EXHIBIT (b)(1)
EXECUTION COPY
November 10, 2000
FedEx Corporation
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Acquisition Credit Facility
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Commitment Letter
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FedEx Corporation
000 Xxxxx Xxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Ladies and Gentlemen:
You (the "Borrower") have advised Chase Securities Inc. ("CSI") and
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The Chase Manhattan Bank ("Chase") that, pursuant to a merger agreement (the
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"Merger Agreement"), you intend to acquire all of the outstanding capital stock
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of the company identified to Chase and CSI (the "Target") for consideration
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(including refinancing of indebtedness) consisting of approximately $750,000,000
in cash and $500,000,000 in shares of your common stock (the "Acquisition"). In
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order to finance the cash consideration for the Acquisition, you have requested
that CSI agree to structure, arrange and syndicate a revolving credit facility
in an aggregate amount of up to $750,000,000 (the "Facility"), and that Chase
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commit to provide the entire principal amount of the Facility and to serve as
administrative agent for the Facility.
CSI is pleased to advise you that it is willing to act as exclusive
advisor, lead arranger and book manager for the Facility.
Furthermore, Chase is pleased to advise you of its commitment to
provide the entire amount of the Facility upon the terms and subject to the
conditions set forth or referred to in this commitment letter (the "Commitment
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Letter") and in the Summary of Terms and Conditions attached hereto as Exhibit A
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(the "Term Sheet").
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It is agreed that Chase will act as the sole and exclusive
Administrative Agent, and that CSI will act as the sole and exclusive advisor,
lead arranger and book manager (in such capacity, the "Arranger"), for the
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Facility, and each will, in such capacities, perform the duties and exercise the
authority customarily performed and exercised by it in such roles. You agree
that no other agents, co-agents, arrangers or book managers will be appointed,
no other titles will be awarded and no compensation
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(other than that expressly contemplated by the Term Sheet and the Fee Letter
referred to below) will be paid in connection with the Facility unless you and
we shall so agree.
We intend to syndicate the Facility to a group of financial
institutions (together with Chase, the "Lenders") identified by us in
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cooperation and active consultation with you. CSI intends to commence
syndication efforts promptly, and you agree actively to assist CSI in completing
a syndication satisfactory to it. Such assistance shall include (a) your using
commercially reasonable efforts to ensure that the syndication efforts benefit
materially from your existing lending relationships, (b) direct contact between
senior management and advisors of the Borrower and the proposed Lenders, (c)
assistance in the preparation of a Confidential Information Memorandum and other
marketing materials to be used in connection with the syndication and (d) the
hosting, with CSI, of one or more meetings of prospective Lenders.
As the Arranger, CSI, in cooperation and active consultation with you,
will manage all aspects of the syndication, including decisions as to the
selection of institutions to be approached and when they will be approached,
when their commitments will be accepted, which institutions will participate,
the allocations of the commitments among the Lenders and the amount and
distribution of fees among the Lenders. In acting as the Arranger, CSI will
have no responsibility other than to arrange the syndication. To assist CSI in
its syndication efforts, you agree promptly to prepare and provide to CSI and
Chase all information with respect to the Borrower, the Acquisition and the
transactions contemplated hereby, including all financial information and
projections (the "Projections"), as we may reasonably request in connection with
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the arrangement and syndication of the Facility. You hereby represent and
covenant that (a) all information other than the Projections (the "Information")
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that has been or will be made available to Chase or CSI by you or any of your
representatives is or will be, when furnished, complete and correct in all
material respects and does not or will not, when furnished, contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not materially misleading in light of
the circumstances under which such statements are made and (b) the Projections
that have been or will be made available to Chase or CSI by you or any of your
representatives have been or will be prepared in good faith based upon
reasonable assumptions at the time of preparation thereof. You understand that
in arranging and syndicating the Facility we may use and rely on the Information
and Projections without independent verification thereof.
As consideration for Xxxxx'x commitment hereunder and CSI's agreement
to perform the services described herein, you agree to pay to Chase the
nonrefundable fees set forth in Annex I to the Term Sheet and in the Fee Letter
dated the date hereof and delivered herewith (the "Fee Letter").
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Xxxxx'x commitment hereunder and CSI's agreement to perform the
services described herein are subject to (a) there not occurring or becoming
known to us any material adverse condition or material adverse change in or
affecting the business, property, condition (financial or otherwise), results of
operations or prospects of the Borrower and its subsidiaries, taken as a whole
after taking into account the acquisition of Target, (b) our not becoming aware
after the date hereof of
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any information or other matter affecting the Borrower, the Acquisition or the
transactions contemplated hereby which is inconsistent in a material and adverse
manner with any such information or other matter disclosed to us prior to the
date hereof, (c) there not having occurred a material disruption of or material
adverse change in financial, banking or capital market conditions that, in our
judgment, could materially impair the syndication of the Facility, (d) our
satisfaction that prior to and during the syndication of the Facility there
shall be no competing offering, placement or arrangement of any debt securities
or bank financing (other than issuances of commercial paper) by or on behalf of
the Borrower or any affiliate thereof, (e) the negotiation, execution and
delivery on or before December 22, 2000 of definitive documentation with respect
to the Facility satisfactory to Chase and its counsel, (f) no material change in
the terms and structure of the Acquisition from that set forth in the Merger
Agreement, and (g) the other conditions set forth or referred to in the Term
Sheet and the Fee Letter. The terms and conditions of Xxxxx'x commitment
hereunder and of the Facility are not limited to those set forth herein and in
the Term Sheet. Those matters that are not covered by the provisions hereof and
of the Term Sheet are subject to the approval and agreement of Chase, CSI and
the Borrower.
You agree (a) to indemnify and hold harmless Chase, CSI, their
affiliates and their respective officers, directors, employees, advisors, and
agents (each, an "indemnified person") from and against any and all losses,
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claims, damages and liabilities to which any such indemnified person may become
subject arising out of or in connection with this Commitment Letter, the
Facility, the Acquisition, the use of the proceeds thereof or any related
transaction or any claim, litigation, investigation or proceeding relating to
any of the foregoing, regardless of whether any indemnified person is a party
thereto, and to reimburse each indemnified person upon demand for any legal or
other expenses incurred in connection with investigating or defending any of the
foregoing, provided that the foregoing indemnity will not, as to any indemnified
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person, apply to losses, claims, damages, liabilities or related expenses to the
extent they are found by a final, non-appealable judgment of a court to arise
from the willful misconduct or gross negligence of such indemnified person, and
(b) to reimburse Chase, CSI and their affiliates on demand for all reasonable
out-of-pocket expenses (including due diligence expenses, syndication expenses,
travel expenses, and reasonable fees, charges and disbursements of counsel)
incurred in connection with the Facility and any related documentation
(including this Commitment Letter, the Term Sheet, the Fee Letter and the
definitive financing documentation) or the administration, amendment,
modification or waiver thereof. No indemnified person shall be liable for any
damages arising from the use by others of Information or other materials
obtained through electronic, telecommunications or other information
transmission systems or for any special, indirect, consequential or punitive
damages in connection with the Facility.
You acknowledge that Chase and its affiliates (the term "Chase" being
understood to refer hereinafter in this paragraph to include such affiliates)
may be providing debt financing, equity capital or other services (including
financial advisory services) to other companies in respect of which you may have
conflicting interests regarding the transactions described herein and otherwise.
Chase will not use confidential information obtained from you by virtue of the
transactions contemplated by this Commitment Letter or their other relationships
with you in connection with the
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performance by Chase of services for other companies, and Chase will not
disclose or furnish any such information to other companies. You also
acknowledge that Chase has no obligation to use in connection with the
transactions contemplated by this Commitment Letter, or to furnish to you,
confidential information obtained from other companies.
This Commitment Letter shall not be assignable by you without the
prior written consent of Chase and CSI (and any purported assignment without
such consent shall be null and void), is intended to be solely for the benefit
of the parties hereto and is not intended to confer any benefits upon, or create
any rights in favor of, any person other than the parties hereto. This
Commitment Letter may not be amended or waived except by an instrument in
writing signed by you, Chase and CSI. This Commitment Letter may be executed in
any number of counterparts, each of which shall be an original, and all of
which, when taken together, shall constitute one agreement. Delivery of an
executed signature page of this Commitment Letter by facsimile transmission
shall be effective as delivery of a manually executed counterpart hereof. This
Commitment Letter and the Fee Letter are the only agreements that have been
entered into among us with respect to the Facility and set forth the entire
understanding of the parties with respect thereto. This Commitment Letter shall
be governed by, and construed in accordance with, the laws of the State of New
York.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of
their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) to your officers, agents and advisors who are directly
involved in the consideration of this matter, (b) upon execution, this
Commitment Letter and the Term Sheet (but not the Fee Letter) may be disclosed
to the Target and its officers, agents and advisors who are directly involved in
the consideration of this matter, or (c) as may be compelled in a judicial or
administrative proceeding or as otherwise required by law (in which case you
agree to inform us promptly thereof).
The compensation, reimbursement, indemnification and confidentiality
provisions contained herein and in the Fee Letter shall remain in full force and
effect regardless of whether definitive financing documentation shall be
executed and delivered and notwithstanding the termination of this Commitment
Letter or Xxxxx'x commitment hereunder.
If the foregoing correctly sets forth our agreement, please indicate
your acceptance of the terms hereof and of the Term Sheet and the Fee Letter by
returning to us executed counterparts hereof and of the Fee Letter, together
with the amounts agreed upon pursuant to the Fee Letter to be payable upon the
acceptance hereof, not later than 5:00 p.m., New York City time, on November 15,
2000. Xxxxx'x commitment and CSI's agreements herein will expire at such time
in the event Chase has not received such executed counterparts and such amounts
in accordance with the immediately preceding sentence.
Chase and CSI are pleased to have been given the opportunity to assist
you in connection with this important financing.
Very truly yours,
THE CHASE MANHATTAN BANK
By: /s/ X. Xxxx Xxxxxx
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Name: X. Xxxx Xxxxxx
Title: Managing Director
CHASE SECURITIES INC.
By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: Managing Director
Accepted and agreed to
as of the date first
written above by:
FEDEX CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
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Name: Xxxxxxx X. Xxxxxx, Xx.
Title: Corporate Vice President & Treasurer
Exhibit A
FEDEX CORPORATION
ACQUISITION CREDIT FACILITY
Summary of Terms and Conditions
November 10, 2000
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I. Parties
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Borrower: FedEx Corporation (the "Borrower").
Guarantors: Federal Express Corporation, FedEx Ground Package
System, Inc., Viking Freight, Inc., FedEx Custom
Critical, Inc., any other subsidiary of the Borrower
which is a guarantor of the Existing Credit Agreement
and, effective upon completion of the merger of
Target with a subsidiary of Borrower, Target.
Advisor, Lead Arranger and Book Manager: Chase Securities Inc. (in such capacity, the
"Arranger").
Administrative Agent: The Chase Manhattan Bank ("Chase" and, in such
capacity, the "Administrative Agent").
Syndication Agent: ______________________
Documentation Agent: ______________________
Lenders: A syndicate of banks, financial institutions and
other entities, including Chase, arranged by the
Arranger (collectively, the "Lenders").
II. Facility
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Type and Amount of Facility: 364-day revolving credit facility (the "Facility") in
the amount of $750,000,000 (the loans thereunder, the
"Loans").
Availability: The Facility shall be available on a revolving basis
during the period commencing on the Closing Date and
ending on the date which is 364 days thereafter (the
"Termination Date").
Term-Out Option: The Borrower may, at its option, elect to convert any
Loans outstanding on the Termination Date into term
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loans, which shall be due and payable on the first
anniversary of the Termination Date.
Maturity: The Termination Date, subject to the Term-Out Option.
Purpose: The proceeds of the Loans shall be used to finance
the Acquisition, including refinancing of Target
indebtedness, to provide back-up for commercial paper
issued by the Borrower and for other general
corporate purposes.
III. Certain Payment Provisions
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Fees and Interest Rates: As set forth on Annex I.
Optional Prepayments and Loans may be prepaid and commitments may be reduced
Commitment Reductions: by the Borrower in minimum amounts to be agreed upon.
IV. Certain Conditions
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Initial Conditions: The availability of the Facility shall be conditioned
upon satisfaction of, among other things, the
following conditions precedent (the date upon which
all such conditions precedent shall be satisfied, the
"Closing Date") on or before December 22, 2000:
(a) The Borrower shall have executed and delivered
satisfactory definitive financing documentation with
respect to the Facility (the "Credit Documentation").
(b) The tender offer portion of the Acquisition
shall be concurrently consummated on terms set forth
in the Merger Agreement or other terms and conditions
reasonably satisfactory to the Lenders.
(c) The Lenders, the Administrative Agent and the
Arranger shall have received all fees required to be
paid, and all expenses for which invoices have been
presented, on or before the Closing Date.
(d) All governmental and third party approvals
necessary in connection with the Acquisition and the
financing contemplated hereby shall have been
obtained and be in full force and effect. All Loans
made by the Lenders under the Facility shall be in
full compliance with all applicable requirements of
law,
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and, upon the request of the Administrative
Agent or any Lender, the Borrower will furnish to the
Administrative Agent and each Lender a properly
completed and duly executed Form FR U-1 or, if
applicable, Form FR G-3.
(e) The Lenders shall have received (i) satisfactory
audited consolidated financial statements of the
Borrower for the two most recent fiscal years ended
prior to the Closing Date as to which such financial
statements are available and (ii) 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 (i) of this
paragraph as to which such financial statements are
available.
(f) The Lenders shall have received such legal
opinions, documents and other instruments as are
customary for transactions of this type or as they
may reasonably request.
On-Going Conditions: The making of each extension of credit shall be
conditioned upon (a) the accuracy of all
representations and warranties in the Credit
Documentation (including, without limitation, the
litigation representation) and (b) there being no
default or event of default under the Facility in
existence at the time of, or after giving effect to
the making of, such extension of credit. As used
herein and in the Credit Documentation a "material
adverse change" shall mean any event, development or
circumstance that has had a material adverse effect
on (a) the business, property, condition (financial
or otherwise), results of operations or prospects of
the Borrower and its subsidiaries taken as a whole,
or (b) the validity or enforceability of any of the
Credit Documentation or the rights and remedies of
the Administrative Agent and the Lenders thereunder.
V. Certain Documentation Matters
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The Credit Documentation shall contain
representations, warranties, covenants, events of
default and other provisions substantially similar to
those contained in the Credit Agreement, dated as of
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January 15, 1998, as amended (the "Existing Credit
Agreement"), including, without limitation:
Representations and Corporate existence and standing; authorization and
Warranties: validity; no conflict; government consent; financial
statements; taxes; litigation and contingent
obligations; subsidiaries; ERISA; accuracy of
information; Regulation U; material agreements;
compliance with laws; existing liens; Investment
Company Act; citizenship; status as air carrier; pari
passu; and material adverse effect.
Affirmative Covenants: Financial reporting; use of proceeds; notices of
default; conduct of business; citizenship and
regulatory certificates; payment of taxes; insurance;
compliance with laws; maintenance of properties;
inspection; and guaranties.
Financial Covenants: Minimum fixed charge coverage and maximum leverage.
Negative Covenants: Dividend declarations; restricted investments; merger
and consolidation; sales of assets; loans, advances
and investments; contingent liabilities; liens; and
certain obligations respecting subsidiaries.
Events of Default: Breach in any material respect of representation or
warranty; failure to pay; breach of certain
covenants; cross-default; voluntary or involuntary
bankruptcy; judgments; certain ERISA events; seizure;
environmental matters; invalidity of loan documents;
and change of control. Events of default shall be
subject to customary grace or cure periods.
Voting: Amendments and waivers with respect to the Credit
Documentation shall require the approval of Lenders
holding not less than 51% of the aggregate amount of
the Loans and unused commitments under the Facility,
except that (a) the consent of each Lender affected
thereby shall be required with respect to (i)
reductions in the amount or extensions of the
scheduled date of final maturity of any Loan (other
than pursuant to the Term-Out Option), (ii)
reductions in the rate of interest or any fee or
extensions of any due date thereof and (iii)
increases in the amount or extensions of the expiry
date of any Lender's commitment and (b) the consent
of 100% of the
Lenders shall be required with respect
to modifications to any of the voting percentages.
Assignments The Lenders shall be permitted to assign and sell
and Participations: participations in their Loans and commitments,
subject, in the case of assignments (other than to
another Lender or to an affiliate of a Lender), to
the consent of the Administrative Agent and the
Borrower (which consent in each case shall not be
unreasonably withheld). In the case of partial
assignments (other than to another Lender or to an
affiliate of a Lender), the minimum assignment amount
shall be $5,000,000, and, after giving effect
thereto, the assigning Lender shall have commitments
and Loans aggregating at least $5,000,000, in each
case unless otherwise agreed by the Borrower and the
Administrative Agent. Participants shall have the
same benefits as the Lenders with respect to yield
protection and increased cost provisions. Voting
rights of participants shall be limited to those
matters with respect to which the affirmative vote of
the Lender from which it purchased its participation
would be required as described under "Voting" above.
Pledges of Loans in accordance with applicable law
shall be permitted without restriction. Promissory
notes shall be issued under the Facility only upon
request.
Yield Protection: The Credit Documentation shall contain customary
provisions (a) protecting the Lenders against
increased costs or loss of yield resulting from
changes in reserve, tax, capital adequacy and other
requirements of law and from the imposition of or
changes in withholding or other taxes and (b)
indemnifying the Lenders for "breakage costs"
incurred in connection with, among other things, any
prepayment of a Eurodollar Loan (as defined in Annex
I) on a day other than the last day of an interest
period with respect thereto.
Expenses and
Indemnification: The Borrower shall pay (a) all reasonable
out-of-pocket expenses of the Administrative Agent
and the Arranger associated with the syndication of
the Facility and the preparation, execution, delivery
and administration of the Credit Documentation and
any amendment or waiver with respect thereto
(including
the reasonable fees, disbursements and
other charges of counsel) and (b) all out-of-pocket
expenses of the Administrative Agent (including the
fees, disbursements and other charges of counsel) in
connection with the enforcement of the Credit
Documentation.
The Administrative Agent, the Arranger and the
Lenders (and their affiliates and their respective
officers, directors, employees, advisors and agents)
will have no liability for, and will be indemnified
and held harmless against, any loss, liability, cost
or expense incurred in respect of the financing
contemplated hereby or the use or the proposed use of
proceeds thereof (except to the extent resulting from
the gross negligence or willful misconduct of the
indemnified party).
Governing Law and Forum: State of New York.
Counsel to the Xxxxxxx Xxxxxxx & Xxxxxxxx.
Administrative Agent
and the Arranger:
Annex I
Interest and Certain Fees
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Interest Rate Options: The Borrower may elect that the Loans comprising each
borrowing bear interest at a rate per annum equal to:
the ABR plus the Applicable Margin; or
the Adjusted LIBO Rate plus the Applicable Margin.
As used herein:
"ABR" means the highest of (i) the rate of interest
publicly announced by Chase as its prime rate in effect
at its principal office in New York City (the "Prime
Rate") and (ii) the federal funds effective rate from
time to time plus 0.5%.
"Adjusted LIBO Rate" means the LIBO Rate, as adjusted for
statutory reserve requirements for eurocurrency
liabilities.
"Applicable Margin" means the margins determined in
accordance with the Pricing Grid attached as Annex I-A.
"LIBO Rate" means the rate at which eurodollar deposits
in the London interbank market for one, two, three or six
months (as selected by the Borrower) are quoted on the
Telerate screen.
Interest Payment Dates: In the case of Loans bearing interest based upon the ABR
("ABR Loans"), quarterly in arrears.
In the case of Loans bearing interest based upon the
Adjusted LIBO Rate ("Eurodollar Loans"), on the last day
of each relevant interest period and, in the case of any
interest period longer than three months, on each
successive date three months after the first day of such
interest period.
Utilization Fee: At any time when the utilization of the Facility is
greater than 25%, the Borrower shall pay a utilization
fee of 0.125% on the outstanding Loans, payable quarterly
in arrears.
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Facility Fees: The Borrower shall pay a facility fee calculated at a
rate per annum calculated in accordance with the Pricing
Grid attached as Annex I-A on the average daily amount of
the Facility (whether used or unused), payable quarterly
in arrears.
Default Rate: At any time when the Borrower is in default in the
payment of any amount of principal due under the
Facility, such amount shall bear interest at 2% above the
rate otherwise applicable thereto. Overdue interest,
fees and other amounts shall bear interest at 2% above
the rate applicable to ABR Loans.
Rate and Fee Basis: All per annum rates shall be calculated on the basis of a
year of 360 days (or 365/366 days, in the case of ABR
Loans the interest rate payable on which is then based on
the Prime Rate) for actual days elapsed.
Annex I-A
Level Applicable Margin Applicable Facility Fee Percentage
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I .300% .075%
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II .400% .100%
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III .500% .125%
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IV .700% .175%
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V 1.15% .225%
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Level I: A rating equal to or better than A- from Standard
& Poor's Ratings Group ("S&P") or A3 from Xxxxx'x
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Investors Service, Inc. ("Xxxxx'x").
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Level II: 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.
Level III: 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: 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, II or III.
Level V: Ratings lower than BbB- from S&P and Baa3 from
Moody's.
