CONTESTED, AND REFLECT SUCH
ACCRUALS AND RESERVES IN ALL FINANCIAL STATEMENTS FURNISHED HEREUNDER.
SECTION 5.07.
COMPLIANCE WITH LAWS.
THE BORROWER WILL, AND WILL
CAUSE EACH OF ITS SUBSIDIARIES TO, COMPLY WITH ALL LAWS, RULES, REGULATIONS AND
ORDERS OF ANY GOVERNMENTAL AUTHORITY APPLICABLE TO IT OR ITS PROPERTY, EXCEPT
WHERE THE FAILURE TO DO SO, INDIVIDUALLY OR IN THE AGGREGATE, COULD NOT
REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.
SECTION 5.08.
MAINTENANCE OF PROPERTIES; INSURANCE.
THE
BORROWER WILL, AND WILL CAUSE EACH OF ITS SIGNIFICANT SUBSIDIARIES TO, (A) KEEP
AND MAINTAIN ALL PROPERTY MATERIAL TO THE CONDUCT OF ITS BUSINESS IN GOOD
WORKING ORDER AND CONDITION, ORDINARY WEAR AND TEAR EXCEPTED, EXCEPT WHERE
FAILURE TO DO SO COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT AND (B) MAINTAIN, WITH FINANCIALLY SOUND AND REPUTABLE INSURANCE
COMPANIES, INSURANCE ON ITS PROPERTY IN SUCH
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AMOUNTS AND AGAINST SUCH RISKS AS ARE CONSISTENT WITH PRUDENT BUSINESS PRACTICE,
AND THE BORROWER WILL FURNISH TO ANY LENDER UPON REQUEST FULL INFORMATION AS TO
THE INSURANCE CARRIED.
SECTION 5.09.
BOOKS AND RECORDS; INSPECTION RIGHTS.
THE
BORROWER WILL, AND WILL CAUSE EACH OF ITS SUBSIDIARIES TO, KEEP PROPER BOOKS OF
RECORD AND ACCOUNT IN WHICH FULL, TRUE AND CORRECT ENTRIES ARE MADE OF ALL
DEALINGS AND TRANSACTIONS IN RELATION TO ITS BUSINESS AND ACTIVITIES.
THE
BORROWER WILL, AND WILL CAUSE EACH OF ITS SUBSIDIARIES TO, PERMIT ANY
REPRESENTATIVES DESIGNATED BY THE ADMINISTRATIVE AGENT OR ANY LENDER, UPON
REASONABLE PRIOR NOTICE, TO VISIT AND INSPECT ITS PROPERTIES, TO EXAMINE AND
MAKE EXTRACTS FROM ITS BOOKS OF ACCOUNTS AND OTHER FINANCIAL RECORDS, AND TO
DISCUSS ITS AFFAIRS, FINANCES AND CONDITION WITH ITS OFFICERS AND INDEPENDENT
ACCOUNTANTS, ALL AT SUCH REASONABLE TIMES AND INTERVALS AS THE LENDERS MAY
DESIGNATE.
SECTION 5.10.
LEVERAGE.
THE BORROWER WILL MAINTAIN AT ALL TIMES
A RATIO OF (I) THE SUM OF (A) THE AGGREGATE UNPAID PRINCIPAL AMOUNT OF ALL
OUTSTANDING FUNDED DEBT, PLUS (B) CAPITALIZED OPERATING LEASE VALUE, TO (II) THE
SUM OF (A) THE ITEMS LISTED IN CLAUSE (I) ABOVE PLUS (B) CONSOLIDATED ADJUSTED
NET WORTH, OF NOT MORE THAN .70 TO 1.
SECTION 5.11.
FIXED CHARGE COVERAGE.
THE BORROWER WILL, FOR
EACH PERIOD OF FOUR CONSECUTIVE FISCAL QUARTERS OF THE BORROWER ENDING AFTER
AUGUST 31, 2003, MAINTAIN A RATIO OF (A) CONSOLIDATED CASH FLOW FOR SUCH PERIOD
TO (B) THE SUM OF INTEREST EXPENSE AND RENT EXPENSE FOR SUCH PERIOD, IN AN
AMOUNT NOT LESS THAN 1.25 TO 1.
SECTION 5.12.
GUARANTEE AGREEMENT.
(A)
WITHIN THIRTY DAYS
AFTER (A) ACQUIRING OR ESTABLISHING ANY SUBSIDIARY THAT CONSTITUTES A
SIGNIFICANT SUBSIDIARY OR (B) ANY SUBSIDIARY (OTHER THAN FEDERAL EXPRESS
INTERNATIONAL (FRANCE) SNC) GUARANTEEING THE EXISTING CREDIT AGREEMENTS OR ANY
PUBLIC DEBT SECURITIES ISSUED BY THE BORROWER, UPON ITS ACQUISITION OR
ESTABLISHMENT OR THE ISSUANCE OF ANY SUCH GUARANTEE, AS THE CASE MAY BE, THE
BORROWER SHALL CAUSE SUCH SUBSIDIARY TO EXECUTE THE GUARANTEE AGREEMENT PURSUANT
TO AN ADDENDUM THERETO IN THE FORM OF ANNEX I TO THE GUARANTEE AGREEMENT,