EX-10.1 BACKSTOP CREDIT AGREEMENT



 





EXHIBIT 10.1




EXECUTION
COPY






 

 






U.S. $7,000,000,000




BACKSTOP CREDIT AGREEMENT




Dated as of October 19, 2007




Among




UNITED PARCEL SERVICE, INC.




as Borrower




THE INITIAL LENDERS NAMED HEREIN




as Initial Lenders




and




CITIGROUP GLOBAL MARKETS INC.




as Arranger




and




CITIBANK, N.A.




as Administrative Agent




 

 






 









 












TABLE OF CONTENTS




	 	 	 	 	 
	
ARTICLE I
	
DEFINITIONS AND ACCOUNTING TERMS
	 
	 	 	 	 
	SECTION 1.01. Certain Defined Terms
	 	 	1	 
	SECTION 1.02. Computation of Time Periods
	 	 	11	 
	SECTION 1.03. Accounting Terms
	 	 	11	 
	 
	 	 	 	 
	
ARTICLE II
	
AMOUNTS AND TERMS OF THE ADVANCES
	 
	 	 	 	 
	SECTION 2.01. The Advances
	 	 	11	 
	SECTION 2.02. Making the Advances
	 	 	12	 
	SECTION 2.03. Fees
	 	 	13	 
	SECTION 2.04. Termination or Reduction of the Commitments
	 	 	13	 
	SECTION 2.05. Repayment of Advances
	 	 	13	 
	SECTION 2.06. Interest on Advances
	 	 	13	 
	SECTION 2.07. Interest Rate Determination
	 	 	14	 
	SECTION 2.08. Optional Conversion of Advances
	 	 	15	 
	SECTION 2.09. Optional Prepayments of Advances
	 	 	15	 
	SECTION 2.10. Increased Costs
	 	 	16	 
	SECTION 2.11. Illegality
	 	 	16	 
	SECTION 2.12. Payments and Computations
	 	 	16	 
	SECTION 2.13. Taxes
	 	 	17	 
	SECTION 2.14. Sharing of Payments, Etc.
	 	 	20	 
	SECTION 2.15. Substitution of Lender
	 	 	20	 
	SECTION 2.16. Evidence of Debt
	 	 	20	 
	 
	 	 	 	 
	
ARTICLE III
	
CONDITIONS TO EFFECTIVENESS AND LENDING
	 
	 	 	 	 
	SECTION 3.01. Conditions Precedent to Effectiveness of Section 2.01
	 	 	21	 
	SECTION 3.02. Conditions Precedent to Each Borrowing
	 	 	22	 
	SECTION 3.03. Determinations Under Section 3.01
	 	 	22	 
	SECTION 3.04. Labor Dispute
	 	 	22	 
	 
	 	 	 	 
	
ARTICLE IV
	
REPRESENTATIONS AND WARRANTIES
	 
	 	 	 	 
	SECTION 4.01. Representations and Warranties of the Borrower
	 	 	23	 






 









 





 
ii



	 	 	 	 	 
	
ARTICLE V
	
COVENANTS OF THE BORROWER
	 
	 	 	 	 
	SECTION 5.01. Affirmative Covenants
	 	 	25	 
	SECTION 5.02. Negative Covenants
	 	 	28	 
	 
	 	 	 	 
	
ARTICLE VI
	
EVENTS OF DEFAULT
	 
	 	 	 	 
	SECTION 6.01. Events of Default
	 	 	29	 
	 
	 	 	 	 
	
ARTICLE VII
	
THE AGENT
	 
	 	 	 	 
	SECTION 7.01. Authorization and Action
	 	 	31	 
	SECTION 7.02. Agent’s Reliance, Etc.
	 	 	31	 
	SECTION 7.03. Citibank and Its Affiliates
	 	 	32	 
	SECTION 7.04. Lender Credit Decision
	 	 	32	 
	SECTION 7.05. Indemnification
	 	 	32	 
	SECTION 7.06. Successor Agent
	 	 	33	 
	SECTION 7.07. Other Agents
	 	 	33	 
	 
	 	 	 	 
	
ARTICLE VIII
	
MISCELLANEOUS
	 
	 	 	 	 
	SECTION 8.01. Amendments, Etc.
	 	 	33	 
	SECTION 8.02. Notices, Etc.
	 	 	34	 
	SECTION 8.03. No Waiver; Remedies
	 	 	35	 
	SECTION 8.04. Costs and Expenses
	 	 	35	 
	SECTION 8.05. Right of Setoff
	 	 	37	 
	SECTION 8.06. Binding Effect
	 	 	37	 
	SECTION 8.07. Assignments, Designations and Participations
	 	 	38	 
	SECTION 8.08. Confidentiality
	 	 	41	 
	SECTION 8.09. Governing Law
	 	 	41	 
	SECTION 8.10. Execution in Counterparts
	 	 	41	 
	SECTION 8.11. Jurisdiction, Etc.
	 	 	41	 
	SECTION 8.12. Patriot Act Notice
	 	 	42	 
	SECTION 8.13. No Advisory or Fiduciary Responsibility
	 	 	42	 







 











 





BACKSTOP CREDIT AGREEMENT




Dated as of October 19, 2007




          UNITED PARCEL SERVICE, INC., a Delaware corporation (the “Borrower”), the banks,
financial institutions and other institutional lenders (collectively, the “Initial Lenders”) listed
on the signature pages hereof, Citibank, N.A. (“Citibank”), as administrative agent (in
such capacity, the “Agent”) for the Lenders (as hereinafter defined), and Citigroup Global
Markets Inc., as arranger and book manager (in such capacity, the “Arranger”), agree as
follows:




ARTICLE I




DEFINITIONS AND ACCOUNTING TERMS




          SECTION 1.01. Certain Defined Terms.




          As used in this Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the terms defined):





     “Advance” means an advance by a Lender to the Borrower as part of a Borrowing
and refers to a Base Rate Advance or a Eurodollar Rate Advance (each of which shall be a
“Type” of Advance), as the context may require.




     “Affiliate” means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such Person;
provided, however, that Overseas Partners shall not be deemed to be an
Affiliate of the Borrower.




     “Agent” has the meaning specified in the recital of parties to this Agreement.




     “Agent’s Account” means (a) the account of the Agent maintained by the Agent at
Citibank at its office at Two Penns Way, New Castle, Delaware 19720, Account No. 36852248,
Attention: Bank Loan Syndications or (b) such other account of the Agent as is designated
in writing from time to time by the Agent to the Borrower and the Lenders for such purpose.




     “Applicable Fee Percentage” means, as of any date, 0.015% per annum.




     “Applicable Lending Office” means, with respect to each Lender, such Lender’s
Domestic Lending Office in the case of a Base Rate Advance and such Lender’s Eurodollar
Lending Office in the case of a Eurodollar Rate Advance.




     “Applicable Margin” means 0.00% per annum for Base Rate Advances and 0.135% per
annum for Eurodollar Rate Advances.




     “Arranger” has the meaning specified in the recital of parties to this
Agreement.









 



 
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     “Assignment and Acceptance” means an assignment and acceptance entered into by
a Lender and an Eligible Assignee, and accepted by the Agent, in substantially the form of
Exhibit C hereto.




     “Attributable Debt” has the meaning specified in the Debenture Indenture.




     “Base Rate” means a fluctuating interest rate per annum in effect from time to
time, which rate per annum shall at all times be equal to the highest of:




     (a) the rate of interest announced publicly by Citibank in New York, New York,
from time to time, as Citibank’s base rate;




     (b) the sum (adjusted to the nearest 1/16 of 1% or, if there is no nearest 1/16
of 1%, to the next higher 1/16 of 1%) of (i) 1/2 of 1% per annum plus (ii) the rate
obtained by dividing (A) the latest three-week moving average of secondary market
morning offering rates in the United States for three-month certificates of deposit
of major United States money market banks, such three-week moving average (adjusted
to the basis of a year of 360 days) being determined weekly on each Monday (or, if
such day is not a Business Day, on the next succeeding Business Day) for the
three-week period ending on the previous Friday by Citibank on the basis of such
rates reported by certificate of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall be suspended or terminated,
on the basis of quotations for such rates received by Citibank from three New York
certificate of deposit dealers of recognized standing selected by Citibank, by (B) a
percentage equal to 100% minus the average of the daily percentages specified during
such three-week period by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement (including, but not
limited to, any emergency, supplemental or other marginal reserve requirement) for
Citibank with respect to liabilities consisting of or including (among other
liabilities) three-month Dollar nonpersonal time deposits in the United States, plus
(iii) the average during such three-week period of the annual assessment rates
estimated by Citibank for determining the then current annual assessment payable by
Citibank to the Federal Deposit Insurance Corporation (or any successor) for
insuring Dollar deposits of Citibank in the United States; and




     (c) 1/2 of 1% per annum above the Federal Funds Rate.




     “Base Rate Advance” means an Advance that bears interest as provided in Section
2.06(a)(i).




     “Beneficial Ownership” means beneficial ownership as determined in accordance
with Rule 13d-3 of the Securities and Exchange Commission under the Exchange Act, as in
effect on the date hereof.




     “Borrower” has the meaning specified in the recital of parties to this
Agreement.









 



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     “Borrower’s Account” means an account of the Borrower designated in writing by
the Borrower to the Agent.




     “Borrowing” means a borrowing consisting of simultaneous Advances of the same
Type made by each of the Lenders pursuant to Section 2.01.




     “Borrowing Minimum” means $25,000,000.




     “Borrowing Multiple” means $1,000,000.




     “Business Day” means a day of the year on which banks are not required or
authorized by law to close in New York City and, if the applicable Business Day relates to
any Eurodollar Rate Advances, on which dealings are carried on in the London interbank
market.




     “Capital Lease Obligations” of any Person means all obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying the right to
use) real or personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such Person under
GAAP.




     “Change of Control” means the occurrence of either of the following:




     (a) any Person or two or more Persons acting in concert other than a Permitted
Person shall have acquired Beneficial Ownership, directly or indirectly, through a
purchase, merger or other transaction or series of transactions or otherwise, of
Voting Stock of the Borrower to which 10% or more of the total Voting Power of the
Borrower is attributable; or




     (b) Permitted Persons shall have Beneficial Ownership of (i) less than 75% of
the shares of common stock of the Borrower and (ii) Voting Stock of the Borrower to
which less than 75% of the total Voting Power of the Borrower is attributable.




     “Citibank” has the meaning specified in the recital of parties to this
Agreement.




     “Commitment” has the meaning specified in Section 2.01.




     “Confidential Information” means information that the Borrower furnishes to the
Agent or any Lender in a writing designated as confidential, but does not include any such
information that is or becomes generally available to the public or that is or becomes
available to the Agent or such Lender from a source other than the Borrower (unless the
Agent or such Lender knows that such information is not generally available to the public).




     “Consolidated” refers to the consolidation of accounts in accordance with GAAP.









 



4



     “Consolidated Net Tangible Assets” has the meaning specified in the Debenture
Indenture.




     “Convert”, “Conversion” and “Converted” each refers to a
conversion of Advances of one Type into Advances of the other Type pursuant to Section 2.07
or 2.08.




     “Debenture Indenture” means the Indenture, dated as of December 1, 1989,
between United Parcel Service of America, Inc. and Chemical Bank pursuant to which the
8-3/8% Debentures Due April 1, 2020 were issued, as in effect on the date of this Agreement
(without giving effect to any amendment, supplement or other modification thereto, any
repayment or covenant defeasance thereunder or any termination thereof), a copy of which is
attached as Exhibit E hereto.




     “Debt” of any Person means, without duplication, (a) all obligations of such
Person for borrowed money, or with respect to deposits with or advances of any kind to such
Person, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest charges are customarily
paid, (d) all obligations of such Person under conditional sale or other title retention
agreements relating to property or assets purchased by such Person, (e) all obligations of
such Person issued or assumed as the deferred purchase price of property or services
(excluding payables incurred in the ordinary course of business), (f) all Debt of others
secured by (or for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Lien on property or assets owned or acquired by such Person
(other than Non-Recourse Debt), (g) all Guarantees by such Person of Debt of others, (h) all
Capital Lease Obligations of such Person and (i) all obligations of such Person in respect
of Hedge Agreements; provided, however, that at any given time the term
“obligations” as used in this clause (i) shall only include the net amounts due and payable
at such time under any such agreements or arrangements. The Debt of any Person shall
include the Debt of any partnership in which such Person is a general partner.




     “Default” means any Event of Default or any event that would constitute an
Event of Default but for the requirement that notice be given or time elapse or both.




     “Dollars” and the sign “$” mean lawful currency of the United States of
America.




     “Domestic Lending Office” means, with respect to any Lender, the office of such
Lender specified as its “Domestic Lending Office” opposite its name on Schedule I hereto or
in the Assignment and Acceptance pursuant to which it became a Lender, or such other office
of such Lender as such Lender may from time to time specify to the Borrower and the Agent.




     “Effective Date” has the meaning specified in Section 3.01.




     “Eligible Assignee” means (i) a Lender; (ii) an Affiliate of a Lender that is
otherwise an Eligible Assignee; (iii) a commercial bank organized under the laws of the
United States, or any state thereof, and having total assets in excess of $1,000,000,000,
calculated in accordance with the accounting principles prescribed by the regulatory









 



5



authority applicable to such bank in its jurisdiction of organization; (iv) a
commercial bank organized under the laws of any other country that is a member of the OECD,
or a political subdivision of any such country, and having total assets in excess of
$1,000,000,000, calculated in accordance with the accounting principles prescribed by the
regulatory authority applicable to such bank in its jurisdiction of organization, so long as
such bank is acting through a branch or agency located in the country in which it is
organized or another country that is described in this clause (iv); (v) the central bank of
any country that is a member of the OECD; or (vi) a finance company, insurance company or
other financial institution or fund (whether a corporation, partnership, trust or other
entity) organized under the laws of the United States, or any state thereof, that is engaged
in making, purchasing or otherwise investing in commercial loans in the ordinary course of
its business and having total assets in excess of $1,000,000,000, calculated in accordance
with the accounting principles prescribed by the regulatory authority applicable to such
entity in its jurisdiction of organization; provided, however, that neither
the Borrower nor an Affiliate of the Borrower shall qualify as an Eligible Assignee.




     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued thereunder.




     “ERISA Affiliate” means any trade or business (whether or not incorporated)
that is a member of a group of which the Borrower is a member and which is treated as a
single employer under Section 414 of the Internal Revenue Code.




     “Eurocurrency Liabilities” has the meaning assigned to that term in Regulation
D.




     “Eurodollar Lending Office” means, with respect to any Lender, the office of
such Lender specified as its “Eurodollar Lending Office” opposite its name on Schedule I
hereto or in the Assignment and Acceptance pursuant to which it became a Lender (or, if no
such office is specified, its Domestic Lending Office), or such other office of such Lender
as such Lender may from time to time specify to the Borrower and the Agent.




     “Eurodollar Rate” means, for any Interest Period for each Eurodollar Rate
Advance comprising part of the same Borrowing, an interest rate per annum equal to the rate
per annum obtained by dividing (a) the rate per annum (rounded upward to the nearest whole
multiple of 1/16 of 1% per annum) appearing on Reuters Screen LIBOR01 Page (or any successor
page) as the London interbank offered rate for deposits in Dollars at approximately 11:00
A.M. (London time) two Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period or, if for any reason such rate is not available,
the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such
average is not such a multiple) of the rate per annum at which deposits in Dollars are
offered by the principal office of each of the Reference Banks in London, England to prime
banks in the London interbank market at 11:00 A.M. (London time) two Business Days before
the first day of such Interest Period in an amount substantially equal to such Reference
Bank’s Eurodollar Rate Advance comprising part of such Borrowing to be outstanding during
such Interest Period and for









 



6



a period equal to such Interest Period by (b) a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest Period. If the Reuters Screen LIBOR01
Page (or any successor page) is unavailable, the Eurodollar Rate for any Interest Period for
each Eurodollar Rate Advance comprising part of the same Borrowing shall be determined by
the Agent on the basis of applicable rates furnished to and received by the Agent from the
Reference Banks two Business Days before the first day of such Interest Period,
subject, however, to the provisions of Section 2.07(b).




     “Eurodollar Rate Advance” means an Advance that bears interest as provided in
Section 2.06(a)(ii).




     “Eurodollar Rate Reserve Percentage” means, for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing, the reserve percentage
applicable two Business Days before the first day of such Interest Period under regulations
issued from time to time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including, without limitation,
any emergency, supplemental or other marginal reserve requirement) for a member bank of the
Federal Reserve System in New York City with respect to liabilities or assets consisting of
or including Eurocurrency Liabilities (or with respect to any other category of liabilities
that includes deposits by reference to which the interest rate on Eurodollar Rate Advances
is determined) having a term equal to such Interest Period.




     “Event of Default” has the meaning specified in Section 6.01.




     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the regulations promulgated and rulings issued thereunder.




     “Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a Business Day, for
the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate
is not so published for any day that is a Business Day, the average of the quotations for
such day on such transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.




     “Financial Officer” of any corporation means the chief financial officer,
principal accounting officer, treasurer, assistant treasurer or controller of such
corporation.




     “Fiscal Year” means, with respect to any Person, the period commencing on
January 1 and ending on December 31 of any calendar year.




     “GAAP” has the meaning specified in Section 1.03.




     “Governmental Authority” means any federal, state, local or foreign court or
governmental agency, authority, instrumentality or regulatory body.









 



7



     “Guarantee” of or by any Person means any obligation, contingent or otherwise,
of such Person guaranteeing or having the economic effect of guaranteeing any Debt of any
other Person (the “primary obligor”) in any manner, whether directly or indirectly, and
including, without limitation, any obligation of such Person, direct or indirect, (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or to
purchase (or to advance or supply funds for the purchase of) any security for the payment of
such Debt, (b) to purchase property, securities or services for the purpose of assuring the
owner of such debt of the payment of such Debt or (c) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Debt; provided, however, that the
term “Guarantee” shall not include endorsements for collection or deposit, in either case in
the ordinary course of business.




     “Hedge Agreements” means interest rate swap, cap or collar agreements, interest
rate future or option contracts, currency swap agreements, currency future or option
contracts and other similar agreements.




     “Incurrence” has the meaning specified in Section 5.02(a).




     “Indemnified Party” has the meaning specified in Section 8.04(b).




     “Indemnified Matters” has the meaning specified in Section 8.04(b).




     “Initial Lenders” has the meaning specified in the recital of parties to this
Agreement.




     “Interest Period” means, for each Eurodollar Rate Advance comprising part of
the same Borrowing, the period commencing on the date of such Eurodollar Rate Advance or the
date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance and ending
on the last day of the period selected by the Borrower pursuant to the provisions below and,
thereafter, each subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of the period selected by the Borrower pursuant
to the provisions below. The duration of each such Interest Period shall be one, two, three
or six months, or, subject to clause (iii) below, nine or twelve months, as the Borrower
may, upon notice received by the Agent not later than 11:00 A.M. (New York City time) on the
third Business Day prior to the first day of such Interest Period, select; provided,
however, that:




     (i) the Borrower may not select any Interest Period that ends after the
Termination Date;




     (ii) Interest Periods commencing on the same date for Eurodollar Rate Advances
comprising part of the same Borrowing shall be of the same duration;




     (iii) the Borrower shall not be entitled to select an Interest Period having a
duration of nine or twelve months unless, by 2:00 P.M. (New York City time) on the
third Business Day prior to the first day of such Interest Period, each Lender
notifies the Agent that such Lender will be providing funding for such









 



8



Borrowing with such Interest Period (the failure of any Lender to so respond by
such time being deemed for all purposes of this Agreement as an objection by such
Lender to the requested duration of such Interest Period); provided that, if
any or all of the Lenders object to the requested duration of such Interest Period,
the duration of the Interest Period for such Borrowing shall be one, two, three or
six months, as specified by the Borrower in the applicable Notice of Borrowing as
the desired alternative to an Interest Period of nine or twelve months;




     (iv) whenever the last day of any Interest Period would otherwise occur on a
day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day, provided,
however, that, if such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last day of such Interest
Period shall occur on the next preceding Business Day; and




     (v) whenever the first day of any Interest Period occurs on a day of an initial
calendar month for which there is no numerically corresponding day in the calendar
month that succeeds such initial calendar month by the number of months equal to the
number of months in such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.




     “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued thereunder.




     “Lenders” means the Initial Lenders and each Person that shall become a party
hereto pursuant to Section 8.07(a), (b) and (c).




     “Lien” means any lien, security interest or other charge or encumbrance of any
kind, including, without limitation, the lien or retained security title of a conditional
vendor and any easement, right of way or other encumbrance on title to real property and, in
the case of securities, any purchase option, call or similar right of a third party with
respect to such securities.




     “Margin Stock” means all “margin stock” within the meaning of Regulation U.




     “Material Adverse Change” means any material adverse change in the business,
assets, operations or financial condition of the Borrower and its Subsidiaries, taken as a
whole. For purposes hereof, it is understood and agreed that neither (i) the occurrence of
a labor dispute, nor (ii) the liabilities of the Borrower and its Subsidiaries in respect of
the withdrawal of employees form the Central States multi-employer pension plan of the
International Brotherhood of Teamsters as announced by the Borrower on September 30, 2007,
shall in and of itself constitute a Material Adverse Change.




     “Material Adverse Effect” means (a) a material adverse effect on the business,
assets, operations or financial condition of the Borrower and its Subsidiaries, taken as a
whole, (b) material impairment of the ability of the Borrower to perform any of its
obligations under this Agreement or any Notes or (c) material impairment of the rights of or
benefits available to the Lenders under this Agreement or any Notes. For purposes









 



9



hereof, it is understood and agreed that neither (i) the occurrence of a labor dispute,
nor (ii) the liabilities of the Borrower and its Subsidiaries in respect of the withdrawal
of employees form the Central States multi-employer pension plan of the International
Brotherhood of Teamsters as announced by the Borrower on September 30, 2007, shall in and of
itself constitute a Material Adverse Effect.




     “Material Subsidiary” means any Subsidiary of the Borrower having (a) 5% or
more of the Consolidated Net Tangible Assets or (b) 5% or more of the total revenues
appearing on the most recently prepared Consolidated income statements of the Borrower and
its Subsidiaries as of the end of the immediately preceding fiscal quarter of the Borrower.




     “Moody’s” means Moody’s Investors Service, Inc.




     “Non-Recourse Debt” means, with respect to any Person, Debt for which such
Person neither (a) provides credit support nor (b) is directly or indirectly liable.




     “Note” means a promissory note of the Borrower payable to the order of any
Lender, delivered pursuant to a request made under Section 2.16 in substantially the form of
Exhibit A hereto, evidencing the aggregate indebtedness of the Borrower to such Lender
resulting from the Advances made by such Lender.




     “Notice of Borrowing” has the meaning specified in Section 2.02(a).




     “OECD” means the Organization for Economic Cooperation and Development and any
successor.




     “Overseas Partners” means Overseas Partners Ltd., a Bermuda corporation.




     “Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56,
signed into law October 26, 2001.




     “PBGC” means the Pension Benefit Guaranty Corporation and any successor.




     “Permitted Person” means the UPS Managers Stock Trust, the UPS Stock Trust, the
UPS Savings Plan, the UPS Qualified Stock Ownership Plan (QSOP), the Annie E. Casey
Foundation, any retiree or present or former employee of the Borrower or any of its
Subsidiaries or their respective present or former spouse, relatives (by consanguinity or
law), estate or heirs (or their respective spouse’s estate or heirs) or any other Person
that has Beneficial Ownership of the common stock of the Borrower on the date of this
Agreement, or any Person that is created for the benefit of any of the foregoing after the
date of this Agreement.




     “Person” means an individual, partnership, corporation (including a business
trust), joint stock company, trust, unincorporated association, joint venture, limited
liability company or other entity, or a government or any political subdivision or agency
thereof.









 



10



     “Plan” means any pension plan subject to the provisions of Title IV of ERISA or
Section 412 of the Internal Revenue Code that is maintained for employees of the Borrower or
any ERISA Affiliate.




     “Prepay Minimum” means $10,000,000.




     “Reference Banks” means Citibank and Barclays Bank PLC or if any such Lender
assigns all of its Commitment, the Advances owing to it and any Note or Notes held by it
pursuant to Section 8.07(a), such other Lender as may be designated by the Required Lenders
and approved by the Borrower (such approval not to be unreasonably withheld).




     “Register” has the meaning specified in Section 8.07(d).




     “Regulation A”, “Regulation D”, “Regulation T”, “Regulation
U” or “Regulation X” means Regulation A, Regulation D, Regulation T, Regulation
U or Regulation X, respectively, of the Board of Governors of the Federal Reserve System, in
each case as in effect from time to time, and all official rulings and interpretations
thereunder or thereof, respectively.




     “Reportable Event” means any reportable event as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than a Plan
maintained by an ERISA Affiliate that is considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Internal Revenue Code).




     “Required Lenders” means at any time Lenders owed greater than 50% of the then
aggregate unpaid principal amount of the Advances owing to Lenders, or, if no such principal
amount is then outstanding, Lenders having greater than 50% of the Commitments.




     “Restricted Subsidiary” has the meaning specified in the Debenture Indenture.




     “Sale and Leaseback Transaction” has the meaning specified in the Debenture
Indenture.




     “SEC” means the Securities and Exchange Commission, and any successor thereto
and any analogous Governmental Authority.




     “Secured Indebtedness” has the meaning specified in the Debenture Indenture.




     “S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill
Companies, Inc.




     “Subsidiary” of any Person means any corporation, partnership, joint venture,
limited liability company, trust or estate of which (or in which) more than 50% of (a) the
Voting Power to elect a majority of the board of directors of such corporation (irrespective
of whether at the time capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency), (b) the interest in the
capital or profits of such partnership or joint venture or (c) the









 



11



beneficial interest in such trust or estate is at the time owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or more of such
Person’s other Subsidiaries; provided, however, that Overseas Partners shall
not be deemed to be a Subsidiary of the Borrower.




     “Termination Date” means the earlier of (a) October 17, 2008 and (b) the date
of termination in whole of the Commitments pursuant to Section 2.04 or 6.01.




     “Type” has the meaning specified in the definition of “Advance”.




     “Voting Power” means, with respect to any Voting Stock of any Person at any
time, the number of votes entitled to vote generally in the election of directors of such
Person that are attributable to such Voting Stock at such time divided by the number of
votes entitled to vote generally in the election of directors of such Person that are
attributable to all shares of capital stock of such Person (including such Voting Stock) at
such time.




     “Voting Stock” means capital stock issued by a corporation, or equivalent
interests in any other Person, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been suspended by the happening
of such a contingency.



          SECTION 1.02. Computation of Time Periods. In this Agreement in the computation of
periods of time from a specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” each means “to but excluding”.




          SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting principles consistent with
those applied in the preparation of the financial statements referred to in Section 4.01(e)
(“GAAP”).




ARTICLE II




AMOUNTS AND TERMS OF THE ADVANCES




          SECTION 2.01. The Advances. Each Lender severally agrees, on the terms and conditions
hereinafter set forth, to make Advances to the Borrower from time to time on any Business Day
during the period from the Effective Date until the Termination Date in an aggregate amount not to
exceed at any time outstanding the Dollar amount set forth opposite such Lender’s name on Schedule
I hereto, if such Lender has entered into any Assignment and Acceptance, set forth for such Lender
in the Register maintained by the Agent pursuant to Section 8.07(c), as such amount may be reduced
pursuant to Section 2.04 (such Lender’s “Commitment”). Each Borrowing shall be in an
amount
not less than the Borrowing Minimum or the Borrowing Multiple in excess thereof (or, if less,
an amount equal to the remaining aggregate amount of unused Commitments) and shall consist of
Advances of the same Type made on the same day by the Lenders ratably according to their respective
Commitments.










 



12



Within the limits of each Lender’s Commitment, the Borrower may borrow under this
Section 2.01, prepay pursuant to Section 2.09 and reborrow under this Section 2.01.




          SECTION 2.02. Making the Advances. (a) Each Borrowing shall be made on notice, given
not later than (x) 11:00 A.M. (New York City time) on the third Business Day prior to the date of
the proposed Borrowing in the case of a Borrowing consisting of Eurodollar Rate Advances or (y)
11:00 A.M. (New York City time) on the date of the proposed Borrowing in the case of a Borrowing
consisting of Base Rate Advances, by the Borrower to the Agent, which shall give to each Lender
prompt notice thereof by telecopier. Each such notice of a Borrowing (a “Notice of
Borrowing”) shall be by telephone, confirmed promptly in writing, or by telecopier, in
substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such
Borrowing, (ii) Type of Advances comprising such Borrowing, (iii) aggregate amount of such
Borrowing, (iv) location of the Borrower’s Account to which funds are to be advanced and (v) in the
case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each such
Advance. Each Lender shall, before 1:00 P.M. (New York City time) on the date of such Borrowing
make available for the account of its Applicable Lending Office to the Agent at the applicable
Agent’s Account, in same day funds, such Lender’s ratable portion of such Borrowing. After the
Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in
Article III, the Agent will make such funds available to the Borrower in same day funds at the
applicable Borrower’s Account located in the United States.




          (b) Anything in subsection (a) of this Section 2.02 to the contrary notwithstanding, the
Borrower may not select Eurodollar Rate Advances for any Borrowing if the aggregate amount of such
Borrowing is less than the Borrowing Minimum or if the obligation of the Lenders to make Eurodollar
Rate Advances shall then be suspended pursuant to Section 2.07 or 2.11.




          (c) Each Notice of Borrowing shall be irrevocable and binding on the Borrower. In the case of
any Borrowing that the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by
such Lender as a result of any failure by the Borrower to fulfill on or before the date specified
in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III,
including, without limitation, any loss (excluding loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance,
as a result of such failure, is not made on such date.




          (d) Unless the Agent shall have received notice from a Lender prior to the time of any
Borrowing that such Lender will not make available to the Agent such Lender’s ratable portion of
such Borrowing, the Agent may assume that such Lender has made such portion available to the Agent
on the date of such Borrowing in accordance with subsection (a) of this
Section 2.02 and the Agent may, in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have
so made such ratable portion available to the Agent, such Lender and the Borrower severally agree
to repay to the Agent forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until the date such amount
is repaid to the Agent, at (i) in the case of the Borrower, the interest









 



13


rate applicable at the
time to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds
Rate. If such Lender shall repay to the Agent such corresponding amount, such amount so repaid
shall constitute such Lender’s Advance as part of such Borrowing for purposes of this Agreement.




          (e) The failure of any Lender to make the Advance to be made by it as part of any Borrowing
shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the
date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to
make the Advance to be made by such other Lender on the date of any Borrowing.




          SECTION 2.03. Fees. (a) Facility Fee. The Borrower agrees to pay to the
Agent for the account of each Lender a facility fee on the aggregate amount of such Lender’s
Commitment from the Effective Date in the case of each Initial Lender and from the effective date
specified in the Assignment and Acceptance pursuant to which it became a Lender in the case of each
other Lender until the Termination Date at a rate per annum equal to the Applicable Fee Percentage,
payable in arrears quarterly on the last day of each March, June, September and December,
commencing December 31, 2007, and on the Termination Date.




          (b) Agent’s Fees. The Borrower shall pay to the Agent for its own account such fees
as may from time to time be agreed between the Borrower and the Agent.




          SECTION 2.04. Termination or Reduction of the Commitments. The Borrower shall have
the right, upon at least three Business Days’ notice to the Agent, to terminate in whole or reduce
ratably in part the unused portions of the respective Commitments of the Lenders, provided
that each partial reduction shall be in the aggregate amount of $25,000,000 or an integral multiple
of $1,000,000 in excess thereof.




          SECTION 2.05. Repayment of Advances. The Borrower shall repay to the Agent for the
ratable account of the Lenders on the Termination Date the aggregate principal amount of the
Advances then outstanding.




          SECTION 2.06. Interest on Advances. (a) Scheduled Interest. The Borrower
shall pay interest on the unpaid principal amount of each Advance owing to each Lender from the
date of such Advance until such principal amount shall be paid in full, at the following rates per
annum:





     (i) Base Rate Advances. During such periods as such Advance is a Base Rate
Advance, a rate per annum equal at all times to the sum of (A) the Base Rate in effect from
time to time plus (B) the Applicable Margin in effect from time to time, payable in
arrears quarterly on the last day of each March, June, September and December during such
periods and on the date such Base Rate Advance shall be Converted or paid in full.




     (ii) Eurodollar Rate Advances. During such periods as such Advance is a
Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for
such Advance to the sum of (A) the Eurodollar Rate for such Interest Period for such Advance
plus (B) the Applicable Margin in effect from time to time, payable in arrears on
the last day of such Interest Period and, if such Interest Period has a duration of more









 



14



than three months, on each day that occurs during such Interest Period every three months
from the first day of such Interest Period and on the date such Eurodollar Rate Advance
shall be Converted or paid in full.



          (b) Default Interest. Upon the occurrence and during the continuance of an Event of
Default, the Borrower shall pay interest on (i) the unpaid principal amount of each Advance owing
to each Lender, payable in arrears on the dates referred to in subsection (a)(i) or (a)(ii) of this
Section 2.06, at a rate per annum equal at all times to 1% per annum above the rate per annum
required to be paid on such Advance pursuant to subsection (a)(i) or (a)(ii) of this Section 2.06
and (ii) the amount of any interest, fee or other amount payable hereunder that is not paid when
due, from the date such amount shall be due until such amount shall be paid in full, payable in
arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at
all times to 1% per annum above the rate per annum required to be paid on Base Rate Advances
pursuant to subsection (a)(i) of this Section 2.06.




          SECTION 2.07. Interest Rate Determination. (a) Each Reference Bank agrees, if
requested by the Agent, to furnish to the Agent timely information for the purpose of determining
each Eurodollar Rate. If any one or more of the Reference Banks shall not furnish such timely
information to the Agent for the purpose of determining any such interest rate, the Agent shall
determine such interest rate on the basis of timely information furnished by the remaining
Reference Banks, subject to the provisions of subsection (e) of this Section 2.07. The Agent shall
give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by
the Agent for purposes of Section 2.06(a)(i) or 2.06(a)(ii), and the rate, if any, furnished by
each Reference Bank for the purpose of determining the interest rate under Section 2.06(a)(ii).




          (b) If, with respect to any Eurodollar Rate Advances, the Required Lenders notify the Agent
that (i) they are unable to obtain matching deposits in the London inter-bank market at or about
11:00 A.M. (London time) on the second Business Day before the making of a Borrowing in sufficient
amounts to fund their respective Advances as a part of such Borrowing during its Interest Period or
(ii) the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the
cost to such Required Lenders of making, funding or maintaining their respective Eurodollar Rate
Advances for such Interest Period, the Agent shall forthwith so notify the Borrower and the
Lenders, whereupon (A) the Borrower will, on the last day of the then existing Interest Period
therefor, either (x) prepay such Advances or (y) Convert such
Advances into Base Rate Advances and (B) the obligations of the Lenders to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall notify the
Borrower and the Lenders that the circumstances causing such suspension no longer exist.




          (c) If the Borrower shall fail to select the duration of any Interest Period for any
Eurodollar Rate Advances in accordance with the provisions contained in the definition of “Interest
Period” in Section 1.01, the Agent will forthwith so notify the Borrower and the Lenders and such
Advances will automatically, on the last day of the then existing Interest Period therefor, Convert
into Base Rate Advances.




          (d) On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances
comprising any Borrowing shall be reduced, by payment or prepayment or









 



15


otherwise, to less than the
Borrowing Minimum, such Advances shall automatically Convert into Base Rate Advances.




          (e) Upon the occurrence and during the continuance of any Event of Default, (i) each
Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period
therefor, be Converted into Base Rate Advances and (ii) the obligation of the Lenders to make, or
to Convert Advances into, Eurodollar Rate Advances shall be suspended.




          (f) If Reuters Screen LIBOR01 Page is unavailable and fewer than two Reference Banks furnish
timely information to the Agent for determining the Eurodollar Rate for any Eurodollar Rate
Advances after the Agent has requested such information,





     (i) the Agent shall forthwith notify the Borrower and the Lenders that the interest
rate cannot be determined for such Eurodollar Rate Advances,




     (ii) each such Advance will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Base Rate Advance (or if such Advance is then a
Base Rate Advance, will continue as a Base Rate Advance), and




     (iii) the obligations of the Lenders to make Eurodollar Rate Advances, or to Convert
Advances into Eurodollar Rate Advances, shall be suspended until the Agent shall notify the
Borrower and the Lenders that the circumstances causing such suspension no longer exist.



          SECTION 2.08. Optional Conversion of Advances. The Borrower may on any Business Day,
upon notice given to the Agent not later than 11:00 A.M. (New York City time) on the third Business
Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.07,
2.11 and 8.04(d), Convert Advances of one Type comprising the same Borrowing into Advances of the
other Type; provided, however, that any Conversion of Base Rate Advances into
Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in
Section 2.02(b). Each such notice of a Conversion shall, within the restrictions specified above,
specify (a) the date of such Conversion, (b) the Advances to be Converted, and (c) if such
Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for each
such Advance. Each notice of Conversion shall be irrevocable and binding on the Borrower.




          SECTION 2.09. Optional Prepayments of Advances. The Borrower may, upon at least two
Business Days’ notice in the case of Eurodollar Rate Advances and notice on the same Business Day
in the case of Base Rate Advances to the Agent stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding
principal amount of such Advances comprising part of the same Borrowing in whole or ratably in
part, together with accrued interest to the date of such prepayment on the principal amount
prepaid; provided, however, that (a) each partial prepayment shall be in an
aggregate principal amount of not less than the Prepay Minimum or a Borrowing Multiple in excess
thereof and (b) in the event of any such prepayment of a Eurodollar Rate Advance, the Borrower
shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.04(d).

















 





16




          SECTION 2.10. Increased Costs. (a) If, due to either (i) the introduction of or any
change (other than any change by way of imposition or increase of reserve requirements included in
the Eurodollar Rate Reserve Percentage) in or in the interpretation of any law or regulation or
(ii) the compliance with any guideline or request from any central bank or other Governmental
Authority including, without limitation, any agency of the European Union or similar monetary or
multinational authority (whether or not having the force of law), there shall be any increase in
the cost as measured from the date hereof to any Lender of agreeing to make or making, funding or
maintaining Eurodollar Rate Advances, then the Borrower shall from time to time, upon demand by
such Lender (with a copy of such demand to the Agent), promptly pay to the Agent for the account of
such Lender additional amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to the Borrower and the Agent by
such Lender, shall be conclusive and binding for all purposes, absent manifest error.




          (b) If any Lender determines that compliance with any law or regulation or any guideline or
request from any central bank or other Governmental Authority (whether or not having the force of
law) affects or would affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and that the amount of such capital is increased
by or based upon the existence of such Lender’s commitment to lend hereunder and other commitments
of this type, then, upon demand by such Lender (with a copy of such demand to the Agent), the
Borrower shall promptly pay to the Agent for the account of such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such Lender or such
corporation in the light of such circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable to the existence of such Lender’s commitment to
lend hereunder. A certificate as to such amounts submitted to the Borrower and the Agent by such
Lender shall be conclusive and binding for all purposes, absent manifest error.




          SECTION 2.11. Illegality. Notwithstanding any other provision of this Agreement, if
any Lender shall notify the Agent that the introduction of or any change in or in the
interpretation of any law or regulation by any governmental authority charged with such
interpretation makes it unlawful, or any central bank or other Governmental Authority asserts that
it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations
hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances
hereunder, (a) each Eurodollar Rate Advance will automatically, upon such demand be Converted into
a Base Rate Advance or an Advance that bears interest at the rate set forth in Section 2.06(a)(i),
as the case may be, and (b) the obligation of the Lenders to make Eurodollar Rate Advances or to
Convert Advances into Eurodollar Rate Advances shall be suspended until the Agent shall notify the
Borrower and the Lenders that the circumstances causing such suspension no longer exist.




          SECTION 2.12. Payments and Computations. (a) The Borrower shall make each payment
hereunder not later than 1:00 P.M. (New York City time) on the day when due, without setoff or counterclaim, in Dollars to the Agent at the
applicable Agent’s Account in same day funds. The Agent will promptly thereafter cause to be
distributed like funds relating to the payment of principal or interest or facility fees ratably
(other than amounts payable pursuant to Section 2.10, 2.13 or 8.04(d)) to the Lenders for the
account of their respective Applicable










 



17



Lending Offices, and like funds relating to the payment of
any other amount payable to any Lender to such Lender for the account of its Applicable Lending
Office, in each case to be applied in accordance with the terms of this Agreement. Upon its
acceptance of an Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 8.07(d), from and after the effective date specified in such
Assignment and Acceptance, the Agent shall make all payments hereunder and under any Notes in
respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such
Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior
to such effective date directly between themselves.




          (b) The Borrower hereby authorizes the Agent, if and to the extent payment owed to any Lender
is not made when due hereunder or under any Note held by such Lender, to charge from time to time
against any or all of the Borrower’s accounts with the Agent any amount so due.




          (c) All computations of interest based on the Base Rate shall be made by the Agent on the
basis of a year of 365 or 366 days, as the case may be, all computations of interest based on the
Eurodollar Rate or the Federal Funds Rate and of facility fees shall be made by the Agent on the
basis of a year of 360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest or facility fees are
payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.




          (d) Whenever any payment hereunder or under any Notes shall be stated to be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payment of interest or
facility fees, as the case may be; provided, however, that, if such extension would
cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding Business Day.




          (e) Unless the Agent shall have received notice from the Borrower prior to the date on which
any payment is due to the Lenders hereunder that the Borrower will not make such payment in full,
the Agent may assume that the Borrower has made such payment in full to the Agent on such date and
the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due
date an amount equal to the amount then due such Lender. If and to the extent the Borrower shall
not have so made such payment in full to the Agent, each Lender shall repay to the Agent forthwith
on demand such amount distributed to such Lender together with interest thereon, for each day from
the date such amount is distributed to such Lender until the date such Lender repays such amount to
the Agent, at the Federal Funds Rate.




          SECTION 2.13. Taxes. (a) Any and all payments by the Borrower hereunder or under any Notes shall be made, in
accordance with Section 2.12, free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Agent, taxes imposed on its
net income, as well as any branch profit taxes imposed by the United States of America or any
similar tax imposed by any other jurisdiction in which such Lender is located, franchise taxes
measured by income imposed on it, by the jurisdiction under









 



18


the laws of which such Lender or the Agent (as the case may be) is organized or any political subdivision thereof and, in the case of
each Lender, taxes imposed on its net income, and franchise taxes measured by income imposed on it,
by the jurisdiction of such Lender’s Applicable Lending Office or any political subdivision thereof
(all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in
respect of payments hereunder or under any Notes being hereinafter referred to as “Taxes”).
If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Lender or the Agent (i) the sum payable shall be increased as
may be necessary so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.13) such Lender or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with applicable law.




          (b) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies that arise from any payment made
hereunder or under any Notes or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any Notes hereinafter referred to as “Other Taxes”).




          (c) The Borrower shall indemnify each Lender and the Agent for the full amount of Taxes or
Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.13) paid by such Lender or the Agent or any of its Affiliates
(as the case may be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days from the date such Lender, the
Agent or such Affiliate (as the case may be) makes written demand therefor.




          (d) Within 30 days after the date of any payment of Taxes, the Borrower shall furnish to the
Agent, at its address referred to in Section 8.02, the original or a certified copy of a receipt
evidencing payment thereof. If no Taxes are payable in respect of any payment hereunder or under
any Notes, the Borrower will furnish to the Agent, at such address, a certificate from each
appropriate taxing authority, or an opinion of counsel acceptable to the Agent, in either case
stating that such payment is exempt from or not subject to Taxes.




          (e) Each Lender organized under the laws of a jurisdiction outside the United States, on or
prior to the date of its execution and delivery of this Agreement in the case of each Initial
Lender and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender in
the case of each other Lender, and from time to time thereafter if requested in writing
by the Borrower (but only so long as such Lender remains lawfully able to do so), shall
provide each of the Agent and the Borrower with Internal Revenue Service form W-8BEN or W-8ECI, or
(in the case of a Lender that has certified in writing to the Agent that it is not a “bank” as
defined in Section 881(c)(3)(A) of the Internal Revenue Code) Form W-8 (and, if such Non-U.S.
Lender delivers a Form W-8, a certificate representing that such Non-U.S. Lender is not a “bank”
for purposes of Section 881(c) of the Internal Revenue Code, is not a 10-percent shareholder
(within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the Borrower and is
not a









 



19


controlled foreign corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Internal Revenue Code)),as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Lender is entitled to benefits under an income tax
treaty to which the United States is a party which reduces the rate of withholding tax on payments
of interest or certifying that the income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United States. Each such Lender shall
provide the Agent and the Borrower with a new form W-8BEN, W-8ECI or W-8, as appropriate, if and at
such time as the previously provided form becomes invalid. If the form provided by a Lender at the
time such Lender first becomes a party to this Agreement or at any other time indicates a United
States interest withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from “Taxes” as defined in Section 2.13(a).




          (f) For any period with respect to which a Lender has failed to provide the Borrower with the
appropriate form described in subsection (e) of this Section 2.13 (other than if such failure is
due to a change in law occurring subsequent to the date on which a form originally was required to
be provided, or if such form otherwise is not required under the first sentence of subsection (e)
of this Section 2.13), such Lender shall not be entitled to indemnification under subsection (a) or
(c) of this Section 2.13 with respect to Taxes imposed by the United States by reason of such
failure; provided, however, that should a Lender become subject to Taxes because of
its failure to deliver a form required hereunder, the Borrower shall take such steps as the Lender
shall reasonably request to assist the Lender to recover such Taxes.




          (g) Notwithstanding any contrary provisions of this Agreement, in the event that a Lender that
originally provided such form as may be required under subsection (e) of this Section 2.13
thereafter ceases to qualify for complete exemption from United States withholding tax, such
Lender, with the prior written consent of the Borrower, which consent shall not be unreasonably
withheld, may assign its interest under this Agreement to any assignee and such assignee shall be
entitled to the same benefits under this Section 2.13 as the assignor provided that the rate of
United States withholding tax applicable to such assignee shall not exceed the rate then applicable
to the assignor.




          (h) Any Lender claiming any additional amounts payable pursuant to this Section 2.13 agrees to
use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions)
to change the jurisdiction of its Eurodollar Lending Office if the making of such a change would
avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue
and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such
Lender.




          (i) If any Lender or Agent, as the case may be, obtains a refund of any Taxes or Other Taxes
for which payment has been made pursuant to this Section 2.13, which refund in the
good faith judgment of such Lender or Agent, as the case may be (and without any obligation to
disclose its tax records) is allocable to such payment made under this Section 2.13, the amount of
such refund (together with any interest received thereon and reduced by reasonable costs incurred
in obtaining such refund) promptly shall be paid to the Borrower to the extent payment has been
made by the Borrower pursuant to this Section 2.13, provided, however, if the
jurisdiction which refunded such Taxes or Other Taxes subsequently asserts such Taxes or Other
Taxes are due, then the Borrower shall indemnify such Lender or the Agent, as the case may be,









 



20


pursuant to Section 2.13(c). Each Lender and Agent shall take such action, as the Borrower may
reasonably request, in order to apply for and obtain any refund of such amounts the Borrower
reasonably determines to be appropriate under the circumstances; provided that any such
actions shall be at the sole cost and expense of the Borrower.




          SECTION 2.14. Sharing of Payments, Etc. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on
account of the Advances owing to it (other than pursuant to Section 2.10, 2.13 or 8.04(d)) in
excess of its ratable share of payments on account of the Advances obtained by all the Lenders,
such Lender shall forthwith purchase from the other Lenders such participations in the Advances
owing to them as shall be necessary to cause such purchasing Lender to share the excess payment
ratably with each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery together with an amount equal to such Lender’s ratable share (according to
the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so
recovered from the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender
so purchasing a participation from another Lender pursuant to this Section 2.14 may, to the fullest
extent permitted by law, exercise all its rights of payment (including the right of setoff) with
respect to such participation as fully as if such Lender were the direct creditor of the Borrower
in the amount of such participation.




          SECTION 2.15. Substitution of Lender. If the obligation of any Lender to make
Eurodollar Rate Advances has been suspended pursuant to Section 2.11 or any Lender has demanded
compensation or the Borrower is otherwise required to pay additional amounts under Section 2.10 or
2.13, the Borrower shall have the right to seek a substitute lender or lenders who qualify as
Eligible Assignees to assume, in accordance with the provisions of Section 8.07, the Commitment of
such Lender and to purchase the Advances made by such Lender (without recourse to or warranty by
such Lender).




          SECTION 2.16. Evidence of Debt. (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 Advance owing to such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time hereunder in respect of
Advances. The Borrower agrees that upon notice by any Lender to the Borrower (with a copy of such notice to
the Agent) to the effect that a Note is required or appropriate in order for such Lender to
evidence (whether for purposes of pledge, enforcement or otherwise) the Advances owing to, or to be
made by, such Lender, the Borrower shall promptly execute and deliver to such Lender a Note payable
to the order of such Lender in a principal amount up to the Commitment of such Lender.




          (b) The Register maintained by the Agent pursuant to Section 8.07(d) shall include a control
account, and a subsidiary account for each Lender, in which accounts (taken together) shall be
recorded (i) the date and amount of each Borrowing made hereunder, the Type of Advances comprising
such Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the terms of each
Assignment and Acceptance delivered to and accepted by it, (iii)









 



21


the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder
and (iv) the amount of any sum received by the Agent from the Borrower hereunder and each Lender’s
share thereof.




          (c) Entries made in good faith by the Agent in the Register pursuant to subsection (b) above,
and by each Lender in its account or accounts pursuant to subsection (a) above, shall be
prima facie evidence of the amount of principal and interest due and payable or to
become due and payable from the Borrower to, in the case of the Register, each Lender and, in the
case of such account or accounts, such Lender, under this Agreement, absent manifest error;
provided, however, that the failure of the Agent or such Lender to make an entry,
or any finding that an entry is incorrect, in the Register or such account or accounts shall not
limit or otherwise affect the obligations of the Borrower under this Agreement.




ARTICLE III




CONDITIONS TO EFFECTIVENESS AND LENDING




          SECTION 3.01. Conditions Precedent to Effectiveness of Section 2.01. Section 2.01 of
this Agreement shall become effective on and as of the first date (the “Effective Date”) on
which the following conditions precedent have been satisfied:





     (a) The Borrower shall have notified each Lender and the Agent in writing as to the
proposed Effective Date.




     (b) The Borrower shall have paid all fees and other amounts due and payable.




     (c) On the Effective Date, the following statements shall be true and the Agent shall
have received for the account of each Lender a certificate signed by a duly authorized
officer of the Borrower, dated the Effective Date, stating that:




     (i) the representations and warranties contained in Section 4.01 are correct
in all material respects on and as of the Effective Date; and




     (ii) no event has occurred and is continuing that constitutes a Default.




     (d) The Agent shall have received on or before the Effective Date the following, each
dated such day, in form and substance satisfactory to the Agent and (except for the Notes)
in sufficient copies for each Lender:




     (i) The Notes to the order of the Lenders to the extent requested by any Lender
pursuant to Section 2.16.




     (ii) Certified copies of the resolutions of the board of directors of the
Borrower approving this Agreement and any Notes, and of all documents evidencing
other necessary corporate action and governmental approvals, if any, with respect to
this Agreement and any Notes.









 



22



     (iii) A certificate of the Secretary or an Assistant Secretary of the Borrower
certifying the names and true signatures of the officers of the Borrower authorized
to sign this Agreement and any Notes and the other documents to be delivered
hereunder.




     (iv) A favorable opinion of King & Spalding LLP, counsel for the Borrower,
substantially in the form of Exhibit D hereto.




     (v) A favorable opinion of Shearman & Sterling LLP, counsel for the Agent, in
form and substance satisfactory to the Agent.



          SECTION 3.02. Conditions Precedent to Each Borrowing. The obligation of each Lender
to make an Advance on the occasion of each Borrowing shall be subject to the conditions precedent
that the Effective Date shall have occurred and on the date of such Borrowing the following
statements shall be true (and each of the giving of the applicable Notice of Borrowing and the
acceptance by the Borrower of the proceeds of such Borrowing shall constitute a representation and
warranty by the Borrower that on the date of such Borrowing or such extension such statements are
true):





     (a) the representations and warranties contained in Section 4.01 (except the
representations set forth in subsection (f) or (g)(i) thereof) are correct in all material
respects on and as of the date of such Borrowing, before and after giving effect to such
Borrowing and to the application of the proceeds therefrom, as though made on and as of such
date; and




     (b) no event has occurred and is continuing, or would result from such Borrowing or
from the application of the proceeds therefrom, that constitutes a Default.



          SECTION 3.03. Determinations Under Section 3.01. For purposes of determining
compliance with the conditions specified in Section 3.01, each Lender shall be deemed to have
consented to, approved or accepted or to be satisfied with each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an
officer of the Agent responsible for the transactions contemplated by this Agreement shall have
received notice from such Lender prior
to the proposed Effective Date, as notified by the Borrower to the Lenders, specifying its
objection thereto. The Agent shall promptly notify the Borrower and the other Lenders of the
occurrence of any such objection. The Agent shall promptly notify the Borrower and the Lenders of
the Effective Date.




          SECTION 3.04. Labor Dispute. Notwithstanding any condition precedent to the contrary
contained herein, a labor dispute of any sort involving employees of the Borrower or its
Subsidiaries shall not prevent the Borrower from borrowing hereunder unless as a result thereof the
Borrower is in violation of the covenant set forth in Section 5.02(c) or a Default exists under
Section 6.01(a) or (e).










 



23




ARTICLE IV




REPRESENTATIONS AND WARRANTIES




          SECTION 4.01. Representations and Warranties of the Borrower. The Borrower
represents and warrants as follows:





     (a) Each of the Borrower and its Subsidiaries (i) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, except, in the
case of any such Subsidiary, where the failure so to qualify would not result in a Material
Adverse Effect, (ii) has the requisite power and authority to own its property and assets
and to carry on its business as now conducted, except, in the case of any such Subsidiary,
where the failure so to qualify would not result in a Material Adverse Effect, (iii) is
qualified to do business in every jurisdiction where such qualification is required, except
where the failure so to qualify would not result in a Material Adverse Effect and (iv) in
the case of the Borrower, has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement and any Notes and each other agreement or
instrument contemplated thereby to which it is or is to be a party and to borrow under this
Agreement.




     (b) The execution, delivery and performance by the Borrower of this Agreement and any
Notes to be delivered by it and the consummation of the transactions contemplated thereby
are within the Borrower’s corporate powers, have been duly authorized by all necessary
corporate action and, if required, stockholder action, and do not (i) contravene the charter
or other constitutive documents or by-laws of the Borrower or any Subsidiary of the
Borrower, (ii) violate any law or order of any Governmental Authority or any provision of
any indenture or other material agreement or instrument to which the Borrower or any
Subsidiary of the Borrower is a party or by which any of them or any of their property is or
may be bound or affected, (iii) conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under any such indenture, agreement or other
instrument or (iv) result in the creation or imposition of any Lien upon or with respect to
any property or assets now owned or hereafter acquired by the Borrower or any Subsidiary of
the Borrower.




     (c) No authorization, approval or other action by, and no notice to or filing with, any
Governmental Authority is required for the due execution, delivery and performance by the
Borrower of this Agreement or any Notes to be delivered by it, or for the consummation of
the transactions contemplated hereby and thereby, except for such authorizations, approvals,
actions, notices or filings that have been made or obtained and are in full force and
effect.




     (d) This Agreement has been, and any Notes to be delivered by it when delivered
hereunder will have been, duly executed and delivered by the Borrower. This Agreement is,
and any Notes when delivered hereunder will be, the legal, valid and binding obligation of
the Borrower enforceable against the Borrower in accordance with their respective terms
(subject, as to the enforcement of remedies, to applicable









 



24



bankruptcy, reorganization, insolvency, moratorium and similar laws affecting creditors’ rights generally).




     (e) The Consolidated balance sheet of the Borrower and its Subsidiaries as at December
31, 2006, and the related Consolidated statements of income and cash flows of the Borrower
and its Subsidiaries for the Fiscal Year then ended, all audited and certified by Deloitte &
Touche LLP, independent public accountants, and the Consolidated balance sheet of the
Borrower and its Subsidiaries as at June 30, 2007, and the related Consolidated statements
of income and cash flows of the Borrower and its Subsidiaries for the six months then ended,
duly certified by the chief financial officer of the Borrower, copies of which have been
furnished to each Lender, fairly present in all material respects, subject, in the case of
said balance sheet as at June 30, 2007, and said statements of income and cash flows for the
six months then ended, to any requirements for footnote disclosures and to normal year-end
accruals and audit adjustments, the Consolidated financial condition of the Borrower and its
Subsidiaries at such dates and the Consolidated results of the operations of the Borrower
and its Subsidiaries for the periods ended on such dates, all in accordance with GAAP
consistently applied. Such balance sheets and the notes thereto disclose all material
liabilities, direct or contingent, of the Borrower and its Subsidiaries on a Consolidated
basis as of the dates thereof required to be reflected or disclosed therein in accordance
with GAAP.




     (f) There has been no Material Adverse Change since December 31, 2006.




     (g) Except as set forth in the financial statements referred to in subsection (e) of
this Section 4.01, there is no pending or, to the knowledge of the Borrower, threatened
action, suit, investigation, litigation or proceeding affecting the Borrower or any of its
Material Subsidiaries or any business, property or rights of the Borrower or any Material
Subsidiary (i) as to which there is a reasonable possibility of an adverse determination and
which, if adversely determined, is reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect or (ii) that purports to affect the legality, validity
or enforceability of this Agreement, any Note or the consummation of the transactions
contemplated hereby or thereby. Neither the Borrower nor any of its Subsidiaries is in
violation of any law, rule or regulation (including, without limitation, any ERISA or
environmental law, rule or regulation), or in default with respect to any judgment, writ,
injunction or decree of any Governmental Authority, where such violation or default is
reasonably expected to result in a Material Adverse Effect.




     (h) Neither the Borrower nor any of its Subsidiaries is engaged principally, or as one
of its important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock. No part of the proceeds of any Advance will be used,
whether directly or indirectly, and whether immediately, incidentally or ultimately, for any
purpose which entails a violation of, or which is inconsistent with, the provisions of the
Regulations of the Board of Governors of the Federal Reserve System, including Regulation T,
U or X thereof.









 



25



     (i) Neither the Borrower nor any of its Subsidiaries is an “investment company”, as
defined in, or subject to regulation under, the Investment Company Act of 1940, as amended.




     (j) The Borrower will use the proceeds of the Advances as a commercial paper backstop
and for other lawful general corporate purposes.




     (k) Each of the Borrower and its Subsidiaries has filed or caused to be filed all
federal income tax and all other material state and local tax returns required to have been
filed by it and has paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessments received by it, except taxes that are otherwise permitted to
remain unpaid in accordance with the provisions of Section 5.01(b).




     (l) All information, reports, financial statements, exhibits or schedules prepared or
furnished by or on behalf of the Borrower to the Agent, Arranger or any Lender in connection
with the negotiation of this Agreement or delivered pursuant hereto contained, contains or
will contain no material misstatement of fact and did not omit, does not omit and will not
omit to state any material fact necessary to make the statements therein, in the light of
the circumstances under which they were, are or will be made, not misleading.



ARTICLE V




COVENANTS OF THE BORROWER




          SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain unpaid or
any Lender shall have any Commitment hereunder, the Borrower will, and will cause each of its
Material Subsidiaries to, unless the Required Lenders shall otherwise consent in writing:





     (a) Compliance with Laws, Etc. Comply with all applicable laws, rules,
regulations and orders of any Governmental Authority, whether now in effect or hereafter
enacted, such compliance to include, without limitation, compliance with ERISA, applicable
environmental laws and the Patriot Act, except for such noncompliance as would not result in
a Material Adverse Effect.




     (b) Payment of Taxes, Etc. Pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon its income or profits
or in respect of its property, before the same shall become delinquent or in default;
provided, however, that such payment and discharge shall not be required
with respect to any such tax, assessment, charge or levy so long as the validity or amount
thereof shall be contested in good faith by appropriate proceedings or where the failure to
pay such tax, assessment, charge or levy would not result in a Material Adverse Effect. The
charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect
of taxes, assessments, charges and levies are, in the opinion of the Borrower, adequate.




     (c) Maintenance of Insurance. (i) Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers, (ii) maintain such other









 



26



insurance, to such extent and against such risks, including fire and other risks insured
against by extended coverage, as is customary with companies in the same or similar
businesses, including public liability insurance against claims for personal injury or death
or property damage occurring upon, in, about or in connection with the use of any properties
owned, occupied or controlled by the Borrower or any of its Material Subsidiaries, in such
amount as the Borrower or such Subsidiary shall reasonably deem necessary and (iii) maintain
such other insurance as may be required by law (it being understood that the Borrower may
self-insure against certain risks to the extent reasonable or customary with companies
similarly situated).




     (d) Preservation of Corporate Existence, Etc. Preserve and maintain the
Borrower’s corporate existence; obtain, preserve, renew, extend and keep in full force and
effect the rights, licenses, permits, franchises, authorizations, patents, copyrights,
trademarks and tradename material to the conduct of its business (unless the failure to so
preserve or renew would not result in a Material Adverse Effect); and engage, and cause its
Material Subsidiaries to engage principally in businesses of the same general types as those
conducted on the date of this Agreement or reasonably related or incidental thereto;
provided, however, that the Borrower and its Subsidiaries may consummate any
merger or consolidation permitted under Section 5.02(d), and provided, further, that the
Borrower or its Subsidiaries may from time to time convey, transfer or otherwise dispose of
or discontinue any business to the extent such conveyance, transfer, disposition or
discontinuation would not result in a Material Adverse Effect.




     (e) Keeping of Books. Keep, and cause each of its Material Subsidiaries to
keep, proper books of record and account, in which entries that are complete and correct in
all material respects shall be made of all financial transactions and the assets and
business of the Borrower and each such Subsidiary in accordance with generally accepted
accounting principles in effect from time to time.




     (f) Maintenance of Properties, Etc. Maintain and preserve all of its
properties material to the conduct of its business in good repair, working order and
condition, ordinary wear and tear excepted, and from time to time make, or cause to be made,
all needful and proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be properly
conducted at all times.




     (g) Reporting Requirements. In the case of the Borrower, furnish to the Agent
and each Lender:




     (i) within 120 days after the end of each Fiscal Year of the Borrower,
Consolidated balance sheets of the Borrower and its Subsidiaries showing the
financial condition of the Borrower and its Subsidiaries as of the close of such
Fiscal Year and the related statements of Consolidated income and statements of
Consolidated cash flow as of and for such Fiscal Year, all such Consolidated
financial statements of the Borrower and its Subsidiaries to be reported on by
Deloitte & Touche LLP or other independent accountants of nationally recognized
standing or otherwise acceptable to the Required Lenders;









 



27



     (ii) within 60 days after the end of the first three fiscal quarters of each
Fiscal Year, unaudited Consolidated balance sheets and statements of Consolidated
income and statements of Consolidated cash flow showing the financial condition and
results of operations of the Borrower as of the end of each such quarter and, with
respect to statements of Consolidated cash flow, for the then-elapsed portion of the
Fiscal Year, certified by a Financial Officer of the Borrower as presenting fairly
in all material respects the financial position and results of operations of the
Borrower on a Consolidated basis and as having been prepared in accordance with
GAAP, in each case subject to normal year-end audit adjustments and the absence of
notes thereto;




     (iii) promptly after the same are publicly available, copies of all annual
registration statements (other than exhibits thereto, pricing supplements and any
registration statements (A) on Form S-8 (or its equivalent) or (B) in connection
with asset securitization transactions) and reports on Form 10-K and 10-Q (or their
equivalents), which the Borrower shall have filed with the SEC under Section 13 or
15(d) of the Exchange Act and not otherwise required to be delivered to the Agent
pursuant hereto;




     (iv) concurrently with subsections (h)(i) and (h)(ii) of this Section 5.01, a
certificate of a Financial Officer of the Borrower stating compliance, as of the
dates of the financial statements being furnished at such time, with the covenants
set forth in Sections 5.02(a) and (c);




     (v) concurrently with subsections (h)(i) and (h)(ii) of this Section 5.01, a
certificate of the Person referred to therein (which certificate furnished by the
independent accountants referred to in subsection (h)(i) of this Section 5.01 may be
limited to accounting matters and disclaim responsibility for legal interpretations)
certifying that to the best of his, her or its knowledge no Default or Event of
Default has occurred and, in the case of a certificate of a Financial Officer of the
Borrower, if such a Default or Event of Default has occurred, specifying the nature
and extent thereof and any corrective action taken or proposed to be taken with
respect thereto;




     (vi) prompt written notice of a Reportable Event or Reportable Events, or of
the Borrower’s failure to make a required installment or other payment (within the
meaning of Section 412(n)(1) of the Internal Revenue Code), shall have occurred with
respect to any Plan or Plans, in any case that is reasonably expected to result in
liability of the Borrower or any Subsidiary to the PBGC or to a Plan in an aggregate
amount exceeding $100,000,000;




     (vii) prompt written notice of any Default, if such Default is then continuing,
specifying the nature and extent thereof and any corrective action taken or proposed
to be taken with respect thereto;




     (viii) prompt written notice of the filing or commencement of, or any overt
threat or notice of intention of any Person to file or commence, any action,









 



28



suit, arbitration proceeding or other proceeding, whether at law or in equity or by or
before any Governmental Authority, against the Borrower or any Material Subsidiary
thereof that is reasonably expected to result in a Material Adverse Effect;




     (ix) prompt written notice of the issuance by any Governmental Authority of any
injunction, order, decision or other restraint prohibiting, or having the effect of
prohibiting, the making of the Advances or the initiation of any litigation or
similar proceedings seeking any such injunction, order or other restraint; and




     (x) prompt written notice of any Change of Control.



          Financial reports required to be delivered pursuant to clauses (i), (ii) and (iii) above shall
be deemed to have been delivered on the date on which the Borrower notifies the Agent that such
reports are posted on the Borrower’s website at www.ups.com under “Investor Relations”, and such
posting shall be deemed to satisfy the financial reporting requirements of clauses (i), (ii) and
(iii) above, it being understood that the Borrower shall provide all other reports and certificates
required to be delivered under this Section 5.01(g) in the manner set forth in Section 8.02.




          SECTION 5.02. Negative Covenants. So long as any Advance shall remain unpaid or any
Lender shall have any Commitment hereunder, the Borrower will not, and will not permit any of its
Subsidiaries to, without the written consent of the Required Lenders:





     (a) Secured Indebtedness. In the case of the Borrower and each of its
Restricted Subsidiaries, create, assume, incur or guarantee, or permit any Restricted
Subsidiary to create, assume, incur or guarantee (each such creation, assumption, incurrence
or guarantee being an “Incurrence”), any Secured Indebtedness without making
provision whereby all amounts outstanding under this Agreement and any Notes shall be
secured equally and ratably with (or prior to) such Secured Indebtedness (together with, if
the Borrower shall so determine, any other Debt of the Borrower or such Restricted
Subsidiary then existing or thereafter created that is not subordinate to
such amounts outstanding under this Agreement and any Notes) so long as such Secured
Indebtedness shall be outstanding, unless such Secured Indebtedness, when added to (i) the
aggregate amount of all Secured Indebtedness then outstanding (not including in this
computation (A) any Secured Indebtedness if all amounts outstanding under this Agreement and
any Notes are secured equally and ratably with (or prior to) such Secured Indebtedness and
(B) any Secured Indebtedness that is concurrently being retired) and (ii) the aggregate
amount of all Attributable Debt then outstanding pursuant to Sale and Leaseback Transactions
entered into by the Borrower after December 1, 1989, or entered into by any Restricted
Subsidiary after December 1, 1989, or, if later, the date on which such Subsidiary became a
Restricted Subsidiary (not including in this computation any Attributable Debt that is
currently being retired) would not exceed 10% of Consolidated Net Tangible Assets at the
time of such Incurrence.









 



29



     (b) Sale and Lease-Back Transactions. In the case of the Borrower and its
Restricted Subsidiaries, enter into any Sale and Leaseback Transaction unless at such time
it would be permitted to enter into such Sale and Leaseback Transaction pursuant to Section
1006 of the Debenture Indenture.




     (c) Mergers, Etc. In the case of the Borrower, merge or consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to, any Person, or permit another Person to merge into it, except that
(i) any Subsidiary of the Borrower may merge into the Borrower, and (ii) the Borrower may
merge or consolidate with or into any other Person so long as the Borrower is the surviving
corporation; provided, in each case, that no Default shall have occurred and be
continuing at the time of such proposed transaction or would result therefrom.



ARTICLE VI




EVENTS OF DEFAULT




          SECTION 6.01. Events of Default. If any of the following events (“Events of
Default”) shall occur and be continuing:





     (a) the Borrower shall fail to pay (i) any principal of any Advance when the same
becomes due and payable or (ii) any interest on any Advance or any other amount payable
under this Agreement or any Note when the same becomes due and payable and such failure to
pay such interest or such other amount shall remain unremedied for three Business Days; or




     (b) any representation or warranty made or deemed made by the Borrower (or any of its
officers) in or in connection with this Agreement or any Borrowing under this Agreement, or
any representation, warranty, statement or information contained in any report, certificate,
financial statement or other instrument furnished in connection with or
pursuant to this Agreement, shall prove to have been incorrect in any material respect
when made or deemed made; or




     (c) the Borrower shall fail to perform or observe (i) any term, covenant or agreement
contained in subsection (d) (as to the Borrower’s corporate existence) or (g) (other than
subsections (g)(i) through (g)(vi)) of Section 5.01 or Section 5.02 or (ii) any other term,
covenant or agreement contained in this Agreement or any Note on its part to be performed or
observed if such failure to perform such other term, covenant or agreement shall remain
unremedied for 30 days after written notice thereof shall have been given to the Borrower by
the Agent; or




     (d) the Borrower or any of its Subsidiaries shall fail to pay any principal of or
premium or interest on any Debt that is outstanding in a principal amount of at least
$200,000,000 in the aggregate (but excluding Debt under this Agreement or any Notes) of the
Borrower or such Subsidiary (as the case may be), when the same becomes due and payable
(whether at maturity, by acceleration or otherwise), and such failure shall









 



30



continue after the applicable grace period, if any, specified in the agreement or instrument relating to
such Debt; or any other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue after the applicable grace period,
if any, specified in such agreement or instrument, if the effect of such event or condition
is to accelerate (with or without notice or lapse of time or both) the maturity of such
Debt; or




     (e) the Borrower or any of its Material Subsidiaries shall generally not pay its debts
as such debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against the Borrower or any of its Material
Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief
of debtors, or seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted against it (but not instituted
by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days,
or any of the actions sought in such proceeding (including, without limitation, the entry of
an order for relief against, or the appointment of a receiver, trustee, custodian or other
similar official for, it or for any substantial part of its property) shall occur; or the
Borrower or any of its Material Subsidiaries shall take any corporate action to authorize
any of the actions set forth above in this subsection (e); or




     (f) any final judgment or order for the payment of money in excess of $100,000,000 in
the aggregate shall be rendered against the Borrower or any of its Material Subsidiaries or
any combination thereof and either (i) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order or (ii) there shall be any period of 45 consecutive
days during which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or




     (g) any Change of Control shall have occurred; or




     (h) a Reportable Event or Reportable Events, or a failure to make a required
installment or other payment (within the meaning of Section 412(n)(1) of the Internal
Revenue Code), shall have occurred with respect to any Plan or Plans that reasonably could
be expected to result in liability of the Borrower or any Subsidiary to the PBGC or to a
Plan in an aggregate amount exceeding $100,000,000 and, within 30 days after the reporting
of any such Reportable Event or Reportable Events to the Agent, the Agent shall have
notified the Borrower, in writing that (i) the Required Lenders have made a determination
that, on the basis of such Reportable Event or Reportable Events or the failure to make a
required payment, there are reasonable grounds (A) for the termination of such Plan or Plans
by the PBGC or (B) for the appointment by the appropriate United States District Court of a
trustee to administer such Plan or Plans and (ii) as a result thereof, an Event of Default
exists hereunder; or the PBGC shall have instituted proceedings to terminate any Plan or
Plans with vested unfunded liabilities aggregating in excess of $100,000,000; or a trustee
shall be appointed by a United States District Court









 



31



to administer any such Plan or Plans and the Borrower is being requested to make a payment with respect to vested unfunded
liabilities aggregating in excess of $100,000,000;


then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the
Required Lenders, by notice to the Borrower, declare the obligation of each Lender to make Advances
to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or
may with the consent, of the Required Lenders, by notice to the Borrower, declare the Advances, all
interest thereon and all other amounts payable under this Agreement to be forthwith due and
payable, whereupon the Advances, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower; provided, however, that in
the event of an actual or deemed entry of an order for relief with respect to the Borrower or any
of its Subsidiaries under the Federal Bankruptcy Code, (A) the obligation of each Lender to make
Advances shall automatically be terminated and (B) the Advances, all such interest and all such
amounts shall automatically become and be due and payable, without presentment, demand, protest or
any notice of any kind, all of which are hereby expressly waived by the Borrower.




ARTICLE VII




THE AGENT




          SECTION 7.01. Authorization and Action. Each Lender hereby appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such powers and discretion
under this Agreement as are delegated to the Agent by the terms hereof, together with such powers
and discretion as are reasonably incidental thereto. As to any matters not expressly provided for
by this Agreement (including, without limitation, enforcement or collection of any Notes), the
Agent shall not be required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the
instructions of the Required Lenders, and such instructions shall be binding upon all Lenders and
all holders of Notes; provided, however, that the Agent shall not be required to
take any action that exposes the Agent to personal liability or that is contrary to this Agreement
or applicable law. The Agent agrees to give to each Lender prompt notice of each notice given to
it by the Borrower or any of its Subsidiaries pursuant to the terms of this Agreement.




          SECTION 7.02. Agent’s Reliance, Etc. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to be taken by it or
them under or in connection with this Agreement, except for its or their own gross negligence or
willful misconduct. Without limitation of the generality of the foregoing, the Agent: (i) may
treat the payee of any Note as the holder thereof until the Agent receives and accepts an
Assignment and Acceptance entered into by the Lender that is the payee of such Note, as assignor,
and an Eligible Assignee, as assignee, as provided in Section 8.07; (ii) may consult with legal
counsel (including counsel for the Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (iii) make









 



32


no warranty or representation to any Lender and shall not be responsible to any Lender for any statements,
warranties or representations (whether written or oral) made in or in connection with this
Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance,
observance or satisfaction of any of the terms, covenants or conditions of this Agreement on the
part of the Borrower or any of its Subsidiaries or the existence at any time of any Default or to
inspect the property (including the books and records) of the Borrower or any of its Subsidiaries;
(v) shall not be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or
document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of this
Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may
be by telecopier or telegram) believed by it to be genuine and signed or sent by the proper party
or parties.




          SECTION 7.03. Citibank and Its Affiliates. With respect to its Commitment, the
Advances made by it and any Note issued to it, Citibank shall have the same rights and powers under
this Agreement as any other Lender and may exercise the same as though it were not the Agent; and
the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include Citibank in its
individual capacity. Citibank and its Affiliates may accept deposits from, lend money to, act as
trustee under indentures of, accept investment banking engagements from and generally engage in any
kind of business with, the Borrower, any of its Subsidiaries and any Person who may do business
with or own securities of the Borrower or any such Subsidiary, all as if Citibank were not the
Agent and without any duty to account therefor to the Lenders. The Agent shall have no duty to
disclose any information obtained or received by it or any of its Affiliates relating to the
Borrower or any of its Subsidiaries to the extent such information was obtained or received in any
capacity other than as Agent.




          SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent or
any other Lender and based on the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions in taking or not
taking action under this Agreement.




          SECTION 7.05. Indemnification. The Lenders agree to indemnify the Agent and its
Affiliates (to the extent not reimbursed by the Borrower), ratably according to the respective
principal amounts of the Advances then owed to each of them (or if no Advances are at the time
outstanding, ratably according to the respective amounts of their Commitments), from and against
any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or
asserted against the Agent or such Affiliate in any way relating to or arising out of this
Agreement or any action taken or omitted by the Agent under this Agreement (collectively, the
“Indemnified Costs”), provided that no Lender shall be liable for any portion of
such Indemnified Costs resulting from the Agent’s or such Affiliate’s gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender agrees to reimburse the Agent and its
Affiliates promptly upon demand for its ratable share of any out-of-pocket expenses









 



33


(including counsel fees and disbursements) incurred by the Agent or such Affiliate in connection with the
preparation, execution, delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that the Agent or such Affiliate is not
reimbursed for such expenses by the Borrower. In the case of any investigation, litigation or
proceeding giving rise to any Indemnified Costs, this Section 7.05 applies whether any such
investigations, litigation or proceeding is brought by the Agent, any Lender or a third party.




          SECTION 7.06. Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower and may be removed at any time with or without cause
by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the
right to appoint a successor Agent with the approval of the Borrower so long as no Event of Default
exists, such approval not to be unreasonably withheld or delayed. If no successor Agent shall have
been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days
after the retiring Agent’s giving of notice of resignation or the Required Lenders’ removal of the
retiring Agent, then the retiring Agent may, on behalf of the Lenders, with the approval of the
Borrower, such approval not to be unreasonably withheld, appoint a successor Agent, which shall be
a commercial bank organized under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed
to and become vested with all the rights, powers, discretion, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring Agent’s resignation or removal hereunder as Agent, the provisions of this Article VII shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was Agent under this
Agreement.




          SECTION 7.07. Other Agents. Each Lender hereby acknowledges that none of the
documentation agents or any other Lender designated as any “Agent” on the signature pages hereof
has any right, power, obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Lenders as such.




ARTICLE VIII




MISCELLANEOUS




          SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of this
Agreement or the Notes, nor consent to any departure by the Borrower therefrom, shall in any event
be effective unless the same shall be in writing and signed by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no amendment, waiver or consent shall, unless
in writing and signed by all the Lenders, do any of the following: (a) waive any of the conditions
specified in Section 3.01, (b) increase the Commitments of the Lenders, (c) reduce the principal
of, or interest on, the Advances or any fees or other amounts payable hereunder, (d) postpone any
date fixed for any payment of principal of, or interest on, the Advances or any fees or other
amounts payable hereunder, (e) change the percentage of the Commitments or of the










 



34



aggregate unpaid principal amount of the Advances, or the number of Lenders, that shall be required for the Lenders
or any of them to take any action hereunder or (f) amend this Section 8.01; and provided
further that no amendment, waiver or consent shall, unless in writing and signed by the
Agent in addition to the Lenders required above to take such action, affect the rights or duties of
the Agent under this Agreement or any Note.




          SECTION 8.02. Notices, Etc. (a) All notices and other communications provided for
hereunder shall be either (x) in writing (including telecopier or telegraphic communication) and
mailed, telecopied, telegraphed or delivered or (y) as and to the extent set forth in Section
8.02(b) and in the proviso to this Section 8.02(a), if to the Borrower, at its address at 55
Glenlake Parkway, N.E., Atlanta, Georgia 30328, Attention: Financial Resources Department
(telecopier number (404) 828-6562); if to any Initial Lender, at its Domestic Lending Office
specified opposite its name on Schedule I hereto; if to any other Lender, at its Domestic Lending
Office specified in the Assignment and Acceptance pursuant to which it became a Lender; if to the
Agent, at its address at Two Penns Way, Suite 200, New Castle, Delaware 19720, Attention: Bank Loan
Officer (telecopier number (212) 994-0961); or, as to the Borrower or the Agent, at such other
address as shall be designated by such party in a written notice to the other parties and, as to
each other party, at such other address as shall be designated by such party in a written notice to
the Borrower and the Agent, provided that materials required to be delivered pursuant to Section 5.01(g)(i), (ii)
or (iii) may be delivered to the Agent as specified in Section 8.02(b) or as otherwise specified to
the Borrower by the Agent. All such notices and communications shall, when mailed, telecopied,
telegraphed or e-mailed, be effective when deposited in the mails, telecopied, delivered to the
telegraph company or confirmed by e-mail, respectively, except that notices and communications to
the Agent pursuant to Article II, III or VII shall not be effective until received by the Agent.
Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of
this Agreement or any Notes or of any Exhibit hereto to be executed and delivered hereunder shall
be effective as delivery of a manually executed counterpart thereof.




          (b) So long as Citibank or any of its Affiliates is the Agent, materials required to be
delivered pursuant to Section 5.01(g)(i), (ii) or (iii) shall be deemed delivered to the Agent and
each Lender to the extent such materials are posted (within the time periods set forth in Section
5.01(g)(i), (ii) or (iii)) on the Borrower’s web site (www.ups.com), under “Investor Relations”.
The Borrower may also deliver such materials to the Agent in an electronic medium in a format
acceptable to the Agent and the Lenders by e-mail at oploanswebadmin@citigroup.com. The Borrower
agrees that the Agent may make such materials, as well as any other written information, documents,
instruments and other material relating to the Borrower, any of its Subsidiaries or any other
materials or matters relating to this Agreement, the Notes or any of the transactions contemplated
hereby, in each case to the extent that the Agent’s communication thereof to the Lenders is
otherwise proper hereunder (collectively, the “Communications”) available to the Lenders by
posting such notices on Intralinks or a substantially similar electronic system (the
“Platform”). The Borrower acknowledges that (i) the distribution of material through an
electronic medium is not necessarily secure and that there are confidentiality and other risks
associated with such distribution, (ii) the Platform is provided “as is” and “as available” and
(iii) neither the Agent nor any of its Affiliates warrants the accuracy, adequacy or completeness
of the Communications or the Platform and each expressly disclaims liability for errors or
omissions in the Communications or the Platform.









 



35


No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular
purpose, non-infringement of third party rights or freedom from viruses or other code defects, is
made by the Agent or any of its Affiliates in connection with the Platform.




          (c) Each Lender agrees that notice to it (as provided in the next sentence) (a
“Notice”) specifying that any Communications have been posted to the Platform shall
constitute effective delivery of such information, documents or other materials to such Lender for
purposes of this Agreement; provided that if requested by any Lender the Agent shall
deliver a copy of the Communications to such Lender by e-mail or telecopier. Each Lender agrees
(i) to notify the Agent in writing of such Lender’s e-mail or telecopier address to which a Notice
may be sent by electronic transmission (including by electronic communication) on or before the
date such Lender becomes a party to this Agreement (and from time to time thereafter to ensure that
the Agent has on record an effective e-mail or telecopier address for such Lender) and (ii) that
any Notice may be sent to such e-mail or telecopier address.




          SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender or the Agent to exercise, and no delay in exercising,
any right, power or privilege hereunder or under any Note shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or privilege. The remedies
herein provided are cumulative and not exclusive of any remedies provided by law.




          SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to pay on demand all
reasonable out-of-pocket costs and expenses of the Agent and Citigroup Global Markets Inc. in
connection with the preparation, execution, delivery, modification and amendment of this Agreement,
any Notes and the other documents to be delivered hereunder, including, without limitation, (i) all
syndication (including printing, distribution and bank meetings) expenses and (ii) the reasonable
fees and expenses of counsel for the Agent with respect thereto. The Borrower further agrees to
pay on demand all reasonable out-of-pocket costs and expenses of the Agent and the Lenders, if any
(including, without limitation, reasonable counsel fees and expenses), in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, any
Notes and the other documents to be delivered hereunder, including, without limitation, reasonable
fees and expenses of counsel for the Agent and each Lender in connection with the enforcement of
rights under this Section 8.04(a).




          (b) The Borrower agrees to defend, protect, indemnify and hold harmless the Agent, each
Arranger, each Lender, each of their Affiliates and their officers, directors, employees, agents
and advisors (each, an “Indemnified Party”) from and against any and all liabilities,
obligations, losses (other than loss of profits), damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever (excluding any taxes and
including, without limitation, the reasonable fees and disbursements of counsel for such
Indemnified Party in connection with any investigative, administrative or judicial proceeding,
whether or not such Indemnified Party shall be designated a party thereto), imposed on, incurred
by, or asserted against such Indemnified Party in any manner relating to or arising out of this
Agreement, any Notes, any of the transactions contemplated hereby or thereby, the









 



36


Commitments, the use of proceeds, or any act, event or transaction related or attendant thereto (collectively, the
“Indemnified Matters”); provided, however, the Borrower shall have no
obligation to an Indemnified Party hereunder with respect to Indemnified Matters directly caused by
or directly resulting from the willful misconduct or gross negligence of such Indemnified Party, as
determined by a court of competent jurisdiction. In the case of an investigation, litigation or
other proceeding to which the indemnity in this Section 8.04(b) applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought by the Borrower,
its directors, equityholders or creditors or an Indemnified Party or any other Person, whether or
not any Indemnified Party is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated. The Borrower also agrees not to assert any claim for special,
indirect, consequential or punitive damages against the Agent, any Lender, any of their Affiliates,
or any of their respective directors, officers, employees, attorneys and agents, on any theory of
liability, arising out of or otherwise relating to any Notes, this Agreement, any of the
transactions contemplated herein or the actual or proposed use of the proceeds of the Advances.




          (c) Promptly after receipt by any Indemnified Party of written notice of any Indemnified
Matter in respect of which indemnity may be sought by it under this Section 8.04, such Indemnified
Party shall notify the Borrower thereof; provided that failure to give any such notice hereunder
shall not affect the obligation of the Borrower under this Section 8.04. Thereafter, such
Indemnified Party and the Borrower shall consult, to the extent appropriate, with a view to
minimizing the cost to the Borrower of its obligations hereunder. In case any such Indemnified
Party receives written notice of any Indemnified Matter in respect of which indemnity may be sought
by it hereunder and it notifies the Borrower thereof, the Borrower shall be entitled to participate
in the defense thereof, and to the extent that the Borrower may elect by notice delivered to such
Indemnified Party promptly after receiving aforesaid notice from such Indemnified Party, to assume
the defense thereof, with counsel reasonably satisfactory at all times to such Indemnified Party
and at the Borrower’s expense; provided, that if (i) the use of counsel chosen by the
Borrower to represent such Indemnified Party would present such counsel with a conflict of interest
or (ii) the parties against whom any Indemnified Matter arises include both such Indemnified Party
and the Borrower and such Indemnified Party shall have reasonably concluded that there may be legal
defenses available to it or other Indemnified Parties which are different from or additional to
those available to the Borrower and may conflict therewith, such Indemnified Party shall have the
right to select separate counsel to assume such legal defense and otherwise to participate in the
defense of such Indemnified Matter on behalf of such Indemnified Party at the Borrower’s expense.
Upon receipt of notice from the Borrower to such Indemnified Party of the Borrower’s election so to
assume the defense of such Indemnified Matter, and approval of counsel by such Indemnified Party,
the Borrower shall not be liable to such Indemnified Party for any legal expenses subsequently
incurred by such Indemnified Party in connection with the defense thereof unless (i) such
Indemnified Party shall have employed counsel in connection with the assumption of legal defenses
in accordance with the proviso to the next preceding sentence, (ii) the Borrower shall not have
employed within a reasonable time and continued to employ counsel reasonably satisfactory to such
Indemnified Party to represent such Indemnified Party, or (iii) the Borrower shall have approved
the employment of counsel for such Indemnified Party at the Borrower’s expense. The Borrower shall
not be liable for any settlement of any claim, action or proceeding effected without its written
consent, which consent shall not be unreasonably withheld. The Borrower will not settle any claim,
action or proceeding









 



37


affecting any Indemnified Party in respect of which indemnity may be sought
against the Borrower under this Agreement, whether or not such Indemnified Party is an actual or
potential party to such claim, action or proceeding, without such Indemnified Party’s written
consent, which shall not be unreasonably withheld, unless such settlement (x) does not require any
performance by or adverse admission of such Indemnified Party, (y) does not adversely affect its
business and (z) includes an unconditional release of such Indemnified Party from all liability
arising out of such claim, action or proceeding.




          (d) If any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made by
the Borrower to or for the account of a Lender other than on the last day of the Interest Period
for such Advance, as a result of a payment or Conversion pursuant to Section 2.07(b) or (d), 2.09
or 2.11, acceleration of the maturity of the Advances pursuant to Section 6.01 or for any other
reason, or by an Eligible Assignee to a Lender other than on the last day of the Interest Period
for such Advance upon an assignment of rights and obligations under this Agreement pursuant to
Section 8.07 as a result of a demand by the Borrower pursuant to Section 8.07(a), the Borrower
shall, upon demand by such Lender (with a copy of such demand to the
Agent), pay to the Agent for the account of such Lender any amounts required to compensate
such Lender for any additional losses, costs or expenses that it may reasonably incur as a result
of such payment or Conversion, including, without limitation, any loss (excluding loss of
anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by any Lender to fund or maintain such Advance.




          (e) Without prejudice to the survival of any other agreement of the Borrower hereunder, the
agreements and obligations of the Borrower contained in Sections 2.10, 2.13 and 8.04 shall survive
the payment in full of principal, interest and all other amounts payable hereunder and under any
Notes.




          SECTION 8.05. Right of Setoff. Upon (a) the occurrence and during the continuance of
any Event of Default and (b) the making of the request or the granting of the consent specified by
Section 6.01 to authorize the Agent to declare the Advances due and payable pursuant to the
provisions of Section 6.01, each Lender and each of its Affiliates is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final, but excluding any accounts
designated as collateral accounts securing other Debt) at any time held and other indebtedness at
any time owing by such Lender or such Affiliate to or for the credit or the account of the Borrower
against any and all of the obligations of the Borrower now or hereafter existing under this
Agreement and any Note held by such Lender, whether or not such Lender shall have made any demand
under this Agreement or such Note and although such obligations may be unmatured. Each Lender
agrees promptly to notify the Borrower after any such setoff and application, provided that
the failure to give such notice shall not affect the validity of such setoff and application. The
rights of each Lender and its Affiliates under this Section 8.05 are in addition to other rights
and remedies (including, without limitation, other rights of setoff) that such Lender and its
Affiliates may have.




          SECTION 8.06. Binding Effect. This Agreement shall become effective (other than
Section 2.01, which shall only become effective upon satisfaction of the conditions precedent set
forth in Sections 3.01 and 3.02) when it shall have been executed by the Borrower,









 



38


the Agent and when the Agent shall have been notified by each Initial Lender that such Initial Lender has
executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the
Agent and each Lender and their respective successors and assigns, except that the Borrower shall
not have the right to assign its rights hereunder or any interest herein without the prior written
consent of the Lenders.




          SECTION 8.07. Assignments, Designations and Participations. (a) Each Lender may,
with the consent of the Borrower, such consent not to be unreasonably withheld or delayed, and
shall, so long as no Default has occurred and is continuing and if demanded by the Borrower
(pursuant to the provisions of Section 2.15) upon at least five Business Days’ notice to such
Lender and the Agent, assign to one or more Persons all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its Commitment, the Advances owing to it and any Note or Notes held by it);
provided, however, that:





     (i) each such assignment shall be of a constant, and not a varying, percentage of all
rights and obligations under this Agreement,




     (ii) except in the case of an assignment to a Person that, immediately prior to such
assignment, was a Lender or an assignment of all of a Lender’s rights and obligations under
this Agreement, the amount of the Commitment of the assigning Lender being assigned pursuant
to each such assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $100,000,000 or an integral
multiple of $10,000,000 in excess thereof,




     (iii) each such assignment shall be to an Eligible Assignee,




     (iv) each such assignment made as a result of a demand by the Borrower pursuant to this
Section 8.07(a) shall be arranged by the Borrower at the Borrower’s expense, shall be to an
Eligible Assignee acceptable to the Agent (which acceptance shall not be unreasonably
withheld) and shall be either an assignment of all of the rights and obligations of the
assigning Lender under this Agreement or an assignment of a portion of such rights and
obligations made concurrently with another such assignment or other such assignments that
together cover all of the rights and obligations of the assigning Lender under this
Agreement,




     (v) no Lender shall be obligated to make any such assignment as a result of a demand by
the Borrower pursuant to this Section 8.07(a) unless and until such Lender shall have
received one or more payments from either the Borrower or one or more Eligible Assignees in
an aggregate amount at least equal to the aggregate outstanding principal amount of the
Advances owing to such Lender, together with accrued interest thereon to the date of payment
of such principal amount and all other amounts payable to such Lender under this Agreement,




     (vi) the parties to each such assignment shall execute and deliver to the Agent, for
its acceptance and recording in the Register, an Assignment and Acceptance, together with
any Note subject to such assignment and a processing and recordation fee of $3,500,









 



39



     (vii) if such assignment shall be made as a result of a demand by the Borrower pursuant
to this Section 8.07(a) to an assignee that, immediately prior to such assignment, was
neither a Lender nor an Affiliate of a Lender, an administrative fee of $3,500 shall have
been paid by the Borrower to the Agent upon its demand,




     (viii) notwithstanding any other provision set forth in this Agreement, a Lender may
assign to any of its Affiliates all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment, the Advances
owing to it and any Note or Notes held by it) upon notice to the Borrower and the Agent,
with or without the consent of the Borrower or the Agent (but without releasing the
obligations of the assigning Lender hereunder except with the written
consent of the Borrower), so long as such assignment is otherwise in compliance with
this Agreement, and




     (ix) notwithstanding any other provision set forth in this Agreement, a Lender may
assign to any assignee all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, the Advances owing to it
and any Note or Notes held by it) upon notice to the Agent, with or without the consent of
the Borrower, so long as any Event of Default shall have occurred and be continuing.


Upon such execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (B) the Lender
assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto).




          (b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder
and the assignee thereunder confirm to and agree with each other and the other parties hereto as
follows:





     (i) other than as provided in such Assignment and Acceptance, such assigning Lender
makes no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this Agreement or
any Note or the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any Note or any other instrument or document furnished pursuant
hereto;




     (ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under this Agreement, any Note or any
other instrument or document furnished pursuant hereto;









 



40



     (iii) such assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance;




     (iv) such assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in taking or not
taking action under this Agreement or any Note;




     (v) such assignee confirms that it is an Eligible Assignee;




     (vi) such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement and any Note as
are delegated to the Agent by the terms hereof and thereof, together with such powers and
discretion as are reasonably incidental thereto; and




     (vii) such assignee agrees that it will perform in accordance with their terms all of
the obligations that by the terms of this Agreement are required to be performed by it as a
Lender.



          (c) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an
assignee representing that it is an Eligible Assignee, together with any Note or Notes subject to
such assignment, the Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto and has been consented to by the Borrower if such
consent is required, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the Borrower.




          (d) The Agent shall maintain at its address referred to in Section 8.02 a copy of each
Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the
names and addresses of the Lenders and, with respect to Lenders, the Commitment of, and principal
amount of the Advances owing to, each Lender from time to time (the “Register”). The
entries in the Register shall be conclusive and binding for all purposes, absent manifest error,
and the Borrower, the Agent and the Lenders shall treat only the Person whose name is recorded in
the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time and from time to time
upon reasonable prior notice. The Agent shall be considered to act as the agent of the Borrower in
connection with its duties in respect of the Register.




          (e) Each Lender may sell participations to one or more banks or other entities in or to all or
a portion of its rights and obligations under this Agreement (including, without limitation, all or
a portion of its Commitment, the Advances owing to it and any Note or Notes held by it);
provided, however, that (i) such Lender’s obligations under this Agreement
(including, without limitation, its Commitment to the Borrower hereunder) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for the









 



41


performance of such obligations, (iii) such Lender shall remain the holder of any such Note for all purposes of
this Agreement, (iv) the Borrower, the Agent and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and obligations under this
Agreement and any Notes and (v) no participant under any such participation shall have any right to
approve any amendment or waiver of any provision of this Agreement or any Note or any consent to
any departure by the Borrower therefrom, except to the extent that such amendment, waiver or
consent would reduce the principal of, or interest on, the Advances or any fees or other amounts
payable hereunder, in each case to the extent subject to such participation, or postpone any date
fixed for any payment of principal of, or interest on, the Advances or any fees or other amounts
payable hereunder, in each case to the extent subject to such participation.




          (f) Any Lender may, in connection with any assignment, designation or participation or
proposed assignment, designation or participation pursuant to this Section 8.07, disclose to the
assignee, designee or participant or proposed assignee, designee or participant, any information
relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided
that, prior to any such disclosure, the assignee, designee or participant or proposed assignee,
designee or participant shall agree to preserve the confidentiality of any Confidential Information
relating to the Borrower received by it from such Lender.




          (g) Notwithstanding any other provision set forth in this Agreement, any Lender may at any
time create a security interest in all or any portion of its rights under this Agreement
(including, without limitation, the Advances owing to it and any Note or Notes held by it) in favor
of any Federal Reserve Bank in accordance with Regulation A.




          SECTION 8.08. Confidentiality. None of the Agent or any Lender shall disclose any
Confidential Information to any Person without the consent of the Borrower, other than (a) to the
Agent’s or such Lender’s Affiliates and their officers, directors, employees, agents, advisors,
auditors and accountants and to actual or prospective assignees and participants, and then only on
a confidential basis, (b) as required by any law, rule or regulation or judicial process, (c) to
any rating agency when required by it, provided that, prior to any such disclosure, such
rating agency shall undertake to preserve the confidentiality of any Confidential Information
relating to the Borrower received by it from such Lender and (d) as requested or required by any
state, federal or foreign authority or examiner regulating banks or banking.




          SECTION 8.09. Governing Law. This Agreement and all Notes shall be governed by, and
construed in accordance with, the laws of the State of New York.




          SECTION 8.10. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts, each of which when
so executed shall be deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement
by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement.




          SECTION 8.11. Jurisdiction, Etc. (a) Each of the parties hereto hereby irrevocably
and unconditionally submits, for itself and its property, to the nonexclusive









 



42


jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising out of or relating to
this Agreement or any Notes, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in any such New York State or, to the extent
permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right
that any party may otherwise have to bring any action or proceeding relating to this Agreement or
any Note in the courts of any jurisdiction.




          (b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection that it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to this Agreement or any Note
in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.




          SECTION 8.12. Patriot Act Notice. Each Lender and the Agent (for itself and not on
behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the Patriot
Act, it is required to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information that will allow
such Lender or the Agent, as applicable, to identify the Borrower in accordance with the Patriot
Act. The Borrower shall provide, to the extent commercially reasonable, such information and take
such actions as are reasonably requested by the Agent or any Lenders in order to assist the Agent
and the Lenders in maintaining compliance with the Patriot Act.




          SECTION 8.13. No Advisory or Fiduciary Responsibility.
In connection with all aspects
of the financing contemplated hereby (including in connection with any amendment, waiver or other
modification hereof), the Borrower acknowledges and agrees that: (a) (i) the arranging and other
services regarding this Agreement provided by the Agent, the Arranger and the Lenders are
arm’s-length commercial transactions between the Borrower, on the one hand, and the Agent, the
Arranger and the Lenders, on the other hand, (ii) the Borrower has consulted its own legal,
accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) the
Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of
the financing contemplated hereby; (b) (i) each of the Agent, the Arranger and each Lender is and
has been acting solely as a principal and, except as expressly agreed in writing by the relevant
parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the
Borrower or any other Person and (ii) none of the Agent, the Arranger or any Lender has any
obligation to the Borrower or any of its Affiliates with respect to the financing contemplated
hereby except those obligations expressly set forth herein; and (c) the Agent, the Arranger, each
Lender and their respective Affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the Borrower and its Affiliates, and none of the Agent, the
Arranger or any Lender has any obligation to disclose any of such interests to the Borrower or its
Affiliates.











 



 




          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective officers thereunto duly authorized, as of the date first above written.




	 	 	 	 	 
	 	UNITED PARCEL SERVICE, INC.

 	 
	 	By  	 	 
	 	 	Name:  	D. Scott Davis 	 
	 	 	Title:  	Vice Chairman and Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	CITIBANK, N.A.,

as Administrative Agent and a Lender

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	GOLDMAN SACHS CREDIT PARTNERS L.P.

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	GOLDMAN SACHS BANK USA

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	MERRILL LYNCH BANK USA

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	MERRILL LYNCH CAPITAL CORPORATION

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	MORGAN STANLEY BANK

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 









 



 

	 	 	 	 	 



	 	 	 	 	 
	 	UBS LOAN FINANCE LLC

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	BARCLAYS BANK PLC

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title: