EXHIBIT 10.41




 




CREDIT AGREEMENT




 




THIS AGREEMENT is entered into as of July 1,

2002, by and between EXPEDITORS INTERNATIONAL OF WASHINGTON, INC., a Washington

corporation (“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).




 




 




RECITALS




 




Borrower has requested that Bank extend or

continue credit to Borrower as described below, and Bank has agreed to provide

such credit to Borrower on the terms and conditions contained herein.




 




NOW, THEREFORE, for valuable consideration,

the receipt and sufficiency of which are hereby acknowledged, Bank and Borrower

hereby agree as follows:




 




 




ARTICLE I




CREDIT TERMS




 




SECTION 1.1.          LINE

OF CREDIT.




 




(a)             Line

of Credit.  Subject to the terms and

conditions of this Agreement, Bank hereby agrees to make advances to Borrower

from time to time up to and including July 1, 2003, not to exceed at any time

the aggregate principal amount of Fifty Million Dollars ($50,000,000.00) (“Line

of Credit”), the proceeds of which shall be used to finance Borrower’s working

capital requirements and to finance loans and advances by Borrower to

Borrower’s subsidiaries.  Borrower’s

obligation to repay advances under the Line of Credit shall be evidenced by a

promissory note substantially in the form of Exhibit A attached hereto

(“Line of Credit Note”), all terms of which are incorporated herein by this

reference.




 




(b)             Borrowing

and Repayment.  Borrower may from

time to time during the term of the Line of Credit borrow, partially or wholly

repay its outstanding borrowings, and reborrow, subject to all of the

limitations, terms and conditions contained herein or in the Line of Credit

Note; provided however, that the total outstanding borrowings under the Line of

Credit shall not at any time exceed the maximum principal amount available

thereunder, as set forth above.




 




SECTION 1.2.          INTEREST/FEES.




 




(a)             Interest.  The outstanding principal balance of each

credit subject hereto shall bear interest at the rate of interest set forth in

each promissory note or other instrument executed in connection therewith.




 




(b)             Computation

and Payment.  Interest shall be

computed on the basis of a 360-day year, actual days elapsed.  Interest shall be payable at the times and

place set forth in each promissory note or other instrument required hereby.




 




(c)             Unused

Commitment Fee.  Borrower shall pay

to Bank a fee equal to 0.185% per annum (computed on the basis of a 360-day

year, actual days elapsed) on the average daily unused amount of the Line of

Credit, which fee shall be calculated on a quarterly basis by Bank and shall be

due and payable by Borrower in arrears within thirty (30) days after each

billing is sent by Bank.




 




SECTION 1.3.          COLLECTION

OF PAYMENTS.  Borrower authorizes Bank

to collect all principal, interest and fees whenever due under the Line of

Credit by charging Borrower’s deposit account number                  with Bank, or any other deposit account

maintained by Borrower with Bank, for the full amount thereof.  Should there be insufficient funds in any

such deposit account to pay all such sums when due, the full amount of such

deficiency shall be immediately due and payable by Borrower.




 




ARTICLE II




REPRESENTATIONS AND WARRANTIES




 




Borrower makes the following representations

and warranties to Bank, which representations and warranties shall survive the

execution of this Agreement and shall continue in full force and effect until

the full and final payment, and satisfaction and discharge, of all obligations

of Borrower to Bank subject to this Agreement.




 




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SECTION 2.1.          LEGAL

STATUS.  Borrower is a corporation, duly

organized and existing and in good standing under the laws of the State of

Washington, and is qualified or licensed to do business (and is in good

standing as a foreign corporation, if applicable) in all jurisdictions in which

such qualification or licensing is required or in which the failure to so

qualify or to be so licensed could have a material adverse effect on Borrower.




 




SECTION 2.2.          AUTHORIZATION

AND VALIDITY.  This Agreement and each

promissory note, contract, instrument and other document required hereby or at

any time hereafter delivered to Bank in connection herewith (collectively, the

“Loan Documents”) have been duly authorized, and upon their execution and

delivery in accordance with the provisions hereof will constitute legal, valid

and binding agreements and obligations of Borrower or the party which executes

the same, enforceable in accordance with their respective terms.




 




SECTION 2.3.          NO

VIOLATION.  The execution, delivery and

performance by Borrower of each of the Loan Documents do not violate any

provision of any law or regulation, or contravene any provision of the Articles

of Incorporation or By-Laws of Borrower, or result in any breach of or default

under any contract, obligation, indenture or other instrument to which Borrower

is a party or by which Borrower may be bound.




 




SECTION 2.4.          LITIGATION.  There are no pending, or to the best of

Borrower’s knowledge threatened, actions, claims, investigations, suits or

proceedings by or before any governmental authority, arbitrator, court or

administrative agency which could have a material adverse effect on the

financial condition or operation of Borrower other than those disclosed by

Borrower to Bank in writing prior to the date hereof.




 




SECTION 2.5.          CORRECTNESS

OF FINANCIAL STATEMENT.  The financial

statement of Borrower dated June 30, 2002, a true copy of which has been

delivered by Borrower to Bank prior to the date hereof, (a) is complete

and correct and presents fairly the financial condition of Borrower,

(b) discloses all liabilities of Borrower that are required to be

reflected or reserved against under generally accepted accounting principles,

whether liquidated or unliquidated, fixed or contingent, and (c) has been

prepared in accordance with generally accepted accounting principles

consistently applied.  Since the date of

such financial statement there has been no material adverse change in the

financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a

security interest in or otherwise encumbered any material portion of its assets

or properties.




 




SECTION 2.6.          INCOME

TAX RETURNS.  Borrower has no knowledge

of any pending material assessments or adjustments of its income tax payable

with respect to any year.




 




SECTION 2.7.          NO

SUBORDINATION.  There is no agreement,

indenture, contract or instrument to which Borrower is a party or by which

Borrower may be bound that requires the subordination in right of payment of

any of Borrower’s obligations subject to this Agreement to any other obligation

of Borrower.




 




SECTION 2.8.          PERMITS,

FRANCHISES.  Borrower possesses, and

will hereafter possess, all permits, consents, approvals, franchises and

licenses required and rights to all trademarks, trade names, patents, and fictitious

names, if any, necessary to enable it to conduct the business in which it is

now engaged in compliance with applicable law.




 




SECTION 2.9.          ERISA.  Borrower is in compliance in all material

respects with all applicable provisions of the Employee Retirement Income

Security Act of 1974, as amended or recodified from time to time (“ERISA”);

Borrower has not violated any provision of any defined contribution plan (as

defined in ERISA) maintained or contributed to by Borrower (each, a “Plan”); no

Reportable Event as defined in ERISA has occurred and is continuing with

respect to any Plan initiated by Borrower; and each Plan will be able to

fulfill its benefit obligations as they come due in accordance with the Plan

documents and under generally accepted accounting principles.




 




SECTION 2.10.        OTHER

OBLIGATIONS.  Borrower is not in default

on any obligation for borrowed money, any purchase money obligation or any

other material lease, commitment, contract, instrument or obligation in excess

of $1,000,000.00 in the aggregate.




 




SECTION 2.11.        ENVIRONMENTAL

MATTERS.  Except as disclosed by

Borrower to Bank in writing prior to the date hereof, Borrower is in compliance

in all material respects with all applicable federal or state environmental,

hazardous waste, health and safety statutes, and any rules or regulations

adopted pursuant thereto, which govern or affect any of Borrower’s operations

and/or properties, including without limitation, the Comprehensive

Environmental Response, Compensation and Liability Act of 1980, the Superfund

Amendments and Reauthorization Act of 1986, the Federal Resource Conservation

and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any

of the same may be amended, modified or supplemented from time to time.  None of the operations of Borrower is the

subject of any federal or state investigation evaluating whether any remedial

action involving a material expenditure is needed to respond to a release of

any toxic or hazardous waste or substance into the environment.  Borrower has no material contingent

liability in connection with any release of any toxic or hazardous waste or

substance into the environment.




 




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ARTICLE III




CONDITIONS




 




SECTION 3.1.          CONDITIONS

OF INITIAL EXTENSION OF CREDIT.  The

obligation of Bank to extend any credit contemplated by this Agreement is

subject to the fulfillment to Bank’s satisfaction of all of the following

conditions:




 




(a)             Approval

of Bank Counsel.  All legal matters

incidental to the extension of credit by Bank shall be satisfactory to Bank’s

counsel.




 




(b)             Documentation.  Bank shall have received, in form and

substance satisfactory to Bank, each of the following, duly executed:




 




(i)              This

Agreement and each promissory note or other instrument required hereby.




(ii)             Articles

of Incorporation.




(iii)            Corporate

Resolution:  Borrowing




(iv)            Certificate

of Incumbency




(v)             Such

other documents as Bank may require under any other Section of this Agreement.




 




(c)             Financial

Condition.  There shall have been no

material adverse change, as determined by Bank, in the financial condition or

business of Borrower, nor any material decline, as determined by Bank, in the

market value of any collateral required hereunder or a substantial or material

portion of the assets of Borrower.




 




SECTION 3.2.          CONDITIONS

OF EACH EXTENSION OF CREDIT.  The

obligation of Bank to make each extension of credit requested by Borrower

hereunder shall be subject to the fulfillment to Bank’s satisfaction of each of

the following conditions:




 




(a)             Compliance.  The representations and warranties contained

herein and in each of the other Loan Documents shall be true on and as of the

date of the signing of this Agreement and on the date of each extension of

credit by Bank pursuant hereto, with the same effect as though such

representations and warranties had been made on and as of each such date, and

on each such date, no Event of Default as defined herein, and no condition,

event or act which with the giving of notice or the passage of time or both

would constitute such an Event of Default, shall have occurred and be

continuing or shall exist.




 




(b)             Documentation.  Bank shall have received all additional

documents which may be required in connection with such extension of credit.




 




 




ARTICLE IV




AFFIRMATIVE COVENANTS




 




Borrower covenants that so long as Bank remains committed to extend

credit to Borrower pursuant hereto, or any liabilities (whether direct or

contingent, liquidated or unliquidated) of Borrower to Bank under any of the

Loan Documents remain outstanding, and until payment in full of all obligations

of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in

writing:




 




SECTION 4.1.          PUNCTUAL

PAYMENTS.  Punctually pay all principal,

interest, fees or other liabilities due under any of the Loan Documents at the

times and place and in the manner specified therein.




 




SECTION 4.2.          ACCOUNTING

RECORDS.  Maintain adequate books and

records in accordance with generally accepted accounting principles

consistently applied.




 




SECTION 4.3.          FINANCIAL

STATEMENTS.  Provide to Bank all of the

following, in form and detail satisfactory to Bank:




 




(a)             not

later than 90 days after and as of the end of each fiscal year, a 10K report of

Borrower filed with the Securities Exchange Commission;




 




(b)             not

later than 45 days after and as of the end of each fiscal quarter, a 10Q report

of Borrower filed with the Securities Exchange Commission;




 




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(c)             contemporaneously

with each annual and quarterly financial statement of Borrower required hereby,

a certificate of the chief financial officer of Borrower that said financial

statements are accurate and that there exists no Event of Default nor any

condition, act or event which with the giving of notice or the passage of time

or both would constitute an Event of Default.




 




SECTION 4.4.          COMPLIANCE.  Preserve and maintain all licenses, permits,

governmental approvals, rights, privileges and franchises necessary for the

conduct of its business; and comply with the provisions of all documents

pursuant to which Borrower is organized and/or which govern Borrower’s

continued existence and shall conduct its business in a lawful manner.




 




SECTION 4.5.          INSURANCE.  Maintain and keep in force insurance of the

types and in amounts customarily carried in lines of business similar to that

of Borrower, including but not limited to fire, extended coverage, public

liability, flood, property damage and workers’ compensation.




 




SECTION 4.6.          FACILITIES.  Keep all properties useful or necessary to

Borrower’s business in good repair and condition, and from time to time make

necessary repairs, renewals and replacements thereto so that such properties

shall be fully and efficiently preserved and maintained.




 




SECTION 4.7.          TAXES

AND OTHER LIABILITIES.  Pay and

discharge when due any and all indebtedness, obligations, assessments and

taxes, both real or personal, including without limitation federal and state

income taxes and state and local property taxes and assessments, except such

(a) as Borrower may in good faith contest or as to which a bona fide dispute

may arise, and (b) for which Borrower has made provision, to Bank’s

satisfaction, for eventual payment thereof in the event Borrower is obligated

to make such payment.




 




SECTION 4.8.          LITIGATION.  Promptly give notice in writing to Bank of

any litigation pending or threatened against Borrower with a claim in excess of

$10,000,000.00.




 




SECTION 4.9.          FINANCIAL

CONDITION.  Maintain Borrower’s

financial condition on a consolidated basis as follows using generally accepted

accounting principles consistently applied and used consistently with prior

practices (except to the extent modified by the definitions herein), with

compliance determined commencing with Borrower’s financial statements for the

period ending June 30, 2002:




 




(a)             Current

Ratio not at any time less than 1.25 to 1.0, with “Current Ratio” defined as

total current assets divided by total current liabilities.




 




(b)             Tangible

Net Worth not at any time less than $350,000,000.00, with “Tangible Net Worth”

defined as the aggregate of total stockholders’ equity plus subordinated debt

less any intangible assets.




 




(c)             Total

Liabilities divided by Tangible Net Worth not at any time greater than 1.25 to

1.0, with “Total Liabilities” defined as the aggregate of current liabilities

and non-current liabilities less subordinated debt, and with “Tangible Net

Worth” as defined above.




 




SECTION 4.10.        NOTICE

TO BANK.  Promptly (but in no event more

than five (5) days after Borrower becomes aware of the occurrence of each such

event or matter) give written notice to Bank in reasonable detail of:  (a) the occurrence of any Event of

Default, or any condition, event or act which with the giving of notice or the

passage of time or both would constitute an Event of Default; (b) any

change in the name or the organizational structure of Borrower; (c) the

occurrence and nature of any Reportable Event or Prohibited Transaction, each

as defined in ERISA, or any funding deficiency with respect to any Plan; or (d) any

termination or cancellation of any insurance policy or policies in excess of

$10,000,000.00 in the aggregate which Borrower is required to maintain, or any

uninsured or partially uninsured loss or losses in excess of $10,000,000.00 in

the aggregate through liability or property damage, or through fire, theft or

any other cause affecting Borrower’s property.




 




ARTICLE V




NEGATIVE COVENANTS




 




Borrower further covenants that so long as

Bank remains committed to extend credit to Borrower pursuant hereto, or any

liabilities (whether direct or contingent, liquidated or unliquidated) of

Borrower to Bank under any of the Loan Documents remain outstanding, and until

payment in full of all obligations of Borrower subject hereto, Borrower will

not without Bank’s prior written consent:




 




SECTION 5.1.          USE

OF FUNDS.  Use any of the proceeds of

any credit extended hereunder except for the purposes stated in Article I

hereof.




 




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SECTION 5.2           MERGER,

CONSOLIDATION, TRANSFER OF ASSETS.  Merge

into or consolidate with any other entity unless Borrower is the surviving

entity and the value of the entity being merged into or consolidated

with Borrower is less than 15% of Borrower’s Tangible Net Worth (as defined in

Section 4.9 (b) above) at the time of such merger or consolidation; make any

substantial change in the nature of Borrower’s business as conducted as of the

date hereof; acquire all or substantially all of the assets of any other entity

unless the value of assets to be acquired is less than 15% of Borrower’s

Tangible Net Worth (as defined in Section 4.9(b) above) at the time of

such acquisition; nor sell, lease, transfer or otherwise dispose of all or a

substantial or material portion of Borrower’s assets except in the ordinary course

of its business.




 




SECTION 5.3.          PLEDGE

OF ASSETS.  Mortgage, pledge, grant or

permit to exist a security interest in, or lien upon, any material portion of

Borrower’s assets now owned or hereafter acquired; provided, however, that

Borrower may grant another lender a lien upon a material portion of Borrower’s

real property to finance the acquisition of such property or to refinance the

balance of a prior acquisition loan secured by such property, so long as

Borrower provides Bank with a reasonable opportunity to provide such financing

or refinancing.




 




ARTICLE VI




EVENTS OF DEFAULT




 




SECTION 6.1.          The

occurrence of any of the following shall constitute an “Event of Default” under

this Agreement:




 




(a)             Borrower

shall fail to pay when due any principal, interest, fees or other amounts

payable under any of the Loan Documents.




 




(b)             Any

financial statement or certificate furnished to Bank in connection with, or any

representation or warranty made by Borrower or any other party under this

Agreement or any other Loan Document shall prove to be incorrect, false or

misleading in any material respect when furnished or made.




 




(c)             Any

default in the performance of or compliance with any obligation, agreement or

other provision contained herein or in any other Loan Document (other than

those referred to in subsections (a) and (b) above), and with respect to any

such default which by its nature can be cured, such default shall continue for

a period of twenty (20) days from its occurrence.




 




(d)             Any

default in the payment or performance of any obligation, or any defined event

of default, under the terms of any contract or instrument (other than any of

the Loan Documents) pursuant to which Borrower has incurred any debt or other

liability to any financial institution or lender, including Bank; provided

however, that in the case of a default or defined event of default under the

terms of indebtedness to a financial institution or lender other than Bank,

such indebtedness is in excess of One Million Dollars ($1,000,000.00),

individually or in the aggregate for all such defaults combined.




 




(e)             The

filing of a notice of judgment lien against Borrower or the recording of any

abstract of judgment against Borrower in any county in which Borrower has an

interest in real property; or the service of a notice of levy and/or of a writ

of attachment or execution, or other like process, against the assets of

Borrower or the entry of a judgment against Borrower; provided, however, that

no Event of Default shall be deemed to have occurred hereunder if such

judgments, liens, levies, writs, executions and other process are satisfied or

stayed pending appeal and insured against in a manner satisfactory to Bank

within twenty (20) days after the creation thereof, or at least ten (10) days

prior to the date on which any assets could be lawfully sold in satisfaction

thereof.




 




(f)              Borrower

shall become insolvent, or shall suffer or consent to or apply for the

appointment of a receiver, trustee, custodian or liquidator of itself or any of

its property, or shall generally fail to pay its debts as they become due, or

shall make a general assignment for the benefit of creditors; Borrower shall

file a voluntary petition in bankruptcy, or seeking reorganization, in order to

effect a plan or other arrangement with creditors or any other relief under the

Bankruptcy Reform Act, Title 11 of the United States Code, as amended or

recodified from time to time (“Bankruptcy Code”), or under any state or federal

law granting relief to debtors, whether now or hereafter in effect; or any

involuntary petition or proceeding pursuant to the Bankruptcy Code or any other

applicable state or federal law relating to bankruptcy, reorganization or other

relief for debtors is filed or commenced against Borrower, or Borrower shall

file an answer admitting the jurisdiction of the court and the material

allegations of any involuntary petition; or Borrower shall be adjudicated a

bankrupt, or an order for relief shall be entered against Borrower by any court

of competent jurisdiction under the Bankruptcy Code or any other applicable

state or federal law relating to bankruptcy, reorganization or other relief for

debtors.




 




(g)             The

dissolution or liquidation of Borrower, or any of its directors, stockholders

or members shall take action seeking to effect the dissolution or liquidation

of Borrower.




 




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SECTION 6.2.          REMEDIES.  Upon the occurrence of any Event of

Default:  (a) all indebtedness of

Borrower under each of the Loan Documents, any term thereof to the contrary

notwithstanding, shall at Bank’s option and without notice become immediately

due and payable without presentment, demand, protest or notice of dishonor, all

of which are hereby expressly waived by Borrower; (b) the obligation, if

any, of Bank to extend any further credit under any of the Loan Documents shall

immediately cease and terminate; and (c) Bank shall have all rights,

powers and remedies available under each of the Loan Documents, or accorded by

law, including without limitation the right to resort to any or all security

for any credit subject hereto and to exercise any or all of the rights of a

beneficiary or secured party pursuant to applicable law.  All rights, powers and remedies of Bank may

be exercised at any time by Bank and from time to time after the occurrence of

an Event of Default, are cumulative and not exclusive, and shall be in addition

to any other rights, powers or remedies provided by law or equity.




 




ARTICLE VII




MISCELLANEOUS




 




SECTION 7.1.          NO

WAIVER.  No delay, failure or

discontinuance of Bank in exercising any right, power or remedy under any of

the Loan Documents shall affect or operate as a waiver of such right, power or

remedy; nor shall any single or partial exercise of any such right, power or

remedy preclude, waive or otherwise affect any other or further exercise

thereof or the exercise of any other right, power or remedy.  Any waiver, permit, consent or approval of

any kind by Bank of any breach of or default under any of the Loan Documents

must be in writing and shall be effective only to the extent set forth in such

writing.




 




SECTION 7.2.          NOTICES.  All notices, requests and demands which any

party is required or may desire to give to any other party under any provision

of this Agreement must be in writing delivered to each party at the following

address:




 




	

  BORROWER:


  	

  EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.


  1015 Third

  Avenue, 12th Floor


  Seattle, WA   98104


  Attn: Chief

  Financial Officer


  cc: Chief

  Operating Officer


  





 




 




	

  BANK:


  	

  WELLS FARGO

  BANK, NATIONAL ASSOCIATION


  999 Third

  Avenue, 11th Floor


  Seattle,

  WA   98104


  





 




or to such other address as any party may designate by written notice

to all other parties.  Each such notice,

request and demand shall be deemed given or made as follows:   (a) if sent by mail, upon the earlier

of the date of receipt or three (3) days after deposit in the U.S. mail, first

class and postage prepaid; and (b) if sent by telecopy, upon receipt.




 




SECTION 7.3.          COSTS,

EXPENSES AND ATTORNEYS’ FEES.  Subject

to the last sentence of this paragraph (which provides that the prevailing

party in an action to enforce this Agreement is entitled to recover certain

fees and costs in connection therewith), Borrower shall pay to Bank immediately

upon demand the full amount of all payments, advances, charges, costs and

expenses, including reasonable attorneys’ fees (to include outside counsel

fees), expended or incurred by Bank in connection with (a) the negotiation

and preparation of any mutually agreed to amendments and waivers to this

Agreement and the other Loan Documents, (b) the enforcement of Bank’s

rights and/or the collection of any amounts which become due to Bank under any

of the Loan Documents, and (c) the prosecution or defense of any action in

any way related to any of the Loan Documents, including without limitation, any

action for declaratory relief, whether incurred at the trial or appellate

level, in an arbitration proceeding or otherwise, and including any of the

foregoing incurred in connection with any bankruptcy proceeding (including without

limitation, any adversary proceeding, contested matter or motion brought by

Bank or any other person) relating to Borrower or any other person or

entity.  Notwithstanding anything herein

to the contrary, the prevailing party in any action to enforce this Agreement

shall be entitled to recover its reasonable outside attorneys’ fees and costs

incurred in connection with such action from the non-prevailing party in such

action.




 




SECTION 7.4.          SUCCESSORS,

ASSIGNMENT.  This Agreement shall be

binding upon and inure to the benefit of the heirs, executors, administrators,

legal representatives, successors and assigns of the parties; provided however,

that Borrower may not assign or transfer its interest hereunder without Bank’s

prior written consent.  Bank reserves

the right to sell, assign, transfer, negotiate or grant participations in all

or any part of, or any interest in, Bank’s rights and benefits under each of

the Loan Documents.  In connection

therewith, subject to that certain Confidentiality Agreement dated as of June

15, 2001 between Borrower and Bank, Bank may disclose all documents and

information which Bank now has or may hereafter acquire relating to any credit

subject hereto, Borrower or its business, or any collateral required hereunder.




 




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SECTION 7.5.          ENTIRE

AGREEMENT; AMENDMENT.  This Agreement

and the other Loan Documents constitute the entire agreement between Borrower

and Bank with respect to each credit subject hereto and supersede all prior

negotiations, communications, discussions and correspondence concerning the

subject matter hereof.  This Agreement

may be amended or modified only in writing signed by each party hereto.




 




SECTION 7.6.          NO

THIRD PARTY BENEFICIARIES.  This

Agreement is made and entered into for the sole protection and benefit of the

parties hereto and their respective permitted successors and assigns, and no

other person or entity shall be a third party beneficiary of, or have any

direct or indirect cause of action­ or claim in connection with, this Agreement

or any other of the Loan Documents to which it is not a party.




 




SECTION 7.7.          TIME.  Time is of the essence of each and every

provision of this Agreement and each other of the Loan Documents.




 




SECTION 7.8.          SEVERABILITY

OF PROVISIONS.  If any provision of this

Agreement shall be prohibited by or invalid under applicable law, such

provision shall be ineffective only to the extent of such prohibition or

invalidity without invalidating the remainder of such provision or any remaining

provisions of this Agreement.




 




SECTION 7.9.          COUNTERPARTS.  This Agreement may be executed in any number

of counterparts, each of which when executed and delivered shall be deemed to

be an original, and all of which when taken together shall constitute one and

the same Agreement.




 




SECTION 7.10.        GOVERNING

LAW.  This Agreement shall be governed

by and construed in accordance with the laws of the State of Washington.




 




SECTION 7.11.        ARBITRATION.




 




(a)  Arbitration.  The parties hereto agree, upon demand by any

party, to submit to binding arbitration all claims, disputes and controversies

between or among them (and their respective employees, officers, directors,

attorneys, and other agents), whether in tort, contract or otherwise arising

out of or relating to in any way (i) the loan and related Loan Documents which

are the subject of this Agreement and its negotiation, execution,

collateralization, administration, repayment, modification, extension,

substitution, formation, inducement, enforcement, default or termination; or

(ii) requests for additional credit.




 




(b)  Governing Rules.  Any arbitration proceeding will (i) proceed

in a location in Washington selected by the American Arbitration Association

(“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United

States Code), notwithstanding any conflicting choice of law provision in any of

the documents between the parties; and (iii) be conducted by the AAA, or such

other administrator as the parties shall mutually agree upon, in accordance

with the AAA’s commercial dispute resolution procedures, unless the claim or

counterclaim is at least $1,000,000.00 exclusive of claimed interest,

arbitration fees and costs in which case the arbitration shall be conducted in

accordance with the AAA’s optional procedures for large, complex commercial

disputes (the commercial dispute resolution procedures or the optional

procedures for large, complex commercial disputes to be referred to, as

applicable, as the “Rules”).  If there

is any inconsistency between the terms hereof and the Rules, the terms and

procedures set forth herein shall control. 

Any party who fails or refuses to submit to arbitration following a

demand by any other party shall bear all costs and expenses incurred by such

other party in compelling arbitration of any dispute.  Nothing contained herein shall be deemed to be a waiver by any

party that is a bank of the protections afforded to it under 12 U.S.C. §91 or

any similar applicable state law.




 




(c)        No Waiver of

Provisional Remedies, Self-Help and Foreclosure.  The arbitration requirement does not limit the right of any party

to (i) foreclose against real or personal property collateral; (ii) exercise

self-help remedies relating to collateral or proceeds of collateral such as

setoff or repossession; or (iii) obtain provisional or ancillary remedies such

as replevin, injunctive relief, attachment or the appointment of a receiver,

before during or after the pendency of any arbitration proceeding.  This exclusion does not constitute a waiver

of the right or obligation of any party to submit any dispute to arbitration or

reference hereunder, including those arising from the exercise of the actions

detailed in sections (i), (ii) and (iii) of this paragraph.




 




(d)        Arbitrator

Qualifications and Powers.  Any

arbitration proceeding in which the amount in controversy is $5,000,000.00 or

less will be decided by a single arbitrator selected according to the Rules,

and who shall not render an award of greater than $5,000,000.00.  Any dispute in which the amount in

controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel

of three arbitrators; provided however, that all three arbitrators must

actively participate in all hearings and deliberations.  The arbitrator will be a neutral attorney

licensed in the State of Washington or a neutral retired judge of the state or

federal judiciary of Washington, in either case with a minimum of ten years

experience in the substantive law applicable to the subject matter of the

dispute to be arbitrated.  The

arbitrator will determine whether or not an issue is arbitratable and will give

effect to the statutes of limitation in determining any claim.  In any arbitration proceeding the arbitrator

will decide (by documents only or with a hearing at the arbitrator’s

discretion) any pre-hearing motions which are similar to motions to dismiss for

failure to state a claim or motions for




 




27





























 




summary adjudication.  The

arbitrator shall resolve all disputes in accordance with the substantive law of

Washington and may grant any remedy or relief that a court of such state could

order or grant within the scope hereof and such ancillary relief as is

necessary to make effective any award. 

The arbitrator shall also have the power to award recovery of all costs

and fees, to impose sanctions and to take such other action as the arbitrator

deems necessary to the same extent a judge could pursuant to the Federal Rules

of Civil Procedure, the Washington Rules of Civil Procedure or other applicable

law.  Judgment upon the award rendered

by the arbitrator may be entered in any court having jurisdiction.  The institution and maintenance of an action

for judicial relief or pursuit of a provisional or ancillary remedy shall not

constitute a waiver of the right of any party, including the plaintiff, to

submit the controversy or claim to arbitration if any other party contests such

action for judicial relief.




 




(e)        Discovery.  In any arbitration proceeding discovery will

be permitted in accordance with the Rules. 

All discovery shall be expressly limited to matters directly relevant to

the dispute being arbitrated and must be completed no later than 20 days before

the hearing date and within 180 days of the filing of the dispute with the

AAA.  Any requests for an extension of

the discovery periods, or any discovery disputes, will be subject to final

determination by the arbitrator upon a showing that the request for discovery

is essential for the party’s presentation and that no alternative means for

obtaining information is available.




 




(f)        Class Proceedings

and Consolidations.  The resolution

of any dispute arising pursuant to the terms of this Agreement shall be

determined by a separate arbitration proceeding and such dispute shall not be

consolidated with other disputes or included in any class proceeding.




 




(g)        Payment Of

Arbitration Costs And Fees.  The

arbitrator shall award all costs and expenses of the arbitration proceeding.




 




(h)        Miscellaneous.  To the maximum extent practicable, the AAA,

the arbitrators and the parties shall take all action required to conclude any

arbitration proceeding within 180 days of the filing of the dispute with the

AAA.  No arbitrator or other party to an

arbitration proceeding may disclose the existence, content or results thereof,

except for disclosures of information by a party required in the ordinary

course of its business or by applicable law or regulation.  If more than one agreement for arbitration

by or between the parties potentially applies to a dispute, the arbitration

provision most directly related to the Loan Documents or the subject matter of

the dispute shall control.  This

arbitration provision shall survive termination, amendment or expiration of any

of the Loan Documents or any relationship between the parties.




 




ORAL

AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR

ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.




 




IN WITNESS WHEREOF, the parties hereto have

caused this Agreement to be executed as of the day and year first written

above.




 




	

   


  	

  WELLS

  FARGO BANK,


  
	

  EXPEDITORS

  INTERNATIONAL


  OF WASHINGTON, INC.


  	

  NATIONAL

  ASSOCIATION


  
	

   


  	

   


  
	

   


  	

   


  
	

  By:


  	

  /s/ Jordan Gates


  	

   


  	

  By:


  	

  /s/ Donald Ralston


  	

   


  
	 
	

  Jordan Gates


  	 
	Donald Ralston

	

   


  	

  Executive Vice President


  and Chief Financial Officer


  	

   


  	

  Vice President


  
	 
	 

	 
	 

	

  By:


  	

  /s/ Charles Lynch


  	

   


  	

   


  
	

   


  	

  Charles Lynch


  	

   


  
	

   


  	

  Vice President-Corporate


  Controller


  	

   


  





 




28





























 




EXHIBIT A




 




REVOLVING LINE OF CREDIT

NOTE




 








	

  $50,000,000.00


  	

   


  	

  Seattle, Washington


  
	

   


  	

   


  	

  July 1, 2002


  










 




FOR VALUE RECEIVED, the undersigned EXPEDITORS INTERNATIONAL OF

WASHINGTON INC. (“Borrower”) promises to pay to the order of WELLS FARGO BANK,

NATIONAL ASSOCIATION (“Bank”) at its office at Seattle RCBO, 999 Third Avenue

11th Floor, Seattle, Washington, or at such other place as the

holder hereof may designate, in lawful money of the United States of America

and in immediately available funds, the principal sum of Fifty Million Dollars

($50,000,000.00), or so much thereof as may be advanced and be outstanding,

with interest thereon, to be computed on each advance from the date of its

disbursement as set forth herein.




 




DEFINITIONS:




 




As used herein, the following terms shall have the meanings set forth

after each, and any other term defined in this Note shall have the meaning set

forth at the place defined:




 




(a)           “Business Day” means

any day except a Saturday, Sunday or any other day on which commercial banks in

Washington are authorized or required by law to close.




 




(b)           “Fixed Rate Term”

means a period commencing on a Business Day and continuing for 1, 2, 3 or 6

months, as designated by Borrower, during which all or a portion of the

outstanding principal balance of this Note bears interest determined in relation

to LIBOR; provided however, that no Fixed Rate Term may be selected for a

principal amount less than One Million Dollars ($1,000,000.00); and provided

further, that no Fixed Rate Term shall extend beyond the scheduled maturity

date hereof.  If any Fixed Rate Term

would end on a day which is not a Business Day, then such Fixed Rate Term shall

be extended to the next succeeding Business Day.




 




(c)           “LIBOR” means the

rate per annum (rounded upward, if necessary, to the nearest whole 1/8 of 1%)

and determined pursuant to the following formula:




 




	

  LIBOR =


  	

  Base LIBOR


  
	

   


  	

  100% - LIBOR Reserve Percentage


  





 




(i)            “Base LIBOR” means

the rate per annum for United States dollar deposits quoted by Bank as the

Inter-Bank Market Offered Rate, with the understanding that such rate is quoted

by Bank for the purpose of calculating effective rates of interest for loans

making reference thereto, on the first day of a Fixed Rate Term for delivery of

funds on said date for a period of time approximately equal to the number of

days in such Fixed Rate Term and in an amount approximately equal to the

principal amount to which such Fixed Rate Term applies.  Borrower understands and agrees that Bank

may base its quotation of the Inter-Bank Market Offered Rate upon such offers

or other market indicators of the Inter-Bank Market as Bank in its discretion

deems appropriate including, but not limited to, the rate offered for U.S.

dollar deposits on the London Inter-Bank Market.




 




(ii)           “LIBOR Reserve

Percentage” means the reserve percentage prescribed by the Board of Governors

of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities”

(as defined in Regulation D of the Federal Reserve Board, as amended), adjusted

by Bank for expected changes in such reserve percentage during the applicable

Fixed Rate Term.




 




(d)           “Prime Rate” means

at any time the rate of interest most recently announced within Bank at its

principal office as its Prime Rate, with the understanding that the Prime Rate

is one of Bank’s base rates and serves as the basis upon which effective rates

of interest are calculated for those loans making reference thereto, and is

evidenced by the recording thereof after its announcement in such internal

publication or publications as Bank may designate.




 




INTEREST:




 




(a)           Interest.  The outstanding principal balance of this

Note shall bear interest (computed on the basis of a 360–day year, actual

days elapsed) either (i) at a fluctuating rate per annum equal to the Prime

Rate in effect from time to time, or (ii) at a fixed rate per annum determined

by Bank to be three-quarters percent (.75000%) above LIBOR in effect on the

first day of the applicable Fixed Rate Term. 

When interest is determined in relation to the Prime Rate, each change

in the rate of interest hereunder shall become effective on the date each Prime

Rate change is announced within Bank. 

With respect to each LIBOR selection hereunder, Bank is 




 




29





























 




hereby authorized to note the date, principal amount, interest rate and

Fixed Rate Term applicable thereto and any payments made thereon on Bank’s

books and records (either manually or by electronic entry) and/or on any

schedule attached to this Note, which notations shall be prima facie evidence

of the accuracy of the information noted.




 




(b)           Selection of

Interest Rate Options.  At any time

any portion of this Note bears interest determined in relation to LIBOR, it may

be continued by Borrower at the end of the Fixed Rate Term applicable thereto

so that all or a portion thereof bears interest determined in relation to the

Prime Rate or to LIBOR for a new Fixed Rate Term designated by Borrower.  At any time any portion of this Note bears

interest determined in relation to the Prime Rate, Borrower may convert all or

a portion thereof so that it bears interest determined in relation to LIBOR for

a Fixed Rate Term designated by Borrower. 

At such time as Borrower requests an advance hereunder or wishes to

select a LIBOR option for all or a portion of the outstanding principal balance

hereof, and at the end of each Fixed Rate Term, Borrower shall give Bank notice

specifying: (i) the interest rate option selected by Borrower; (ii) the

principal amount subject thereto; and (iii) for each LIBOR selection, the

length of the applicable Fixed Rate Term. Any such notice may be given by

telephone (or such other electronic method as Bank may permit) so long as, with

respect to each LIBOR selection, (A) if requested by Bank, Borrower provides to

Bank written confirmation thereof not later than three (3) Business Days after

such notice is given, and (B) such notice is given to Bank prior to 10:00 a.m.

on the first day of the Fixed Rate Term, or at a later time during any Business

Day if Bank, at it’s sole option but without obligation to do so, accepts

Borrower’s notice and quotes a fixed rate to Borrower.  If Borrower does not immediately accept a

fixed rate when quoted by Bank, the quoted rate shall expire and any subsequent

LIBOR request from Borrower shall be subject to a redetermination by Bank of

the applicable fixed rate.  If no

specific designation of interest is made at the time any advance is requested

hereunder or at the end of any Fixed Rate Term, Borrower shall be deemed to

have made a Prime Rate interest selection for such advance or the principal

amount to which such Fixed Rate Term applied.




 




(c)           Taxes and

Regulatory Costs.  Borrower shall

pay to Bank immediately upon demand, in addition to any other amounts due or to

become due hereunder, any and all (i) withholdings, interest equalization

taxes, stamp taxes or other taxes (except income and franchise taxes) imposed

by any domestic or foreign governmental authority and related in any manner to

LIBOR, and (ii) future, supplemental, emergency or other changes in the LIBOR

Reserve Percentage, assessment rates imposed by the Federal Deposit Insurance

Corporation, or similar requirements or costs imposed by any domestic or

foreign governmental authority or resulting from compliance by Bank with any

request or directive (whether or not having the force of law) from any central

bank or other governmental authority and related in any manner to LIBOR to the

extent they are not included in the calculation of LIBOR.  In determining which of the foregoing are

attributable to any LIBOR option available to Borrower hereunder, any

reasonable allocation made by Bank among its operations shall be conclusive and

binding upon Borrower.




 




(d)           Payment of

Interest.  Interest accrued on this

Note shall be payable on the 1st day of each month, commencing August 1, 2002.




 




(e)           Default Interest.  From and after the maturity date of this

Note, or such earlier date as all principal owing hereunder becomes due and

payable by acceleration or otherwise, the outstanding principal balance of this

Note shall bear interest until paid in full at an increased rate per annum

(computed on the basis of a 360–day year, actual days elapsed) equal to

four percent (4%) above the rate of interest from time to time applicable to

this Note.




 




BORROWING AND REPAYMENT:




 




(a)           Borrowing and Repayment.  Borrower may from time to time during the

term of this Note borrow, partially or wholly repay its outstanding borrowings,

and reborrow, subject to all of the limitations, terms and conditions of this

Note and of any document executed in connection with or governing this Note;

provided however, that the total outstanding borrowings under this Note shall

not at any time exceed the principal amount stated above.  The unpaid principal balance of this

obligation at any time shall be the total amounts advanced hereunder by the

holder hereof less the amount of principal payments made hereon by or for any

Borrower, which balance may be endorsed hereon from time to time by the

holder.  The outstanding principal balance

of this Note shall be due and payable in full on July 1, 2003.




 




(b)           Advances.  Advances hereunder, to the total amount of

the principal sum stated above, may be made by the holder at the written

request of Jordan Gates and Charles Lynch, acting together, who are authorized

to request advances and direct the disposition of any advances to any deposit

account of the Borrower until written notice of the revocation of such

authority is received by the holder at the office designated above, which

advances, when so deposited, shall be conclusively presumed to have been made

to or for the benefit of Borrower regardless of the fact that persons other

than those authorized to request advances may have authority to draw against

such account.




 




(c)           Application of

Payments.  Each payment made on this

Note shall be credited first, to any interest then due and second, to the

outstanding principal balance hereof. 

All payments credited to principal shall be applied first, to the

outstanding principal balance of this Note which bears interest determined in

relation to the Prime Rate, if any, and second, to the outstanding




 




30





























 




principal balance of this Note which bears interest determined in

relation to LIBOR, with such payments applied to the oldest Fixed Rate Term

first.




 




PREPAYMENT:




 




(a)           Prime Rate.  Borrower may prepay principal on any portion

of this Note which bears interest determined in relation to the Prime Rate at

any time, in any amount and without penalty.




 




(b)           LIBOR.  Borrower may prepay principal on any portion

of this Note which bears interest determined in relation to LIBOR at any time

and in the minimum amount of One Hundred Thousand Dollars ($100,000.00);

provided however, that if the outstanding principal balance of such portion of

this Note is less than said amount, the minimum prepayment amount shall be the

entire outstanding principal balance thereof. 

In consideration of Bank providing this prepayment option to Borrower,

or if any such portion of this Note shall become due and payable at any time

prior to the last day of the Fixed Rate Term applicable thereto by acceleration

or otherwise, Borrower shall pay to Bank immediately upon demand a fee which is

the sum of the discounted monthly differences for each month from the month of

prepayment through the month in which such Fixed Rate Term matures, calculated

as follows for each such month:




 




(i)   Determine the

amount of interest which would have accrued each month on the amount prepaid at

the interest rate applicable to such amount had it remained outstanding until

the last day of the Fixed Rate Term applicable thereto.




 




(ii)   Subtract from

the amount determined in (i) above the amount of interest which would have

accrued for the same month on the amount prepaid for the remaining term of such

Fixed Rate Term at LIBOR in effect on the date of prepayment for new loans made

for such term and in a principal amount equal to the amount prepaid.




 




(iii)   If the result obtained

in (ii) for any month is greater than zero, discount that difference by LIBOR used

in (ii) above.




 




Each Borrower acknowledges that prepayment of such amount may result in

Bank incurring additional costs, expenses and/or liabilities, and that it is

difficult to ascertain the full extent of such costs, expenses and/or

liabilities.  Each Borrower, therefore,

agrees to pay the above–described prepayment fee and agrees that said

amount represents a reasonable estimate of the prepayment costs, expenses

and/or liabilities of Bank.  If Borrower

fails to pay any prepayment fee when due, the amount of such prepayment fee

shall thereafter bear interest until paid at a rate per annum two percent

(2.00%) above the Prime Rate in effect from time to time (computed on the basis

of a 360–day year, actual days elapsed). 

Each change in the rate of interest on any such past due prepayment fee

shall become effective on the date each Prime Rate change is announced within

Bank.




 




EVENTS OF DEFAULT:




 




This Note is made pursuant to and is subject to the terms and

conditions of that certain Credit Agreement between Borrower and Bank dated as

of July 1, 2002, as amended from time to time (the “Credit Agreement”).  Any default in the payment or performance of

any obligation under this Note, or any defined event of default under the

Credit Agreement, shall constitute an “Event of Default” under this Note.




 




MISCELLANEOUS:




 




(a)           Remedies.  Upon the occurrence of any Event of Default,

the holder of this Note, at the holder’s option, may declare all sums of

principal and interest outstanding hereunder to be immediately due and payable

without presentment, demand, notice of nonperformance, notice of protest,

protest or notice of dishonor, all of which are expressly waived by each

Borrower, and the obligation, if any, of the holder to extend any further

credit hereunder shall immediately cease and terminate.  Subject to the last sentence of this

paragraph (which provides that the prevailing party in an action to enforce

this Note is entitled to recover certain fees and costs in connection

therewith), each Borrower shall pay to the holder immediately upon demand the

full amount of all payments, advances, charges, costs and expenses, including

reasonable attorneys’ fees (to include outside counsel fees), expended or

incurred by the holder in connection with the enforcement of the holder’s

rights and/or the collection of any amounts which become due to the holder

under this Note, and the prosecution or defense of any action in any way

related to this Note, including without limitation, any action for declaratory

relief, whether incurred at the trial or appellate level, in an arbitration

proceeding or otherwise, and including any of the foregoing incurred in

connection with any bankruptcy proceeding (including without limitation, any

adversary proceeding, contested matter or motion brought by Bank or any other

person) relating to any Borrower or any other person or entity.  Notwithstanding anything herein to the

contrary, the prevailing party in any action to enforce this Note shall be

entitled to recover its reasonable outside attorneys’ fees and costs incurred

in connection with such action from the non-prevailing party in such action.




 




(b)           Governing Law.  This Note shall be governed by and construed

in accordance with the laws of the State of Washington.




 




31





























 




ORAL AGREEMENTS OR

ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR ENFORCING REPAYMENT

OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.




 




IN WITNESS WHEREOF, the undersigned has executed this Note as of the

date first written above.




 




	

  EXPEDITORS INTERNATIONAL


  OF WASHINGTON INC.


  
	

   


  
	

  By:


  	

  /s/ Jordan Gates


  	

   


  
	

   


  	

  Jordan Gates, Executive Vice President


  and Chief Financial Officer


  
	

   


  	

   


  
	

   


  	

   


  
	

  By:


  	

  /s/

  Charles Lynch


  	

   


  
	

   


  	

  Charles Lynch, Vice President-Corporate


  Controller


  





 




32