenant contained
herein, (iii) any act or omission by Seller taken at any time prior to the
Effective Date in respect of the Equipment and (iv) any other event or
circumstance whether or not caused by any action or omission of Seller arising
prior to the Effective Date in respect of the Equipment.
6.2 Purchaser shall indemnify Seller against, and agrees to protect, save and
keep harmless Seller from, and to assume liability for, all actions, suits,
proceedings, investigations, claims, demands, injunctions, judgments, orders,
damages, penalties, fines, costs, settlements, liabilities, obligations, taxes,
liens, losses, expenses and fees, including reasonable attorneys' fees and
expenses, that may be imposed on or incurred by Seller as a consequence of (i)
any misrepresentation or breach of warranty by Purchaser in this Agreement, (ii)
any failure by Purchaser to perform any Agreement or covenant contained herein,
(iii) any act or omission by Purchaser taken at any time on or after the
Effective Date in respect of the Equipment and (iv) any other event or
circumstance whether or not caused by any action or omission of Purchaser
arising on or after the Effective Date in respect of the Equipment.
6.3 The foregoing indemnities shall include all reasonable attorneys' fees and
expenses incurred by the indemnitee in connection with the enforcement of this
provision against the indemnitor.
6.4 The foregoing indemnities are subject to (i) the receipt by indemnitor of
prompt notice of any claim under which the obligation to indemnify may arise,
(ii) the right of the indemnitor to control the defense and/or settlement of any
such claim, and (iii) the reasonable cooperation of the indemnitee in the
defense and/or settlement of any such claim.
7. Investment Representation. Purchaser hereby represents and
acknowledges that Purchaser is not purchasing the shares in connection with any
distribution of the Shares. Purchaser acknowledges that the Shares have not been
registered under the Securities Act of 1933, as amended (the "Act"), or
qualified under the California Corporate Securities Law of 1968, as amended.
8. Conditions to Seller's Obligations. The obligations of Seller to
sell the Shares shall be subject to the fulfillment at or prior to the
execution of this Agreement of the following:
(a) Purchaser shall tender full payment of the Purchase Price in the
manner previously agreed.
(b) All declarations or filings with, or authorizations, consents,
orders or approvals of, or expirations of waiting periods imposed by, any
governmental entity or other third party necessary for the sale of the Shares
pursuant to this Agreement shall have been filed, been obtained or have
occurred.
(c) Purchaser shall execute and deliver such additional documents as
may be reasonably requested by Seller or as may be necessary to consummate this
transaction.
All conditions set forth in this Section shall be deemed to have been
satisfied at the execution of this Agreement (provided that Purchaser is not
relieved of its obligation to pay the Purchase Price in accordance with the
terms hereof).
9. Conditions to Purchaser's Obligations. The obligations of
Purchaser to purchase the Shares shall be subject to the fulfillment at or
prior to the execution of this Agreement of the following:
(a) Purchaser shall have received an original certificate for
the Shares endorsed to Purchaser or accompanied by an executed stock power.
(b) The representations and warranties of Seller contained in
this Agreement shall be true and complete in all material respects at the time
of the execution of this Agreement.
(c) All or declarations or filings with, or authorizations,
consents, orders or approvals of, expirations of waiting periods imposed by, any
governmental entity or other third party necessary for the purchase of the
Shares shall have been filed, have been obtained or have occurred.
(d) The Company shall have good and marketable title to the
Equipment, free and clear of liens, security interests and encumbrances, other
than those arising under the Lease.
(e) Seller and the Company shall execute and deliver and/or
cause to be filed with the [Federal Aviation Authority of the United
States][Aviation Authority of ______________] such additional documents as may
be reasonably requested by Purchaser or as may be necessary to consummate this
transaction.
(f) Seller shall have delivered to Purchaser complete and
correct originals of (i) the Certificate of Incorporation and Bylaws of the
Company as amended to the date of execution of this Agreement and (ii) the
minute book (containing the complete records of meetings of the stockholders,
the board of directors, and any committees of the board of directors), the stock
certificate inventory, and the stock record log of the Company.
All conditions set forth in this Section shall be deemed to have been
satisfied at the execution of this Agreement (other than Seller shall remain
obligated following the purchase and sale contemplated by this Agreement to
comply with its obligations in (a), (e) and (f)).
10. Further Assurances. Each of Purchaser and Seller shall execute and
deliver promptly to the other all such further instruments and documents and
take such further actions, as may reasonably be requested by the other in order
to carry out fully the intent, and to accomplish the purposes, of the
transaction contemplated herein.
11. Sharing Costs. Notwithstanding Section 6.2, each of Seller and
Purchaser shall share equally in all costs, expenses and liabilities incurred by
or on behalf of either party relating to the sale of the Shares from Seller to
Purchaser or in connection with the transaction contemplated herein, including
without limitation, any outside legal expenses and any sales, transfer or other
taxes (other than income taxes).
12. Taxes. Solely for purposes of Purchaser's and Seller's
calculation of their relative liability for Seller's and Purchaser's federal
income tax, and not for external tax reporting purposes,
(a) the purchase and sale of the Shares pursuant to this Agreement
shall be treated as a purchase and sale of the assets of the Company
and
(b) [For FSC entities: Seller will be assumed to be eligible for
the net tax benefit arising from a deductible Foreign Sales
Corporation commission, i.e., for purposes of this computation,
the gain on the sale will be assumed to be taxable at a federal
income tax rate of 29.75%] [For non-FSC entity, e.g., Hawk, Aileron,
etc.: the gain on the sale will be assumed to be taxable at the
maximum federal income tax rate of 35%].
13. Successors and Assigns. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto. This Agreement
shall not be assigned in whole or in part by either party without the prior
written consent of the other party provided that Purchaser may assign this
Agreement to any wholly-owned subsidiary of Purchaser. This Agreement may not be
changed, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of any change, discharge or
termination is sought.
14. Entire Agreement. This Agreement supersedes all previous
arrangements and agreements, whether written or oral, and comprises the entire
agreement between the parties hereto, in respect of the subject matter hereof.
15. Amendment. This Agreement may be amended or modified only in
writing, signed by duly authorized officers of Purchaser and Seller.
16. Severability. If any provision hereof shall be held invalid or
unenforceable by any court or as a result of future administrative or
legislative action, such holding or action shall be strictly construed and
shall not affect the validity or effect of any other provision hereof.
17. Governing Law. This Agreement shall be governed by the laws of
the State of Washington.
18. Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed will be an original, but all of
which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
[THE BOEING COMPANY][MCDONNELL DOUGLAS
CORPORATION] as Seller
By:_________________________________
Name:
Title:
Date:
[BOEING CAPITAL CORPORATION][BOEING
CAPITAL SERVICES CORPORATION] as
Purchaser
By:_________________________________
Name:
Title:
Date:
<PAGE>
EXHIBIT A TO EXHIBIT G TO TERM SHEET
Lease Agreement and the Related Agreements:
1. Lease dated as of ______________, by and between [The Boeing
Company][McDonnell Douglas Corporation], and _______________, together
with the Lease Supplement thereto dated ___________________.
2.
3.
List of security deposit, maintenance reserves, prepaid rents and all other
amounts being held by the Company under the Lease Agreement:
1
2
<PAGE>
EXHIBIT B TO EXHIBIT G TO TERM SHEET
BALANCE SHEET OF THE COMPANY
<PAGE>
EXHIBIT H TO TERM SHEET
PARTICIPATION AGREEMENT
This Participation Agreement (this "Agreement") made as of January 1,
2000, is by and between ________________, a ____________ corporation ("Seller"),
as seller, and Boeing Capital Loan Corporation, a Delaware corporation qualified
to do business in the state of Nevada ("Participant"), as participant.
RECITALS
A. Seller has extended credit to customers and others under loan
agreements and similar arrangements, pursuant to which and in
consideration for the extension of credit, such customers and others
(together with their successors and assigns, the "Obligors" and each an
"Obligor") agreed to make payments to Seller and perform other
obligations for Seller's benefit, on specified terms and conditions (as
hereinafter defined further, "Obligations").
B. Seller wishes to sell, and Participant wishes to purchase, a
participation interest in the Obligations identified on Exhibit A
hereto (the "Participations", as more particularly defined
hereinafter), on the terms and conditions of this Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Participant and Seller agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following words and phrases have the meanings
indicated:
1.1 Collateral means any tangible or intangible property securing
a Participation pursuant to any of the Credit Documents,
including any security interest in property or equipment, any
guaranty or letter of credit, or any other security interest.
1.2 Collateral Disposition means any repossession or subsequent
sale, lease or other disposition of any Collateral.
1.3 Collateral Proceeds means all proceeds received by Seller
pursuant to any Collateral Disposition.
1.4 Credit Documents means the agreement or agreements between
Seller and an Obligor, relating to an extension of credit by
Seller to such Obligor with respect to a Participation, all
exhibits, schedules, annexes, certificates and attachments,
and any amendments thereto and modifications of any thereof.
1.5 Effective Date means January 1, 2000.
1.6 Interest Rate means the rate of interest stated in a Credit
Document that is owed on a Participation, without regard to
any default interest rate or penalty interest rate.
1.7 Obligation means all amounts outstanding at a particular time,
owed by an Obligor to Seller pursuant to the applicable Credit
Documents, whether characterized as principal, lease or other
payment obligations. "Obligation" also includes all amounts
due by an Obligor to Seller pursuant to the Credit Documents
as interest at the Interest Rate on such amounts, all default
or penalty interest, insurance proceeds, indemnity payments,
penalties, and reimbursement for costs and expenses incurred;
provided, that as used herein, "Obligation" does not include
any amounts due from an Obligor to Seller under any agreements
other than the Credit Documents relating to the relevant
Participation.
1.8 Participation means an Obligation described in Exhibit A
hereto which has been participated to Participant on the terms
and conditions herein.
1.9 Purchase Price means the amount agreed to be paid by
Participant to Seller in consideration for Seller's sale to
Participant of the Participations.
1.10 Term Sheet means that certain Term Sheet dated as of January
1, 2000 by and between The Boeing Company, which is the
ultimate parent of both Seller and Participant, and affiliates
of Participant with respect to the Participations and similar
transactions.
SECTION 2. AGREEMENT TO PARTICIPATE
On the terms and subject to the conditions of this Agreement, Seller hereby
sells to Participant and Participant hereby purchases from Seller an undivided
100% participation interest in all of Seller's right, title and interest in, to
or arising under the Participations. The net book value of each Participation on
the books of Seller and its affiliates as of the Effective Date is set forth in
the schedule attached to the Term Sheet as Exhibit A.
SECTION 3. PURCHASE PRICE
Contemporaneous with the execution of this Agreement, Participant shall deliver
to Seller evidence of payment of the Purchase Price which (a) has been agreed to
by the parties as the price for the sale contemplated by this Agreement and (b)
is set forth with respect thereto in an exhibit to the Term Sheet. Payment of
such Purchase Price shall be made in accordance with the pertinent payment
provision in the Term Sheet.
SECTION 4. PAYMENTS
After execution of this Agreement, provided that Participant shall have
performed its obligations under Section 3 above, Seller shall pay to
Participant, and Participant shall pay to Seller, in accordance with the terms
and provisions hereof, the amounts set forth in this Section 4 with respect to
each Participation.
4.1 Payments
Except as otherwise set forth herein, Seller shall pay to Participant
all amounts received by Seller on or after the Effective Date in
connection with each Participation, including but not limited to,
principal payments, interest at the Interest Rate on such principal
amount, all default or penalty interest, insurance proceeds, indemnity
payments, penalties, and reimbursement for costs and expenses incurred
and Collateral Proceeds.
4.2 Interest at the Overdue Rate.
If Seller receives from an Obligor any payment of interest at a penalty
or overdue interest rate pursuant to the Credit Documents, Seller shall
pay to Participant the amount of interest at the overdue rate so
received by Seller.
4.3 Costs, Losses and Expenses
If on or after the Effective Date, Seller incurs any costs, losses or
expenses (except for any income tax or business and occupation tax) in
connection with its performance of its obligations under, or the
enforcement of any rights or remedies created in connection with, any
of the Credit Documents or in connection with any actual or proposed
amendment or waiver of any term thereof or restructuring or refinancing
thereof, and such amounts are (x) not promptly reimbursed by the
Obligor to Seller in accordance with the Credit Documents and (y) not
attributable to Seller's gross negligence or willful misconduct, then,
at the written request of Seller setting forth in reasonable detail
such costs, expenses, claims, losses or liabilities incurred by Seller,
Participant shall pay to Seller an amount equal to such costs, losses
or expenses.
If Seller receives any reimbursement of costs, losses or expenses
(including any interest payment received in respect of any thereof)
from an Obligor pursuant to the Credit Documents in respect of which
Participant shall have paid amounts pursuant to the foregoing paragraph
of this Section 4.3, Seller shall repay to Participant the amounts so
paid by Participant together with any interest payment received by
Seller in respect of such amounts.
4.4 Payments After Collateral Disposition
Following any Collateral Disposition, Seller shall pay to Participant
all Collateral Proceeds received by Seller.
4.5 Insurance Proceeds
(i) Seller shall pay to Participant any insurance proceeds received by
Seller as the result of property damage constituting an event of loss
under the Credit Documents.
(ii) If Seller receives insurance proceeds as a result of property
damage not constituting an event of loss under the Credit Documents,
then (x) to the extent Seller is required to make the proceeds of such
insurance or any portion thereof available to the applicable Obligor
for repair or replacement of Collateral, Seller shall have the right to
retain such proceeds and disburse such proceeds as required by the
Credit Documents on behalf of Participant and (y) to the extent Seller
is permitted under the Credit Documents (due to the occurrence and
continuance of an event of default) to retain the proceeds of such
insurance or any portion thereof, Seller shall pay to Participant any
such proceeds; provided, however, that if, at any time, Seller must
make available to an Obligor, pursuant to the applicable Credit
Documents, any proceeds of such insurance by reason of an event of
default having thereafter been cured by the Obligor, Participant shall,
upon receipt of written notice thereof from Seller, promptly repay to
Seller the amount of such insurance proceeds.
4.6 Net Payments From Effectiveness to Execution.
Upon execution of this Agreement, the parties shall calculate
(a) the total amount payable by Seller to Participant under
Section 4.1 from the Effective Date through the date of execution
of this Agreement and
(b) the total amount payable by Participant to Seller under Section
4.3 from the Effective Date through the date of execution
of this Agreement.
If (a) exceeds (b), Seller shall pay the excess to Participant; if (b)
exceeds (a), Participant shall pay the excess to Seller. Such payment
shall be made as provided in the Term Sheet.
4.7 Time and Manner of Payment after Execution
Any amounts received by Seller from and after the execution date of
this Agreement which Seller is required to pay to Participant under
this Section 4 shall be made within not more than five (5) business
days from and after the receipt by Seller of the funds giving rise to
the payment obligation, by transfer in immediately available U.S.
funds. All other payments due under this Agreement shall be paid within
not more than ten business days after notice of the amount payable is
received by the party from whom payment is due, by transfer in
immediately available U.S. funds to an account designated by the payee.
Any amount not paid by the due date thereof as provided herein shall
bear interest at the rate per annum equal to the New York overnight
Federal Funds rate (computed on the basis of a year of 360 days and
actual days elapsed).
4.8 Return of Amounts Paid to Participant
If Seller makes any payment to Participant pursuant to this Section 4
and either does not receive promptly thereafter or has not previously
received from the relevant Obligor, or for any reason is required to
return or to pay to the relevant Obligor or any person or entity for
the account of the relevant Obligor, the corresponding payment under
the applicable Credit Documents, Seller shall give Participant prompt
written notice thereof and Participant shall repay to Seller, upon
request, the amount not received or required to be returned or paid.
Participant's obligations under this Section 4.8 shall survive any
termination of this Agreement.
SECTION 5. REPRESENTATIONS OF SELLER
5.1 Except as set forth in Sections 8 and 12 below, Seller makes no
representation or warranty as to, and shall have no responsibility for,
(i) the due authorization, execution or delivery of the Credit
Documents by any Obligor, (ii) the value, legality, validity,
sufficiency, enforceability or collectibility of any Credit Documents
or any Collateral or other support for the amount owed under the Credit
Documents, (iii) any representation or warranty made by, or the
accuracy, completeness, currentness or sufficiency of any information
provided (directly or indirectly through Seller) by an Obligor or any
other person or entity, (iv) the performance or observance by an
Obligor or any other person or entity (at any time, whether prior to,
on or after the date hereof) or any of the provisions of the Credit
Documents (or any of its other obligations in connection therewith, (v)
the financial condition of an Obligor or any other obligor on the
Collateral or (vi) any other matter relating to an Obligor or the
Credit Documents or Collateral.
5.2 No provision of this Agreement shall be construed to constitute a
guaranty by, or confer recourse against, Seller with respect to the
payment obligations of an Obligor under the Credit Documents.
SECTION 6. STANDARD OF CARE
6.1 Seller shall not be liable for any action taken or omitted to be taken
by it under the Credit Documents or this Agreement if, prior to the act
or omission, Seller was instructed to take such action or to fail to
take such action by Participant in writing.
6.2 Seller will exercise the same care in administering the Credit
Documents and this Agreement as it exercises with respect to similar
transactions entered into by Seller historically.
SECTION 7. CONDUCT OF OTHER BUSINESS
Participant shall have no interest, by virtue of this Agreement and
Participant's rights hereunder, in participations or other commercial
arrangements between Seller and the Obligors other than the Participations.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Participant as follows:
8.1 Seller has all requisite corporate power and authority to execute and
deliver this Agreement and to perform its obligations under this
Agreement, and the execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action
on the part of Seller. This Agreement constitutes the legal, valid and
binding obligation of Seller enforceable against Seller in accordance
with the terms hereof, except as such enforceability may be limited by
applicable bankruptcy or similar laws affecting creditors' rights
generally or by general principles of equity. The making and
performance of this Agreement, and fulfillment of its obligations
hereunder, do not violate any law or regulation of the jurisdiction
under which it exists, any other law or regulation applicable to it, or
constitute a breach or default of any agreement to which it is a party
or by which it is bound, or contravene any provision of any document
under which it was organized.
8.2 At the time each of the Credit Documents was executed, Seller had all
requisite corporate power and authority to execute and deliver such
document and to perform its obligations thereunder, and the execution,
delivery and performance of such document was duly authorized by all
necessary corporate action on the part of Seller. Each of the Credit
Documents constitutes the legal, valid and binding obligation of Seller
enforceable against Seller in accordance with the terms thereof, except
as such enforceability may be limited by applicable bankruptcy or
similar laws affecting creditors' rights generally or by general
principles of equity. The making and performance of each of the Credit
Documents, and fulfillment of Seller's obligations thereunder, do not
violate any law or regulation of the jurisdiction under which Seller
exists, any other law or regulation applicable to it, or constitute a
breach or default of any agreement to which it is a party or by which
it is bound, or contravene any provision of any document under which it
was organized. The information set forth on Exhibit A hereto and in
Exhibit A to the Term Sheet with respect to each Participation is true
and accurate.
8.3 To the best of Seller's knowledge, at the time each of the Credit
Documents was executed, the relevant Obligor had all requisite
corporate power and authority to execute and deliver such document and
to perform its obligations thereunder, and the execution, delivery and
performance of such document was duly authorized by all necessary
corporate action on the part of the relevant Obligor. To the best of
Seller's knowledge, each of the Credit Documents constitutes the legal,
valid and binding obligation of the relevant Obligor enforceable
against the relevant Obligor in accordance with the terms thereof,
except as such enforceability may be limited by applicable bankruptcy
or similar laws affecting creditors' rights generally or by general
principles of equity. To the best of Seller's knowledge, the making and
performance of each of the Credit Documents and the fulfillment of the
relevant Obligor's obligations thereunder, do not violate any law or
regulation of the jurisdiction under which the relevant Obligor exists,
any other law or regulation applicable to it, or constitute a breach or
default of any agreement to which it is a party or by which it is
bound, or contravene any provision of any document under which it was
organized.
SECTION 9. PARTICIPANT REPRESENTATIONS AND WARRANTIES
Participant represents and warrants to Seller that Participant has all requisite
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder, and the execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action on the
part of Participant. This Agreement constitutes the legal, valid and binding
obligation of Participant enforceable against Participant in accordance with the
terms hereof, except as such enforceability may be limited by applicable
bankruptcy or similar laws affecting creditors' rights generally or by general
principles of equity. The making and performance of this Agreement, and
fulfillment of its obligations hereunder, do not violate any law or regulation
of the jurisdiction under which it exists, any other law or regulation
applicable to it, or constitute a breach or default of any agreement to which it
is a party or by which it is bound, or contravene any provision of any document
under which it was organized.
SECTION 10. COVENANTS
10.1 Consents, Waivers, Etc.
Seller shall not, without the prior consent of Participant, agree to
requests for waivers or give consents under the Credit Documents or
otherwise act pursuant to the Credit Documents, other than acts in the
ordinary course of administering the Credit Documents.
10.2 Notices, Financial Statements
To the same extent received from the Obligors, Seller shall promptly
make available to Participant copies of all notices, documents,
certificates, financial statements and other information of any kind
relating to the Credit Documents, the Obligors or the Collateral
including, without limitation, any information concerning the location,
condition, use or operation of the Collateral, which Seller may at any
time receive from the Obligors pursuant to or in connection with the
Credit Documents. Seller shall make available to Participant copies of
all insurance policies and insurance certificates (including, without
limitation, any insurance brokers' reports and certificates received by
Participant) relating to the Collateral which it may receive from time
to time pursuant to the Credit Documents.
10.3 Maintenance; Return of Collateral; Inspection
To the extent Seller has any right under the Credit Documents to
supervise, attend or participate in any way with respect to ensuring
the performance of an Obligor's obligations thereunder, including
without limitation the obligations of an Obligor to maintain the
Collateral and to return the Collateral in good condition following an
event of default, then Participant shall have the right, on reasonable
prior notice to Seller, to send a representative in connection with the
exercise of such right.
10.4 Remedies
Upon the occurrence of any default or event of default under a Credit
Document, Seller shall notify Participant and take only such action as
Participant shall direct in writing prior to any such action.
SECTION 11. CONDITIONS PRECEDENT TO CLOSING BY PARTICIPANT
Participant shall not be obligated to purchase any Participation unless the
following shall have occurred and be continuing as of the execution date of this
Agreement.
11.1 Representations and Warranties
The representations and warranties of Seller set forth in Section 8
hereof shall be true and accurate. Seller represents and warrants to
Participant that as of the date of execution of this Agreement:
(i) No Default and No Litigation
No default or event of default has occurred which is continuing under
the Credit Documents relating to the Participations and no litigation,
arbitration or other adversarial proceeding is pending or, to its
actual knowledge, threatened in connection with the Credit Documents
that could have an adverse effect on the related Participation or
Participant's rights and remedies hereunder or in respect thereof.
Seller has not breached any of its representations, warranties and
covenants contained in, or failed to perform any of its obligations
under, the Credit Documents.
(ii) Collateral
The Collateral is accurately identified in the Credit Documents and
secures the Obligations set forth on Exhibit A.
(iii) Security Interest and Not Insider
Seller has a valid and perfected security interest in the Collateral
identified in the applicable Credit Documents, pursuant to the laws
relevant to the perfection of security interests in such Collateral and
no liens have been filed or exist against the Collateral other than the
lien granted in favor of Seller pursuant to the Credit Documents and
liens permitted by the terms of the Credit Documents. With respect to
each Participation, Seller is not, nor has it been since the
acquisition of such Obligation, an "insider" as such term is defined in
Section 101(31) of the Bankruptcy Code, of the relevant Obligor.
(iv) Credit Documents
Seller is the sole legal and beneficial owner of all right, title and
interest to, and has undivided good title to, the Obligations and the
Credit Documents, free and clear of all liens, charges, claims, other
encumbrances or security interests, and it has not pledged, encumbered,
assigned, transferred, participated, conveyed, disposed of, terminated
or granted any security in, in whole or in part, any of its right,
title and interest in and to the Obligations and the Credit Documents,
and is not party to any agreement that would result in the foregoing
(other than this Agreement). None of the Credit Documents has been
amended or modified except as previously disclosed to Participant.
Seller has not received any written or oral notice that the Credit
Documents may be subject to subordination, reduction or disallowance
for any reason, including, without limitation, any setoff, right of
recoupment, avoidance claim, defense or counterclaim of any kind. With
respect to each Obligation, Seller does not hold any property or funds
of, or owe any property or amounts to, the relevant Obligor; it has not
granted to the relevant Obligor or any other person or entity, by
contract or otherwise, any setoff, right of recoupment against the
Obligation and has not setoff any funds or other property in
satisfaction of the Obligation. Except as otherwise expressly provided
herein, Seller shall have no recourse to the Participations and the
sale of the Participations by Seller to Participant is irrevocable.
11.2 Credit Documents
To the extent the same shall have been received by Seller from the
Obligors, Participant shall have received executed copies of each of
the Credit Documents and each of the documents referred to therein.
11.3 No Liens
To the extent the same shall have been received by Seller from the
Obligors, Participant shall have received a search report prepared by a
nationally recognized lien search firm indicating that no liens (other
than the liens granted in favor of Seller and any permitted liens
identified in the Credit Documents) shall have been recorded or filed
against the Collateral or any part thereof.
11.4 Financial Statements
To the extent the same shall have been received by Seller from the
Obligors, Participant shall have received copies of Obligor's audited
financial statements (balance sheets, income statements and statements
of change in financial position) for the immediately preceding fiscal
year and an unaudited management financial statement for the fiscal
period ended not more than 95 days prior to the Effective Date.
11.5 Insurance Broker's Certificate
Participant shall have received copies of the most recent insurance
broker's report and certificate received by Seller pursuant to the
Credit Documents.
11.6 Other Agreements
Participant shall have received such other documents and information,
including without limitation, any opinions of legal counsel relating to
any legal matter incident to this Agreement, the Collateral, or the
Credit Documents, as Participant may reasonably request.
SECTION 12. CONDITIONS PRECEDENT TO CLOSING BY SELLER
Seller shall not be obligated to sell any Participation unless the following
shall have occurred and be continuing:
12.1 Representations and Warranties
The representations and warranties of Participant set forth in Section
9 hereof shall be true and accurate. Participant further represents to
Seller that:
(i) Credit Evaluation
It has made, independently and without reliance on Seller and based on
documents and information it has deemed appropriate, its own credit
evaluation and appraisal of each Obligor and all Credit Documents for
the purpose of purchasing the Participations, and it will continue to
make its own credit decisions with respect to the Participations
without such reliance and upon such basis.
(ii) No Reliance
Except as provided in Section 8 above, it has not relied and will not
rely upon Seller or upon any information furnished by Seller relating
to an Obligor, and Seller shall have no obligation other than as
described in Section 11 above to furnish any information to Participant
with respect to the credit, affairs, financial condition or business of
an Obligor or its affiliates. Participant acknowledges that Seller may
have commercial relationships with the Obligors other than those
evidenced by the Credit Documents.
12.1 Other Agreements
Seller shall have received such other documents and information,
including without limitation, any opinions of legal counsel relating to
any legal matter incident to this Agreement, the Collateral, or the
Credit Documents, as Seller may reasonably request.
SECTION 13. ADDITIONAL PARTICIPATIONS
Neither Seller nor Participant shall transfer any of its rights or interests in
the Credit Documents or assign, subdivide or subparticipate any of its rights
hereunder to any person without the prior written consent of the other.
SECTION 14. COMMUNICATIONS
Except as otherwise provided herein, all communications hereunder shall be given
in writing or by telex or facsimile transmission (with confirmed answerback) to
the intended recipient at its address or facsimile number, as applicable,
specified for such purpose in this Agreement or at such other address as it
shall have notified the other party hereto in writing. Communications shall be
effective when received.
SECTION 15. GOVERNING LAW
This Agreement shall in all respects, including all matters of construction,
validity and performance, be governed by and construed in accordance with the
laws of the State of New York without regard to any rules governing conflicts of
law.
SECTION 16. CONFIDENTIAL TREATMENT
Participant and Seller agree that neither they nor any of their respective
employees, agents, distributors or representatives will disclose the terms of
this Agreement or the Credit Documents to any third party except (a) as required
by applicable law or governmental regulation or (b) with the prior written
consent of the other. In connection with any such disclosure of this Agreement
or of the information contained herein or in any Credit Document pursuant to
subsection (a) of this Section 16, Participant and Seller shall request and use
reasonable efforts to obtain confidential treatment of this Agreement and the
information contained herein and in the Credit Documents. In making such request
and using such reasonable efforts, each party hereto agrees to cooperate with
the other in making and supporting such request for confidential treatment. In
connection with any such disclosure of this Agreement or of the information
contained herein or in the Credit Documents to any third party pursuant to this
Section 16, each party hereto shall cause such third party to treat this
Agreement and the information contained herein or in the Credit Documents as
privileged and confidential.
SECTION 17. AMENDMENTS
No amendment, modification, waiver, termination or discharge of any provision of
this Agreement, nor consent to any departure therefrom by either party hereto,
shall in any event be effective unless the same shall be in writing specifically
identifying the provision hereof intended to be amended, modified, revised,
terminated or discharged and signed by each of the parties to this Agreement,
and each such amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreement, course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by each of the parties to this
Agreement.
SECTION 18. EXECUTION IN COUNTERPARTS
This Agreement and any amendments, waivers, consents or supplements hereto may
be executed in any number of counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original, and all of which
counterparts, taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of this ____ day of March, 2000.
Address For Notice: [SELLER]
By: _____________________________
Name: ___________________________
Title: __________________________
Address For Notice: BOEING CAPITAL LOAN CORPORATION
Boeing Capital Loan Corporation By: _____________________________
2325-B Renaissance Drive, Suite 8 Name: ___________________________
Las Vegas, Nevada 89119 Title: __________________________
Attention: Thomas J. Friel - CPA
Client Services Manger
Fax: 702-966-4247
<PAGE>
EXHIBIT A TO EXHIBIT H TO TERM SHEET
PARTICIPATIONS
EXHIBIT 2.2
PROMISSORY NOTE
$1,000,000 January 1, 2000
For value received, Boeing Capital Corporation, a Delaware corporation ("BCC"),
hereby unconditionally promises to pay to the order of Boeing Nevada, Inc., a
Delaware corporation ("BNI"), the principal sum of One Million United States
Dollars (U.S. $1,000,000) or such other sum on the register attached hereto that
documents the principal amount then outstanding under this Note, with all
accrued interest thereon, on January 15, 2007; provided, however, BCC shall
earlier pay all or part of such principal, with all accrued interest thereon,
without premium or penalty, on
(1) the date 30 days (or such later date as may be agreed to by BNI)
following receipt by BCC of BNI's written request for payment in full
or in part of this Note, or
(2) the date 30 days following receipt by BCC of written consent by BNI
to BCC's prepayment of this Note in full or in part as proposed in a
written notice from BCC to BNI.
The unpaid principal amount of this Note shall bear interest until maturity
(whether by acceleration or otherwise) at a rate per annum of 7.70 per cent.
Interest shall accrue from and including the date hereof and shall be payable on
the last day of each Interest Period (as defined below) or on the date due in
accordance with (1) or (2) above. The initial Interest Period shall commence on
the date hereof and each Interest Period occurring thereafter shall commence on
the day on which the preceding Interest Period expires.
"Interest Period" shall be a period of six calendar months (except for the first
and last Interest Periods, which may be other than six months). Interest on the
principal amount of this Note will be payable semiannually on the 15th day of
January and July, commencing July 15, 2000. Such interest shall be computed on
the basis of a 360-day year of twelve 30-day months.
If any date that a payment of interest or principal is due falls on a day that
is not a business day for both BCC and BNI, the required payment will be made on
the next succeeding business day and will be deemed made on the date such
payment was due, and no interest will accrue on such payment for the period from
and after such original payment date to the date of payment on the next
succeeding business day.
In the event of a failure by BCC to pay within five business days of the due
date any sum of money to be paid under this Note, BCC shall pay BNI interest on
such unpaid sum at a rate equal to the Prime Rate (being the rate which Citibank
announces from time to time as its prime lending rate, such Prime Rate to change
from time to time when any such change is announced). All computations of
interest at the Prime Rate shall be made on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be or the maximum
contract rate permitted by applicable law, whichever is lower (the "Overdue
Rate"). Acceptance by BNI of interest at the Overdue Rate shall not constitute a
waiver of BCC's obligation to pay such overdue amount or prevent BNI from
exercising any legal remedy.
BNI shall, and is hereby authorized by BCC to, record on the register attached
hereto and made a part hereof (including additional pages, if any), the amount
of each advance by BNI hereunder and each payment of principal by or on behalf
of BCC, the date thereof, and the resulting principal balance then outstanding.
If action is instituted to collect or enforce this Note, or any portion thereof,
BCC shall immediately pay to BNI, in addition to the amounts due hereunder, the
costs, disbursements and reasonable attorneys' fees and other costs of
collection or enforcement hereof.
BCC waives presentment, demand for payment, notice of dishonor, and any and all
other notices and demands in connection with the delivery, acceptance,
performance, default or enforcement of this Note and consents to all renewals,
extensions of time, releases of liens, waivers or modifications that may be made
or granted to BNI.
All payments under this Note shall be made in immediately available funds in
United States Dollars. The laws of the State of New York shall govern this Note.
The obligations of BCC may not be pledged, transferred or assigned without the
prior written consent of BNI.
BOEING CAPITAL CORPORATION
By: /s/ MICHAEL C. DRAFFIN
---------------------------------
Title: Vice President - Tax and
Associate General Counsel
----------------------------------
<PAGE>
<TABLE>
<CAPTION>
BCC REGISTER
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
<S> <C> <C> <C> <C>
Date Transaction Transaction Amount Outstanding Principal BNI Entry
(indicate advance or payment) Balance Made By
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
3/31 Loan $499,132,000.00 $499,132,000.00 Howard
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
Repayment from equity
3/31 infusion (45,000,000.00) 454,132,000.00 Howard
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
</TABLE>
<PAGE>
PROMISSORY NOTE
$100,000,000 January 1, 2000
For value received, Boeing Capital Loan Corporation, a Delaware corporation
("BCLC"), hereby unconditionally promises to pay to the order of Boeing Nevada,
Inc., a Delaware corporation ("BNI"), the principal sum of One Hundred Million
United States Dollars (U.S. $100,000,000) or such other sum on the register
attached hereto that documents the principal amount then outstanding under this
Note, with all accrued interest thereon, on January 15, 2007; provided, however,
BCLC shall earlier pay all or part of such principal, with all accrued interest
thereon, without premium or penalty, on
(3) the date 30 days (or such later date as may be agreed to by BNI)
following receipt by BCLC of BNI's written request for payment in
full or in part of this Note, or
(4) the date 30 days following receipt by BCLC of written consent by BNI
to BCLC's prepayment of this Note in full or in part as proposed in a
written notice from BCLC to BNI.
The unpaid principal amount of this Note shall bear interest until maturity
(whether by acceleration or otherwise) at a rate per annum of 7.70 per cent.
Interest shall accrue from and including the date hereof and shall be payable on
the last day of each Interest Period (as defined below) or on the date due in
accordance with (1) or (2) above. The initial Interest Period shall commence on
the date hereof and each Interest Period occurring thereafter shall commence on
the day on which the preceding Interest Period expires.
"Interest Period" shall be a period of six calendar months (except for the first
and last Interest Periods, which may be other than six months). Interest on the
principal amount of this Note will be payable semiannually on the 15th day of
January and July, commencing July 15, 2000. Such interest shall be computed on
the basis of a 360-day year of twelve 30-day months.
If any date that a payment of interest or principal is due falls on a day that
is not a business day for both BCLC and BNI, the required payment will be made
on the next succeeding business day and will be deemed made on the date such
payment was due, and no interest will accrue on such payment for the period from
and after such original payment date to the date of payment on the next
succeeding business day.
In the event of a failure by BCLC to pay within five business days of the due
date any sum of money to be paid under this Note, BCLC shall pay BNI interest on
such unpaid sum at a rate equal to the Prime Rate (being the rate which Citibank
announces from time to time as its prime lending rate, such Prime Rate to change
from time to time when any such change is announced). All computations of
interest at the Prime Rate shall be made on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be or the maximum
contract rate permitted by applicable law, whichever is lower (the "Overdue
Rate"). Acceptance by BNI of interest at the Overdue Rate shall not constitute a
waiver of BCLC's obligation to pay such overdue amount or prevent BNI from
exercising any legal remedy.
BNI shall, and is hereby authorized by BCLC to, record on the register attached
hereto and made a part hereof (including additional pages, if any), the amount
of each advance by BNI hereunder and each payment of principal by or on behalf
of BCLC, the date thereof, and the resulting principal balance then outstanding.
If action is instituted to collect or enforce this Note, or any portion thereof,
BCLC shall immediately pay to BNI, in addition to the amounts due hereunder, the
costs, disbursements and reasonable attorneys' fees and other costs of
collection or enforcement hereof.
BCLC waives presentment, demand for payment, notice of dishonor, and any and all
other notices and demands in connection with the delivery, acceptance,
performance, default or enforcement of this Note and consents to all renewals,
extensions of time, releases of liens, waivers or modifications that may be made
or granted to BNI.
All payments under this Note shall be made in immediately available funds in
United States Dollars. The laws of the State of New York shall govern this Note.
The obligations of BCLC may not be pledged, transferred or assigned without the
prior written consent of BNI.
BOEING CAPITAL LOAN CORPORATION
By: /s/ MICHAEL C. DRAFFIN
----------------------------------
Title: Vice President - Tax and
Associate General Counsel
----------------------------------
<PAGE>
<TABLE>
<CAPTION>
BCLC REGISTER
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
<S> <C> <C> <C> <C>
Date Transaction Transaction Amount Outstanding Principal BNI Entry
(indicate advance or payment) Balance Made By
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
3/31 Loan $762,792,000.00 $762,792,000.00 Howard
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
Credit proceeds of Thai
3/31 principal repayment (358,449,000.00) 404,343,000.00 Howard
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
- ------------ ------------------------------------------- ---------------------- --------------------------- ---------------
</TABLE>
<PAGE>
EXHIBIT 23.1
Consent of Independent Accountants
We consent to the incorporation by reference in Registration Statement Nos.
33-37635 and 333-82391 of Boeing Capital Corporation on Form S-3 of our report
dated April 12, 2000 relating to the Statements of Net Assets Acquired of the
Customer Financing Business of The Boeing Company as of December 31, 1999 and
1998, and the related Statements of Revenues, Direct Expenses and Identified
Corporate Expenses for each of the three years in the period ended December 31,
1999 included in Form 8-K of Boeing Capital Corporation filed on April 13, 2000.
DELOITTE & TOUCHE LLP
Seattle, Washington
April 13, 2000
