AMENDMENT NO. 2 (TEMPORARY)
DATED AS OF DECEMBER 10, 1998
TO
CREDIT AGREEMENT
DATED AS OF JANUARY 15, 1998
THIS AMENDMENT NO. 2 (TEMPORARY) TO THE CREDIT AGREEMENT (the
"Amendment") is made as of December 10, 1998 by and among FDX Corporation, a
Delaware corporation (the "Borrower"), the Lenders and The First National Bank
of Chicago, in its capacity as agent ("Agent"). Defined terms used herein and
not otherwise defined herein shall have the meanings given to them in that
certain Credit Agreement dated as of January 15, 1998 by and among the Borrower,
the Lenders, First Chicago Capital Markets, Inc., as Arranger, ▇.▇. ▇▇▇▇▇▇
Securities Inc., as Co-Arranger and Syndication Agent, Chase Securities Inc., as
Co-Arranger and Documentation Agent, and the Agent (as amended by that certain
Amendment No. 1 dated as of the date hereof, the "Credit Agreement").
WITNESSETH
WHEREAS, the Borrower, the Lenders and the Agent are parties to the
Credit Agreement;
WHEREAS, the Borrower wishes to enter into a new Credit Agreement of
even date herewith among the Borrower, the lenders parties thereto and ▇▇▇▇▇▇
Guaranty Trust Company of New York, as Paying Agent, as the same may be amended,
modified or supplemented from time to time (the "New Credit Agreement"), to
finance, among other things, the working capital needs of the Borrower in the
event of an actual or threatened business interruption and to finance
contingency plans related thereto;
WHEREAS, the New Credit Agreement will terminate on the date (the "New
Facility Termination Date") when (i) all of the "Obligations" (as defined in the
New Credit Agreement) have been paid in full and (ii) all of the "Commitments"
(as defined in the New Credit Agreement) have been terminated in accordance with
the terms of the New Credit Agreement;
WHEREAS, the Borrower, the Lenders and the Agent have agreed to amend
the Credit Agreement on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Borrower, the Lenders and the Agent agree as follows:
1. TEMPORARY AMENDMENTS TO CREDIT AGREEMENT. Effective as of December
10, 1998 subject to the satisfaction of the conditions precedent set forth in
SECTION 2 below, and remaining in effect only until the New Facility Termination
Date, the Credit Agreement is hereby amended as follows:
1.1. Article I is amended as follows:
(a) The definitions of "Applicable Tranche A Margin" and
"Applicable Tranche B Margin" are amended in their entirety to read as
follows:
"`Applicable Tranche A 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 Tranche A Margin
I 1.900%
II 1.875%
III 1.850%
IV 1.800%
V 1.750%
Each change in the Applicable Tranche A 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."
"`Applicable Tranche B 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 Tranche B Margin
I 1.925%
II 1.900%
III 1.875%
IV 1.825%
V 1.775%
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Each change in the Applicable Tranche B 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."
(b) The definition of "Loan Documents" is amended in its
entirety to read as follows:
"Loan Documents" means this Agreement, the Guaranty and, after
the execution and delivery thereof and before the release
thereof in accordance with Section 6.26, the Security
Documents.
(c) The definition of "Material Adverse Effect" is amended in
its entirety to read as follows:
"Material Adverse Effect" means a material adverse effect
(excluding the effects of an actual or threatened business
interruption, including but not limited to self-help actions
or a strike, by members of the FedEx Pilots Association, or
contingency plans related thereto) 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 Agent or the Lenders thereunder.
(d) The following new definitions are added to Article I in
appropriate alphabetical order:
"Adjusted Net Income" means, on a consolidated basis, 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) or any extraordinary
or non-recurring loss or gain resulting from an actual or
threatened business interruption relating to any self-help
actions or strike, by members of the FedEx Pilots Association,
or contingency plans related thereto, provided that the
aggregate amount of the foregoing reductions to income (loss)
before income taxes shall not exceed $1,000,000,000.
"Aircraft Mortgage" means an Aircraft Mortgage and Security
Agreement to be executed by FedEx pursuant to Section 6.26,
substantially in the form approved pursuant to Section 6.27.
"Amendment No. 2" means that certain Amendment No. 2
(Temporary), dated as of December 10, 1998, by and among the
Borrower, the Lenders party thereto and the Agent.
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"Appraisal Report" means, with respect to any aircraft or
engine, an extended desktop appraisal of the Appraiser, which
does not include any on-site inspection of such aircraft or
engine or its maintenance records, but may include
consideration of maintenance status information that is
provided to the Appraiser from the client and/or aircraft
operator, and may include adjustments from the mid-time,
mid-life baseline to account for the actual maintenance status
of such aircraft or engine.
"Appraiser" means BK Associates, or another independent
appraiser selected by the Borrower with the prior written
consent of ▇▇▇▇▇▇.
"BK Associates" means BK Associates, Inc., an independent
aircraft appraisal firm.
"Caliber Collateral" is defined in Section 6.26.
"Caliber Operating Income" means, as of any date, the
operating income (or loss) of Caliber and its consolidated
Subsidiaries for the four most recent fiscal quarters then
ended, determined on a consolidated basis in accordance with
GAAP.
"Caliber Stock" means the capital stock of Caliber and the
Subsidiaries of Caliber other than the Designated Immaterial
Subsidiaries.
"Collateral" means all the Property and interests in Property
now owned or hereafter acquired by the Borrower and its
Subsidiaries upon which a Lien is granted or purported to be
granted under any of the Security Documents.
"Collateral Trust Agreement" means a Collateral Trust
Agreement to be executed pursuant to Section 6.26,
substantially in the form approved pursuant to Section 6.27.
"Designated Collateral" means (i) all now owned and hereafter
acquired or arising (a) capital stock of Caliber and its
domestic operating Subsidiaries (other than any Designated
Immaterial Subsidiaries), (b) accounts receivable of FedEx and
its Subsidiaries, (c) intercompany indebtedness owed to the
Borrower by its Subsidiaries and (d) motor vehicles (other
than passenger vehicles) and real estate of FedEx and its
Subsidiaries), except such motor vehicles and real estate
which are subject to Liens as of the date of Amendment No. 2
(such real estate to include, without limitation, the real
estate listed on SCHEDULE 1 attached to such Amendment No. 2),
and (ii) all aircraft (including airframes and engines) of
FedEx listed on SCHEDULE 1 attached to Amendment No. 2 hereto
and such additional unencumbered aircraft (including airframes
and engines) as the Borrower may designate in writing to the
Agent from time to time.
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"Designated Immaterial Subsidiaries" means, during each fiscal
year of the Borrower, any Subsidiary of Caliber which had
revenues (determined in accordance with GAAP) for the
immediately preceding fiscal year of Caliber not in excess of
2.0% of the consolidated revenues (determined in accordance
with GAAP) of Caliber and the consolidated Subsidiaries of
Caliber for such immediately preceding fiscal year.
"Eligible Receivables" means, at any date of determination
thereof, and with respect to any Person, the aggregate of all
Receivables of such Person at such date (net of maximum
discounts, allowances, retainage and any other amounts
deferred with respect thereto), which is not, except as
otherwise agreed by ▇▇▇▇▇▇ in its sole discretion exercised in
a commercially reasonable manner, of any of the following
types:
(i) (A) it arises out a sale the original terms
of which provide for payment more than 90
days after the date of the original invoice
issued by such Person in connection with
such sale or (B) it is more than 60 days
past due according to the original terms of
sale; or
(ii) it arises out of a sale not made in the
ordinary course of such Person's business or
a sale to a Person which is an Affiliate of
such Person or controlled by an Affiliate of
such Person; or
(iii) it fails to meet or violates any warranty,
representation or covenant contained in this
Agreement or any of the other Loan
Documents; or
(iv) the account debtor is also a supplier or
creditor of any Borrower or Guarantor and
the Receivable is subject to any contractual
right of setoff by the account debtor, and
such account debtor has not entered into an
agreement with ▇▇▇▇▇▇ with respect to the
waiver of rights of setoff, or the account
debtor has disputed liability with respect
to such Receivable, or made any claim with
respect to any other Receivable due from
such account debtor to such Person, in which
case the Receivable shall be ineligible to
the extent of such dispute, claim or setoff
(without duplication); or
(v) the account debtor has filed a petition for
bankruptcy or any other petition for relief
under the federal bankruptcy code or similar
statute, or made an assignment for the
benefit of creditors, or any petition or
other application for relief under the
federal bankruptcy code or any similar
statute has been filed against the account
debtor, or the account debtor has failed,
suspended its business operations, become
insolvent, suffered a receiver or a trustee
to be
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appointed for any of its assets or affairs,
or is generally failing to pay its debts as
they become due; or
(vi) the sale is to an account debtor which is
not located in the United States or Canada,
unless the account debtor's obligations with
respect to such sale are secured by a letter
of credit, guaranty or eligible bankers'
acceptance having terms, and from such
issuers and confirmation banks, as are
acceptable to ▇▇▇▇▇▇ in its sole discretion
exercised in a commercially reasonable
manner; or
(vii) the sale is on a ▇▇▇▇-and-hold, guaranteed
sale, sale-and-return, sale on approval,
consignment, or any other repurchase or
return basis; or
(viii) ▇▇▇▇▇▇ believes, in the exercise of its
reasonable credit judgment, that collection
of such Receivable is insecure or that such
Receivable may not be paid by reason of the
account debtor's financial inability to pay;
or
(ix) the account debtor is the United States of
America or any department, agency or
instrumentality thereof, unless such Person
assigns its rights to payment of such
Receivable to ▇▇▇▇▇▇ pursuant to the
Assignment of Claims Act of 1940, as amended
(31 U.S.C. Section 3727); or
(x) the goods, the delivery of which has given
rise to such Receivable, have not been
delivered to or, if delivered, have been
rejected by the account debtor or the
services, the performance of which has given
rise to such Receivable, have not been
performed by such Person and accepted by the
account debtor; or
(xi) the amount of the Receivable(s) owing to
FedEx and its Subsidiaries in the aggregate
by any account debtor exceeds (A) a
concentration limit of ten percent (10%) of
the aggregate amount of the Receivables of
FedEx and its Subsidiaries at such time, or
(B) such other credit or concentration limit
determined by ▇▇▇▇▇▇, in the exercise of its
reasonable credit judgment, at any time or
times hereafter, in which case such
Receivable(s) shall be ineligible to the
extent such Receivable(s) exceed(s) such
limits; or
(xii) to the extent such Receivable constitutes
Collateral, ▇▇▇▇▇▇, as collateral agent as
contemplated by Section 6.26, does not have
a senior, perfected security interest in
such Receivable or such
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Receivable is subject to a Lien which is not
permitted under Section 6.19; or
(xiii) the sale is to an account debtor with
respect to which fifty percent (50%) or more
of all Receivables owing by such account
debtor are ineligible for any reason (except
with respect to those categories of
ineligibility where ▇▇▇▇▇▇ determines in its
sole discretion exercised in a commercially
reasonably manner that this clause shall not
apply); or
(xiv) such Receivable arises out of or in
connection with a retainage or similar
arrangement (I.E., the payment of such
Receivable is subject to further
performance), in which case that portion of
such Receivable subject to such arrangement
shall be ineligible until such time as the
requisite performance has been completed.
"FDX Collateral" is defined in Section 6.26.
"FDX Rating" means the ▇▇▇▇▇'▇ FDX Rating or the S&P FDX
Rating.
"Investment Grade Rating" means an S&P FDX Rating greater than
or equal to BBB- or a ▇▇▇▇▇'▇ FDX Rating greater than or equal
to Baa3.
"▇▇▇▇▇'▇ FDX Rating" means, at any particular time, the rating
issued by ▇▇▇▇▇'▇ with respect to the Borrower's senior
unsecured non-credit enhanced long-term public debt.
"▇▇▇▇▇▇" means ▇▇▇▇▇▇ Guaranty Trust Company of New York, and
its successors.
"New Credit Agreement" means the Credit Agreement, dated as of
December 10, 1998, by and among the Borrower, the lenders
party thereto and ▇▇▇▇▇▇, as Paying Agent, as amended,
modified or supplemented from time to time.
"New Credit Agreement Documents" means the New Credit
Agreement and all instruments, agreements and contractual
obligations entered into in connection therewith, as amended,
modified or supplemented from time to time.
"Paying Agent" means the "Paying Agent" (as defined in the New
Credit Agreement.)
"Pledge Agreements" means the pledge agreements to be executed
by the Borrower and certain Subsidiaries pursuant to Section
6.26, substantially in the form approved pursuant to Section
6.27.
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"Real Estate Mortgages" means the mortgages and deeds of trust
to be executed by FedEx pursuant to Section 6.26,
substantially in the form approved pursuant to Section 6.27.
"Receivable" means all present and future "accounts", as such
term is defined in section 9-106 of the Uniform Commercial
Code as in effect in the State of Illinois, and shall include,
without limitation, all accounts receivable, related contract
rights and all forms of obligations whatsoever owing, whether
now existing or hereafter arising and wherever arising, and
whether or not they have been earned by performance; together
with all promissory notes, instruments and documents of title
representing any of the foregoing, all rights in merchandise
or goods (including returned goods) which any of the same may
represent, all right, title, security and guaranties with
respect to any of the foregoing, including any right of
stoppage in transit and all insurance proceeds and corporate
and other business records relating to any of the foregoing;
together with all proceeds thereof.
"S&P FDX Rating" means, at any particular time, the rating
issued by S&P with respect to the Borrower's senior unsecured
non-credit enhanced long-term public debt.
"Security Agreements" means the security agreements to be
executed pursuant to Section 6.26, substantially in the form
approved pursuant to Section 6.27.
"Security Documents" means the Collateral Trust Agreement,
Pledge Agreements, the Aircraft Mortgage, the Real Estate
Mortgages and the Security Agreements.
1.2 Section 2.7 of the Credit Agreement is amended to add the
following sentence at the end thereof:
"Notwithstanding any provision of this Section 2.7 to the
contrary, when no Default exists, the Borrower shall make no
prepayments of any Advance hereunder unless all 'Advances' (as
defined in the New Credit Agreement ) have been repaid in
full."
1.3 The following new Section 4.3 is added immediately after
Section 4.2:
"4.3 ADDITIONAL CONDITION TO EACH ADVANCE. The
Lenders shall not be required to make any Advance, unless on
the applicable Borrowing Date, the 'Aggregate Commitment' (as
defined in the New Credit Agreement) shall have been fully
utilized. Each Borrowing Notice with respect to each such
Advance shall constitute a representation and warranty by the
Borrower that the condition contained in this Section 4.3 has
been satisfied."
1.4 Section 5.3 is amended in its entirety to read as follows:
8
" 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 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, except pursuant to the Security Documents,
result in or require 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. Except for (i) that
certain Indenture between Caliber and The Chase Manhattan
Bank, as Trustee, dated as of August 1, 1996 (the "Caliber
Indenture") and (ii) certain additional Indebtedness in an
aggregate amount of not greater than $50,000,000, none of the
Borrower, any Guarantor or any Subsidiary is a party to any
indenture, instrument or agreement that requires the
Indebtedness governed thereby to be equally and ratably
secured with the Obligations as a result of the execution and
delivery of any of the Security Documents. 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 (other than filings in connection
with the Security Documents).
1.5 Section 5.17 is amended in its entirety to read as
follows:
"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 contingent obligations and liabilities)
of the Borrower and the Guarantors (other than obligations
under the New Credit Agreement Documents, PROVIDED that no
Default has occurred thereunder, and obligations mandatorily
preferred by laws or regulations of general application)."
1.6 The Credit Agreement is amended to add the following after
Section 5.18:
"5.19 MATERIAL ADVERSE EFFECT. Since May 31, 1998,
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."
9
1.7 Section 6.1 is amended in its entirety to read as follows:
"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) 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
fiscal year of the Borrower, and from time to
time as reasonably requested by ▇▇▇▇▇▇, for
Caliber and its Subsidiaries on a consolidated
basis, a certificate signed by the Borrower's
Chief Financial Officer, Treasurer or
Controller, certifying as to (i) for such
period, the Caliber Operating Income and (ii)
at the end of such period, the aggregate
principal amount of all outstanding
Indebtedness of Caliber and its Subsidiaries.
(iv) Together with the financial statements required
hereunder, a certificate signed by its Chief
Financial Officer or Treasurer stating
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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.
(v) 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 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 Agent, of the calculations required to be
made to determine compliance with each of
Sections 6.12, 6.13 and 6.24.
(vi) 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.
(vii) 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.
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(viii) Promptly after any Authorized Officer learns
thereof, notice of any change in any Rating or
any publicly-announced decision by ▇▇▇▇▇'▇ or
S&P to consider a change in any Rating.
(ix) On or before January 15, 1999, and thereafter
from time to time as reasonably requested by
▇▇▇▇▇▇ within 15 Business Days after each such
request, an Appraisal Report setting forth the
fair market value of the airframes and engines
of FedEx included in SCHEDULE 1 attached to
Amendment No. 2 hereto.
(x) Not more than 15 Business Days after the end
of each calendar month following the Effective
Date (as defined in the New Credit Agreement),
or more frequently as ▇▇▇▇▇▇ may reasonably
request from time to time, a report
summarizing the Eligible Receivables of FedEx
and its Subsidiaries as of the end of such
month or such other date.
(xi) Within 15 Business Days after ▇▇▇▇▇▇ may
reasonably request from time to time, an
appraisal setting forth the fair market value
of all or any part of the Designated
Collateral described in clause (iv) of Section
6.26(b).
(xii) Such other information (including
non-financial information) as the Agent or any
Lender may from time to time reasonably
request."
1.8 Section 6.4 is amended to add "(except for changes in the
conduct of business resulting from an actual or threatened business
interruption, including but not limited to self-help actions or a
strike, by members of the FedEx Pilots Association, or contingency
plans related thereto)" after the word "conducted" in the fourth line.
1.9 Section 6.15 is amended to add the phrase "(other than
Caliber)" after the word "Subsidiary" in the first line of clause (a),
clause (b), and clause (d), and to add "Caliber," before the word
"FedEx" in clause (c).
1.10 Section 6.16 is amended to add the following immediately
after clause (f):
"Notwithstanding any provision of this Section 6.16 to the
contrary, the Borrower will not, nor will it permit any
Consolidated Subsidiary to, make any such sale, transfer,
conveyance or lease of any Collateral or Designated Collateral
without the prior written consent of the Required Lenders,
except that the Borrower and its Consolidated Subsidiaries may
sell, transfer, convey or lease, in accordance with the
foregoing provisions of Section 6.16, Designated Collateral
consisting of motor vehicles and real estate without such
written consent, provided that after giving effect thereto,
the Borrower is in compliance with Section 6.24."
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1.11 Section 6.18(e) is amended in its entirety to read as
follows:
"(e) Guaranties included or required under the
New Credit Agreement Documents and the L/C Facility."
1.12 Section 6.19 is amended to:
(a) delete paragraph (l) in its entirety and substitute the
following therefor:
"(l) Liens on Designated Collateral granted in
accordance with Section 6.26; and"
(b) add the following immediately after clause (l):
"(m) Liens not otherwise permitted by Sections 6.19(a)
through (l) 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
6.19(m), does not exceed 8% of Consolidated Adjusted Total
Assets.
Notwithstanding any provision of this Section 6.19 to the
contrary, the Borrower will not, and will not permit any
Consolidated Subsidiary to, create, incur, assume or suffer to
exist, any Lien on any of the Designated Collateral except in
accordance with clause (l) of this Section 6.19, or enter
into, or make any commitment to enter into, any arrangement
for the acquisition of any Designated Collateral through
conditional sales, lease-purchase or other title retention
agreements, except Liens securing a principal amount of not
more than $200,000,000 in the aggregate."
1.13 Section 6.21 is amended to delete the words "The
Borrower" at the beginning thereof and replace them with "Except for
the New Credit Agreement Documents, the Borrower".
1.14 The following provisions are added after Section 6.21:
"6.22 INDEBTEDNESS OF CALIBER AND SUBSIDIARIES. None
of Caliber or its Subsidiaries will directly or indirectly
create, incur, assume or otherwise become or remain liable
with respect to (a) any Indebtedness of the types set forth in
clauses
13
(i), (iii), (iv), (v), (vi), (vii) and (viii) of the
definition of "Indebtedness", or (b) Indebtedness consisting
of purchase-money obligations representing the deferred
purchase price of Property, except:
(i) all such Indebtedness existing under the
Caliber Indenture or otherwise existing on the
date hereof and reflected in the consolidated
financial statements of the Borrower and its
Consolidated Subsidiaries;
(ii) such Indebtedness owed to the Borrower; and
(iii) other Indebtedness in an aggregate principal
amount not to exceed $50,000,000.
6.23 NEW CREDIT AGREEMENT DOCUMENTS. At any time when
no Default exists, the Borrower shall not voluntarily reduce
the "Commitments" (as defined in the New Credit Agreement) in
part. Nothing in this Section 6.23 shall prohibit the Borrower
from terminating the "Commitments" (as defined in the New
Credit Agreement) in full.
6.24 VALUE OF DESIGNATED COLLATERAL AND COLLATERAL;
AIRCRAFT CASUALTY. (a) The aggregate value of the Designated
Collateral shall at all times equal or exceed 1.75 TIMES the
sum of (i) the Aggregate Commitment, or if the Aggregate
Commitment has been terminated, the aggregate outstanding
principal amount of the Obligations, (ii) the "Aggregate
Commitment" (as defined in the New Credit Agreement), or if
such "Aggregate Commitment" has been terminated, the aggregate
outstanding principal amount of the "Obligations" (as defined
in the New Credit Agreement) and (iii) the aggregate amount of
the "Commitments" (as defined in the L/C Facility), or if such
"Commitments" have been terminated, the aggregate outstanding
principal amount of the "Obligations" (as defined in the L/C
Facility).
(b) The Borrower and its applicable Subsidiaries
shall be required to grant Liens on Designated Collateral as
provided in Section 6.26(a) only to the extent necessary so
that the value, as determined pursuant to Section 6.26(b), of
all such Collateral as to which a Lien is granted, equals or
exceeds, at all times prior to the release of such Liens
pursuant to Section 6.26(c), 1.75 TIMES the sum of (i) the
Aggregate Commitment, or if the Aggregate Commitment has been
terminated, the aggregate outstanding principal amount of the
Obligations, (ii) the "Aggregate Commitment" (as defined in
the New Credit Agreement), or if such "Aggregate Commitment"
has been terminated, the aggregate outstanding principal
amount of the "Obligations" (as defined in the New Credit
Agreement) and (iii) the aggregate amount of the "Commitments"
(as defined in the L/C Facility), or if such "Commitments"
have been terminated, the aggregate
14
outstanding principal amount of the "Obligations" (as defined
in the L/C Facility), provided that, if at any time the
aggregate value of such Collateral is less than the amount
required by this sentence, then the Borrower shall (i)
promptly notify the Agent of such shortfall, and (ii) promptly
grant Liens to ▇▇▇▇▇▇ on additional Designated Collateral, in
accordance with Section 6.26(a), to the extent necessary to
reduce such shortfall to zero.
(c) If any airframe or engine set forth on SCHEDULE 1
attached to Amendment No. 2 hereto shall be destroyed or
materially damaged, regardless of the cause of such
destruction or damage, then the Borrower shall promptly notify
the Agent thereof and, within 45 days thereafter, designate in
writing one or more airframes and/or engines, as applicable,
in each case free and clear of any Lien, to be added to such
SCHEDULE 1, as provided in the definition of "Designated
Collateral", having an aggregate value, in accordance with
Section 6.26 hereof, equal to or exceeding the value of the
destroyed or damaged airframe or engine. If the damaged or
destroyed airframe or engine constitutes part of the
Collateral, then the Borrower shall, or shall cause its
Subsidiaries to, enter into such amendments to the Aircraft
Mortgage as ▇▇▇▇▇▇ may reasonably request in order to grant to
▇▇▇▇▇▇, as the collateral agent for the Lenders and for the
lenders under the New Credit Agreement Documents and the L/C
Facility (the "Collateral Agent"), a first priority Lien on
such replacement airframes or engines.
6.25 NO NEGATIVE PLEDGE. From and after the date
hereof, neither the Borrower nor any of its Subsidiaries shall
limit, restrict or delay, its right or power to sell, assign,
pledge, grant any Lien on, transfer, dispose of or otherwise
encumber the Designated Collateral or any part thereof,
including, without limitation, any such restriction on capital
stock, except as provided on the date hereof in the Loan
Documents, the New Credit Agreement Documents or the L/C
Facility.
6.26 GRANT OF SECURITY INTEREST IN COLLATERAL. (a)
Promptly (but in any event within 10 Business Days) after any
one or more dates on which either FDX Rating ceases to be an
Investment Grade Rating, the Borrower shall, to the extent
provided for in Section 6.24 (b), (i) grant, and cause its
Subsidiaries to grant, to the Collateral Agent, a first
priority Lien on the Designated Collateral other than
Designated Collateral owned by Caliber and its Subsidiaries
(the "FDX Collateral"), which Lien shall equally and ratably
secure the Obligations under the Loan Documents and the
obligations under each of the New Credit Agreement Documents
and the L/C Facility, and (ii) cause Caliber and Caliber's
Subsidiaries to grant, to a collateral trustee designated by
▇▇▇▇▇▇, a first priority Lien on all the capital stock of
Caliber's Subsidiaries which constitute part of the Designated
Collateral (the "Caliber Collateral"), which Lien shall
equally and ratably secure the Obligations under the Loan
Documents, the obligations under each of the New Credit
Agreement Documents and the L/C Facility and the notes issued
under the
15
Caliber Indenture. All such Liens granted pursuant to this
Section 6.26 shall be granted in the following order: first,
on the capital stock of Caliber and all Caliber Collateral;
second, on the airframes and engines of FedEx; third, on all
(and not part) of the accounts receivable of FedEx and its
Subsidiaries; and fourth, as designated by ▇▇▇▇▇▇, on the
motor vehicles and real estate of FedEx and its Subsidiaries,
and the intercompany indebtedness owed to the Borrower by its
Subsidiaries, in each case, to the extent constituting part of
the Designated Collateral. From time to time, the Borrower and
its Subsidiaries shall execute and deliver, or cause to be
executed and delivered, such additional agreements,
instruments, certificates (including without limitation any
good standing certificates), legal opinions or documents, and
take all such actions, as ▇▇▇▇▇▇ may reasonably request, for
the purposes of implementing or effectuating this Section 6.26
or the Security Documents, or of more fully perfecting,
preserving or renewing the rights of ▇▇▇▇▇▇ and the Lenders
with respect to the Collateral (or with respect to any
additions thereto or replacements or proceeds thereof or with
respect to any other Property or assets hereafter acquired by
the Borrower or its Subsidiaries which is or may be deemed to
be part of the Collateral) pursuant hereto or thereto.
(b) Designated Collateral and Collateral shall at all
times be valued as follows:
(i) the value of the Caliber Stock shall equal
9.0 times Caliber Operating Income, less the
aggregate principal amount of all
outstanding Indebtedness (including, without
limitation, intercompany indebtedness) of
Caliber and its Subsidiaries;
(ii) the value of the airframes and engines
listed on SCHEDULE 1 attached to Amendment
No. 2 hereto shall equal the fair market
value thereof set forth in the most recently
delivered Appraisal Report delivered
pursuant to Section 4.1 or 6.1, and prior to
the delivery of the first such Appraisal
Report, such Property shall be valued at
$1,892,600,000.
(iii) the value of the accounts receivable of
FedEx and its Subsidiaries shall equal 0.75
TIMES the aggregate amount of Eligible
Receivables of FedEx and its Subsidiaries,
as determined on the report of Eligible
Receivables most recently delivered pursuant
to Section 4.1 or Section 6.1; and
(iv) the value of the motor vehicles and real
estate of FedEx and its Subsidiaries and the
intercompany indebtedness owed to the
Borrower by its Subsidiaries shall equal the
fair market value thereof as determined in
the most recent appraisal provided by a
16
nationally recognized firm of appraisers
pursuant to Section 6.1, and prior to the
delivery of the first such appraisal with
respect to any such Property, such Property
shall be valued at $633,300,000.
(c) Any Liens granted under this Section 6.26 shall
be released at the written request of the Borrower in
accordance with the Security Documents if the S&P FDX Rating
and ▇▇▇▇▇'▇ FDX Rating both become Investment Grade Ratings,
but shall be reinstated on any one or more additional dates
thereafter on which either FDX Rating ceases to be an
Investment Grade Rating. Notwithstanding the foregoing, (i)
all such Liens shall be released when all of the "Obligations"
(under and as defined in the New Credit Agreement) have been
paid in full and the "Commitments" (under and as defined in
the New Credit Agreement) have been terminated, and (ii) the
Lien on any asset sold or otherwise disposed of in accordance
with Section 6.16 shall be released promptly after the
Borrower's written request therefor.
6.27. APPROVAL OF FORMS OF SECURITY DOCUMENTS. The
Borrower shall, as soon as practicable, and in any event no
later than the later of (i) January 15, 1999 and (ii) seven
Business Days after ▇▇▇▇▇▇ delivers drafts of such documents
to the Borrower, give written notice to ▇▇▇▇▇▇ that it has
approved a final form of each Security Document which is in
form and substance satisfactory to the Agent and the agents
under the New Credit Agreement Documents and under the L/C
Facility."
1.15 Section 7.3 is amended to delete such section in its
entirety and substitute the following therefor:
" 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,
6.19, 6.22, 6.23, 6.24, 6.25 or 6.26."
1.16 Section 7.4 is amended in its entirety to read as
follows:
" 7.4. BREACH OF OTHER COVENANTS, LOAN DOCUMENTS, NEW
CREDIT AGREEMENT DOCUMENTS OR L/C FACILITY. 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
provisions of this Agreement or any other Loan Document which
is not remedied within five days after written notice from the
Agent or any Lender; or the occurrence of any "Default" (as
defined in the New Credit Agreement) or any "Event of Default"
(as defined in the L/C Facility)."
1.17 Section 7.12 is amended in its entirety to read as
follows:
17
"7.12. INVALIDITY, ETC. OF LOAN DOCUMENTS; FAILURE OF
SECURITY. At any time, for any reason (i) 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 Agent the benefits
purported to be created thereby, or (ii) Liens in favor of the Lenders
or any collateral agent for the Lenders shall, while the Security
Documents are in effect or purported to be in effect pursuant hereto,
be invalidated or otherwise cease to be in full force and effect, or
such Liens shall be subordinated or shall not have the priority
contemplated hereby or by the Security Documents."
1.18 Section 8.2 is amended in its entirety to read as
follows:
"8.2. AMENDMENTS. Subject to the provisions of this Article
VIII, the Required Lenders (or the 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 Tranche A Facility Termination
Date, extend the Tranche B Facility
Termination Date other than as provided in
Section 2.19, or reduce the amount or extend
the payment date for, the mandatory payments
required under Section 2.2, or increase the
amount of the Commitment of any Lender
hereunder, or permit the Borrower to assign
its rights under this Agreement.
(iv) Amend, modify, or waive Section 2.2(a),
Section 4.1, Section 4.2, Sections 6.24(a)
or (b), this Section 8.2, or Section 12.1.
18
(v) Release FedEx or RPS from any of their
material obligations, respectively, under
the Guaranty.
(vi) Release all or substantially all of the
Collateral, or release the Borrower or any
Guarantor from any of its material
obligations under the Security Documents, in
each case other than pursuant to Section
6.26(c) or 9.16;
No amendment of any provision of this Agreement relating to
the Agent shall be effective without the written consent of
the Agent. The Agent may waive payment of the fee required
under Section 12.3.3 without obtaining the consent of any
other party to this Agreement."
1.19 Section 9.16 is amended in its entirety to read as
follows:
"9.16. RELEASE OF GUARANTORS. Upon the consummation
of any liquidation, dissolution, merger, consolidation, sale
or other transfer of a Guarantor other than Caliber, FedEx or
RPS (collectively, a "Transfer"), and provided (i) no Default
or Unmatured Default has occurred and is continuing or would
occur as a result of such Transfer, and (ii) the Liens and
security interests contemplated by the Security Documents are
not then in effect or purported to be in effect, 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 Agent, evidencing such release."
1.20 Section 10.2 is amended in its entirety to read as
follows:
"10.2. POWERS. The Agent shall have and may exercise
such powers under the Loan Documents as are specifically
delegated to the Agent by the terms of each thereof, together
with such powers as are reasonably incidental thereto. The
Agent shall have the right to negotiate and approve the form,
terms and provisions of the Security Documents, and to enter
into the Security Documents for the benefit of the Lenders, in
accordance with Section 6.26. Any action taken by the Agent in
accordance with the provisions of the Security Documents, and
the exercise by the Agent of the powers set forth therein,
together with such other powers as are reasonably incidental
thereto, are hereby authorized by, and shall be binding upon,
each of the Lenders. The Agent shall have no implied duties to
the Lenders, or any obligation to the Lenders to take any
action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent."
1.21 Section 11.2 is amended to add "(other than pursuant to
the Security Documents)" after the word "collateral" in the sixth line.
19
1.22 SCHEDULE 2 of the Credit Agreement is hereby replaced
with SCHEDULE 2 attached to Amendment No. 2 hereto.
2. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective
as of the date set forth above when each of the following conditions has been
satisfied:
(a) the Agent shall have received a counterpart of this
Amendment executed by the Borrower, the Agent and Lenders, and a
counterpart of the Acknowledgment attached hereto as Exhibit A,
executed by each of the Guarantors; PROVIDED, however, that SECTION
1.18 of this Amendment shall only become effective when the Agent shall
have received a counterpart of this Amendment executed by the Borrower,
the Agent and each of the Lenders;
(b) the Borrower has furnished to the Agent such documents
evidencing corporate existence, action and authority of the Borrower
and the Guarantors as the Agent may reasonably request;
(c) the L/C Facility shall have been amended to permit the
execution, delivery and performance of the Loan Documents;
(d) the New Credit Agreement shall have been executed and
delivered by the parties thereto and shall have become effective in
accordance with its terms; and
(e) the Agent shall have received a summary of the Eligible
Receivables of FedEx and its Subsidiaries as of November 30, 1998, and
a calculation of the value of the Designated Collateral (determined in
accordance with Section 6.26(b)), in each case in form satisfactory to
the Agent.
3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants that:
(a) This Amendment, and the Credit Agreement as previously
executed and as amended hereby, constitute legal, valid and binding
obligations of the Borrower and are enforceable against the Borrower in
accordance with their terms.
(b) Upon the effectiveness of this Amendment, the Borrower
reaffirms all covenants, representations and warranties made in the
Credit Agreement.
(c) No Default or Unmatured Default has occurred and is
continuing.
4. EFFECT ON CREDIT AGREEMENT.
20
(a) During the period that this Amendment is effective, each
reference in the Credit Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a
reference to the Credit Agreement as amended hereby.
(b) Except as specifically amended above, the Credit Agreement
and all other Loan Documents, instruments and agreements executed
and/or delivered in connection therewith, shall remain in full force
and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of the Agent or the Lenders, nor
constitute a waiver of any provision of the Credit
Agreement or any other Loan Documents, instruments and agreements
executed and/or delivered in connection therewith.
(d) In the event of any inconsistency between the provisions
of this Amendment and the provisions of that certain Amendment No. 1
dated as of December 10, 1998 among the Borrower, the Agent and the
Lenders, this Amendment shall govern and control so long as this
Amendment remains in effect.
5. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Illinois.
6. HEADINGS. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
7. COUNTERPARTS. This Amendment may be executed by one or more of the
parties to the Amendment on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
21
IN WITNESS WHEREOF, the undersigned have executed this Amendment as
of the date first above written.
FDX CORPORATION
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
THE FIRST NATIONAL BANK OF
CHICAGO, as Agent
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
▇▇▇▇▇▇ GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
THE CHASE MANHATTAN BANK
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
KREDIETBANK N.V., GRAND
CAYMAN BRANCH
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
CITICORP USA, INC.
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
COMMERZBANK
AKTIENGESELLSCHAFT, ATLANTA AGENCY
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
NATIONSBANK, N.A.
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
CIBC INC.
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
THE FUJI BANK, LIMITED
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
MELLON BANK, N.A.
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
KEYBANK NATIONAL ASSOCIATION
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
FIRST AMERICAN NATIONAL BANK
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
BANK OF HAWAII
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
THE BANK OF NEW YORK
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
THE BANK OF NOVA SCOTIA
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
CREDIT SUISSE FIRST BOSTON
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
DEUTSCHE VERKEHRS BANK
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
THE SANWA BANK, LIMITED
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
SUNTRUST BANK, NASHVILLE, N.A.
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
BANCA NAZIONALE DEL LAVORO
SPA
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
THE SUMITOMO BANK, LIMITED
By: /s/
----------------------
Name:
----------------------
Title:
----------------------
EXHIBIT A
TO
AMENDMENT NO. 2 (TEMPORARY)
DATED AS OF DECEMBER 10, 1998
ACKNOWLEDGMENT
--------------
Each of the undersigned (i) acknowledges receipt of a copy of
Amendment No. 2 (Temporary) dated as of December 10, 1998, to the Credit
Agreement dated as of January 15, 1998 by and among the Borrower, the
Lenders, First Chicago Capital Markets, Inc., as Arranger, ▇.▇. ▇▇▇▇▇▇
Securities Inc., as Co-Arranger and Syndication Agent, Chase Securities Inc.,
as Co-Arranger and Documentation Agent, and the Agent (the "Credit
Agreement"), (ii) reaffirms the terms and conditions of that certain Guaranty
dated as of January 27, 1998 (the "Guaranty") and (iii) acknowledges and
agrees that the Guaranty (A) remains in full force and effect and (B) is
hereby ratified and confirmed.
FEDERAL EXPRESS CORPORATION
By:
-------------------------------
Name:
-----------------------------
Title:
-----------------------------
RPS, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
-----------------------------
CALIBER SYSTEM, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
-----------------------------
VIKING FREIGHT, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
-----------------------------
▇▇▇▇▇▇▇ EXPRESS, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
-----------------------------
Dated as of December 10, 1998