EXHIBIT (b)(2)
CONFORMED COPY
CREDIT AGREEMENT
among
FEDEX CORPORATION,
THE LENDERS,
COMMERZBANK AG,
as Syndication Agent
BANK OF AMERICA, N.A.,
as Documentation Agent
THE CHASE MANHATTAN BANK,
as Administrative Agent
and
CHASE SECURITIES INC.,
as Lead Arranger and Book Manager
Dated as of December 13, 2000
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................1
ARTICLE II THE CREDIT.......................................................14
2.1 Revolving Commitments.....................................14
2.2 Termination...............................................15
2.3 Ratable Loans; Types of Advances..........................15
2.4 Determination of Levels...................................15
2.5 Facility Fees: Administrative Agent's Fee: Reductions
in Aggregate Commitment...................................15
2.6 Minimum Amount of Each Advance............................16
2.7 Optional Principal Payments...............................16
2.8 Method of Selecting Types and Interest Periods for
New Advances..............................................16
2.9 Conversion and Continuation of Outstanding Advances.......17
2.10 Interest..................................................18
2.11 Rates Applicable After Maturity of Advances...............18
2.12 Method of Payment.........................................18
2.13 Evidence of Debt: Telephonic Notices......................19
2.14 Interest Payment Dates: Interest and Fee Basis............19
2.15 Notification of Advances, Interest Rates, Prepayments
and Commitment Reductions.................................20
2.16 Lending Installations.....................................20
2.17 Non-Receipt of Funds by the Administrative Agent..........20
2.18 Withholding Tax Exemption.................................21
2.19 Mandatory Prepayment......................................21
ARTICLE III CHANGE IN CIRCUMSTANCES.........................................21
3.1 Yield Protection..........................................21
3.2 Changes in Capital Adequacy Regulations...................22
3.3 Availability of Types of Advances.........................22
3.4 Funding Indemnification...................................23
3.5 Lender Statements; Survival of Indemnity..................23
ARTICLE IV CONDITIONS PRECEDENT.............................................23
4.1 Closing...................................................23
4.2 Each Advance..............................................25
4.3 Further Conditions........................................25
ARTICLE V REPRESENTATIONS AND WARRANTIES....................................25
5.1 Corporate Existence and Standing..........................26
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5.2 Authorization and Validity................................26
5.3 No Conflict; Government Consent...........................26
5.4 Financial Statements......................................26
5.5 Taxes.....................................................27
5.6 Litigation and Contingent Obligations.....................27
5.7 Subsidiaries..............................................27
5.8 ERISA.....................................................27
5.9 Accuracy of Information...................................27
5.10 Regulation U..............................................27
5.11 Material Agreements.......................................28
5.12 Compliance with Laws......................................28
5.13 Existing Liens............................................28
5.14 Investment Company Act....................................28
5.15 Citizenship...............................................28
5.16 Status as Air Carrier.....................................29
5.17 Pari Passu................................................29
ARTICLE VI COVENANTS........................................................29
6.1 Financial Reporting.......................................29
6.2 Use of Proceeds...........................................31
6.3 Notice of Default.........................................31
6.4 Conduct of Business.......................................31
6.5 Citizenship and Regulatory Certificates...................31
6.6 Payment of Taxes..........................................32
6.7 Insurance.................................................32
6.8 Compliance with Laws......................................32
6.9 Maintenance of Properties.................................32
6.10 Inspection................................................32
6.11 Leverage..................................................33
6.12 Fixed Charge Coverage.....................................33
6.13 Restricted Investments....................................33
6.14 Merger and Consolidation..................................33
6.15 Sales of Assets...........................................34
6.16 Loans, Advances and Investments...........................35
6.17 Contingent Liabilities....................................36
6.18 Liens.....................................................37
6.19 Guaranties................................................39
6.20 Negative Covenants in Subsidiary Agreements...............39
6.21 Sales of Unrestricted Margin Stock........................40
ARTICLE VII DEFAULTS........................................................40
7.1 Breach of Representation or Warranty......................40
7.2 Failure to Pay............................................40
7.3 Breach of Certain Covenants...............................40
7.4 Breach of Other Covenants.................................40
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7.5 Cross-Default.............................................41
7.6 Voluntary Bankruptcy, Etc.................................41
7.7 Involuntary Bankruptcy, Etc...............................41
7.8 Judgments.................................................42
7.9 ERISA.....................................................42
7.10 Seizure...................................................42
7.11 Environmental Matters.....................................42
7.12 Invalidity, Etc of Loan Documents.........................42
7.13 Change of Control.........................................42
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES.................43
8.1 Acceleration..............................................43
8.2 Amendments................................................43
8.3 Preservation of Rights....................................44
ARTICLE IX GENERAL PROVISIONS...............................................44
9.1 Survival of Representations...............................44
9.2 Governmental Regulation...................................44
9.3 Taxes.....................................................44
9.4 Headings..................................................45
9.5 Entire Agreement..........................................45
9.6 Several Obligations; Benefits of this Agreement...........45
9.7 Expenses; Indemnification.................................45
9.8 Numbers of Documents......................................46
9.9 Severability of Provisions................................46
9.10 Nonliability of Lenders...................................46
9.11 CHOICE OF LAW.............................................46
9.12 Consent to Jurisdiction; Waivers..........................46
9.13 WAIVER OF JURY TRIAL......................................47
9.14 Confidentiality...........................................47
9.15 Accounting................................................47
9.16 Release of Guarantors.....................................47
9.17 No Waiver; Cumulative Remedies............................47
9.18 Acknowledgments...........................................48
ARTICLE X THE AGENTS........................................................48
10.1 Appointment...............................................48
10.2 Delegation of Duties......................................48
10.3 Exculpatory Provisions....................................49
10.4 Reliance by Administrative Agent..........................49
10.5 Notice of Default.........................................49
10.6 Non-Reliance on Agents and Other Lenders..................50
10.7 Indemnification...........................................50
10.8 Agent in Its Individual Capacity..........................51
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10.9 Successor Administrative Agent............................51
10.10 Documentation Agent and Syndication Agent.................51
ARTICLE XI SETOFF: RATABLE PAYMENTS.........................................52
11.1 Setoff....................................................52
11.2 Ratable Payments..........................................52
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS...............52
12.1 Successors and Assigns....................................52
12.2 Participations............................................53
12.3 Assignments...............................................54
12.4 Dissemination of Information..............................55
12.5 Tax Treatment.............................................56
12.6 Conduit Lenders...........................................56
ARTICLE XIII NOTICES........................................................56
13.1 Giving Notice.............................................56
13.2 Change of Address.........................................56
ARTICLE XIV COUNTERPARTS....................................................56
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FEDEX CORPORATION
CREDIT AGREEMENT
This Agreement, dated as of December 13, 2000, is among FEDEX CORPORATION,
the Lenders, THE CHASE MANHATTAN BANK, as Administrative Agent, COMMERZBANK AG,
as Syndication Agent, BANK OF AMERICA, N.A., as Documentation Agent, and CHASE
SECURITIES INC., as Lead Arranger and Book Manager.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any Person or division thereof, whether
through purchase of assets, merger or otherwise or (ii) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the outstanding
partnership interests of a partnership.
"Adjusted Net Income" means, on a consolidated basis in accordance with
GAAP, for the Borrower and its Consolidated Subsidiaries for the twelve most
recent complete fiscal months, income (loss) before income taxes minus, to the
extent included in determining income (loss) before income taxes, any net loss
or gain realized in connection with any sale or disposition of any asset (other
than in the ordinary course of business).
"Administrative Agent" means The Chase Manhattan Bank in its capacity as
agent for the Lenders pursuant to Article X, and not in its individual capacity
as a Lender, and any successor Administrative Agent appointed pursuant to
Article X.
"Advance" means a borrowing hereunder (including pursuant to the Term-Out
Option) consisting of the aggregate amount of the several Loans made by the
Lenders to the Borrower of the same Type and, in the case of Eurodollar
Advances, for the same Interest Period.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
when used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
1
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"Agents" means the collective reference to the Syndication Agent, the
Documentation Agent and the Administrative Agent.
"Aggregate Commitment" means the aggregate of the Revolving Commitments of
all of the Lenders, as reduced from time to time pursuant to the terms hereof.
As of the Effective Date, the Aggregate Commitment equals $750,000,000.
"Agreement" means this Credit Agreement, as it may be amended or modified
and in effect from time to time.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Prime Rate for such day and (ii) the sum of the
Federal Funds Effective Rate for such day plus 1/2% per annum.
"American Freightways" means American Freightways Corporation, an Arkansas
corporation.
"Applicable Facility Fee Percentage" means, subject to the following
provisions of this definition, the per annum rate corresponding to the Level in
effect from time to time, as set forth in the following table:
Level Applicable Facility Fee Percentage
----- ----------------------------------
I .075%
II .100%
III .125%
IV .175%
V .225%
Each change in the Applicable Facility Fee Percentage resulting from a change
in a Rating shall take effect at the time such change in such Rating is
publicly announced by the relevant rating agency.
"Applicable Margin" means, subject to the following provisions of this
definition, the per annum rate of interest corresponding to the Level in effect
from time to time, as set forth in the following table:
Level Applicable Margin
----- -----------------
I .300%
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Level Applicable Margin
----- -----------------
II .400%
III .500%
IV .700%
V 1.15%
Each change in the Applicable Margin resulting from a change in a Rating shall
take effect at the time such change in such Rating is publicly announced by the
relevant rating agency.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee substantially in the form of Exhibit "C"
hereto or any other form approved by the Administrative Agent.
"Authorized Officer" means any one of the Chief Executive Officer, the
Executive Vice President and Chief Financial Officer, the Treasurer, or the
Staff Vice President and Assistant Treasurer of the Borrower or any other
officer or employee of the Borrower designated in writing as an "Authorized
Officer" under this Agreement by any one of the Chief Executive Officer, the
Executive Vice President and Chief Financial Officer, the Treasurer, or the
Staff Vice President and Assistant Treasurer of the Borrower.
"Beneficial Owner" means a Person deemed the "Beneficial Owner" of any
securities as to which such Person or any of such Person's Affiliates is or may
be deemed to be the beneficial owner pursuant to Rule 13d-3 or l3d-5 under the
Securities Exchange Act of 1934 (as the same may from time to time be amended,
modified or readopted), as well as any securities as to which such Person or
any of such Person's Affiliates has the right to become such a beneficial owner
(whether such right is exercisable immediately or only after the passage of
time or the occurrence of a specified event) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise. In determining the
percentage of the outstanding Voting Stock with respect to which a Person is
the Beneficial Owner, all shares as to which such Person is deemed the
Beneficial Owner shall be deemed outstanding.
"Borrower" means FedEx Corporation, a Delaware corporation.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.8.
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"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close, provided, that with respect to notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, such day is
also a day for trading by and between banks in Dollar deposits in the interbank
eurodollar market.
"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.
"Capitalized Operating Lease Value" means the present value, using a
discount rate equal to 12.5%, of the Borrower's and the Consolidated
Subsidiaries' future minimum lease payments for aircraft leases scheduled to
terminate more than 365 days after their respective dates of execution.
"Change of Control" means any of the following: (1) any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder as in effect on the date thereof)
becoming the Beneficial Owner of Voting Stock of the Borrower having more than
30 percent of the voting power of all of the then outstanding Voting Stock of
the Borrower, (2) individuals who are not Continuing Directors constituting a
majority of the Board of Directors of the Borrower, or (3) the Borrower
consolidating with or merging into any other Person, or any other Person
consolidating with or merging into the Borrower, pursuant to a transaction in
which capital stock of the Borrower then outstanding (other than capital stock
held by the Borrower or capital stock held by any Person which is a party to
such consolidation or merger) is changed or exchanged unless the Borrower is
the surviving entity and no Default or Unmatured Default shall occur upon
giving effect to such consolidation or merger.
"Chase" means The Chase Manhattan Bank.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Conduit Lender" means any special purpose corporation organized and
administered by any Lender for the purpose of making Loans otherwise required
to be made by such Lender and designated by such Lender in a written
instrument, subject to the consent of the Administrative Agent and the Borrower
(which consent shall not be unreasonably withheld); provided, that the
designation by any Lender of a Conduit Lender shall not relieve the designating
Lender of any of its obligations to fund a Loan under this Agreement if, for
any reason, its Conduit Lender fails to fund any such Loan, and the designating
Lender (and not the Conduit Lender) shall have the sole right and
responsibility to deliver all consents and waivers required or requested under
this Agreement with respect to its Conduit Lender, and provided, further, that
no Conduit Lender shall (a) be entitled to receive any greater amount pursuant
to
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Section 2.18, 3.1, 3.2, 3.4, 9.3 or 9.7 than the designating Lender would
have been entitled to receive in respect of the extensions of credit made by
such Conduit Lender or (b) be deemed to have any Revolving Commitment.
"Consolidated Adjusted Net Worth" means, at any date as of which the
amount thereof is to be determined, (a) the sum of the amounts set forth as
preferred stock, common stock, capital in excess of par value or paid-in
surplus and retained earnings on a consolidated balance sheet of the Borrower
and the Consolidated Subsidiaries prepared as of such date in accordance with
GAAP, minus (b) the sum of the amounts set forth on such consolidated balance
sheet as (i) the cost of any shares of the Borrower's common stock held in the
treasury and (ii) any surplus resulting from any write-up of assets after the
date of this Agreement and (iii) the aggregate value of all goodwill, all
determined in accordance with GAAP.
"Consolidated Adjusted Total Assets" means, at any date as of which the
amount thereof is to be determined, (a) the aggregate amount set forth as the
assets of the Borrower and the Consolidated Subsidiaries on a consolidated
balance sheet of the Borrower and the Consolidated Subsidiaries prepared as of
such date in accordance with GAAP, minus (b) the aggregate book value as of
such date of determination of all assets of the Borrower or any Consolidated
Subsidiary subject on such date of determination to a Lien permitted by Section
6.18(j).
"Consolidated Cash Flow" means, on a consolidated basis for the Borrower
and its Consolidated Subsidiaries for the twelve most recent complete fiscal
months, the sum of (i) Adjusted Net Income, plus (ii) Interest Expense, plus
(iii) Rent Expense, in each case as determined in accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income (or net
loss) of the Borrower and the Consolidated Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP and after giving
appropriate effect to any outside minority interests in the Consolidated
Subsidiaries, excluding
(a) any aggregate net gain arising from the sale or other disposition
of any assets other than any such gain arising from the sale or other
disposition of assets (including aircraft) in the ordinary course of
business,
(b) any gain arising from any write-ups of assets,
(c) any unrealized capital gain or loss on any investment,
(d) any portion of the earnings of any Consolidated Subsidiary which
for any reason is unavailable for payment of dividends to the Borrower or
another Consolidated Subsidiary,
(e) any amount representing the interest of the Borrower and the
Consolidated Subsidiaries in the undistributed earnings of any other
Person (other than a Consolidated Subsidiary), and
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(f) the net income (or net loss) of any Person prior to the date it
became a Consolidated Subsidiary.
"Consolidated Subsidiary" means at any date any Subsidiary or other entity
the accounts of which would be consolidated with those of the Borrower in its
consolidated financial statements in accordance with GAAP if such statements
were prepared as of such date.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person,
or agrees to maintain the net worth or working capital or other financial
condition of any other Person, or otherwise assures any creditor of such other
Person against loss, including, without limitation, any comfort letter,
operating agreement, or take-or-pay contract.
"Continuing Director" means an individual who is a member of the Board of
Directors of the Borrower on the date of this Agreement or who shall have
become a member of the Board of Directors of the Borrower subsequent to such
date and who shall have been nominated or elected by a majority of the other
Continuing Directors then members of the Board of Directors of the Borrower.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
"Current Maturities" means, as of any date with respect to the Long Term
Debt or the Capitalized Lease Obligations of any Person, any portion of such
Long Term Debt or Capitalized Lease Obligations, as the case may be, which
would in accordance with GAAP be classified as a current liability of such
Person.
"Dealer" means a Lender, First Tennessee Bank, N.A. or any other national
or state bank or trust company or dealer or broker of government securities
having either (A) capital, surplus and undivided profits or (B) total equity of
at least $250,000,000, or any affiliate thereof authorized to deal in the
commercial products described in clauses (i), (ii), and (iii) of Section
6.16(e).
"Default" means an event described in Article VII.
"Documentation Agent" is defined in the preamble hereto.
"Dollars" and "$" means dollars in lawful currency of the United States.
"Effective Date" means the Business Day on or before December 13, 2000 on
which (a) the Borrower, the Administrative Agent and the Lenders have executed
this Agreement, (b) the Borrower has satisfied all of the terms and conditions
of Section 4.1, and (c)
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the Borrower has paid all fees and other expenses then due to the
Administrative Agent and the Lenders in connection with this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Advance" means an Advance which bears interest at a Eurodollar
Rate.
"Eurodollar Base Rate" means, with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum determined
on the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period appearing
on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business
Days prior to the beginning of such Interest Period. In the event that such
rate does not appear on Page 3750 of the Telerate screen (or otherwise on such
screen), the "Eurodollar Base Rate" shall be determined by reference to such
other comparable publicly available service for displaying eurodollar rates as
may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate determined by the Administrative Agent
to be the arithmetic average of the rates reported to the Administrative Agent
by the Reference Lenders as the rate at which deposits in U.S. dollars are
offered by the Reference Lenders to first-class banks in the London interbank
market at approximately 11 a.m. (London time) two Business Days prior to the
first day of such Interest Period, in the approximate amount of such Reference
Lenders' relevant Eurodollar Loan and having a maturity approximately equal to
such Interest Period.
"Eurodollar Loan" means a Loan which bears interest at a Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the sum of (i) an amount equal to (a) the Eurodollar
Base Rate applicable to such Interest Period, divided by (b) one minus the
Reserve Requirement (expressed as a decimal), if any, applicable to such
Interest Period, and (ii) the Applicable Margin. The Eurodollar Rate shall be
rounded to the next higher multiple of 1/16 of 1% if the rate is not such a
multiple.
"Existing Credit Agreement" means that certain Credit Agreement, dated as
of January 15, 1998, by and among the Borrower, the Lenders parties thereto,
Banc One Capital Markets, Inc. (formerly known as First Chicago Capital
Markets, Inc.), as Arranger, J.P. Morgan Securities Inc., as Co-Arranger and
Syndication Agent, Chase Securities Inc., as Co-Arranger and Documentation
Agent, and Bank One, NA (formerly known as The First National Bank of Chicago),
as Agent, as amended, and as the same may be further amended, supplemented,
modified, replaced or refinanced from time to time.
"Extended Date" is defined in Section 2.2(b).
"FAA" means the Federal Aviation Administration or any other governmental
agency succeeding to the jurisdiction thereof.
"FDX, Inc." means FDX, Inc., a Delaware corporation and Wholly-Owned
Subsidiary of the Borrower.
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"Facility Fee" is defined in Section 2.5(a).
"Federal Aviation Act" means the Federal Aviation Act of 1958, as amended
from time to time.
"Federal Express Corporation" means Federal Express Corporation, a
Delaware corporation.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations at approximately 11:00
a.m. (New York time) on such day on such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by the Administrative Agent in its sole discretion.
"Flight Equipment" means, collectively, aircraft, aircraft engines,
appliances and spare parts, all as defined in the Federal Aviation Act, and
related parts.
"Floating Rate" means, for any day, a rate per annum equal to the
Alternate Base Rate for such day, changing when and as the Alternate Base Rate
changes.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate.
"Funded Debt" means any Indebtedness (other than items characterized as
Indebtedness pursuant to clause (vii) of the definition thereof) of the
Borrower and its Consolidated Subsidiaries that is outstanding on the date of
determination.
"GAAP" means generally accepted principles of accounting as in effect at
the time of application to the provisions hereof provided that any modification
in generally accepted accounting principles which is made within twelve months
prior to any such application and which would result in a Default or Unmatured
Default shall be disregarded.
"Guarantor" means Federal Express Corporation, FedEx Ground Package
System, Inc., Viking Freight, Inc., FedEx Custom Critical, Inc., and each other
Subsidiary that executes the Guaranty in accordance with Section 6.19 hereof.
"Guaranty" means that certain Guaranty of even date herewith, executed by
each Guarantor, substantially in the form of Exhibit "A" attached hereto.
"Indebtedness" of a Person means, without duplication, such Person's (i)
obligations for borrowed money, (ii) obligations representing the deferred
purchase price of Property or services (other than accounts payable arising in
the ordinary course of such Person's business payable on terms customary in the
trade), (iii) obligations, whether or not assumed,
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secured by Liens or payable out of the proceeds or production from property now
or hereafter owned or acquired by such Person, (iv) obligations which are
evidenced by notes, acceptances, or other instruments, (v) Capitalized Lease
Obligations, (vi) net liabilities under interest rate swap, exchange or cap
agreements, (vii) Contingent Obligations, and (viii) obligations created
through asset securitization financing programs.
"Interest Expense" means, for any period, the gross interest expense
(without regard to any offsetting interest income or reduction for capitalized
interest) of the Borrower and its Consolidated Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"Interest Period" means, with respect to a Eurodollar Advance, a period of
one, two, three, or six months commencing on a Business Day selected by the
Borrower pursuant to this Agreement. Such Interest Period shall end on (but
exclude) the day which corresponds numerically to such date one, two, three, or
six months thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third, or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, third,
or sixth succeeding month. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable
arising in the ordinary course of business on terms customary in the trade),
deposit account (other than a demand deposit account maintained in the ordinary
course of business) or contribution of capital by such Person to any other
Person or any investment in, or purchase or other acquisition of, the stock,
partnership interests, notes, debentures or other securities of any other
Person made by such Person.
"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns; provided that
unless the context otherwise requires, each reference herein to the Lenders
shall be deemed to include any Conduit Lender.
"Lending Installation" means, with respect to a Lender or the
Administrative Agent, any office, branch, subsidiary or affiliate of such
Lender or the Administrative Agent.
"Level" means any of Level I, Level II, Level III, Level IV, or Level V.
"Level I" means, subject to Section 2.4, a Rating equal to or better than
A- from S&P or A3 from Moody's.
"Level II" means, subject to Section 2.4, a Rating equal to or better than
BBB+ from S&P or Baa1 from Moody's but less than a Rating that would place the
Borrower at Level I.
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"Level III" means, subject to Section 2.4, a Rating equal to or better
than BBB from S&P or Baa2 from Moody's but less than a Rating that would place
the Borrower at Level I or Level II.
"Level IV" means, subject to Section 2.4, a Rating equal to or better than
BBB- from S&P or Baa3 from Moody's but less than a Rating that would place the
Borrower at Level I, Level II or Level III.
"Level V means, subject to Section 2.4, Ratings lower than BBB- from S&P
and Baa3 from Moody's.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loan" means any loan by a Lender to the Borrower made pursuant to Section
2.1 and, in any event, shall include any loans that remain outstanding after
the Termination Date pursuant to Section 2.2(b).
"Loan Documents" means this Agreement and the Guaranty.
"Loan Parties" means the collective reference to the Borrower and the
Guarantors.
"Long Term Debt" means, as of any date with respect to any Person, all
liabilities of such Person outstanding on such date which would in accordance
with GAAP be classified as long term debt of such Person.
"Margin Stock" has the meaning assigned to such term in Regulation U.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents, or
(iii) the validity or enforceability of any of the Loan Documents or the rights
or remedies of the Administrative Agent or the Lenders thereunder.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
November 12, 2000, among the Borrower, American Freightways and FDX, Inc., as
it may be amended or modified from time to time.
"Moody's" means Moody's Investors Service, Inc. or, if Moody's shall cease
rating Indebtedness of the Borrower and its ratings business with respect to
Indebtedness of the Borrower shall have been transferred to a successor Person,
such successor Person; provided, however, that if Moody's ceases rating
securities similar to Indebtedness of the Borrower and its ratings business
with respect to such securities shall not have been transferred to any
successor Person, then "Moody's" shall mean any other nationally recognized
rating agency (other than S&P) selected by the Borrower that rates any
Indebtedness of the Borrower.
<PAGE>
"Moody's Rating" means, at any particular time, the higher of the ratings
issued by Moody's with respect to the Borrower's senior unsecured non-credit
enhanced long-term public debt.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Notice of Assignment" is defined in Section 12.3.3.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Loans (including, without limitation, interest accruing at the
then-applicable rate provided herein after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), all accrued and unpaid
fees and all expenses, reimbursements, indemnities and other obligations of the
Borrower to the Lenders or to any Lender, the Administrative Agent or any
indemnified party hereunder arising under the Loan Documents.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each February, May, August, and
November after the date of this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof
"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have
any liability.
"Prime Rate" means a rate per annum publicly announced from time to time
by Chase as its prime rate in effect at its principal office in New York City;
each change in the Prime Rate shall be effective from and including the date
such change is publicly announced as being effective.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned or leased
by such Person.
"Purchaser" is defined in Section 12.3.1.
"Rating" means the Moody's Rating or the S&P Rating.
<PAGE>
"Reference Lenders" means Chase, Commerzbank AG, and Bank of America, N.A.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or
other regulation or official interpretation of said Board of Governors relating
to reserve requirements applicable to member banks of the Federal Reserve
System.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to
the extension of credit by banks for the purpose of purchasing or carrying
Margin Stock applicable to member banks of the Federal Reserve System.
"Rent Expense" means, for any period, the rental expense of the Borrower
and its Consolidated Subsidiaries determined on a consolidated basis in
accordance with GAAP excluding rental expense with respect to leases of
aircraft scheduled to terminate no more than 365 days after their respective
dates of execution.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation has waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of
the notice requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least 51% of
the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 51% of the aggregate unpaid principal
amount of the outstanding Advances.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on
Eurocurrency liabilities.
"Restricted Investment" means any Investment other than an Investment
permitted by Section 6.16.
"Restricted Margin Stock" means Margin Stock owned by the Borrower or any
Subsidiary which represents not more than 33-1/3% of the aggregate value
(determined in accordance with Regulation U), on a consolidated basis, of the
Property and assets of the Borrower and the Subsidiaries (other than Margin
Stock) that is subject to the provisions of Article 6 (including Section 6.18).
<PAGE>
"Revolving Commitment" means, with respect to each Lender, the obligation
of such Lender to make Loans not exceeding the amount set forth opposite its
signature below, as such amount may be modified from time to time pursuant to
the terms hereof.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill,
Inc., or, if S&P shall cease rating Indebtedness of the Borrower and its
ratings business with respect to Indebtedness of the Borrower shall have been
transferred to a successor Person, such successor Person; provided, however,
that if S&P ceases rating securities similar to Indebtedness of the Borrower
and its ratings business with respect to such securities shall not have been
transferred to any successor Person, then "S&P" shall mean any other nationally
recognized rating agency (other than Moody's) selected by the Borrower that
rates any Indebtedness of the Borrower.
"S&P Rating" means, at any particular time, the higher of the ratings
issued by S&P with respect to the Borrower's senior unsecured non-credit
enhanced long-term public debt.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Significant Subsidiary" means, during each fiscal year of the Borrower,
any Subsidiary of the Borrower which had revenues (determined in accordance
with GAAP) for the immediately preceding fiscal year of the Borrower in excess
of 2.0% of the consolidated revenues (determined in accordance with GAAP) of
the Borrower and the Consolidated Subsidiaries for such immediately preceding
fiscal year.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding Voting Stock of which shall at the time be owned or controlled,
directly or indirectly, by such Person or by one or more of its Subsidiaries or
by such Person and one or more of its Subsidiaries, or (ii) any partnership,
association, joint venture or similar business organization more than 50% of
the ownership interests having power to direct the ordinary affairs thereof of
which shall at the time be so owned or controlled. Unless otherwise expressly
provided, all references herein to a "Subsidiary" shall mean a Subsidiary of
the Borrower.
"Substantial Portion" means, with respect to the Property of the Borrower
and its Subsidiaries, Property which (i) represents more than 10% of the
consolidated assets of the Borrower and its Subsidiaries as would be shown in
the consolidated financial statements of the Borrower and its Subsidiaries as
at the beginning of the twelve-month period ending with the month in which such
determination is made, or (ii) is responsible for more than 10% of the
consolidated net sales or of the consolidated net income of the Borrower and
its Subsidiaries as reflected in the financial statements referred to in clause
(i) above.
"Syndication Agent" is defined in the preamble hereto.
"Termination Date" means the date which is 364 days after the Effective
Date or any earlier date on which the Revolving Commitments are canceled by the
Borrower or otherwise terminated pursuant to this Agreement.
<PAGE>
"Term-Out Option" is defined in Section 2.2(b).
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as a Floating Rate
Advance or Eurodollar Advance.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested nonforfeitable benefits under all Single Employer Plans
exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"Unrestricted Margin Stock" means any Margin Stock owned by the Borrower
or any Subsidiary which is not Restricted Margin Stock.
"Voting Stock" means all outstanding shares of capital stock of a Person
entitled to vote generally in the election of directors.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities (other than directors' qualifying shares and
other de minimis local ownership required by law) of which shall at the time be
owned or controlled, directly or indirectly, by such Person or one or more
Wholly-Owned Subsidiaries of such Person, or by such Person and one or more
Wholly-Owned Subsidiaries of such Person, or (ii) any Person 100% of the
ownership interests (other than directors' qualifying shares and other de
minimis local ownership required by law) having ordinary voting power of which
shall at the time be so owned or controlled. Unless otherwise specified herein,
references to "Wholly-Owned Subsidiaries" herein shall be deemed to refer to
Wholly-Owned Subsidiaries of the Borrower.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
ARTICLE II
THE CREDIT
2.1 Revolving Commitments. From and including the date of this Agreement
and prior to the Termination Date, each Lender severally agrees, on the terms
and conditions set forth in this Agreement, to make Loans to the Borrower from
time to time in amounts not to exceed in the aggregate at any one time
outstanding the amount of its Revolving Commitment. Subject to the terms of
this Agreement, the Borrower may borrow, repay and reborrow Loans at any time
prior to the Termination Date. The Revolving Commitments shall expire on the
Termination Date.
<PAGE>
2.2 Termination. (a) The Borrower unconditionally promises to pay the
unpaid principal amount of each Loan on the Termination Date. The Borrower also
unconditionally promises to pay all other Obligations on the Termination Date.
(b) Notwithstanding anything to the contrary contained herein, so long as
the Borrower gives the Administrative Agent at least 30 days' notice in advance
of the Termination Date, the Borrower may elect (such election, the "Term-Out
Option") that all or any portion of the Loans outstanding on the Termination
Date shall be due and payable in full on the date (the "Extended Date") which
is one calendar year following the Termination Date (or such earlier date as
the Loans become due and payable pursuant to Article VIII of this Agreement).
2.3 Ratable Loans; Types of Advances. Each Advance hereunder shall consist
of Loans made from the several Lenders ratably in proportion to the ratio that
their respective Revolving Commitments bear to the Aggregate Commitment. The
Advances may be Floating Rate Advances or Eurodollar Advances, or a combination
thereof, selected by the Borrower in accordance with Sections 2.8 and 2.9. Not
more than fifteen Eurodollar Advances may be outstanding at any one time.
2.4 Determination of Levels. The applicable Level of each Rating will be
determined as set forth in the respective definitions of each Level unless
there is a split between the S&P Rating and the Moody's Rating. If there is a
split in the Ratings, the higher of the Ratings will determine the applicable
Level except as provided in the following sentence. If there is a split of two
or more rating levels as between the S&P Rating and the Moody's Rating, the
applicable Level will be determined as set forth in the respective definition
of each Level except that for purposes of applying such definitions the higher
of the two Ratings will be deemed to be reduced to the Rating that is one
Rating below the actual Rating.
2.5 Facility Fees: Administrative Agent's Fee: Reductions in Aggregate
Commitment. (a) The Borrower agrees to pay to the Administrative Agent, for the
ratable account of each Lender, a facility fee (the "Facility Fee") on the
average daily amount of the Aggregate Commitment at a rate per annum equal to
the Applicable Facility Fee Percentage, provided that, in the event that the
Borrower exercises its Term-Out Option pursuant to Section 2.2(b), the Facility
Fee shall be payable on the average daily amount of Loans outstanding after the
Termination Date. Such Facility Fee shall be payable on each Payment Date
hereafter and on the Termination Date or the Extended Date, as applicable. Such
Facility Fee shall be based on the Aggregate Commitment from time to time,
regardless of the utilization by the Borrower from time to time thereunder.
(b) The Borrower shall pay to the Administrative Agent as compensation for
its services hereunder the fees specified in the letter agreement dated
November 10, 2000, between the Administrative Agent and the Borrower, as it may
be amended or supplemented from time to time.
(c) The Borrower may permanently reduce the Aggregate Commitment in whole,
or in part ratably among the Lenders, in the minimum amount of $20,000,000 and
in integral multiples of $10,000,000 in excess thereof, upon at least ten
Business Days' written notice to the Administrative Agent, which notice shall
specify the amount of any such reduction, provided,
<PAGE>
however, that the amount of the Aggregate Commitment may not be reduced below
the aggregate principal amount of the outstanding Advances. All accrued
Facility Fees shall be payable on the effective date of any termination of the
obligations of the Lenders to make Loans hereunder, unless the Borrower shall
have exercised its Term-Out Option pursuant to Section 2.2(b).
(d) The Borrower agrees to pay to the Administrative Agent, for the
ratable account of each Lender, for each calendar month in which the average
daily amount of all Advances outstanding hereunder during such calendar month
exceeds 25% of the average daily Aggregate Commitment during such month, a
utilization fee on the average daily amount of Advances outstanding during such
calendar month, at a per annum rate equal to 0.125%; provided that (A) if the
Borrower exercises the Term-Out Option pursuant to Section 2.2(b) and (B) if
the amount of Advances outstanding on the Termination Date exceeds 25% of the
Aggregate Commitment as of the day the Borrower exercised the Term-Out Option,
the Borrower agrees to pay to the Administrative Agent, for the ratable account
of each Lender, for each calendar month during the period from the Termination
Date to the Extended Date, a utilization fee on the average daily amount of
Advances outstanding during such calendar month, at a per annum rate equal to
0.125%. Such utilization fee shall be payable in arrears on each Payment Date
hereafter, on the Termination Date and the Extended Date.
2.6 Minimum Amount of Each Advance. Each Advance shall be in the minimum
amount of $5,000,000 (and in integral multiples of $1,000,000 if in excess
thereof), provided, however, that any Floating Rate Advance may be in the
amount of the unused Aggregate Commitment.
2.7 Optional Principal Payments. The Borrower may from time to time pay,
without penalty or premium, all outstanding Floating Rate Advances, or, in a
minimum aggregate amount of $5,000,000 or any integral multiple thereof, any
portion of the outstanding Floating Rate Advances upon one Business Day's prior
notice to the Administrative Agent. A Eurodollar Advance may not be paid prior
to the last day of the applicable Interest Period except pursuant to an
acceleration in accordance with this Agreement.
2.8 Method of Selecting Types and Interest Periods for New Advances. The
Borrower shall select the Type of Advance and, in the case of each Eurodollar
Advance, the Interest Period applicable to each Advance from time to time. The
Borrower shall give the Administrative Agent irrevocable notice (a "Borrowing
Notice") not later than 11:00 a.m. (New York time) on the Borrowing Date of
each Floating Rate Advance, and at least three Business Days before the
Borrowing Date for each Eurodollar Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurodollar Advance, the Interest Period
applicable thereto.
<PAGE>
Not later than 1:00 p.m. (New York time) on each Borrowing Date, each Lender
shall make available its Loan or Loans, in funds immediately available in New
York to the Administrative Agent at its address specified pursuant to Article
XIII. Upon satisfaction or waiver in accordance with the terms of this
Agreement of the applicable conditions precedent set forth in Article IV, the
Administrative Agent will make the funds so received from the Lenders available
to the Borrower at the Administrative Agent's aforesaid address.
2.9 Conversion and Continuation of Outstanding Advances. Floating Rate
Advances shall continue as Floating Rate Advances unless and until such
Floating Rate Advances are converted into Eurodollar Advances. Each Eurodollar
Advance of any Type shall continue as a Eurodollar Advance of such Type until
the end of the then applicable Interest Period therefor, at which time such
Eurodollar Advance shall be automatically converted into a Floating Rate
Advance unless the Borrower shall have given the Administrative Agent a
Conversion/Continuation Notice requesting that, at the end of such Interest
Period, such Eurodollar Advance shall either continue as a Eurodollar Advance
of such Type for the same or another Interest Period or be converted into a
Floating Rate Advance. Subject to the terms of Section 2.6, the Borrower may
elect from time to time to convert all or any part of an Advance of any Type
into any other Type or Types of Advances; provided that any conversion of any
Eurodollar Advance shall be made on, and only on, the last day of the Interest
Period applicable thereto. The Borrower shall give the Administrative Agent
irrevocable notice (a "Conversion/Continuation Notice") of each conversion of
an Advance or continuation of a Eurodollar Advance not later than 11:00 a.m.
(New York time) on the date of the requested conversion, in the case of a
conversion of any Advance into a Floating Rate Advance, or at least three
Business Days prior to the date of the requested conversion or continuation, in
the case of a conversion into or continuation of a Eurodollar Advance,
specifying:
(i) the requested date, which shall be a Business Day, of such conversion
or continuation;
(ii) the aggregate amount and Type of the Advance which is to be converted
or continued; and
(iii) the amount and Type(s) of Advance(s) into which such Advance is to
be converted or continued and, in the case of a conversion into or
continuation of a Eurodollar Advance, the duration of the Interest
Period applicable thereto.
2.10 Interest. Each Floating Rate Advance shall bear interest on the
outstanding principal amount thereof, for each day from and including the date
such Advance is made or is converted from a Eurodollar Advance into a Floating
Rate Advance pursuant to Section 2.9 to but excluding the date it becomes due
or is converted into a Eurodollar Advance pursuant to Section 2.9 hereof, at a
rate per annum equal to the Floating Rate for such day. Changes in the rate of
interest on that portion of any Advance maintained as a Floating Rate Advance
will take effect simultaneously with each change in the Alternate Base Rate.
Each Eurodollar Advance shall bear interest from and including the first day of
the Interest Period applicable thereto to (but not including) the last day of
such Interest Period at a rate per annum
<PAGE>
equal to the Eurodollar Rate applicable thereto. No Interest Period for any
Loans may end after the Termination Date or the Extended Date, as applicable.
2.11 Rates Applicable After Maturity of Advances. Notwithstanding anything
to the contrary contained in Section 2.8 or 2.9, no Advance may be made as,
converted into or continued as a Eurodollar Advance (except with the consent of
the Required Lenders) when any Default or Unmatured Default has occurred and is
continuing. If any Advance is not paid at maturity, whether by acceleration or
otherwise, (i) each Eurodollar Advance shall bear interest for the remainder of
the applicable Interest Period at the rate otherwise applicable to such
Eurodollar Advance for such Interest Period plus 2% per annum and at the end of
each Interest Period shall automatically convert to a Floating Rate Advance
bearing interest in accordance with clause (ii) of this Section, and (ii) each
Floating Rate Advance shall bear interest at a rate per annum equal to the
Floating Rate otherwise applicable to the Floating Rate Advance plus 2% per
annum.
2.12 Method of Payment. All payments of the Obligations hereunder shall be
made, without setoff, deduction, or counterclaim, in immediately available
funds to the Administrative Agent at the Administrative Agent's address
specified pursuant to Article XIII, or at any other Lending Installation of the
Administrative Agent specified in writing by the Administrative Agent to the
Borrower, by noon (local time) on the date when due. Each such payment shall be
applied to any Advances and other amounts then due in accordance with the
written instructions from the Borrower to the Administrative Agent accompanying
such payment and shall be applied ratably by the Administrative Agent among the
Lenders. Each payment delivered to the Administrative Agent for the account of
any Lender shall be delivered promptly by the Administrative Agent to such
Lender in the same type of funds that the Administrative Agent received at such
Lender's address specified pursuant to Article XIII or at any Lending
Installation specified in a notice received by the Administrative Agent from
such Lender. The Borrower authorizes the Administrative Agent to charge the
Borrower's account maintained with Chase for each payment of principal,
interest and fees as it becomes due hereunder.
2.13 Evidence of Debt: Telephonic Notices. (a) Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid
to such Lender from time to time hereunder.
(b) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period, if any, applicable thereto, (ii) the amount of any principal
or interest due and payable or to become due and payable from the Borrower to
each Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder for the account of the Lenders and each Lender's
share thereof.
(c) The entries made in the accounts maintained pursuant to subsections
(a) or (b) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
<PAGE>
(d) Any Lender may request that the Loans made by it each be evidenced by
a promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns)
and in a form approved by the Administrative Agent. Thereafter, the Loans
evidenced by such promissory notes and interest thereon shall at all times
(including after assignment pursuant to Section 12.3) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and
its registered assigns).
(e) The Borrower authorizes the Lenders and the Administrative Agent to
extend, convert or continue Advances, effect selections of Types of Advances
and to transfer funds based on telephonic notices made by any person or persons
the Administrative Agent or any Lender in good faith believes to be an
Authorized Officer acting on behalf of the Borrower. The Borrower agrees to
deliver promptly to the Administrative Agent a written confirmation of each
telephonic notice signed by an Authorized Officer. If the written confirmation
differs in any material respect from the action taken by the Administrative
Agent and the Lenders, the records of the Administrative Agent and the Lenders
shall govern absent manifest error.
2.14 Interest Payment Dates: Interest and Fee Basis. Interest accrued on
each Floating Rate Advance shall be payable on each Payment Date, commencing
with the first such date to occur after the date hereof, on any date on which
the Floating Rate Advance is prepaid, whether due to acceleration or otherwise,
and at maturity. Interest accrued on that portion of the outstanding principal
amount of any Floating Rate Advance converted into a Eurodollar Advance on a
day other than a Payment Date shall be payable on the date of conversion.
Interest accrued on each Eurodollar Advance shall be payable on the last day of
its applicable Interest Period, on any date on which the Eurodollar Advance is
prepaid, whether by acceleration or otherwise, and at maturity. Interest
accrued on each Eurodollar Advance having an Interest Period longer than three
months shall also be payable on the last day of each three-month interval
during such Interest Period. Interest on Eurodollar Advances shall be
calculated for actual days elapsed on the basis of a 360-day year. All other
interest and fees shall be calculated for actual days elapsed on the basis of a
365- or 366-day year, as appropriate. Interest shall be payable for the day an
Advance is made but not for the day of any payment on the amount paid if
payment is received prior to noon (local time) at the place of payment. If any
payment of principal of or interest on an Advance shall become due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and, in the case of a principal payment, such extension of time
shall be included in computing interest in connection with such payment.
2.15 Notification of Advances, Interest Rates, Prepayments and Commitment
Reductions. Promptly after receipt thereof, the Administrative Agent will
notify each Lender of the contents of each Aggregate Commitment reduction
notice, Borrowing Notice, Conversion/Continuation Notice, and repayment notice
received by it hereunder. The Administrative Agent will notify each Lender of
the interest rate applicable to each Eurodollar Advance promptly upon
determination of such interest rate and will give each Lender prompt notice of
each change in the Alternate Base Rate. Each Reference Lender agrees to furnish
timely information for the purpose of determining the Eurodollar Rate.
<PAGE>
2.16 Lending Installations. Each Lender may book its Loans at any Lending
Installation selected by such Lender and may change its Lending Installation
from time to time. All terms of this Agreement shall apply to any such Lending
Installation, and the Loans shall be deemed held by each Lender for the benefit
of such Lending Installation. Each Lender may, by written notice to the
Administrative Agent and the Borrower, designate a Lending Installation through
which Loans will be made by it and for whose account Loan payments are to be
made.
2.17 Non-Receipt of Funds by the Administrative Agent. Unless the Borrower
or a Lender, as the case may be, notifies the Administrative Agent prior to the
date on which it is scheduled to make payment to the Administrative Agent of
(i) in the case of a Lender, the proceeds of a Loan or (ii) in the case of the
Borrower, a payment of principal, interest or fees to the Administrative Agent
for the account of the Lenders, that it does not intend to make such payment,
the Administrative Agent may assume that such payment has been made. The
Administrative Agent may, but shall not be obligated to, make the amount of
such payment available to the intended recipient in reliance upon such
assumption. If such Lender or the Borrower, as the case may be, has not in fact
made such payment to the Administrative Agent, the recipient of such payment
shall, on demand by the Administrative Agent, repay to the Administrative Agent
the amount so made available together with interest thereon in respect of each
day during the period commencing on the date such amount was so made available
by the Administrative Agent until the date the Administrative Agent recovers
such amount at a rate per annum equal to (i) in the case of payment by a
Lender, the Federal Funds Effective Rate for such day or (ii) in the case of
payment by the Borrower, the interest rate applicable to the relevant Loan.
2.18 Withholding Tax Exemption. At least five Business Days prior to the
first date on which interest or fees are payable hereunder for the account of
any Lender, each Lender that is not incorporated under the laws of the United
States of America, or a state thereof, agrees that it will deliver to each of
the Borrower and the Administrative Agent two duly completed copies of United
States Internal Revenue Service Form W-8BEN or W-8ECI, certifying in either
case that such Lender is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes.
Each Lender which so delivers a Form W-8BEN or W-8ECI further undertakes to
deliver to each of the Borrower and the Administrative Agent two additional
copies of such form (or a successor form) on or before the date that such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent forms so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably requested by the
Borrower or the Administrative Agent, in each case certifying that such Lender
is entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender advises the Borrower and the Administrative Agent that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax.
2.19 Mandatory Prepayment. If the tender offer portion of the Acquisition
of American Freightways has not been consummated on or before February 15, 2001
on terms set
<PAGE>
forth in the Merger Agreement or other terms and conditions reasonably
satisfactory to the Lenders, the Borrower shall prepay all outstanding Loans on
such date. In such event, until the conditions set forth in Section 4.3 hereof
are satisfied, the Borrower may not request any Advance to be made.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1 Yield Protection. If any law or any governmental or quasi-governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law), or any interpretation thereof or the compliance of any Lender
therewith,
(i) subjects any Lender or any applicable Lending Installation to any
tax, duty, charge or withholding on or from payments due from the
Borrower (excluding federal taxation of the overall net income of any
Lender or applicable Lending Installation), or changes the basis of
taxation of payments to any Lender in respect of its Loans or other
amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended
by, any Lender or any applicable Lending Installation (other than
reserves and assessments taken into account in determining the
Eurodollar Rate), or
(iii) imposes any other condition the result of which is to increase the
cost to any Lender or any applicable Lending Installation of making,
funding or maintaining loans or reduces any amount receivable by any
Lender or any applicable Lending Installation in connection with
loans, or requires any Lender or any applicable Lending Installation
to make any payment calculated by reference to the amount of loans
held or interest received by it, by an amount deemed material by such
Lender,
then, within 15 days after demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an
amount received which such Lender determines is attributable to making, funding
and maintaining its Loans and its Revolving Commitments.
3.2 Changes in Capital Adequacy Regulations. If a Lender determines that
the amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a Change, then, within 15 days after demand by such
Lender, the Borrower shall pay such Lender the amount necessary to compensate
such Lender for any shortfall in the rate of return on the portion of such
increased capital which such Lender determines is attributable to this
Agreement, its Loans or its obligation to make Loans hereunder (after taking
into account such
<PAGE>
Lender's policies as to capital adequacy). "Change" means (i) any change after
the date of this Agreement in the Risk-Based Capital Guidelines or (ii) any
adoption of or change in any other law, governmental or quasi-governmental
rule, regulation, policy, guideline, interpretation, or directive (whether or
not having the force of law) after the date of this Agreement which affects the
amount of capital required or expected to be maintained by any Lender or any
Lending Installation or any corporation controlling any Lender. "Risk-Based
Capital Guidelines" means (i) the risk-based capital guidelines in effect in
the United States on the date of this Agreement, including transition rules,
and (ii) the corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988 report of the
Basle Committee on Banking Regulation and Supervisory Practices Entitled
"International Convergence of Capital Measurements and Capital Standards,"
including transition rules, and any amendments to such regulations adopted
prior to the date of this Agreement.
3.3 Availability of Types of Advances. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (i) deposits
of a type and maturity appropriate to match fund Eurodollar Advances are not
available or (ii) the interest rate applicable to a Eurodollar Advance does not
accurately reflect the cost of making or maintaining such Advance, then the
Administrative Agent shall suspend the availability of Eurodollar Advances and
require any Eurodollar Advances to be converted to Floating Rate Advances.
3.4 Funding Indemnification. If any payment or conversion of a Eurodollar
Advance occurs on a date which is not the last day of the applicable Interest
Period, whether because of acceleration, prepayment or otherwise, or a
Eurodollar Advance is not made on the date specified by the Borrower for any
reason other than default by the Lenders, the Borrower will indemnify each
Lender for any loss or cost incurred by it resulting therefrom including,
without limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain the Eurodollar Advance.
3.5 Lender Statements; Survival of Indemnity. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Loans to reduce any liability of the Borrower to such
Lender under Sections 3.1 and 3.2 or to avoid the unavailability of Eurodollar
Advances under Section 3.3, so long as such designation is not disadvantageous
to such Lender as determined by such Lender in its sole discretion. Each Lender
shall deliver a written statement of such Lender as to the amount due, if any,
under Section 3.1, 3.2 or 3.4. Such written statement shall set forth in
reasonable detail the calculations upon which such Lender determined such
amount and shall be final, conclusive and binding on the Borrower in the
absence of manifest error. Determination of amounts payable under such Sections
in connection with a Eurodollar Loan shall be calculated as though each Lender
funded its Eurodollar Loan through the purchase of a deposit of the type and
maturity corresponding to the deposit used as a reference in determining the
Eurodollar Rate applicable to such Loan, whether in fact that is the case or
not. Unless otherwise provided herein, the amount specified in the written
statement shall be payable on demand after receipt by the Borrower of the
written statement. The obligations of the Borrower under Sections 3.1, 3.2 and
3.4 shall survive payment of the Obligations and termination of this Agreement.
<PAGE>
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Closing. The Lenders shall not be required to make the initial Advance
hereunder unless:
(a) on or before the Effective Date the Administrative Agent shall have
received, with sufficient copies for the Lenders:
(i) Counterpart signature pages of this Agreement executed by each party
hereto;
(ii) Counterparts of the Guaranty, executed by each Guarantor;
(iii) Copies of the charter of the Borrower and each Guarantor, together
with all amendments, and a certificate of good standing for each such
Person, all certified on or within 15 days prior to the Effective
Date by the appropriate governmental officer in such Person's
jurisdiction of incorporation;
(iv) Copies, certified as of the Effective Date by the Secretary or
Assistant Secretary of the Borrower and each Guarantor, of its
by-laws and of its Board of Directors' resolutions (and resolutions
of other bodies, if any are reasonably deemed necessary by counsel
for any Lender) authorizing the execution, delivery, and performance
of the Loan Documents;
(v) Incumbency certificates, executed as of the Effective Date by the
Secretary or Assistant Secretary of the Borrower and each Guarantor,
which shall identify by name and title and bear the signature of the
officers of the Borrower or such Guarantor, as the case may be,
authorized to sign the Loan Documents and to make borrowings
hereunder, upon which certificate the Administrative Agent and the
Lenders shall be entitled to rely until informed of any change in
writing by the Borrower;
(vi) A certificate, dated the Effective Date, signed by the Chief
Financial Officer or Treasurer of the Borrower, stating that on such
date no Default or Unmatured Default has occurred and is continuing;
(vii) A written opinion of the Borrower's counsel, addressed to the
Lenders in substantially the form of Exhibit "B" hereto. The Borrower
requests its counsel to issue such opinion;
(viii) Written money transfer instructions addressed to the Administrative
Agent and signed by an Authorized Officer, together with such other
related money transfer authorizations as the Administrative Agent may
have reasonably requested;
<PAGE>
(ix) A written representation and warranty by the Borrower that, as of the
Effective Date, since August 31, 2000, there has been no change in
the business, Property, prospects, condition (financial or otherwise)
or results of operations of the Borrower and its Subsidiaries taken
as a whole which could reasonably be expected to have a Material
Adverse Effect;
(x) Copies of the December 31, 1999 audited consolidated financial
statements and September 30, 2000 unaudited consolidated financial
statements of American Freightways and its consolidated Subsidiaries;
(xi) (A) Satisfactory audited consolidated financial statements of the
Borrower for the two most recent fiscal years ended prior to the
Effective Date as to which such financial statements are available,
and (B) satisfactory unaudited interim consolidated financial
statements of the Borrower for each quarterly period ended subsequent
to the date of the latest financial statements delivered pursuant to
clause (A) of this paragraph as to which such financial statements
are available; and
(xii) Such other documents as any Lender or its counsel may reasonably
request; and
(b) The following additional condition precedent has been satisfied:
(i) All governmental and material third party approvals necessary in
connection with the tender offer portion of the Acquisition of
American Freightways and the financing contemplated hereby shall have
been obtained and be in full force and effect.
4.2 Each Advance. The Lenders shall not be required to make any Advance
(including the initial Advance), unless on the applicable Borrowing Date:
(i) There exists no Default or Unmatured Default and no Default or
Unmatured Default shall occur upon giving effect to the application
of the proceeds of such Advance; and
(ii) The representations and warranties contained in Article V are true
and correct as of such Borrowing Date except for changes in the
Schedules hereto reflecting transactions permitted by this Agreement
Each Borrowing Notice with respect to each such Advance shall constitute a
representation and warranty by the Borrower that the conditions contained in
Section 4.2 have been satisfied.
4.3 Further Conditions. The Lenders shall not be required to make any
Advance on or after February 15, 2001 unless the tender offer portion of the
Acquisition of American Freightways shall have been consummated on terms set
forth in the Merger Agreement or other terms and conditions reasonably
satisfactory to the Lenders.
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1 Corporate Existence and Standing. Each of the Borrower, each of the
Guarantors and each of the Significant Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted and where the
failure to have such requisite authority would have a Material Adverse Effect.
5.2 Authorization and Validity. The Borrower and each of the Guarantors
has the corporate power and authority and legal right to execute and deliver
the Loan Documents executed by it and to perform its obligations thereunder.
The execution and delivery by the Borrower and the Guarantors of the Loan
Documents and the performance of their respective obligations thereunder have
been duly authorized by proper corporate proceedings, and the Loan Documents
constitute legal, valid and binding obligations of the Borrower and the
Guarantors, enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and subject also to
the availability of equitable remedies if equitable remedies are sought.
5.3 No Conflict; Government Consent. Neither the Borrower's nor any
Guarantor's execution and delivery of the Loan Documents, nor the consummation
of the transactions therein contemplated, nor compliance with the provisions
thereof will violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrower, any Guarantor or any of
the Significant Subsidiaries or the Borrower's, any Guarantor's or any
Significant Subsidiary's articles or certificate of incorporation or by-laws or
the provisions of any material indenture, instrument or agreement to which the
Borrower, any Guarantor or any of the Significant Subsidiaries is a party or is
subject, or by which it, or its Property, is bound, or conflict with or
constitute a default thereunder, or result in the creation or imposition of any
Lien in, of or on the Property of the Borrower, any Guarantor or any
Significant Subsidiary pursuant to the terms of any such indenture, instrument
or agreement. No order, consent, approval, license, authorization or validation
of, or filing, recording or registration with, or exemption by, any
governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with the execution,
delivery and performance of or the legality, validity, binding effect or
enforceability of, any of the Loan Documents.
5.4 Financial Statements. The May 31, 2000 audited consolidated financial
statements and August 31, 2000 unaudited consolidated financial statements of
the Borrower and its Consolidated Subsidiaries heretofore delivered to the
Lenders were prepared in accordance with GAAP in effect on the dates such
statements were prepared and fairly present the consolidated financial
condition and operations of the Borrower and its Consolidated Subsidiaries at
such dates and the consolidated results of their operations for the periods
then ended (except, in the case of such unaudited statements, for normal
year-end adjustments).
<PAGE>
5.5 Taxes. The Borrower and its Significant Subsidiaries have filed all
United States federal tax returns and all other material tax returns which are
required to be filed and have paid all taxes due pursuant to said returns or
pursuant to any assessment received by the Borrower or any of its Significant
Subsidiaries, except such taxes, if any, as are being contested in good faith
and as to which adequate reserves determined in accordance with GAAP have been
provided. The charges, accruals and reserves on the books of the Borrower and
its Significant Subsidiaries in respect of any taxes or other governmental
charges are adequate.
5.6 Litigation and Contingent Obligations. Except for such matters as are
referenced in the form of opinion of counsel attached hereto as Exhibit "B",
there is no litigation, arbitration, governmental investigation, proceeding or
inquiry pending or, to the knowledge of any of their officers, threatened
against or affecting the Borrower or any of its Significant Subsidiaries which
could reasonably be expected to have a Material Adverse Effect. Other than any
liability incident to such litigation, arbitration or proceedings, the Borrower
and its Significant Subsidiaries have no material contingent obligations not
provided for or disclosed in the financial statements referred to in Section
5.4.
5.7 Subsidiaries. Schedule "1" hereto contains an accurate list of all of
the presently existing Significant Subsidiaries of the Borrower, setting forth
their respective jurisdictions of incorporation and the percentage of their
respective capital stock owned by the Borrower or other Subsidiaries. All of
the issued and outstanding shares of capital stock of such Subsidiaries have
been duly authorized and issued and are fully paid and non-assessable.
5.8 ERISA. The Unfunded Liabilities of all Single Employer Plans do not in
the aggregate exceed $80,000,000. Each Plan complies in all material respects
with all applicable requirements of law and regulations, no Reportable Event
has occurred with respect to any Plan, neither the Borrower nor any other
member of the Controlled Group has withdrawn from any Plan or initiated steps
to do so, and no steps have been taken to reorganize or terminate any Plan.
5.9 Accuracy of Information. No information, exhibit or report furnished
by the Borrower or any of its Subsidiaries to the Administrative Agent or to
any Lender in connection with the negotiation of, or compliance with, the Loan
Documents contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein,
in light of the circumstances under which they were made, not misleading.
5.10 Regulation U. Margin Stock constitutes less than 25% of the aggregate
value (determined in accordance with Regulation U), on a consolidated basis, of
the Property and assets of the Borrower and its Subsidiaries that is subject to
the provisions of Article 6 (including Section 6.18).
5.11 Material Agreements. Neither the Borrower nor any Subsidiary is a
party to any agreement (including, without limitation, this Agreement) or
instrument or subject to any charter or other corporate restriction which could
reasonably be expected to have a Material Adverse Effect. Neither the Borrower
nor any Subsidiary is in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any
<PAGE>
agreement to which it is a party, which default could reasonably be expected to
have a Material Adverse Effect.
5.12 Compliance with Laws. The Borrower and its Subsidiaries have complied
in all material respects with all applicable statutes, rules, regulations,
orders and restrictions of any domestic or foreign government or any
instrumentality or agency thereof having jurisdiction over the conduct of their
respective businesses or the ownership of their respective Property. Neither
the Borrower nor any Subsidiary has received any notice to the effect, nor does
any Authorized Officer have any actual knowledge, that its operations are not
in material compliance with any of the requirements of applicable federal,
state and local environmental, health and safety statutes and regulations or
the subject of any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any toxic or hazardous
waste or substance into the environment, which non-compliance or remedial
action could reasonably be expected to have a Material Adverse Effect.
5.13 Existing Liens. None of the assets of the Borrower or any of its
Subsidiaries is subject to any Lien other than those permitted by Section 6.18.
5.14 Investment Company Act. Neither the Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
5.15 Citizenship. Federal Express Corporation is a citizen of the United
States, as defined in 49 U.S.C. ss.40102(a)(15) (a "Citizen"). Each other
Subsidiary that must be a Citizen in order to conduct its business as currently
conducted is a Citizen. Neither Federal Express Corporation nor any such other
Subsidiary is a national of any foreign country designated in Presidential
Executive Order No. 8389 or 9193, as amended, and the regulations issued
thereunder, as amended, or a national of any foreign country designated in the
Foreign Assets Control Regulations or in the Cuban Assets Control Regulations
of the United States Treasury Department, 31 C.F.R., Chapter V, as amended.
5.16 Status as Air Carrier. Federal Express Corporation, and each other
Subsidiary that must be so authorized in order to conduct its business as
currently conducted, (i) is authorized to engage in all cargo domestic and
international air service under certificates issued pursuant to 49 U.S.C.
ss.41103 and 49 U.S.C. ss.41102(a), respectively, and (ii) is the holder of a
valid and effective operating certificate issued by the FAA pursuant to Part
119 of the Federal Aviation Regulations. Such certificates are in full force
and effect and are adequate for the conduct of the business of the Borrower and
its Subsidiaries as now conducted. There are no actions, proceedings or
investigations pending or, to the knowledge of any of its officers, threatened
(or any basis therefor known to the Borrower) to amend, modify, suspend or
revoke any such certificate in whole or in part, which would have any material
adverse effect on any such certificate or any of the operations of the Borrower
or its Subsidiaries.
5.17 Pari Passu. All the payment obligations of the Borrower and the
Guarantors arising under or pursuant to the Loan Documents will at all times
rank pari passu, with all other unsecured and unsubordinated payment
obligations and liabilities (including
<PAGE>
contingent obligations and liabilities) of the Borrower and the Guarantors
(other than those which are mandatorily preferred by laws or regulations of
general application).
ARTICLE VI
COVENANTS
During the term of this Agreement and so long as any Loans or other
Obligations are outstanding or any Revolving Commitment is in effect hereunder,
unless the Required Lenders shall otherwise consent in writing:
6.1 Financial Reporting. The Borrower will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with GAAP, and furnish to the Lenders:
(i) Within 90 days after the close of each of its fiscal years, an
unqualified audit report certified by independent certified public
accountants of recognized national standing acceptable to the
Lenders, prepared in accordance with GAAP on a consolidated basis for
itself and the Consolidated Subsidiaries, including a balance sheet
as of the end of such period, related profit and loss and
reconciliation of surplus statements, and a statement of cash flows,
accompanied by (a) any management letter prepared by said
accountants, and (b) a certificate of said accountants that, in the
course of their examination necessary for their certification of the
foregoing, they have obtained no knowledge of any Default or
Unmatured Default, or if, in the opinion of such accountants, any
Default or Unmatured Default shall exist, stating the nature and
status thereof.
(ii) Within 45 calendar days after the end of each of the first three
quarters of each fiscal year of the Borrower, for itself and the
Consolidated Subsidiaries, an unaudited consolidated balance sheet as
at the close of such period and consolidated profit and loss and
reconciliation of surplus statements and a statement of cash flows
for the period from the beginning of such fiscal year to the end of
such quarter, all certified as complete and accurate and prepared in
accordance with GAAP by its Chief Financial Officer, Treasurer or
Controller.
(iii) Together with the financial statements required hereunder, a
certificate signed by its Chief Financial Officer or Treasurer
stating that no Default or Unmatured Default exists, or if any
Default or Unmatured Default exists, stating the nature and status
thereof, and stating the steps the Borrower is taking to cure such
Default or Unmatured Default.
(iv) As soon as available, and in any event within 45 calendar days after
the end of each of the first three quarters of each fiscal year of
the Borrower and within 90 calendar days after the end of the fourth
quarter of each
<PAGE>
fiscal year of the Borrower, a schedule in substantially the form of
Schedule "2" hereto, certified as accurate by the Borrower's Chief
Financial Officer, Treasurer or Controller, showing, as of the end of
such quarter, the Borrower's calculation, in form and detail
satisfactory to the Administrative Agent, of the calculations
required to be made to determine compliance with each of Sections
6.11 and 6.12.
(v) Promptly upon becoming available, copies of:
(a) All financial statements, reports, notices and proxy statements
sent by the Borrower, any Guarantor or any Significant
Subsidiary to its public stockholders (if any).
(b) All prospectuses (other than on Form S-8 or a similar form) of
the Borrower or any Consolidated Subsidiary filed with the
Securities and Exchange Commission or any other governmental
agency succeeding to the jurisdiction thereof.
(c) All regular and periodic reports filed by the Borrower or any
Consolidated Subsidiary with any securities exchange or with the
Securities and Exchange Commission or any other governmental
agency succeeding to the jurisdiction thereof.
(vi) As soon as possible and in any event within 10 days after receipt by
the Borrower, a copy of (a) any notice or claim to the effect that
the Borrower or any of its Subsidiaries is or may be liable to any
Person as a result of the release by the Borrower, any of its
Subsidiaries, or any other Person of any toxic or hazardous waste or
substance into the environment, and (b) any notice alleging any
violation of any federal, state or local environmental, health or
safety law or regulation by the Borrower or any of its Subsidiaries,
which, in either case, could reasonably be expected to have a
Material Adverse Effect.
(vii) Such other information (including non-financial information) as the
Administrative Agent or any Lender may from time to time reasonably
request.
6.2 Use of Proceeds. The Borrower will, and will cause each Subsidiary to,
use the proceeds of the Advances as liquidity support for the issuance of
commercial paper by the Borrower, for Acquisitions not prohibited under the
following sentence, to refinance any existing Indebtedness of American
Freightways in connection with the Acquisition of American Freightways, for
general corporate purposes and working capital of the Borrower and its
Subsidiaries, and to repay outstanding Advances. The Borrower will not, nor
will it permit any Subsidiary to, use any of the proceeds of the Advances to
purchase or carry any Margin Stock in violation of Regulation U or to make any
Acquisition which has not been approved or consented to by the board of
directors or equivalent governing body of the Person whose assets or equity
interests are to be acquired.
<PAGE>
6.3 Notice of Default. The Borrower will, and will cause each Subsidiary
to, give prompt notice in writing to the Lenders of the occurrence of any
Default or Unmatured Default and of any other development, financial or
otherwise, which could reasonably be expected to have a Material Adverse
Effect.
6.4 Conduct of Business. Except as permitted by Sections 6.14 and 6.15,
the Borrower will, and will cause each Guarantor and Significant Subsidiary to,
carry on and conduct its business in substantially the same manner and in
substantially the same fields of enterprise as it is presently conducted and to
do all things necessary to remain duly incorporated, validly existing and in
good standing as a domestic corporation in its jurisdiction of incorporation
and maintain all requisite authority to conduct its business in each
jurisdiction in which its business is conducted and where the failure to have
such requisite authority could reasonably be expected to have a Material
Adverse Effect.
6.5 Citizenship and Regulatory Certificates. The Borrower will cause
Federal Express Corporation and each other applicable Subsidiary to continue to
be (a) a citizen of the United States, as defined in 49 U.S.C. ss.40102(a)(15),
(b) authorized to engage in all cargo domestic and international air service
under certificates issued pursuant to 49 U.S.C. ss.41103 and 49 U.S.C.
ss.41102(a), respectively, (c) the holder of all other certificates, rights,
permits, franchises and concessions from appropriate governments or
governmental authorities necessary or appropriate to enable the Borrower and
its Subsidiaries to conduct their business in all material respects as
presently being conducted, and (d) the holder of a valid and effective
operating certificate issued by the FAA pursuant to Part 119 of the Federal
Aviation Regulations. The Borrower will, and will cause each of its
Subsidiaries to, use its best efforts to maintain, preserve and keep in full
force and effect its certificates, rights, permits, franchises and concessions
from appropriate governments or governmental authorities and use its best
efforts from time to time to obtain appropriate renewals or replacements,
provided, that nothing in this Section 6.5 shall prevent the Borrower or any of
its Subsidiaries from abandoning, or permitting the amendment, expiration or
termination of, any such certificate, right, permit, franchise or concession
if, in the opinion of the Borrower, such abandonment, amendment, expiration or
termination is in the interest of the Borrower and not prejudicial in any
material respect to the Lenders.
6.6 Payment of Taxes. The Borrower will, and will cause each Subsidiary
to, pay and discharge all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits, or upon any property belonging
to it, and all lawful claims which, if unpaid, would become a Lien, except
where failure to do any of the foregoing would not have a Material Adverse
Effect and provided that neither the Borrower nor a Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim the payment of
which is being contested in good faith and by appropriate proceedings; and make
monthly accruals of all of the estimated liability of the Borrower and
Subsidiaries for such taxes, assessments, charges and levies, determined in
accordance with GAAP, and establish adequate reserves determined in accordance
with GAAP, for such thereof as may be contested, and reflect such accruals and
reserves in all financial statements finished hereunder.
6.7 Insurance. The Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies insurance on
all its respective Property
<PAGE>
in such amounts and covering such risks as is consistent with sound business
practice, and the Borrower will furnish to any Lender upon request full
information as to the insurance carried.
6.8 Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject, except
where failure to do so could not reasonably be expected to have a Material
Adverse Effect.
6.9 Maintenance of Properties. The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times,
except where failure to do any of the foregoing could not reasonably be
expected to have a Material Adverse Effect.
6.10 Inspection. The Borrower will, and will cause each Subsidiary to,
permit the Lenders, by their respective representatives and agents, to inspect
any of the Property, corporate books and financial records of the Borrower and
each Subsidiary, to examine and make copies of the books of accounts and other
financial records of the Borrower and each Subsidiary, and to discuss the
affairs, finances and accounts of the Borrower and each Subsidiary with, and to
be advised as to the same by, their respective officers at such reasonable
times and intervals as the Lenders may designate upon reasonable notice to the
Borrower.
6.11 Leverage. The Borrower will maintain at all times a ratio of (i) the
sum of (a) the aggregate unpaid principal amount of all outstanding Funded
Debt, plus (b) Capitalized Operating Lease Value, to (ii) the sum of (a) the
items listed in clause (i) above plus (b) Consolidated Adjusted Net Worth, of
not more than .70 to 1.
6.12 Fixed Charge Coverage. The Borrower will at all times maintain a
ratio of (a) Consolidated Cash Flow to (b) the sum of Interest Expense and Rent
Expense, in an amount not less than 1.25 to 1.
6.13 Restricted Investments. The Borrower will not, nor will it permit any
Consolidated Subsidiary to, make any Restricted Investment except Restricted
Investments made by the Borrower or a Consolidated Subsidiary provided that,
after giving effect to any such Restricted Investment (i) the aggregate amount
of all such Restricted Investments existing on the date of such proposed action
shall not exceed (x) $750,000,000 plus (y) 75% (or in the case of a deficit,
minus 100%) of the Consolidated Net Income for the period commencing on June 1,
1997 and ending on and including the date of any such proposed action (the
"Computation Period") plus (z) the aggregate amount of the net cash proceeds
received by the Borrower during the Computation Period from the sale of its
stock and Indebtedness of the Borrower convertible into stock of the Borrower
(but only to the extent that any such Indebtedness has been converted into
shares of such stock during such period), and (ii) there shall exist no Default
or Unmatured Default.
6.14 Merger and Consolidation. The Borrower will not, nor will it permit
any Consolidated Subsidiary to, merge or consolidate with or into or enter into
any analogous
<PAGE>
reorganization or transaction with any other Person, or sell all or
substantially all of the assets of the Borrower and its Consolidated
Subsidiaries taken as a whole, except:
(a) Any Consolidated Subsidiary or other corporation may merge or
consolidate with the Borrower, provided that, after giving effect to any
such merger or consolidation, (i) the Borrower shall be the continuing or
surviving corporation and (ii) no Default or Unmatured Default shall
exist;
(b) Any Wholly-Owned Subsidiary may merge with any other Wholly-Owned
Subsidiary;
(c) The Borrower and any Consolidated Subsidiary may transfer its
assets to the Borrower or any Wholly-Owned Subsidiary;
(d) Any Consolidated Subsidiary other than a Significant Subsidiary
may be liquidated or dissolved; and
(e) Any other corporation may merge or consolidate with any
Consolidated Subsidiary, provided that, after giving effect to any such
merger or consolidation, (i) the continuing or surviving corporation shall
be a Consolidated Subsidiary, (ii) no Default or Unmatured Default shall
exist, and (iii) the Borrower owns, directly or indirectly, 100% of such
Consolidated Subsidiary; provided, further, that the requirements of
clauses (i) and (iii) will not apply to a merger or consolidation of any
Consolidated Subsidiary in connection with a transaction permitted under
Section 6.15(c).
6.15 Sales of Assets. The Borrower will not, nor will it permit any
Consolidated Subsidiary to, sell, transfer, convey (including, without
limitation, any sale, transfer or conveyance related to a sale and leaseback
transaction but excluding sales of inventory in the ordinary course of
business) or lease (or enter into any commitment to sell transfer, convey or
lease) all or any part of its assets (other than Unrestricted Margin Stock)
(whether in one or a series of transactions) except:
(a) Leases by the Borrower and Consolidated Subsidiaries of Flight
Equipment to others provided that the aggregate book value of all Flight
Equipment leased to any other Person or Persons by the Borrower or any
such Consolidated Subsidiary shall not at any time exceed $500,000,000;
(b) Sales of property by the Borrower or a Consolidated Subsidiary
provided that at the time of any such sale or other disposition the
Borrower or Consolidated Subsidiary making such sale or disposition shall
have previously acquired or shall be simultaneously acquiring, in
contemplation of such sale or other disposition, substantially similar
property, or shall have previously entered into, or shall be
simultaneously entering into, a binding purchase agreement or purchase
agreements to acquire substantially similar property, which property is
acquired within three years of such sale or other disposition;
<PAGE>
(c) Sales of property (including any deemed sales of property
pursuant to Section 6.14(e)) determined by the Borrower to be surplus or
obsolete provided that the aggregate net book value of all such surplus or
obsolete property sold in any one fiscal year of the Borrower shall not
exceed 12.5% of Consolidated Adjusted Net Worth as of the last day of the
fiscal year of the Borrower immediately preceding the fiscal year of the
Borrower during which any such sale of assets shall take place; and
(d) Sales of any property in order concurrently or subsequently to
lease as lessee such or similar property, provided that (i) any such sale
takes place within 360 days after (A) in the case of personal property,
the date on which the Borrower or the applicable Consolidated Subsidiary
acquired such property, and (B) in the case of real property or fixtures,
the later of the date on which the Borrower or the applicable Consolidated
Subsidiary acquired such property or the date on which construction of all
improvements on such property was completed, and (ii) after giving effect
to the creation of the Capitalized Lease Obligations, if any, of the
Borrower or a Consolidated Subsidiary resulting from the lease of such
property by the Borrower or a Consolidated Subsidiary, the Borrower is in
compliance with Section 6.11;
(e) Sales of Property commonly known as "Federal Express Stage 3
Kits" in accordance with Federal Express Corporation's ordinary business
practices; and
(f) Transfers of assets permitted pursuant to Section 6.14.
Notwithstanding the foregoing in this Section 6.15, the Borrower and its
Consolidated Subsidiaries will be permitted to sell, transfer or otherwise
dispose of Unrestricted Margin Stock without regard to the foregoing
restrictions contained in this Section 6.15.
6.16 Loans, Advances and Investments. The Borrower will not, nor will it
permit any Consolidated Subsidiary to, make or suffer to exist any Investments,
or commitments therefor, except
(a) Marketable direct obligations of the United States of America, or
an instrumentality or agency thereof, having a remaining term to maturity
of not more than one year;
(b) Certificates of deposit or other obligations having a remaining
term to maturity of not more than one year and issued by a Lender, First
Tennessee Bank, N.A. or any other national or state bank or trust company
having capital, surplus and undivided profits in excess of $250,000,000 in
the aggregate;
(c) Other certificates of deposit having a remaining term to maturity
of not more than one year and issued by a bank or other financial
institution approved in accordance with the Borrower's corporate
investment guidelines and
<PAGE>
procedures provided that the aggregate outstanding principal amount of all
such certificates of deposit shall not at any one time exceed $1,000,000;
(d) Time deposits in any currency having a remaining term to maturity
of not more than one year and held by (i) foreign branches of American
banks, each such bank having capital, surplus and undivided profits in
excess of $250,000,000, or (ii) foreign banks, each such bank having total
capital, surplus and undivided profits in excess of $250,000,000 or its
equivalent in other currencies;
(e) For a period not in excess of one year, (i) marketable direct
obligations of the United States of America, or an instrumentality or
agency thereof, or (ii) instruments fully supported by marketable direct
obligations of the United States of America, or an instrumentality or
agency thereof, or (iii) open market commercial paper maturing within one
year after acquisition of such commercial paper, which is rated Al or
better by S&P or P1 or better by Moody's; in each case, purchased by the
Borrower or a Consolidated Subsidiary and actually delivered to or held by
a Dealer for the account of the Borrower or a Consolidated Subsidiary
under a repurchase agreement with the Dealer from which such obligations
or commercial paper was purchased obligating such Dealer to repurchase
such obligations or commercial paper within fourteen calendar days after
the date of such repurchase agreement;
(f) Open-market commercial paper maturing within one year after the
acquisition thereof, which is rated A1 or better by S&P or P1 or better by
Moody's;
(g) Investments in the capital stock of a Consolidated Subsidiary;
(h) Loans and advances by the Borrower to a Consolidated Subsidiary;
(i) Loans and advances by a Consolidated Subsidiary to any other
Consolidated Subsidiary or to the Borrower;
(j) Investments in any Person not otherwise permitted by this Section
6.16, which together with all other Investments at the time outstanding
under this Section 6.16(j), do not exceed 12.5% of Consolidated Adjusted
Net Worth provided that at least 66-2/3% of such Investments are
reasonably related to the same fields of enterprise as those in which the
Borrower and the Consolidated Subsidiaries are now engaged; and
(k) Restricted Investments made in compliance with Section 6.13.
In determining from time to time the amount of the Investments permitted by
this Section 6.16, loans and advances shall be taken at the principal amount
thereof then remaining unpaid at the time of such determination and other
Investments shall be taken at the original cost thereof, regardless of any
subsequent appreciation or depreciation therein.
<PAGE>
6.17 Contingent Liabilities. The Borrower will not, nor will it permit any
Consolidated Subsidiary to, assume, guarantee (including entering into any
contract which is, in economic effect, substantially equivalent to a guaranty),
endorse, contingently agree to purchase or to provide funds for the payment of,
agree to maintain the net worth or working capital or any other financial test
of, or otherwise become liable upon, any obligation of, any Person, except:
(a) the Guaranties;
(b) By the endorsement of negotiable instruments for deposit or
collection (or similar transactions) in the ordinary course of business;
(c) Guaranties of customs fees in the ordinary course of business;
and
(d) Any other Contingent Obligation which after having given effect
thereto would not cause the Borrower to fail to be in compliance with
Section 6.11.
In determining from time to time the amount of guaranties and contingent
liabilities permitted by this Section 6.17, guaranties and contingent
liabilities shall be taken at the principal amount then remaining unpaid at the
time of such determination on the indebtedness and obligations so guaranteed or
related to such contingent liabilities.
6.18 Liens. The Borrower will not, nor will it permit any Consolidated
Subsidiary to, create, incur, assume or suffer to exist, any Lien on, or enter
into, or make any commitment to enter into, any arrangement for the acquisition
of, any Property (other than Unrestricted Margin Stock) through conditional
sales, lease-purchase or other title retention agreement, except:
(a) Liens which may be hereafter created to secure payment of the
Obligations;
(b) Deposits or pledges, made in the ordinary course of business, to
secure payment of workers' compensation, unemployment insurance, old age
pensions or other social security obligations;
(c) Deposits or pledges, made in the ordinary course of business, to
secure performance of bids, tenders, contracts (other than contracts for
Indebtedness), leases, public or statutory obligations, surety bonds, or
other deposits or pledges for purposes of like general nature made in the
ordinary course of business;
(d) Deposits or pledges for the purpose of securing an appeal, stay
or discharge in the course of legal proceedings, or Liens for judgments or
awards which were not incurred in connection with Indebtedness or the
obtaining of advances or credits, provided such deposits, pledges and
Liens do not, in the aggregate for the Borrower and the Consolidated
Subsidiaries, materially detract from the value of their assets or
properties or materially impair the use thereof in the ordinary course of
business and such appeal, judgment or award, as the case
<PAGE>
may be, is being diligently contested or litigated in good faith by
appropriate proceedings being diligently conducted, and provided further
there has been set aside on the books of the Borrower or the Consolidated
Subsidiaries, as the case may be, reserves in accordance with GAAP with
respect thereto, which reserves shall be maintained until the related
liabilities are paid or otherwise discharged, and provided further
execution is not levied upon any such judgment or award;
(e) Liens for taxes, fees, assessments and governmental charges not
delinquent or which are being contested in good faith by appropriate
proceedings being diligently conducted, provided there has been set aside
on the books of the Borrower or the Consolidated Subsidiaries, as the case
may be, adequate reserves in accordance with GAAP with respect thereto,
which reserves shall be maintained until the related liabilities are paid
or otherwise discharged, and provided further, execution is not levied
upon any such Lien;
(f) Mechanics', carriers', workers', repairmen's or other like Liens
arising in the ordinary course of business securing obligations which are
not overdue for a period of more than 90 calendar days, or which are being
contested in good faith by appropriate proceedings being diligently
conducted provided there has been set aside on the books of the Borrower
and the Consolidated Subsidiaries, as the case may be, adequate reserves
in accordance with GAAP with respect thereto, which reserves shall be
maintained until the related liabilities are paid or otherwise discharged,
and provided further, execution is not levied upon any such Lien;
(g) Lessors' interests under Capitalized Leases;
(h) Liens on property acquired or constructed with the proceeds of
any tax-exempt airport bond financing to secure such financing;
(i) Liens securing Indebtedness of a Consolidated Subsidiary to the
Borrower;
(j) Liens existing on the property of a corporation or other business
entity immediately prior to its being consolidated with or merged into the
Borrower or a Consolidated Subsidiary or its becoming a Consolidated
Subsidiary, or Liens existing on any property acquired by the Borrower or
a Consolidated Subsidiary at the time such is so acquired (whether or not
the Indebtedness secured thereby shall have been assumed), provided that
(i) no such Lien was created or assumed in contemplation of such
consolidation or merger or such entity's becoming a Consolidated
Subsidiary or such acquisition of property and (ii) each such Lien shall
only cover the acquired property and, if required by the terms of the
instrument originally creating such Lien, property which is an improvement
to or is acquired for specific use in connection with such acquired
property;
<PAGE>
(k) Liens on Flight Equipment acquired on or after the date of this
Agreement which (i) secure the payment of all or any part of the purchase
price of such Flight Equipment or improvements thereon, (ii) are limited
to the Flight Equipment so acquired and improvements thereon, and (iii)
attach to such Flight Equipment within one year after the acquisition or
improvement of such Flight Equipment; and
(l) Liens not otherwise permitted by Sections 6.18(a) through (k)
provided that at all times the sum of (i) the aggregate principal amount
of all outstanding Long Term Debt of the Consolidated Subsidiaries
(excluding the Current Maturities of any such Long Term Debt and any Long
Term Debt of a Consolidated Subsidiary owing to the Borrower) which is
unsecured, plus (ii) the aggregate principal amount of all outstanding
Long Term Debt of the Borrower or any Consolidated Subsidiary (excluding
the Current Maturities of any such Long Term Debt and any Long Term Debt
of a Consolidated Subsidiary owing to the Borrower) which is secured as
permitted by this Section 6.18(l), does not exceed 8% of Consolidated
Adjusted Total Assets.
6.19 Guaranties. (a) Within thirty (30) days after acquiring or
establishing any Subsidiary that constitutes a Significant Subsidiary ((x)
other than Federal Express Canada Ltd. or FedEx Global Logistics, Inc. and (y)
so long as (i) the Borrower is and remains in compliance with the requirements
of Section 6.19(b) and (ii) such Significant Subsidiary is not a guarantor
under the Existing Credit Agreement, any other Significant Subsidiary) upon its
acquisition or establishment or the consummation of any transactions
contemplated at the time of its establishment, the Borrower shall cause such
Significant Subsidiary to execute the Guaranty pursuant to an Addendum thereto
in the form of Annex I to the Guaranty, and to deliver documentation similar to
that described in Section 4.1(a)(iii), (iv), (v) and (vii) relating to the
authorization for, execution and delivery of, and validity of such Significant
Subsidiary's obligations as a Guarantor, such documentation to be in form and
substance reasonably satisfactory to the Administrative Agent.
(b) If at any time the Guarantors do not consist of Subsidiaries of the
Borrower which, in the aggregate, had revenues (determined in accordance with
GAAP) for the immediately preceding fiscal year of the Borrower in excess of
90% of the consolidated revenues (determined in accordance with GAAP) of the
Borrower and the Consolidated Subsidiaries for such immediately preceding
fiscal year, then the Borrower shall promptly cause one or more additional
Subsidiaries each to execute the Guaranty pursuant to an Addendum thereto in
the form of Annex I to the Guaranty, and to deliver documentation similar to
that described in Section 4.1(a)(iii), (iv), (v) and (vii) relating to the
authorization for, execution and delivery of, and validity of such Subsidiary's
obligations as a Guarantor, such documentation to be in form and substance
reasonably satisfactory to the Administrative Agent, so that the aggregate
consolidated revenues (determined in accordance with GAAP) of the Guarantors
for such fiscal year equal or exceed 90% of the consolidated revenues
(determined in accordance with GAAP) of the Borrower and the Consolidated
Subsidiaries for such fiscal year.
6.20 Negative Covenants in Subsidiary Agreements. The Borrower will not
permit any of its Subsidiaries to enter into, after the date hereof, any
agreement, instrument or
<PAGE>
indenture that, directly or indirectly, contains negative covenants restricting
any of the following (or otherwise prohibits or restricts, or has the effect of
prohibiting or restricting, any of the following):
(i) the incurrence or payment of Indebtedness owed to the Borrower or any
other Subsidiary of the Borrower;
(ii) the granting of Liens;
(iii) the declaration or payment of dividends; and
(iv) the making of loans, advances or other Investments to or in the
Borrower or any other Subsidiary of the Borrower.
6.21 Sales of Unrestricted Margin Stock. The Borrower shall not, and shall
not permit any Subsidiary to, (a) sell or otherwise dispose of any Capital
Stock constituting Unrestricted Margin Stock other than in exchange for cash or
cash equivalents or (b) fail to maintain the proceeds of any such sale or other
disposition as cash, cash equivalents or short-term investments; provided that
(i) to the extent that the Borrower shall elect to reduce the Aggregate
Commitments pursuant to Section 2.5(c) at any time after any such sale or other
disposition, the requirements of clause (b) above shall cease to apply to the
portion of such proceeds as shall be equal to the aggregate amount of any such
reductions and (ii) this Section shall not apply to sales or other dispositions
of Unrestricted Margin Stock pursuant to Section 6.14(c).
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall constitute
a Default:
7.1 Breach of Representation or Warranty. Any representation or warranty
made or deemed made by or on behalf of the Borrower or any of its Subsidiaries
to the Lenders or the Administrative Agent under or in connection with this
Agreement, any Loan or any certificate or information delivered in connection
with this Agreement or any other Loan Document shall be materially false on the
date as of which made or deemed made.
7.2 Failure to Pay. Nonpayment of principal of any Loan when due, or
nonpayment of interest on any Loan or of any Facility Fee or other obligations
under any of the Loan Documents within five days after the same becomes due.
7.3 Breach of Certain Covenants. The breach by the Borrower of any of the
terms or provisions of Section 6.2, 6.3, 6.5, 6.11, 6.12, 6.13, 6.14, 6.15,
6.16, 6.17, 6.18, or 6.21.
7.4 Breach of Other Covenants. The breach by the Borrower (other than a
breach which constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the
terms or
<PAGE>
provisions of this Agreement which is not remedied within five days after
written notice from the Administrative Agent or any Lender.
7.5 Cross-Default. Failure of the Borrower or any Consolidated Subsidiary
to pay when due or within any applicable grace period any portion of either any
single obligation constituting Indebtedness in excess of $20,000,000 (or the
equivalent thereof in any other currency) or Indebtedness in an aggregate
principal amount in excess of $60,000,000 (or the equivalent thereof in any
other currency); or any default or other event shall occur under or with
respect to either any agreement under which any single obligation constituting
Indebtedness in excess of $20,000,000 (or the equivalent thereof in any other
currency) was created or is governed, or any agreements under which
Indebtedness in an aggregate principal amount in excess of $60,000,000 (or the
equivalent thereof in any other currency) was created or is governed, the
effect of which, in either case, is to cause, or to permit the holder or
holders of such Indebtedness to cause, such Indebtedness to become due prior to
its stated maturity; or either any single obligation constituting Indebtedness
in excess of $20,000,000 (or the equivalent thereof in any other currency) or
Indebtedness in an aggregate principal amount in excess of $60,000,000 (or the
equivalent thereof in any other currency) shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
payment), prior to the stated maturity thereof.
7.6 Voluntary Bankruptcy, Etc. The Borrower or any Consolidated Subsidiary
shall (i) fail to pay, or admit in writing its inability to pay, its debts
generally as they become due, (ii) have an order for relief entered with
respect to it under the Federal bankruptcy laws as now or hereafter in effect,
(iii) make an assignment for the benefit of creditors, (iv) apply for, seek,
consent to, or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any Substantial Portion of
its Property, (v) institute any proceeding seeking an order for relief under
the Federal bankruptcy laws as now or hereafter in effect or seeking to
adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it or
its debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (vi) take any
corporate action to authorize or effect any of the foregoing actions set forth
in this Section 7.6 or (vii) fail to contest in good faith any appointment or
proceeding described in Section 7.7.
7.7 Involuntary Bankruptcy, Etc. Without the application, approval or
consent of the Borrower or any Consolidated Subsidiary, a receiver, trustee,
examiner, liquidator or similar official shall be appointed for the Borrower or
any Consolidated Subsidiary or any Substantial Portion of its Property, or a
proceeding described in Section 7.6(v) shall be instituted against the Borrower
or any Consolidated Subsidiary and such appointment continues undischarged or
such proceeding continues undismissed or unstayed for a period of 45
consecutive days.
7.8 Judgments. The Borrower or any Consolidated Subsidiary shall fail
within 45 days to pay, bond or otherwise discharge any judgment or order for
the payment of money in excess of $1,000,000, which is not stayed on appeal or
otherwise being appropriately contested in good faith.
<PAGE>
7.9 ERISA. The Unfunded Liabilities of all Single Employer Plans shall
exceed in the aggregate $80,000,000 or any Reportable Event shall occur in
connection with any Plan.
7.10 Seizure. An administrator, custodian or other representative, by or
pursuant to any legislative act, resolution or rule (other than the Federal
bankruptcy laws or any similar law, State or Federal, whether now or hereafter
existing) or any order or decree of any court or any governmental board or
agency (other than any order or decree issued pursuant to the Federal
bankruptcy laws or any similar law, State or Federal, whether now or hereafter
existing) shall take possession or control of all or such portions of the
property of any one or more of the Borrower and the Consolidated Subsidiaries
as would, in the sole opinion of the Required Lenders, materially interfere
with the operation of the business of the Borrower and the Consolidated
Subsidiaries, on a consolidated basis, and such possession or control shall
continue for 45 calendar days.
7.11 Environmental Matters. The Borrower or any of its Subsidiaries shall
be the subject of any proceeding or investigation pertaining to the release by
the Borrower or any of its Subsidiaries, or any other Person of any toxic or
hazardous waste or substance into the environment, or any violation of any
federal, state or local environmental, health or safety law or regulation,
which, in either case, could reasonably be expected to have a Material Adverse
Effect.
7.12 Invalidity, Etc of Loan Documents. Any provision of any Loan Document
shall at any time for any reason cease to be valid and binding and enforceable
against the Borrower or any Guarantor, or the validity, binding effect or
enforceability thereof against the Borrower or any Guarantor shall be contested
by any Person, or the Borrower or any Guarantor shall deny that it has any or
further liability or obligation thereunder, or any Loan Document shall be
terminated, invalidated or set aside, or be declared ineffective or inoperative
or in any way cease to give or provide to the Lenders and the Administrative
Agent the benefits purported to be created thereby.
7.13 Change of Control. A Change of Control shall have occurred.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1 Acceleration. If any Default described in Section 7.6 or 7.7 occurs as
a result of any action taken by or against the Borrower, the obligations of the
Lenders to make Loans hereunder shall automatically terminate and the
Obligations shall immediately become due and payable without any election or
action on the part of the Administrative Agent or any Lender. If any other
Default occurs, the Required Lenders (or the Administrative Agent, with the
written consent of the Required Lenders) may terminate or suspend the
obligations of the Lenders to make Loans hereunder, or declare the Obligations
to be due and payable, or both, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which the Borrower hereby expressly waives.
<PAGE>
If, within 14 days after acceleration of the maturity of the Obligations
or termination of the obligations of the Lenders to make Loans hereunder as a
result of any Default (other than any Default as described in Section 7.6 or
7.7 with respect to the Borrower) and before any judgment or decree for the
payment of the Obligations due shall have been obtained or entered, the
Required Lenders (in their sole discretion) shall so direct, the Administrative
Agent shall, by notice to the Borrower, rescind and annul such acceleration
and/or termination, provided that the Borrower certifies to the Lenders to
their satisfaction that, upon giving effect to such rescission, no other
Indebtedness of the Borrower shall be accelerated by virtue of a cross-default
or cross-acceleration to Indebtedness under this Agreement.
8.2 Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Administrative Agent with the consent in writing of
the Required Lenders) and the Borrower may enter into agreements supplemental
hereto for the purpose of adding or modifying any provisions to the Loan
Documents or changing in any manner the rights of the Lenders or the Borrower
hereunder or waiving any Default hereunder, provided, however, that no such
supplemental agreement shall, without the consent of each Lender affected
thereby:
(i) Extend the maturity or the time of payment of any Loan or reduce the
principal amount thereof or reduce the rate or extend the time of
payment of interest thereon or fees hereunder.
(ii) Reduce the percentage specified in the definition of Required Lenders
or amend, modify or waive any provision requiring action by the
Required Lenders to require action by any other Person in lieu of the
Required Lenders.
(iii) Extend the Termination Date other than as provided in Section
2.2(b), or increase the amount of the Revolving Commitment of any
Lender hereunder, or permit the Borrower to assign its rights under
this Agreement.
(iv) Amend, modify, or waive Section 4.1, Section 4.2, this Section 8.2,
or Section 12.1.
(v) Release any Significant Subsidiary from any of its material
obligations under the Guaranty.
No amendment of any provision of this Agreement relating to the Administrative
Agent shall be effective without the written consent of the Administrative
Agent. The Administrative Agent may waive payment of the fee required under
Section 12.3.3 without obtaining the consent of any other party to this
Agreement.
8.3 Preservation of Rights. No delay or omission of the Lenders or the
Administrative Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of a Loan notwithstanding the existence of
a Default or the inability of the Borrower to satisfy the conditions precedent
to such Loan shall not constitute any waiver or acquiescence. Any single or
partial exercise of any such right shall not preclude other or further exercise
thereof or the
<PAGE>
exercise of any other right, and no waiver, amendment or other variation of the
terms, conditions or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by the Lenders required pursuant to Section 8.2, and
then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Administrative Agent and the Lenders until the
Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1 Survival of Representations. All representations and warranties of the
Borrower contained in this Agreement shall survive delivery of this Agreement
and the making of the Loans herein contemplated.
9.2 Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3 Taxes. Any taxes (excluding income taxes on the overall net income of
any Lender) or other similar assessments or charges payable or ruled payable by
any governmental authority, including withholding taxes, in respect of the Loan
Documents shall be paid by the Borrower, together with interest and penalties,
if any.
9.4 Headings. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
9.5 Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Borrower, the Administrative Agent and the Lenders and
supersede all prior agreements and understandings among the Borrower, the
Administrative Agent and the Lenders relating to the subject matter thereof.
9.6 Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other. The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender
from any of its obligations hereunder. This Agreement shall not be construed so
as to confer any right or benefit upon any Person other than the parties to
this Agreement and their respective successors and assigns.
9.7 Expenses; Indemnification. The Borrower shall reimburse the
Administrative Agent for any and all reasonable costs, internal charges and
out-of-pocket expenses (including attorneys' fees and time charges of attorneys
for the Administrative Agent, which attorneys may be employees of the
Administrative Agent) paid or incurred by the Administrative Agent in
connection with the preparation, negotiation, execution, delivery (subject to,
with respect to all the foregoing, the terms of that certain commitment letter
between the Administrative Agent and the Borrower dated November 10, 2000, as
it may be amended or
<PAGE>
supplemented from time to time), amendment, and modification, of the Loan
Documents. The Borrower also agrees to reimburse the Administrative Agent and
the Lenders for any and all reasonable costs, internal charges and
out-of-pocket expenses (including attorneys' fees and time charges of attorneys
for the Administrative Agent and the Lenders, which attorneys may be employees
of the Administrative Agent or the Lenders) paid or incurred by the
Administrative Agent or any Lender in connection with the collection and
enforcement of the Loan Documents and the protection of rights thereunder. The
Borrower further agrees to indemnify the Administrative Agent and each Lender,
its directors, officers and employees against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not the
Administrative Agent or any Lender is a party thereto) which any of them may
pay or incur arising out of or relating to this Agreement, the other Loan
Documents, the transactions contemplated hereby or the direct or indirect
application or proposed application of the proceeds of any Loan hereunder. The
obligations of the Borrower under this Section shall survive the termination of
this Agreement, the cancellation of the Revolving Commitments, and the payment
of all outstanding Obligations.
9.8 Numbers of Documents. All statements, notices, closing documents, and
requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to
each of the Lenders.
9.9 Severability of Provisions. Any provision in any Loan Document that is
held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as
to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
9.10 Nonliability of Lenders. The relationship between the Borrower and
the Lenders and the Administrative Agent shall be solely that of borrower and
lender. Neither the Administrative Agent nor any Lender shall have any
fiduciary responsibilities to the Borrower. Neither the Administrative Agent
nor any Lender undertakes any responsibility to the Borrower to review or
inform the Borrower of any matter in connection with any phase of the
Borrower's business or operations.
9.11 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE
TO NATIONAL BANKS.
9.12 Consent to Jurisdiction; Waivers. The Borrower hereby irrevocably
submits to the non-exclusive jurisdiction of the courts of the State of New
York, the courts of the United States for the Southern District of New York,
and appellate courts from any thereof in any action or proceeding arising out
of or relating to any Loan Document, and the Borrower hereby irrevocably agrees
that all claims in respect of such action or proceeding may be heard and
determined in any such court and irrevocably waives any objection it may now or
hereafter have as to the venue of any such suit, action or proceeding brought
in such a court or that such court is an inconvenient forum. Nothing herein
shall limit the right of the Administrative Agent
<PAGE>
or any Lender to bring proceedings against the Borrower in the courts of any
other jurisdiction. Any judicial proceeding by the Borrower against the
Administrative Agent or any Lender or any Affiliate of the Administrative Agent
or any Lender involving, directly or indirectly, any matter in any way arising
out of, related to, or connected with any Loan Document shall be brought only
in a court in New York City. The Borrower hereby agrees that service of process
in any such action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to the Borrower at its address set forth below its signature
hereto or at such other address of which the Administrative Agent shall have
been notified pursuant thereto, and the Borrower further agrees that nothing
herein shall affect the right to effect service of process in any other manner
permitted by law. The Borrower hereby waives, to the maximum extent not
prohibited by law, any right it may have to claim or recover in any legal
action or proceeding referred to in this Section any special, exemplary,
punitive or consequential damages.
9.13 WAIVER OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
9.14 Confidentiality. The Administrative Agent and each Lender agrees to
hold any confidential information which it may receive from the Borrower
pursuant to or in connection with this Agreement or in the course of an
inspection pursuant to Section 6.10 in confidence, except for disclosure (i) to
other Lenders and their respective Affiliates, each of whom shall be made aware
of the terms of this Section 9.14 and shall agree to abide thereby, (ii) to
legal counsel, accountants, and other professional advisors to the
Administrative Agent or that Lender, (iii) to regulatory officials (provided
that, to the extent practicable and permissible, the Administrative Agent and
each Lender shall give the Borrower prior notice of such disclosure), (iv) as
required by law, regulation, or legal process, (v) in connection with any legal
proceeding to which the Administrative Agent or that Lender is a party, and
(vi) permitted by Section 12.4; provided that, in connection with any
disclosure permitted under clause (iv) or (v) hereinabove, the Administrative
Agent or such Lender, as appropriate, shall give the Borrower prior notice of
such disclosure unless such notice is prohibited by law, regulation, or
process.
9.15 Accounting. Except as provided to the contrary herein, all accounting
terms used herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with GAAP.
9.16 Release of Guarantors. Upon the consummation of any liquidation,
dissolution, merger, consolidation, sale or other transfer of a Guarantor other
than Federal Express Corporation (collectively, a "Transfer"), and provided no
Default or Unmatured Default has occurred and is continuing or would occur as a
result of such Transfer, such Guarantor shall automatically be released from
all of its obligations under the Guaranty, and, if the Borrower so requests,
the Lenders shall promptly execute an instrument, in form and substance
reasonably satisfactory to the Borrower and the Administrative Agent,
evidencing such release.
<PAGE>
9.17 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
9.18 Acknowledgments. The Borrower hereby acknowledges that:
(a) It has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) Neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between the Administrative Agent and Lenders, on one hand,
and the Borrower, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and
(c) No joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among the Borrower and the Lenders.
ARTICLE X
THE AGENTS
10.1 Appointment. Each Lender hereby irrevocably designates and appoints
the Administrative Agent as the agent of such Lender under this Agreement and
the other Loan Documents, and each such Lender irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
10.2 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.
<PAGE>
10.3 Exculpatory Provisions. Neither any Agent nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall
be (i) liable for any action lawfully taken or omitted to be taken by it or
such Person under or in connection with this Agreement or any other Loan
Document (except to the extent that any of the foregoing are found by a final
and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Agents under or in connection with, this Agreement or
any other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Agents shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
10.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any instrument,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including counsel to the Borrower), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent may deem and
treat the payee of any promissory note as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Administrative Agent. The Administrative Agent shall
be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders (or, if so specified by this Agreement,
all Lenders) as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
The Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders (or, if so specified by this
Agreement, all Lenders), and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Lenders and all future
holders of the Loans.
10.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default unless the
Administrative Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default and stating that such
notice is a "notice of default". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to
such Default as shall be reasonably directed by the Required Lenders (or, if so
specified by this Agreement, all Lenders); provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking
<PAGE>
such action, with respect to such Default as it shall deem advisable in the
best interests of the Lenders.
10.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or Affiliates have made any
representations or warranties to it and that no act by any Agent hereafter
taken, including any review of the affairs of a Loan Party or any Affiliate of
a Loan Party, shall be deemed to constitute any representation or warranty by
any Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and
their Affiliates and made its own decision to make its Loans hereunder and
enter into this Agreement. Each Lender also represents that it has not relied
on the Unrestricted Margin Stock in its credit analysis or its decision to
enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their Affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders
by the Administrative Agent hereunder, the Administrative Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of any Loan Party or any Affiliate
of a Loan Party that may come into the possession of the Administrative Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
10.7 Indemnification. The Lenders agree to indemnify each Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably in proportion to
their respective Revolving Commitments in effect on the date on which
indemnification is sought under this Section (or, if indemnification is sought
after the date upon which the Revolving Commitments shall have terminated and
the Loans shall have been paid in full, ratably in accordance with such
Revolving Commitments immediately prior to such date), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever that may at any
time (whether before or after the payment of the Loans) be imposed on, incurred
by or asserted against such Agent in any way relating to or arising out of, the
Revolving Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements that are found by a final and nonappealable decision of a court
of competent jurisdiction to have resulted from such Agent's gross negligence
or willful misconduct. The agreements in this Section shall survive the payment
of the Loans and all other amounts payable hereunder.
<PAGE>
10.8 Agent in Its Individual Capacity. Each Agent and its Affiliates may
make loans to, accept deposits from and generally engage in any kind of
business with any Loan Party as though such Agent were not an Agent. With
respect to its Loans made or renewed by it, each Agent shall have the same
rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include each Agent in its individual capacity.
10.9 Successor Administrative Agent. The Administrative Agent may resign
as Administrative Agent upon 10 days' notice to the Lenders and the Borrower.
If the Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders, which successor agent
shall (unless a Default under Section 7.1, Section 7.6 or Section 7.7 with
respect to the Borrower shall have occurred and be continuing) be subject to
approval by the Borrower (which approval shall not be unreasonably withheld or
delayed), whereupon such successor agent shall succeed to the rights, powers
and duties of the Administrative Agent, and the term "Administrative Agent"
shall mean such successor agent effective upon such appointment and approval,
and the former Administrative Agent's rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Loans. If no successor agent has accepted
appointment as Administrative Agent by the date that is 10 days following a
retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall become effective 30 days following
such notice of resignation, and the Lenders shall assume and perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above. After any
retiring Administrative Agent's resignation as Administrative Agent, the
provisions of this Section 9 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent under this
Agreement and the other Loan Documents.
10.10 Documentation Agent and Syndication Agent. Neither the Documentation
Agent nor the Syndication Agent shall have any duties or responsibilities
hereunder in its capacity as such.
ARTICLE XI
SETOFF: RATABLE PAYMENTS
11.1 Setoff. In addition to, and without limitation of, any rights of the
Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default or Unmatured Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or
not collected or available) and any other Indebtedness at any time held or
owing by any Lender to or for the credit or account of the Borrower may be
offset and applied toward the payment of the Obligations owing to such Lender,
whether or not the Obligations, or any part hereof shall then be due.
<PAGE>
11.2 Ratable Payments. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Loans (other than payments received pursuant to
Section 3.1, 3.2 or 3.4) in a greater proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion
of the Loans held by the other Lenders so that after such purchase each Lender
will hold its ratable proportion of Loans. If any Lender, whether in connection
with setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such
action necessary such that all Lenders share in the benefits of such collateral
ratably in proportion to their Loans. In case any such payment is disturbed by
legal process, or otherwise, appropriate further adjustments shall be made to
accomplish the intent of this Section.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and
the Lenders and their respective successors and assigns, except that (i) the
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents and (ii) any assignment by any Lender must be made in compliance
with Section 12.3 (it being understood that the requirements of Section 12.3
shall not apply to the successor of any Lender as a result of merger,
consolidation, amalgamation or similar restructuring). Notwithstanding clause
(ii) of this Section, any Lender may at any time, without the consent of the
Borrower or the Administrative Agent, assign all or any portion of its rights
under this Agreement to a Federal Reserve Bank; provided, however, that no such
assignment shall release the transferor Lender from its obligations hereunder.
The Administrative Agent may treat each Lender as the owner of the Loans made
by such Lender for all purposes hereof unless and until such Lender complies
with Section 12.3 in the case of an assignment thereof or, in the case of any
other transfer, a written notice of the transfer is filed with the
Administrative Agent. Any assignee or transferee of a Loan agrees by acceptance
thereof to be bound by all the terms and provisions of the Loan Documents. Any
request, authority or consent of any Person, who at the time of making such
request or giving such authority or consent is the owner of any Loan, shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Loan.
12.2 Participations.
12.2.1 Permitted Participants; Effect. Any Lender other than any
Conduit Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or
other entities ("Participants") participating interests in any Loan owing
to such Lender, any note held by such Lender evidencing any such Loan, any
Revolving Commitment of such Lender or any other interest of such Lender
under the Loan Documents. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations under
the Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the
<PAGE>
performance of such obligations, such Lender shall remain the owner of all
Loans made by it for all purposes under the Loan Documents, all amounts
payable by the Borrower under this Agreement shall be determined as if
such Lender had not sold such participating interests, and the Borrower
and the Administrative Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations
under the Loan Documents.
12.2.2 Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than
any amendment, modification or waiver with respect to any Loan or
Revolving Commitment in which such Participant has an interest which
requires the approval of all of the Lenders pursuant to Section 8.2.
12.2.3 Benefit of Setoff. Upon selling any participating interest to
a Participant pursuant to Section 12.2.1, each Lender will have the option
to, but shall not be required to, give the Borrower and the Administrative
Agent written notice of the fact that it has made such a sale (without
being required to specify the amount or any other information concerning
the participating interest sold) and the name of the purchasing
Participant (each Participant named in such a notice is hereinafter
referred to as an "Acknowledged Participant"). The Borrower agrees that
each Acknowledged Participant shall be deemed to have the right of setoff
provided in Section 11.1 as of the date of the Borrower's receipt of the
aforementioned notice in respect of its participating interest in amounts
owing under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the
Loan Documents, provided that each Lender shall retain the right of setoff
provided in Section 11.1 with respect to the amount of participating
interests sold to each Acknowledged Participant. The Lenders agree to
share with each Acknowledged Participant, and each Acknowledged
Participant, by exercising the right of setoff provided in Section 11.1,
agrees to share with each Lender, any amount received pursuant to the
exercise of its right of setoff such amounts to be shared in accordance
with Section 11.2 as if each Acknowledged Participant were a Lender.
12.3 Assignments.
12.3.1 Permitted Assignments. Any Lender other than any Conduit
Lender may, in accordance with applicable law, at any time make
assignments to additional banks or other entities (each a "Purchaser") of
all or any portion of its rights and obligations under the Loan Documents;
provided that, unless otherwise agreed by the Borrower and the
Administrative Agent (which agreement shall not be unreasonably withheld),
(i) no such assignment shall be to a Purchaser other than any Lender or
any Affiliate of a Lender, and (ii) no such assignment to a Purchaser
(other than any Lender or an Affiliate of a Lender) shall be in an
aggregate principal amount of less than $5,000,000, and, after giving
effect to such assignment, such assigning Lender shall have Revolving
Commitments and Loans in an aggregate amount of at least $5,000,000, in
each case described in
<PAGE>
this clause (ii) except in the case of an assignment of all of a Lender's
interests under this Agreement. For purposes of the proviso contained in
the preceding sentence, the amount described therein shall be aggregated
in respect of each Lender and its Affiliates, if any. Any assignment under
this Section 12.3 shall be substantially in the form of Exhibit "C" hereto
or in such other form as may be agreed to by the parties thereto. If an
acceleration of the Obligations has occurred and is continuing, the
consent of the Borrower shall not be required prior to an assignment
becoming effective. Notwithstanding anything in this Article XII to the
contrary, nothing in this Agreement shall prohibit or limit the right of
any Lender to make assignments (and no consent shall be required in
connection with such assignments) of all or any part of its interests
under the Loan Documents (i) to a Purchaser which is a Lender or an
Affiliate thereof and (ii) after the occurrence and during the continuance
of an acceleration of the Obligations, to any Purchaser. Notwithstanding
the foregoing, any Conduit Lender may assign at any time to its
designating Lender hereunder without the consent of the Borrower or the
Administrative Agent any or all of the Loans it may have funded hereunder
and pursuant to its designation agreement and without regard to the
limitations set forth in the first sentence of this Section 12.3.1.
12.3.2 Required Assignments. The Borrower shall have the right, by
giving at least 15 Business Days' prior written notice to the affected
Lender and the Administrative Agent, at any time when no Default or
Unmatured Default has occurred and is continuing, to require any Lender to
assign all of its rights and obligations under the Loan Documents to a
Purchaser approved by the Borrower. Such assignment shall be substantially
in the form of Exhibit "C" hereto or in such other form as may be agreed
to by the parties thereto but shall be on terms and conditions reasonably
satisfactory to the affected Lender. If the affected Lender is a Reference
Lender, the Administrative Agent, with the consent of the Borrower (which
shall not be unreasonably withheld), shall appoint a new Reference Lender
from among the Lenders. The Borrower shall remain liable to the affected
Lender for any indemnification provided under Section 3.4 with respect to
Loans of such Lender outstanding on the effective date of an assignment
required under this Section 12.3.2, as well as for all other Obligations
owed to such Lender under this Agreement as of such effective date.
12.3.3 Effect; Effective Date. Upon (i) delivery to the
Administrative Agent of a duly completed Assignment and Acceptance
executed by a transferor Lender and a Purchaser, together with any
consents required by Section 12.3.1, and (ii) payment of a $3,500 fee to
the Administrative Agent for processing such assignment, such assignment
shall become effective on the effective date, specified in Schedule 1 to
such Assignment and Acceptance. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender under this
Agreement and any other Loan Document executed by the Lenders and shall
have all the rights and obligations of a Lender under the Loan Documents,
to the same extent as if it were an original party hereto, and no further
consent or action by the Borrower, the Lenders or the Administrative Agent
shall be required to release the transferor Lender with respect to the
<PAGE>
Revolving Commitments and Loans assigned to such Purchaser and such Lender
shall be immediately so released. Upon the consummation of any assignment
to a Purchaser pursuant to this Section 12.3.3, the transferor Lender, the
Administrative Agent and the Borrower shall make appropriate arrangements
so that, to the extent notes have been issued to evidence any of the
transferred Loans, replacement notes are issued to such transferor Lender
and, if so requested by such Purchaser, new notes or, as appropriate,
replacement notes, are issued to such Purchaser, in each case in principal
amounts reflecting their respective Revolving Commitments, as adjusted
pursuant to such assignment.
12.4 Dissemination of Information. The Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and
any prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries; provided
that each Transferee and prospective Transferee agrees to be bound by Section
9.14 of this Agreement.
12.5 Tax Treatment. If any interest in any Loan Document is transferred to
any Transferee which is organized under the laws of any jurisdiction other than
the United States or any State thereof the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply
with the provisions of Section 2.18.
12.6 Conduit Lenders. Each of the Borrower, each Lender and the
Administrative Agent hereby confirms that it will not institute against a
Conduit Lender or join any other Person in instituting against a Conduit Lender
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding under any federal or state bankruptcy or similar law, for one year
and one day after the payment in full of the latest maturing commercial paper
note issued by such Conduit Lender; provided, however, that each Lender
designating any Conduit Lender hereby agrees to indemnify, save and hold
harmless each other party hereto for any loss, cost, damage or expense arising
out of its inability to institute such a proceeding against such Conduit Lender
during such period of forbearance.
ARTICLE XIII
NOTICES
13.1 Giving Notice. Except as otherwise permitted by Section 2.13 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other address as
may be designated by such party in a notice to the other parties. Any notice,
if mailed and properly addressed with postage prepaid or if delivered to the
Borrower's delivery service and properly addressed, shall be deemed given when
received; any notice, if transmitted by telex or facsimile, shill be deemed
given when transmitted (answerback confirmed in the case of telexes).
<PAGE>
13.2 Change of Address. The Borrower, the Administrative Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto
may execute this Agreement by signing any such counterpart. This Agreement
shall be effective upon receipt by0 the Administrative Agent of original or
faxed copies of such counterparts executed by the Borrower, the Administrative
Agent and the Lenders.
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Lenders and the Administrative Agent
have executed this Agreement as of the date first above written.
FEDEX CORPORATION
By: /s/ Charles M. Buchas, Jr.
----------------------------
Charles M. Buchas, Jr.
Corporate Vice President and Treasurer
FedEx Corporation
942 S. Shady Grove Road
Memphis, Tennessee 38120
Attn: Treasurer
Telephone: 901-818-7040
Telecopy: 901-818-7121
Copy all notices and credit matters to:
FedEx Corporation
942 S. Shady Grove Road
Memphis, Tennessee 38120
Attn: Kenneth R. Masterson
Telephone: 901-818-7588
Telecopy: 901-818-7590
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Lender
By: /s/ Matthew H. Massie
-------------------------
Name: Matthew H. Massie
Title: Managing Director
Revolving Commitment: $60,000,000
<PAGE>
BANK OF AMERICA, N.A.,
as Documentation Agent and as a Lender
By: /s/ Sharon Burks Heros
--------------------------
Name: Sharon Burks Heros
Title: Vice President
Revolving Commitment: $60,000,000
<PAGE>
COMMERZBANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES,
as Syndication Agent and as a Lender
By: /s/ Harry P. Vergey
-----------------------
Name: Harry P. Vergey
Title: Senior Vice President & Manager
By: /s/ Brian J. Campbell
-------------------------
Name: Brian J. Campbell
Title: Vice President
Revolving Commitment: $60,000,000
<PAGE>
BANK ONE, N.A.,
as a Lender
By: /s/ Joanna W. Anderson
--------------------------
Name: Joanna W. Anderson
Title: Corporate Banking Officer
Revolving Commitment: $40,000,000
<PAGE>
BANK OF TOKYO-MITSUBISHI TRUST COMPANY,
as a Lender
By: /s/ Joseph P. Divoe
-----------------------
Name: Joseph P. Divoe
Title: Vice President
Revolving Commitment: $40,000,000
<PAGE>
CITICORP USA, INC.,
as a Lender
By: /s/ Michael Boster
----------------------
Name: Michael Boster
Title: Vice President
Revolving Commitment: $40,000,000
<PAGE>
CREDIT SUISSE FIRST BOSTON,
as a Lender
By: /s/ Robert N. Finney
------------------------
Name: Robert N. Finney
Title: Managing Director
Revolving Commitment: $40,000,000
<PAGE>
MERRILL LYNCH BANK USA,
as a Lender
By: /s/ D. Kevin Imlay
----------------------
Name: D. Kevin Imlay
Title: Vice President,
Senior Lending Officer
Revolving Commitment: $40,000,000
<PAGE>
THE NORTHERN TRUST COMPANY,
as a Lender
By: /s/ Ashish S. Bhagwat
---------------------
Name: Ashish S. Bhagwat
Title: Second Vice President
Revolving Commitment: $40,000,000
<PAGE>
SUNTRUST BANK, INC.,
as a Lender
By: /s/ Renee D. Drake
----------------------
Name: Renee D. Drake
Title: Vice President
Revolving Commitment: $40,000,000
<PAGE>
UNION PLANTERS BANK, N.A.,
as a Lender
By: /s/ Tommy Faulkner
----------------------
Name: Tommy Faulkner
Title: Vice President
Revolving Commitment: $40,000,000
<PAGE>
THE BANK OF NEW YORK,
as a Lender
By: /s/ Steven Cavallizzo
-------------------------
Name: Steven Cavallizzo
Title: Vice President
Revolving Commitment: $20,000,000
<PAGE>
THE BANK OF NOVA SCOTIA,
as a Lender
By: /s/ M. D. Smith
-------------------
Name: M. D. Smith
Title: Agent
Revolving Commitment: $20,000,000
<PAGE>
DEUTSCHE VERKEHRSBANK AG,
as a Lender
By: /s/ Constance Laudenschlager
--------------------------------
Name: Constance Laudenschlager
Title: Senior Vice President
By: /s/ James M. Morton
-----------------------
Name: James M. Morton
Title: Assistant Vice President
Revolving Commitment: $15,000,000
<PAGE>
KBC BANK, N.V.,
as a Lender
By: /s/ Robert Snauffer
-----------------------
Name: Robert Snauffer
Title: First Vice President
Revolving Commitment: $20,000,000
<PAGE>
KEY BANK NATIONAL ASSOCIATION,
as a Lender
By: /s/ Mark A. LoSchiavo
-------------------------
Name: Mark A. LoSchiavo
Title: Senior Vice President
Revolving Commitment: $15,000,000
<PAGE>
KREDITANSTALT FUR WIEDERAUFBAU,
as a Lender
By: /s/ M. Nesbusch
-------------------
Name: M. Nesbusch
Title: Vice President
Revolving Commitment: $20,000,000
<PAGE>
MELLON BANK, N.A.,
as a Lender
By: /s/ Mark F. Johnston
-----------------------
Name: Mark F. Johnston
Title: Vice President
Revolving Commitment: $20,000,000
<PAGE>
THE SANWA BANK LIMITED,
acting through its New York Branch,
as a Lender
By: /s/ P. Bartlett Wu
----------------------
Name: P. Bartlett Wu
Title: Vice President
Revolving Commitment: $20,000,000
<PAGE>
THE SUMITOMO BANK LIMITED,
as a Lender
By: /s/ C. Michael Garrido
--------------------------
Name: C. Michael Garrido
Title: Senior Vice President
Revolving Commitment: $40,000,000
<PAGE>
WACHOVIA BANK, N.A.,
as a Lender
By: /s/ Karin E. Reel
---------------------
Name: Karin E. Reel
Title: Vice President
Revolving Commitment: $20,000,000
<PAGE>
THE FUJI BANK, LIMITED,
as a Lender
By: /s/ Yuji Tanaka
-------------------
Name: Yuji Tanaka
Title: Vice President & Manager
Revolving Commitment: $40,000,000
