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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: August 16, 1995
(Date of earliest event reported)
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FEDERAL EXPRESS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State of Incorporation)
1-7806 71-0427007
(Commission File Number) (IRS Employer Identification No.)
2005 Corporate Avenue, Memphis, Tennessee 38132
(Address of principal executive offices)
Registrant's Telephone Number, including area code: (901) 369-3600
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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The following documents relating to the 1995 Pass Through
Certificates, Series A1 and Series A2 are being filed in connection with, and
incorporated by reference in, the Registrant's Registration Statements on Form
S-3 Nos. 33-50013, 33-51623 and 33-56569, which were declared effective
September 3, 1993, February 18, 1994 and July 26, 1995, respectively.
Exhibit Description of Exhibit
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1.b Underwriting Agreement relating to Federal Express
Corporation 1995 Pass Through Certificates Series A1 and
Federal Express Corporation 1995 Pass Through
Certificates Series A2
4.a.1 Pass Through Trust Agreement dated as of February 1,
1993, between Federal Express Corporation and the Pass
Through Trustee (Filed as Exhibit 4.19 to Registrant's
1993 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
4.a.2 Revised form of Pass Through Certificates
(included in Exhibit 4.a.3)
4.a.3 Forms of Series Supplements 1995-A1 and 1995-A2 to the
Pass Through Trust Agreement between Federal Express
Corporation and the Pass Through Trustee relating to the
Pass Through Certificates
4.c.1 Forms of Trust Indenture and Security Agreements (Federal
Express Corporation Trust Nos. N658FE and N659FE,
respectively) between the Owner Trustee and the Indenture
Trustee relating to Equipment Trust Certificates (Federal
Express Corporation Trust Nos. N658FE and N659FE,
respectively) in connection with the offering of Pass
Through Certificates
4.c.2 Forms of Equipment Trust Certificates
(included in Exhibit 4.c.1)
4.e.1 Forms of Participation Agreements (Federal Express
Corporation Trust Nos. N658FE and N659FE, respectively)
among Federal Express Corporation, as Lessee, the
applicable Owner Participant, the Original Loan
Participants, the Indenture Trustee, the Owner Trustee
and the Pass Through Trustee relating to Equipment Trust
Certificates (Federal Express Corporation Trust Nos.
N658FE and N659FE, respectively)
4.f Forms of Trust Agreements (Federal Express Corporation
Trust Nos. N658FE and N659FE, respectively) between the
applicable Owner Participant and the Owner Trustee
relating to Equipment Trust Certificates (Federal Express
Corporation Trust Nos. N658FE and N659FE, respectively)
4.g Forms of Lease Agreements (Federal Express Corporation
Trust Nos. N658FE and N659FE, respectively) between the
Owner Trustee, as Lessor, and Federal Express
Corporation, as Lessee, relating to Equipment Trust
Certificates (Federal Express Corporation Trust Nos.
N658FE and N659FE, respectively)
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FEDERAL EXPRESS CORPORATION
By: /s/ JAMES S. HUDSON
--------------------------------
James S. Hudson
Vice President and Controller
(principal accounting officer)
Dated: August 17, 1995
EXHIBIT INDEX
Exhibit Description of Exhibit
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1.b Underwriting Agreement relating to Federal Express
Corporation 1995 Pass Through Certificates Series A1 and
Federal Express Corporation 1995 Pass Through
Certificates Series A2
4.a.1 Pass Through Trust Agreement dated as of February 1,
1993, between Federal Express Corporation and the Pass
Through Trustee (Filed as Exhibit 4.19 to Registrant's
1993 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
4.a.2 Revised form of Pass Through Certificates
(included in Exhibit 4.a.3)
4.a.3 Forms of Series Supplements 1995-A1 and 1995-A2 to the
Pass Through Trust Agreement between Federal Express
Corporation and the Pass Through Trustee relating to the
Pass Through Certificates
4.c.1 Forms of Trust Indenture and Security Agreements (Federal
Express Corporation Trust Nos. N658FE and N659FE,
respectively) between the Owner Trustee and the Indenture
Trustee relating to Equipment Trust Certificates (Federal
Express Corporation Trust Nos. N658FE and N659FE,
respectively) in connection with the offering of Pass
Through Certificates
4.c.2 Forms of Equipment Trust Certificates
(included in Exhibit 4.c.1)
4.e.1 Forms of Participation Agreements (Federal Express
Corporation Trust Nos. N658FE and N659FE, respectively)
among Federal Express Corporation, as Lessee, the
applicable Owner Participant, the Original Loan
Participants, the Indenture Trustee, the Owner Trustee
and the Pass Through Trustee relating to Equipment Trust
Certificates (Federal Express Corporation Trust Nos.
N658FE and N659FE, respectively)
4.f Forms of Trust Agreements (Federal Express Corporation
Trust Nos. N658FE and N659FE, respectively) between the
applicable Owner Participant and the Owner Trustee
relating to Equipment Trust Certificates (Federal Express
Corporation Trust Nos. N658FE and N659FE, respectively)
4.g Forms of Lease Agreements (Federal Express Corporation
Trust Nos. N658FE and N659FE, respectively) between the
Owner Trustee, as Lessor, and Federal Express
Corporation, as Lessee, relating to Equipment Trust
Certificates (Federal Express Corporation Trust Nos.
N658FE and N659FE, respectively)
CONFORMED COPY
FEDERAL EXPRESS CORPORATION
1995 Pass Through Certificates, Series A1
1995 Pass Through Certificates, Series A2
UNDERWRITING AGREEMENT
MERRILL LYNCH & CO. August 16, 1995
Merrill Lynch, Pierce, Fenner & Smith Incorporated
CHASE SECURITIES, INC.
c/o MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center, North Tower
New York, New York 10281-1305
Ladies and Gentlemen:
Federal Express Corporation, a Delaware corporation (the
"Company"), proposes that NationsBank, National Association (Carolinas),
successor in interest to NationsBank of South Carolina, National Association,
acting not in its individual capacity but solely as pass through trustee (the
"Trustee") under the Pass Through Trust Agreement dated as of February 1, 1993
(the "Basic Agreement"), as supplemented for each series (each, a "Series") of
pass through certificates (the "Pass Through Certificates") to be purchased
hereunder by a Series Supplement (each, a "Series Supplement"), in each case
between the Company and the Trustee (for each Series, the Basic Agreement, as
supplemented by the related Series Supplement, being referred to herein as the
"Pass Through Agreement"), issue and sell to the underwriters named in
Schedule I hereto its Pass Through Certificates in the aggregate amounts and
with the applicable interest rates and final distribution dates set forth on
Exhibit A hereto (the "Offered Certificates") on the terms and conditions
stated herein and in Schedule II.
Each Series of Pass Through Certificates will represent interests
in a separate trust (each, a "Pass Through Trust") established pursuant to the
related Pass Through Agreement to fund the purchase of equipment trust
certificates ("Equipment Certificates") which are to be issued as nonrecourse
obligations by certain owner trustees, each acting not in its individual
capacity but solely as owner trustee (each, an "Owner Trustee"), in connection
with separate leveraged lease transactions entered into by the Company, in
each case to refund a portion of the payment by such Owner Trustees of the
purchase price for two Airbus A300F4-605R aircraft bearing U.S. Registration
Numbers N658FE and N659FE, respectively, that have been leased by the Company
from the Owner Trustees (together, the "Aircraft"). Each series of Equipment
Certificates will be issued under a separate Trust Indenture and Security
Agreement between NationsBank of Georgia, National Association, as Indenture
Trustee (the "Indenture Trustee") and the related Owner Trustee (each, an
"Indenture" and, collectively, the "Indentures"). As used herein, unless the
context otherwise requires, the term "Underwriters" shall mean the firm or
firms named as Underwriter or Underwriters in Schedule I and the term "you"
shall mean the Underwriter or Underwriters, if no underwriting syndicate is
purchasing the Offered Certificates, or the representative or representatives
of the Underwriters, if an underwriting syndicate is purchasing the Offered
Certificates, as indicated in Schedule I.
The Company has filed with the Securities and Exchange Commission
(the "Commission") three registration statements on Form S-3 (Nos. 33-50013,
33-51623 and 33-56569) for the registration of certain equipment trust
certificates and pass through certificates, including the Offered
Certificates, under the Securities Act of 1933, as amended (the "1933 Act"),
and the offering thereof from time to time in accordance with Rule 415 of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations"). Such registration statements have been declared effective by
the Commission and the Basic Agreement has been qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act"). The Company has, pursuant
to Rule 424 under the 1933 Act, filed with, or transmitted for filing to, or
shall within the required period of time hereafter file with or transmit for
filing to, the Commission a prospectus supplement (the "Prospectus
Supplement") specifically relating to the Offered Certificates, together with
a revised and restated prospectus relating to pass through certificates
covered by the three above-referenced registration statements. The term
"Registration Statement" refers collectively to such registration statements
in the respective forms in which each became effective, including the exhibits
thereto and the documents incorporated by reference therein, as amended to the
date hereof. The term "Basic Prospectus" means the above-referenced revised
and restated prospectus relating to pass through certificates. The term
"Prospectus" means the Basic Prospectus supplemented by the Prospectus
Supplement. The term "Preliminary Prospectus" means a preliminary prospectus
supplement specifically relating to the Offered Certificates together with the
Basic Prospectus. As used herein, the terms "Basic Prospectus," "Prospectus"
and "Preliminary Prospectus" shall include in each case the documents, if any,
incorporated by reference therein. The terms "supplement" and "amendment" or
"amend" as used herein shall include all documents deemed to be incorporated
by reference in the Prospectus that have been filed subsequent to the date of
the Basic Prospectus by the Company with the Commission pursuant to the
Securities Exchange of 1934, as amended (the "1934 Act").
Capitalized terms used but not otherwise defined in this
Agreement shall have the meanings specified in or pursuant to the Pass Through
Agreement or the Indenture relating to each related series of Equipment
Certificates.
SECTION 1. Representations and Warranties.
(a) The Company represents and warrants to you and to each
Underwriter named in Schedule I, as of the date hereof, as follows:
(i) Due Incorporation and Qualification. The Company has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the state of Delaware, is a "citizen of the
United States" and a "certificated air carrier" within the meaning of
Sections 41102(a) and 41103 of Title 49 of the United States Code (the
"Transportation Code"), has the corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus; and the Company is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify would not have a material adverse
effect on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(ii) Subsidiaries. Each subsidiary of the Company which is a
significant subsidiary as defined in Rule 405 of Regulation C of the
1933 Act Regulations (each a "Significant Subsidiary") has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure to so qualify would not have a
material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise; and all of the issued and
outstanding capital stock of each Significant Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and,
except for directors' qualifying shares (except as otherwise stated in
the Registration Statement), is owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(iii) Registration Statement and Prospectus. At the respective
times the Registration Statement became effective, the Registration
Statement complied, and as of the date hereof does comply, in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations and the 1939 Act and the rules and regulations of the
Commission promulgated thereunder. The Registration Statement, at the
respective times it became effective, did not, and at each time
thereafter at which any amendment to the Registration Statement becomes
effective and any Annual Report on Form 10-K is filed by the Company
with the Commission, will not, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The
Prospectus, as of the date hereof does not contain an untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus
made in reliance upon and in conformity with information furnished to
the Company in writing by an Underwriter expressly for use in the
Registration Statement or Prospectus or to those parts of the
Registration Statement which constitute the Trustee's and the
Indenture Trustee's Statements of Eligibility and Qualification (Form
T-1) under the 1939 Act. No stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for
that purpose have been initiated or threatened by the Commission.
(iv) Incorporated Documents. The documents incorporated by
reference in the Prospectus, at the time they were or hereafter are
filed with the Commission, complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and
regulations promulgated thereunder (the "1934 Act Regulations"), and,
when read together and with the other information in the Prospectus, did
not and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were or are made, not misleading.
(v) Accountants. The accountants who certified the financial
statements included or incorporated by reference in the Prospectus are
independent public accountants as required by the 1933 Act and the 1933
Act Regulations.
(vi) Financial Statements. The financial statements of the
Company included or incorporated by reference in the Prospectus and the
Registration Statement present fairly the financial position of the
Company as of the dates thereof and the results of operations, changes
in common stockholders' investment and cash flows of the Company, for
the respective periods covered thereby, all in conformity with generally
accepted accounting principles applied, on a consistent basis throughout
the entire period involved; and the financial schedules included or
incorporated by reference in the Registration Statement meet the
requirements of the 1933 Act Regulations or the 1934 Act Regulations, as
applicable, and accurately present the information required to be shown
therein.
(vii) Material Changes or Material Transactions. Except as
stated in the Prospectus, subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
the Company has not incurred any liabilities or obligations, direct or
contingent, or entered into any transactions which are material to the
Company, and there has not been any material change in the capital stock
or short-term debt, or any material increase in long-term debt of the
Company, or any material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or
other), business, prospects, net worth or results of operations of the
Company.
(viii) No Defaults; Regulatory Approvals. Neither the
Company nor any of its subsidiaries is in violation of its charter or
in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which it or any of them or
their properties may be bound; and the execution and delivery of this
Agreement, each Pass Through Agreement and the other Operative
Agreements to which the Company is or is to be a party and the
consummation of the transactions contemplated herein and therein have
been duly authorized by all necessary corporate action and will not
conflict with or constitute a breach of, or default under, or result
in the creation or imposition of any lien (other than as permitted
under the Leases), charge or encumbrance upon any property or assets
of the Company or any of its subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company or any such subsidiary is a party or by which it
or any of them may be bound or to which any of the property or assets
of the Company or any such subsidiary is subject, which conflict,
breach or default would have, individually or in the aggregate with
any other such instances, a material adverse effect on the condition
(financial or other), business, prospects, net worth or results of
operations of the Company and its subsidiaries considered as one
entity, nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or any law,
administrative regulation or administrative or court order or decree
currently in effect or in effect at the time of execution and
delivery of this Agreement, each Pass Through Agreement and the other
Operative Agreements and applicable to the Company or any of its
subsidiaries; and no consent, approval, authorization, order or
decree of any court or governmental agency or body is required for
the consummation by the Company of the transactions contemplated by
this Agreement, any Pass Through Agreement or any other Operative
Agreement to which the Company is or is to be a party, except such as
may be required under the 1933 Act, the 1939 Act, the 1933 Act
Regulations or state securities or Blue Sky laws, the Transportation
Code, and the Uniform Commercial Code as in effect in Delaware and
Tennessee.
(ix) Legal Proceedings; Contracts. Except for matters described
in the Prospectus (as to which the Company makes no representation as to
the outcome), there is no pending legal, governmental or administrative
proceeding or series of related proceedings to which the Company is a
party or of which any property of the Company is the subject which is
reasonably likely, individually or in the aggregate, to have a material
adverse effect on the condition (financial or other), business,
prospects, net worth or results of operations of the Company on a
consolidated basis; to the best knowledge of any financial or legal
officer of the Company, no such proceedings are threatened or
contemplated against the Company by governmental authorities or others
and no basis for any such proceedings exists; and there are no contracts
or documents of the Company or any of its subsidiaries which are
required to be filed as exhibits to the Registration Statement by the
1933 Act or by the 1933 Act Regulations which have not been so filed.
(x) Compliance with Laws. The Company's business and
operations comply in all material respects with all laws and regulations
applicable thereto and there are no known, proposed or threatened
changes in any laws or regulations which would have a material adverse
effect on the Company or the manner in which it conducts its business;
the Company possesses all valid and effective certificates, licenses and
permits required to conduct its business as now conducted, except for
instances which individually or in the aggregate do not, or will not,
have a material adverse effect on the condition (financial or other),
business, prospects, net worth or results of operations of the Company.
(xi) Enforceability of Operative Agreements. Each of the Pass
Through Agreements and the other Operative Agreements to which the
Company is or is to be a party have been duly authorized by the Company,
will each be substantially in the form heretofore supplied to you and,
when duly executed and delivered by the Company and the other parties
thereto, will each constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
The Basic Agreement as executed is substantially in the form filed as an
exhibit to the Registration Statement and has been duly qualified under
the 1939 Act.
(xii) Validity of the Offered Certificates. When executed,
issued, authenticated and delivered pursuant to the provisions of the
applicable Pass Through Agreement and sold and paid for as provided in
this Agreement, each Series of Offered Certificates will constitute
valid and legally binding obligations of the Trustee enforceable in
accordance with their terms; and the Certificateholders of such Offered
Certificates will be entitled to the benefits provided by such Pass
Through Agreement.
(xiii) Equipment Certificates. The Equipment Certificates to be
issued under each applicable Indenture, when duly executed and delivered
by the related Owner Trustee and duly authenticated by the Indenture
Trustee in accordance with the terms of such Indenture, will be duly
issued under such Indenture and will constitute the valid and binding
obligations of such Owner Trustee, and the Holders thereof will be
entitled to the benefits of such Indenture.
(xiv) Due Execution. This Agreement has been duly executed and
delivered by the Company.
(xv) Descriptions. The Offered Certificates, Pass Through
Agreements, Indentures, Participation Agreements, Leases and other
Operative Agreements conform, or will upon execution conform, in all
material respects to the descriptions thereof in the Prospectus.
The representations and warranties made by the Company as to the
enforceability of the Pass Through Agreements, the Indentures, the Offered
Certificates, the Equipment Certificates and the other Operative Agreements
set forth in subparagraphs (xi), (xii) and (xiii) above are limited by
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting enforcement of creditors' rights or by general equity
principles, and the enforceability of any Pass Through Agreement, Lease and
Indenture is also limited by applicable laws which may affect the remedies
provided therein but which do not affect the validity of such Pass Through
Agreement, Lease or Indenture or make such remedies inadequate for the
practical realization of the benefits intended to be provided thereby.
(b) Additional Certifications. Any certificate signed by any
officer of the Company and delivered to you or to counsel for the Underwriters
in connection with an offering of the Offered Certificates shall be deemed a
representation and warranty by the Company to each Underwriter participating
in such offering as to the matters covered thereby on the date of such
certificate and unless subsequently amended or supplemented subsequent
thereto.
SECTION 2. Purchase and Sale.
(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions set forth herein and in
Schedule II, if any, the Company agrees to cause the Trustee to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase from the Trustee, at the purchase price specified in Exhibit A
hereto, the respective amounts of each Series of Offered Certificates set
forth opposite the name of such Underwriter in Schedule I. It is understood
that you propose to offer the Offered Certificates for sale to the public as
set forth in the Prospectus.
(b) Payment of the purchase price for any Offered Certificates
to be purchased by the Underwriters shall be made at either the Company's
offices in Memphis, Tennessee or the office of Davis Polk & Wardwell, 450
Lexington Avenue, New York, New York 10017, or at such other place as shall be
agreed upon by you and the Company, at 9:00 A.M., New York City time, on the
third business day (unless postponed in accordance with the provisions of
Section 10) following the date hereof or at such other date, time or location
specified in Schedule II, or as otherwise shall be agreed upon by you and the
Company (such time and date being referred to as a "Closing Time"). Delivery
of the Offered Certificates shall be made for your account as specified in
Schedule II against payment by you of the purchase price thereof to, or upon
the order of, the Trustee (or such other person as the Company may direct) by
wire transfer of federal funds or other immediately available funds. Such
Offered Certificates shall be registered in such names, and in such
denominations, as you may request in writing at least one business day prior
to the Closing Time. Such Offered Certificates, which may be in temporary
form, will be made available for examination and packaging by you in New York,
New York, on or before the first business day prior to the Closing Time or at
such other time and place specified in Schedule II.
(c) As compensation to you for your commitments and obligations
hereunder in respect of the Offered Certificates, including your undertakings
to distribute Offered Certificates, the Company will pay (or cause to be paid)
to you an amount equal to that percentage of the aggregate amount of each
series of Offered Certificates purchased by you as set forth in Exhibit A as
the underwriting discounts and commissions. Such payment shall be made
simultaneously with the payment by you to the Trustee of the purchase price of
the Offered Certificates as specified in Section 2(b) hereof. Payment of such
compensation shall be made by wire transfer of federal or other immediately
available funds.
SECTION 3. Covenants of the Company.
The Company covenants with each of you, and with each Underwriter
participating in the offering as follows:
(a) Prospectus Supplement. The Company has prepared a
Preliminary Prospectus containing such information as you and the Company have
deemed appropriate, and immediately following the execution of this Agreement,
the Company will prepare a Prospectus Supplement setting forth such
information as you and the Company deem appropriate in connection with the
offering of the Offered Certificates. The Company will promptly transmit
copies of the Prospectus Supplement to the Commission for filing pursuant to
Rule 424 of the 1933 Act Regulations.
(b) Notice of Certain Events. The Company will notify you
immediately (i) of the effectiveness of any amendment to the Registration
Statement, (ii) of the transmittal to the Commission for filing of any
supplement to the Prospectus or any document to be filed pursuant to the 1934
Act which will be incorporated by reference in the Prospectus, (iii) of the
receipt of any comments from the Commission with respect to the Registration
Statement, the Prospectus or the Prospectus Supplement relating in any way to
the offer and sale of the Offered Certificates, (iv) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, and (v) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(c) Notice of Certain Proposed Filings. The Company will give
you notice of its intention to file or prepare any amendment to the
Registration Statement or any amendment or supplement to the Prospectus,
whether by the filing of documents pursuant to the 1934 Act, the 1933 Act or
otherwise, and will furnish you with copies of any such amendment or
supplement or other documents proposed to be filed or prepared a reasonable
time in advance of such proposed filing or preparation, as the case may be.
(d) Copies of the Registration Statement and the Prospectus.
The Company will deliver to you as many signed and conformed copies of the
Registration Statement (as originally filed) and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated by reference in the Prospectus) as you may reasonably
request. The Company will furnish to you as many copies of the Prospectus (as
amended or supplemented) as you shall reasonably request so long as you are
required to deliver a Prospectus in connection with sales or solicitations of
offers to purchase the Offered Certificates.
(e) Revisions of Prospectus -- Material Changes. If at any
time when the Prospectus is required by the 1933 Act to be delivered in
connection with sales of the Offered Certificates any event shall occur or
condition exist as a result of which it is necessary, in the reasonable
opinion of counsel for the Underwriters or counsel for the Company, to further
amend or supplement the Prospectus in order that the Prospectus will not
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the reasonable opinion of such
counsel, at any such time to amend or supplement the Registration Statement or
the Prospectus in order to comply with the requirements of the 1933 Act or the
1933 Act Regulations the Company will promptly prepare and file with the
Commission such amendment or supplement, whether by filing documents pursuant
to the 1934 Act, the 1933 Act or otherwise, as may be necessary to correct
such untrue statement or omission or to make the Registration Statement and
Prospectus comply with such requirements.
(f) Earnings Statements. The Company will make generally
available to its security holders as soon as practicable, but not later than
90 days after the close of the period covered thereby, an earnings statement
(in form complying with the provisions of Rule 158 under the 1933 Act)
covering each twelve-month period beginning, in each case, not later than the
first day of the Company's fiscal quarter next following the "effective date"
(as defined in such Rule 158) of the Registration Statement with respect to
each sale of Offered Certificates.
(g) Blue Sky Qualifications. The Company will endeavor, in
cooperation with you, to qualify the Offered Certificates for offering and
sale under the applicable securities laws of such states and other
jurisdictions of the United States as the Underwriters may designate, and will
maintain such qualifications in effect for so long as may be required for the
distribution of the Offered Certificates; provided, however, that the Company
shall not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or to subject itself to taxation as doing
business in any jurisdiction in which it is not otherwise required to be so
qualified. The Company will file such statements and reports as may be
required by the laws of each jurisdiction in which the Offered Certificates
have been qualified as provided above.
(h) 1934 Act Filings. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act, will file promptly
all documents required to be filed with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the 1934 Act.
(i) Stand-Off Agreement. The Company will not, between the
date of this Agreement and termination of any trading restrictions with
respect to the Offered Certificates or the Closing Time, whichever is later,
(i) without your prior written consent, offer or sell, or enter into any
agreement to sell, any debt securities of the Company pursuant to a public
offering of securities registered under the 1933 Act (other than the Offered
Certificates which are to be sold pursuant hereto and commercial paper in the
ordinary course of business), (ii) offer or sell, or enter into any agreement
to sell, any equipment notes, pass through certificates, equipment trust
certificates or equipment purchase certificates secured by aircraft owned or
leased by the Company (or rights relating thereto) unless the Company has
provided the Underwriters at least three business days' notice thereof, or
(iii) as may otherwise be provided in Schedule II.
SECTION 4. Payment of Expenses.
The Company will pay all expenses incident to the performance of
its obligations under this Agreement, including:
(i) the preparation and filing of the Registration Statement
and all amendments thereto, the Preliminary Prospectus and the
Prospectus and any amendments or supplements thereto;
(ii) the preparation and filing of this Agreement;
(iii) the preparation, printing, issuance and delivery of the
Offered Certificates;
(iv) the reasonable fees and disbursements of the Company's
accountants and counsel, of the Trustee, the Owner Trustees and the
Indenture Trustees and their respective counsel, and of any registrar,
paying agent and authenticating agent;
(v) the qualification of the Offered Certificates under
securities laws in accordance with the provisions of Section 3(g),
including filing fees and the reasonable fees and disbursements of
counsel to the Underwriters in connection therewith and in connection
with the preparation of any Blue Sky Survey and any Legal Investment
Survey;
(vi) the printing and delivery to the Underwriters in quantities
as hereinabove stated of copies of the Registration Statement and any
amendments thereto, and of the Prospectus and any amendments or
supplements thereto, and the delivery by the Underwriters of the
Prospectus and any amendments or supplements thereto in connection with
solicitations or confirmations of sales of the Offered Certificates;
(vii) the preparation and delivery to the Underwriters of copies
of the Pass Through Agreements and the other Operative Agreements,
including all expenses incident to the performance of the Company's
obligations under the Pass Through Agreements, Participation Agreements,
Indentures, Leases and each of the other agreements and instruments
referred to in the Indentures and Participation Agreements.
(viii)any fees charged by rating agencies for the rating of the
Offered Certificates; and
(ix) certain fees and disbursements of your counsel, as
heretofore agreed.
If this Agreement is terminated by you in accordance with the
provisions of Section 5 or clause (i) of Section 9 hereof, the Company shall
reimburse upon demand the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Underwriters that shall have been incurred by you in connection with the
proposed purchase and sale of the Offered Certificates.
SECTION 5. Conditions of Underwriters' Obligations.
The several obligations of the Underwriters to purchase the
Offered Certificates pursuant to this Agreement will be subject at all times
to the accuracy of the representations and warranties on the part of the
Company herein, to the accuracy of the statements of the Company's officers
made in any certificate furnished pursuant to the provisions hereof, to the
performance and observance by the Company of all covenants and agreements
contained herein, or in Schedule II hereto, on its part to be performed and
observed and to the following additional conditions precedent:
(a) Stop Order; Ratings Change; etc. At the Closing Time, (i)
no stop order suspending the effectiveness of the Registration Statement shall
have been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, (ii) the rating assigned as of the date of this
Agreement by any "nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g) under the 1933 Act
Regulations, to any debt securities of the Company shall not have been lowered
since the execution of this Agreement nor shall any such rating organization
have publicly announced that it has placed any debt securities of the Company
on what is commonly termed a "watch list" for possible downgrading, and (iii)
there shall not have come to your attention any facts that would cause you to
believe that the Prospectus, including the Prospectus Supplement, at the time
it was required to be delivered to a purchaser of the Offered Certificates,
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in light of
the circumstances existing at such time, not misleading.
(b) Legal Opinions. At the Closing Time, you shall have
received the following documents:
(1) Opinion of Special Counsel to the Company. The opinion of
Davis Polk & Wardwell, special counsel to the Company, dated as of such
date, in form and substance satisfactory to you, to the effect set forth
in Exhibit B and the opinion of such counsel required to be delivered
pursuant to each Participation Agreement, dated as of such date, in form
and substance satisfactory to you, to the effect set forth in Exhibit C.
(2) Opinion of Company Counsel. The opinion of the Senior Vice
President and General Counsel of the Company or the Vice President-Law,
Corporate and Business Transactions, dated as of such date, in form and
substance satisfactory to you, to the effect as set forth in Exhibit D.
(3) Opinion of Counsel to the Underwriters. The opinion of
Vedder, Price, Kaufman & Kammholz, counsel to the Underwriters, with
respect to such matters as you may reasonably request.
(c) Officers' Certificate. At the Closing Time, there shall
not have been, since the respective dates as of which information is given in
the Registration Statement and the Prospectus, any material adverse change in
the condition (financial or otherwise) of the Company, or in the earnings,
business affairs or business prospects of the Company, whether or not arising
in the ordinary course of business; and you shall have received a certificate
of the Chief Executive Officer or the Executive Vice President, Worldwide
Customer Operations and the Chief Financial Officer, the Treasurer or the
Controller of the Company, dated as of the Closing Time, to the effect (i)
that there has been no such material adverse change, (ii) that the other
representations and warranties of the Company contained in Section 1 are true
and correct with the same force and effect as though expressly made at and as
of the date of such certificate, (iii) that the Company has made or caused to
be made any required filing of the Prospectus pursuant to Rule 424(b) in the
manner and within the time period required by Rule 424(b), and (iv) that the
Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to the date of such certificate.
(d) Comfort Letter. At the time of the execution of this
Agreement and at the Closing Time, you shall have received a letter from
Arthur Andersen LLP or their successors as the Company's independent
accountants (the "Independent Accountants"), dated as of the date hereof and
of the Closing Time, as the case may be, in form and substance satisfactory to
you to the effect that:
(i) they are independent public accountants within the meaning
of the 1933 Act and the 1933 Act Regulations;
(ii) in their opinion the Company's financial statements and
schedules included or incorporated by reference in the Registration
Statement and Prospectus and covered by their reports included or
incorporated therein comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations or the 1934 Act and the 1934 Act Regulations, as the case
may be;
(iii) on the basis of a reading of the financial statements and
schedules of the Company included or incorporated in the Prospectus and
the Registration Statement, and the latest available unaudited interim
financial statements of the Company, inquiries of officials of the
Company responsible for financial and accounting matters, a reading of
the minute books of the Company, and other specified procedures and
inquiries, nothing has come to their attention that caused them to
believe that:
(A) with respect to the period subsequent to the date of
the most recent financial statements incorporated in the
Registration Statement and the Prospectus, as of a specified date
not more than five business days prior to the date of delivery of
such letter, there has been any change in the common or preferred
stock or long-term debt of the Company or, as of such date, there
has been any decrease in assets or common stockholders'
investment, in each case as compared with amounts shown in the
most recent consolidated balance sheet of the Company included or
incorporated in the Registration Statement and the Prospectus,
except in each case for changes or decreases which the Prospectus
discloses have occurred or may occur or which are described in
such letter; or
(B) for the period from the date of the most recent
financial statements incorporated in the Registration Statement
and the Prospectus to such specified date, there was any decrease
in operating revenues, operating income, income before taxes or
net income of the Company in each case as compared with the
comparable period of the preceding year, except in each case for
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(iv) in addition to their audit referred to in their reports
included or incorporated by reference in the Registration Statement and
the Prospectus and the review, inquiries and procedures referred to in
clause (iii) above, such letter shall state that Arthur Andersen LLP has
performed other specified procedures, with respect to certain numerical
data and information included or incorporated in the Registration
Statement and the Prospectus, as are requested by an Underwriter and
specified in such letter and have found such data and information to be
in agreement with the accounting records of or analyses prepared by the
Company.
(e) Satisfaction of Conditions Precedent in Participation
Agreements. At the Closing Time, all conditions precedent specified in each
Participation Agreement with respect to the refunding of the related Equipment
Certificates shall have been satisfied; the representations and warranties of
the Company, the Owner Trustee, the Pass Through Trustee and the Indenture
Trustee contained in each of the Participation Agreements shall be accurate
as of the Closing Time (except to the extent that they relate solely to an
earlier date in which case they shall be accurate as of such earlier date) and
you shall have received certificates of the Chief Financial Officer or the
Treasurer of the Company and appropriate officers of the respective Owner
Trustees, Pass Through Trustees and Indenture Trustees, dated as of the
Closing Time, to such effect; and you shall have received a copy of each
opinion required to be delivered under each of the Participation Agreements
dated as of the Closing Time, and addressed to you, and of such other
documents furnished in connection with the fulfillment of such conditions as
you or your counsel may reasonably request.
(f) Other Documents. At the Closing Time, counsel for the
Underwriters shall have been furnished with such documents and opinions as
such counsel may reasonably require for the purpose of enabling such counsel
to pass upon the issuance and sale of Offered Certificates as herein
contemplated and related proceedings, or in order to evidence the accuracy and
completeness of any of the representations and warranties, or the fulfillment
of any of the conditions, herein contained; and all proceedings taken by the
Company in connection with the issuance and sale of Offered Certificates as
herein contemplated shall be satisfactory in form and substance to you and to
counsel for the Underwriters.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by you
by notice to the Company at any time at or prior to the Closing Time, and such
termination shall be without liability of any party to any other party except
as provided in Section 4 hereof.
SECTION 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, arising out of any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment thereto), or
the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or investigation
or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission,
if such settlement is effected with the written consent of the Company;
and
(iii) against any and all expense whatsoever (including the fees
and disbursements of counsel chosen by you), joint or several, as
incurred, reasonably incurred in investigating, preparing or defending
against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by
any Underwriter expressly for use in the Registration Statement (or any
amendment thereto) or the Prospectus (or any amendment or supplement thereto),
or made in reliance upon the Trustee's or the Indenture Trustee's Statements
of Eligibility and Qualification (Form T-1) under the 1939 Act filed as an
exhibit to the Registration Statement; and provided, further, that the
foregoing indemnity agreement, with respect to any Preliminary Prospectus
shall not inure to the benefit of any Underwriter from whom the person
asserting any such losses, claims, damages or liabilities purchased Offered
Certificates, or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or
on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Offered Certificates to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such losses, claims,
damages or liabilities.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements
or omissions, made in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company by such
Underwriters through you expressly for use in the Registration Statement (or
any amendment thereto) or the Prospectus (or any amendment or supplement
thereto).
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it
may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of such
action. In no event shall the indemnifying parties be liable for the fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
SECTION 7. Contribution.
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 6 is
for any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, the Company and the Underwriters of
each offering of Offered Certificates shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Company and one or more of the
Underwriters in respect of such offering, as incurred, in such proportions
that the Underwriters are responsible for that portion represented by the
percentage that the underwriting discount appearing on the cover page of the
Prospectus in respect of such offering bears to the initial public offering
price appearing thereon and the Company is responsible for the balance;
provided, however, that no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as such Underwriter, and each director of
the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company submitted
pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Company, and shall survive each
delivery of and payment for any of the Offered Certificates.
SECTION 9. Termination of Agreement.
You may also terminate this Agreement, immediately upon notice to
the Company, at any time prior to the Closing Time (i) if there has been,
since the date hereof or since the respective dates as of which information is
given in the Registration Statement, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, whether or not arising in the ordinary
course of business, or (ii) if there shall have occurred any material adverse
change in the financial markets in the United States or any outbreak or
escalation of hostilities or other national or international calamity or
crisis, the effect of which shall be such as to make it, in your judgment,
impracticable to market the Offered Certificates or enforce contracts for the
sale of the Offered Certificates, or (iii) if trading in any securities of the
Company shall have been suspended by the Commission or a national securities
exchange, or if trading generally on either the American Stock Exchange or the
New York Stock Exchange shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been required, by either of said exchanges or by order
of the Commission or any other governmental authority, or if a banking
moratorium shall have been declared by either federal or New York authorities.
In the event of any termination of this Agreement, the covenant set forth in
Section 3(f) hereof, the provisions of Section 4 hereof, the indemnity and
contribution agreements set forth in Sections 6 and 7 hereof, and the
provisions of Sections 8 and 13 hereof shall remain in effect.
SECTION 10. Default by One of the Underwriters.
If either Underwriter shall fail at the Closing Time to purchase
the Offered Certificates which it is obligated to purchase hereunder (the
"Defaulted Certificates"), then the remaining Underwriter or any other
underwriters (the "Non-Defaulting Underwriters") shall have the right, but not
the obligation, within 24 hours thereafter, to make arrangements to purchase
all, but not less than all, of the Defaulted Certificates upon the terms
herein set forth; if, however, the Non-Defaulting Underwriters shall not have
completed such arrangements for the purchase of all of the Defaulted
Certificates within such 24-hour period, then this Agreement shall terminate
without liability on the part of the Non-Defaulting Underwriters.
No action taken pursuant to this Section shall relieve a
defaulting Underwriter from liability in respect of its default under this
Agreement.
In the event of any such default which does not result in a
termination of this Agreement, either the Non-Defaulting Underwriters or the
Company shall have the right to postpone the Closing Time for a period not
exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
SECTION 11. Notices.
All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed, delivered by
Federal Express service or transmitted by any facsimile communication.
Notices to the Underwriters shall be directed, on behalf of all of the
Underwriters, to Merrill Lynch, Pierce, Fenner & Smith Incorporated, Merrill
Lynch World Headquarters, World Financial Center, North Tower, New York, New
York, 10281, Attention: Sidney E. Goodfriend, Director, Investment Banking
Group, with copies thereof directed to Vedder, Price, Kaufman & Kammholz, 222
North LaSalle Street, Chicago, Illinois 60601, Attention: Jennifer R. Evans.
Notices to the Company shall be directed to it at 2007 Corporate Avenue,
Memphis, Tennessee 38132 (if by Federal Express service) or P.O. Box 727,
Memphis, Tennessee 38194 (if by mail), attention of Vice President and
Treasurer, with copies thereof directed to the Legal Department of the Company
at 1980 Nonconnah Drive, Memphis, Tennessee 38132 (if by Federal Express
Service) or P.O. Box 727, Memphis, Tennessee 38194 (if by mail), attention of
the Managing Director of Business Transactions.
SECTION 12. Parties.
This Agreement shall inure to the benefit of and be binding upon
you and the Company and any Underwriter who becomes a party hereto and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any hereon, firm or corporation, other
than the parties hereto and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the parties hereto their respective successors
and said controlling persons and officers and directors and their heirs and
legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Offered Certificates from any Underwriter shall
be deemed to be a successor by reason merely of such purchase.
SECTION 13. Governing Law.
This Agreement and the rights and obligations of the parties
created hereby and thereby shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made and to be
performed in such state. Any suit, action or proceeding brought by the
Company against an Underwriter in connection with or arising under this
Agreement shall be brought solely in the state or federal court of appropriate
jurisdiction located in the Borough of Manhattan, The City of New York.
* * *
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument along with all counterparts will become a binding
agreement between you and the Company in accordance with its terms.
Very truly yours,
FEDERAL EXPRESS CORPORATION
By: /s/ Robert D. Henning
-----------------------
Robert D. Henning
Managing Director,Structured Finance
CONFIRMED AND ACCEPTED, as of
the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CHASE SECURITIES, INC.
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: /s/ Sidney E. Goodfriend
----------------------------------
Sidney E. Goodfriend
Director, Investment Banking
Acting on behalf of themselves and the
other named Underwriter
Exhibit A
FEDERAL EXPRESS CORPORATION
1995 Pass Through Certificates, Series A1
1995 Pass Through Certificates, Series A2
<TABLE>
<CAPTION>
1995 Pass
Through Applicable Final Underwriting
Certificates Purchase Interest Distribution Aggregate Discounts and
Designation Price Rate Date Amounts Commissions
------------ -------- ---------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C>
Series A1 $103,334,000 7.63% 1/5/2014 $103,334,000 0.64%
Series A2 $ 19,482,000 8.06% 1/5/2016 $ 19,482,000 0.70%
----------- ------------
TOTAL $ 122,816,000 $122,816,000 $797,711.60
============= ============
</TABLE>
Exhibit B
Opinion of Davis Polk & Wardwell,
Special Counsel for the Company
The opinion of Davis Polk & Wardwell, special counsel for the
Company, to be delivered pursuant to Section 5(b)(1) of the Underwriting
Agreement shall be to the effect that:
1. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
2. The Registration Statement has become effective under the
1933 Act and the Basic Agreement has been duly qualified under the 1939 Act.
3. Although we are not aware of any judicial authority, none of
the Pass Through Trusts is required to be registered under the Investment
Company Act of 1940, as amended.
4. The Pass Through Trusts will not be classified as
associations taxable as corporations, but, rather, will be classified as
grantor trusts under subpart E, Part I of Subchapter J of the Internal Revenue
Code of 1986, as amended, and each Certificate Owner will be treated as the
owner of a pro rata undivided interest in each of the Equipment Certificates
and any other property held in the related Pass Through Trust. With respect
to all other matters addressed in the Basic Prospectus under the caption
"Federal Income Tax Consequences," we are also of the opinions ascribed to us
therein.
We have considered the matters required to be included in the
Registration Statement and the Prospectus and the information contained
therein. In our opinion (i) the statements in the Basic Prospectus under the
captions "Description of the Pass Through Certificates" and "Description of
the Equipment Certificates" and in the Prospectus Supplement under the
captions "Description of the Pass Through Certificates" and "Description of the
Equipment Trust Certificates," insofar as such statements constitute a summary
of the Pass Through Agreement, the Leases, the Participation Agreements and
the Indentures, fairly present the information called for by the 1933 Act and
the 1933 Act Regulations with respect thereto and fairly summarize the
material provisions thereof and (ii) the statements in the Basic Prospectus
in the fourth paragraph under the caption "Description of the Equipment
Certificates - Security" and in the Prospectus Supplement in the ninth
paragraph under the caption "Description of the Equipment Certificate -
Remedies," insofar as such statements constitute a description of Section 1110
of the Bankruptcy Code as such Section would be applicable to the Equipment
Certificates, fairly summarize the material provisions of such Section as such
Section would be applicable to the Equipment Certificates. The Offered
Certificates conform in all material respects to the summary descriptions
thereof contained in the Prospectus. We have not ourselves checked the
accuracy or completeness of, or otherwise verified, the information furnished
with respect to other matters in the Registration Statement or the Prospectus.
We have generally reviewed and discussed with certain officers and employees
of the Company, its independent public accountants and your representatives
and counsel the information furnished, whether or not subject to our check and
verification. On the basis of such consideration, review and discussion, but
without independent check or verification, except as stated, (i) we are of the
opinion that the Registration Statement and the Prospectus (except for the
financial statements and other financial and statistical information set forth
or incorporated by reference therein, as to which we are not called upon to
express any opinion) comply as to form in all material respects with the 1933
Act and the applicable 1933 Act Regulations and (ii) we have no reason to
believe that the Registration Statement and the prospectus included therein
(except for the financial statements and other financial and statistical
information set forth or incorporated by reference therein and the Statement
of Eligibility and Qualification (Form T-1) under the 1939 Act of NationsBank,
National Association (Carolinas), as to all of which we are not called upon to
express a belief) at the time the Registration Statement became effective
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that, as of the Closing Time, either the
Registration Statement or the Prospectus (except for the financial statements
and other financial and statistical information set forth or incorporated by
reference therein, as to which we are not called upon to express a belief),
contains an untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading.
The foregoing opinions are subject to the following qualifications:
(a) We are members of the Bar of the State of New York and the
foregoing opinions are limited to the laws of the State of New York, the
federal laws of the United States of America and the General Corporation Laws
of the State of Delaware.
(b) We express no opinion as to the scope, effect or other
matters arising under the Transportation Code, or the rules and regulations
thereunder or as to matters involving filing and recording with the Federal
Aviation Administration.
(c) This opinion is issued solely to you in connection with the
above matter and may not be relied upon by you for any other purpose or relied
upon by or furnished to any other person without our prior written consent.
Exhibit C
[Letterhead of Davis Polk & Wardwell]
August ____, 1995
To each of the parties
named on the Schedule hereto
Ladies and Gentlemen:
We have acted as special counsel for Federal Express Corporation,
a Delaware corporation ("Federal Express"), in connection with the transaction
contemplated by the Participation Agreement (Federal Express Corporation Trust
No. [N658FE][N659FE]), dated as of [May 1] [June 1], 1995, as amended and
restated as of August 1, 1995 (the "Participation Agreement", as originally
executed, the "Original Participation Agreement") among Federal Express, as
Lessee, [Amsouth Leasing Corporation] [Shawmut Bank, National Association], as
Owner Participant, the entities listed on Schedule I to the Original
Participation Agreement as Loan Participants, as Original Loan Participants,
First Security Bank of Utah, National Association, as Owner Trustee,
NationsBank of Georgia, National Association, as Indenture Trustee and
NationsBank, National Association (Carolinas), as Pass Through Trustee. Unless
otherwise defined herein, capitalized terms used herein shall have the
meanings assigned thereto in Schedule II to the Participation Agreement. This
opinion is being delivered pursuant to Section 4.01(l)(viii) of the
Participation Agreement.
Pursuant to the Original Participation Agreement, the Owner
Participant and the Original Loan Participants participated in the payment of
the Purchase Price of one Airbus A300F4-605R aircraft which was purchased by
Federal Express from the Manufacturer pursuant to the Purchase Agreement, sold
by Federal Express to the Owner Trustee pursuant to the Bills of Sale,
subjected to the Lien of the Original Indenture and leased to Federal Express
under the Original Lease. The Participation Agreement provides, among other
things, for the refinancing of the Original Loan Certificates using the
proceeds from the public offering of Pass Through Certificates. Two Series of
Pass Through Certificates will be issued by separate Pass Through Trusts, each
formed to acquire, among other securities, the Certificates bearing a
particular interest rate and having a particular Maturity that will be issued
under the Indenture.
In connection with the opinions expressed below, we have examined
the Original Participation Agreement, the Original Trust Agreement, the
Original Lease, the Lease Supplement, the Original Indenture, the Indenture
and Security Agreement Supplement, the Purchase Agreement, the Purchase
Agreement Assignment, the Consent and Agreement, the Engine Consent and
Agreement, the Original Loan Certificates, the Certificates, the Pass Through
Certificates, the Pass Through Agreement, each Series Supplement, the
Participation Agreement, the Indenture, the Lease and the Trust Agreement. We
have also examined originals, or copies certified to our satisfaction, of such
other agreements, documents, certificates and statements of governmental
officials and corporate officers as we have deemed necessary or advisable as a
basis for such opinions. In such examination, we have assumed the genuineness
of all signatures and the authenticity of all documents submitted to us as
originals and the conformity with the originals of all documents submitted to
us as copies.
As to any facts material to our opinions expressed below, we have,
with your consent, relied on the representations and warranties made in or
pursuant to the Participation Agreement, the Original Participation Agreement
and the other documents referred to therein, the accuracy of which we have not
independently verified. In addition, we have, when relevant facts were not
independently established by us, relied, to the extent we deemed such reliance
proper, upon certificates of public officials and certificates, telegrams and
other written or oral statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and
the other property included in the Lessor's Estate as may not be covered
by the recording system established by the Federal Aviation
Administration (the "FAA") pursuant to Section 44107 of the Act, no
filing or recording of any document or other action was or is necessary
in order to establish the Owner Trustee's title thereto and interest
therein as against Federal Express and any third parties.
2. The Lease creates a valid leasehold interest in the
Aircraft, the entitlement thereof to the benefits of recordation under
the Act being subject to the due and timely filing for recording of (A)
the Lease, with the Indenture attached as an exhibit, (B) the Indenture
and (C) the Trust Agreement.
3. The execution, delivery and performance of the Original
Participation Agreement, the Participation Agreement, the Original Trust
Agreement, the Trust Agreement, the Original Indenture, the Indenture,
the Indenture and Security Agreement Supplement, the Original Lease, the
Lease and the Lease Supplement by the Owner Trustee in its individual or
trust capacity, as the case may be, and the issuance, execution,
delivery and performance of the Certificates by the Owner Trustee in its
trust capacity do not violate, and fully comply with, any laws and
governmental rules and regulations of the State of New York that may be
applicable to the Owner Trustee in its individual or trust capacity, as
the case may be. The opinion set forth in this paragraph 3 is rendered
without regard to the effect, if any, on such issuance (in the case of
the Certificates), execution, delivery or performance of the taking of
any other action, the conduct of any other business or the exercise of
any other powers by First Security Bank of Utah, National Association,
in its individual or in a trust capacity in the State of New York not
related to the transactions contemplated by the Original Agreements or
the Operative Agreements.
4. The execution, delivery and performance of the Participation
Agreement, the Pass Through Agreement and each Series Supplement by the
Pass Through Trustee in its individual or trust capacity, as the case
may be, and the issuance, execution, delivery and performance of the
Pass Through Certificates by the Pass Through Trustee in its trust
capacity do not contravene any laws and governmental rules and
regulations of the State of New York that may be applicable to the Pass
Through Trustee in its individual or trust capacity, as the case may be.
The opinion set forth in this paragraph 4 is rendered without regard to
the effect, if any, on such issuance (in the case of the Pass Through
Certificates), execution, delivery or performance of the taking of any
other action, the conduct of any other business or the exercise of any
other powers by NationsBank, National Association (Carolinas), in its
individual or in a trust capacity in the State of New York not related
to the transactions contemplated by the Original Agreements or the
Operative Agreements.
5. (a) Each of the Original Agreements and the Operative
Agreements to which Federal Express is a party has been duly authorized,
executed and delivered by Federal Express.
(b) The execution, delivery and performance of each of the
Original Agreements and each of the Operative Agreements to which
Federal Express is a party by Federal Express do not violate, and fully
comply with, any laws and governmental rules and regulations of the
State of New York that may be applicable to Federal Express. The
opinion set forth in this paragraph 5(b) is rendered without regard to
the taking of any other action or the conduct of any other business by
Federal Express in the State of New York not related to the transactions
contemplated by the Original Agreements or the Operative Agreements.
6. Assuming (i) the due authorization, execution and delivery
of the Original Participation Agreement, the Participation Agreement,
the Original Lease, the Lease, the Lease Supplement, the Original
Indenture, the Indenture, the Indenture and Security Agreement
Supplement, the Original Trust Agreement, the Trust Agreement, the
Original Tax Indemnity Agreement, Amendment No. 1 to the Original Tax
Indemnity Agreement, the Bills of Sale, the Purchase Agreement, the
Consent and Agreement, the Engine Consent and Agreement, the Pass
Through Agreement, each Series Supplement and each other Original
Agreement and Operative Agreement by each of the parties to each such
document (other than Federal Express), (ii) the due authorization,
execution, issue and delivery by the Owner Trustee, and the due
authentication by the Indenture Trustee, of the Certificates to be
issued under the Indenture in accordance with the terms of the
Indenture, (iii) that the Original Loan Certificates are delivered by
the Original Loan Participants to the Indenture Trustee for cancellation
and are cancelled, (iv) the due authorization, execution, issuance,
delivery and authentication by the Pass Through Trustee of the Pass
Through Certificates to be issued under the Pass Through Agreement and
the Series Supplement relating to such Pass Through Certificates, in
each case in accordance with the terms of the Pass Through Agreement and
such Series Supplement, and (v) that the form of each such document is
in compliance with all applicable laws and governmental rules and
regulations (other than Federal laws and the laws of the State of New
York), then: (A) each such document in form constitutes a legal, valid
and binding agreement of each party thereto enforceable against each
such party in accordance with its terms; (B) the Original Indenture
created, and the Indenture creates, for the benefit of the Holders the
security interest in the Trust Indenture Estate that they purport to
create; (C) the Certificates, when issued to and acquired by the Pass
Through Trustee, will be legal, valid and binding obligations of the
Owner Trustee enforceable against the Owner Trustee in accordance with
their terms and the terms of the Indenture and will be entitled to the
benefits of the Indenture, including the benefit of the security interest
created thereby; (D) the Pass Through Certificates, when issued to and
acquired by the Underwriters in accordance with the Underwriting
Agreement, will be legal, valid and binding obligations of the Pass
Through Trustee enforceable against the Pass Through Trustee in
accordance with their terms and will be entitled to the benefits of the
Pass Through Agreement and the Series Supplement relating thereto; and
(E) the beneficial interest of the Owner Participant under the Trust
Agreement in and to the properties which are part of the Trust Indenture
Estate is subject, to the extent provided in the Indenture, to the Lien
of the Indenture in favor of the Holders. The opinions set forth in
this paragraph 6 are subject to the due recording with the FAA of the
Indenture, the Lease and the Trust Agreement.
7. All the properties which are part of the Trust Indenture
Estate (including all right, title and interest of the Owner Trustee
pledged and mortgaged by it pursuant to the Indenture in and to the
Aircraft and the Lease) have been pledged and mortgaged with the
Indenture Trustee as part of the Trust Indenture Estate (subject to the
due recording or filing of those documents referred to in paragraph 2
above and the financing statements referred to in Section 4.01(f) of the
Participation Agreement), and the beneficial interests of the Owner
Participant under the Trust Agreement in and to such properties are
subject, to the extent provided in the Indenture, to the Lien of the
Indenture in favor of the Holders of the Certificates issued and to be
issued under the Indenture.
8. The Indenture creates, as security for all of the
Certificates duly issued and to be issued under the Indenture, the first
priority security interest in the Aircraft it purports to create, the
perfection and rank thereof being subject to the registration with the
Federal Aviation Administration of the Aircraft in the name of the Owner
Trustee and the due and timely filing for recording in accordance with
the Act of the documents referred to in paragraph 2 above. We express
no opinion with respect to the status of any security interest in any
portion of the Aircraft which does not constitute an "aircraft" or
"aircraft engine", as defined in paragraphs (6) and (7) of Section
40102(a) of the Act.
9. Federal Express' participation in the transactions
contemplated by the Operative Agreements does not and will not
constitute a violation of Section 7 of the Securities Exchange Act of
1934.
10. It is not necessary, in connection with the creation of the
beneficial interest of the Owner Participant of the Trust Indenture
Estate under the circumstances contemplated by the Participation
Agreement to register such beneficial interest under the Securities Act
of 1933, as amended, or to qualify the Trust Agreement under the Trust
Indenture Act of 1939, as amended.
11. The provisions of Section 1110 of the United States
Bankruptcy Code will apply to the Aircraft for the benefit of the
Indenture Trustee.
The foregoing opinions are subject to the following qualifications:
(a) To the extent that this opinion relates to matters involving
filing and recording with the Federal Aviation Administration, we have
relied, without independent investigation and verification and subject
to the assumptions and qualifications contained therein, upon the
opinion of Daugherty, Fowler & Peregrin to be delivered to you and dated
the date hereof. For purposes of the matters stated in paragraph 5(a)
above and as to matters of Tennessee law, we have also relied on the
opinion dated the date hereof of George W. Hearn, Vice President-Law of
the Lessee. Such opinions are satisfactory to us in form and scope and
we believe that you and we are justified in relying thereon.
(b) We are qualified to practice law in the State of New York,
and we do not purport to be experts on, or to express any opinion herein
concerning, any laws other than the laws of the State of New York and
the laws of the United States and the General Corporation Law of the
State of Delaware.
(c) The opinion as to enforceability contained in paragraph 6
above is subject, as to enforceability of rights and remedies, to (i)
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and (ii)
recognized equitable principles which may affect the remedies provided
in the agreements referred to in said opinions, which laws and
principles, however, do not in our opinion make the remedies provided in
said agreements inadequate for the practical realization of the benefits
of the security intended to be provided thereby.
(d) This opinion is rendered solely to you at Federal Express'
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by or furnished
to any other person, other than your successors and permitted assigns,
without our prior written consent.
(e) We rendered an opinion dated [May 4] [July 31], 1995 (the
"Delivery Opinion"), a copy of which is attached hereto, in connection
with the financing and acquisition of the Aircraft on such date. We
hereby consent and agree that the addressees hereto who were not
addressees to the Delivery Opinion may rely on the Delivery Opinion as
fully and with the same force and effect as if such addressees were
originally named therein on the date of the Delivery Opinion.
Very truly yours,
SCHEDULE
Owner Trustee
-------------
First Security Bank of Utah, National Association
Indenture Trustee
-----------------
NationsBank of Georgia, National Association
Owner Participant
-----------------
Amsouth Leasing Corporation
Shawmut Bank, National Association
Original Loan Participants
--------------------------
The Entities listed on Schedule I to the Participation Agreement as Original
Loan Participants
Lessee
------
Federal Express Corporation
Pass Through Trustee
--------------------
NationsBank, National Association (Carolinas), successor in interest to
NationsBank of South Carolina, National Association
Underwriters
------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Chase Securities, Inc.
Exhibit D
Form of Opinion of Company Counsel
----------------------------------
August ___, 1995
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
CHASE SECURITIES, INC.
c/o MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
Merrill Lynch World Headquarters
World Financial Center, North Tower
New York, New York 10281-1305
Re: Federal Express Corporation
1995 Pass Through Certificates, Series A1 and A2 (the "Offered
Certificates")
--------------------------------------------------------------
Ladies and Gentlemen:
This opinion is directed to the Underwriters pursuant to Section 5(b)(2)
of the Underwriting Agreement dated August 16, 1995 (the "Underwriting
Agreement"), among the Company and you, with respect to the offer and sale of
the Offered Certificates. All terms defined or used in the Underwriting
Agreement have the same meaning when used herein, unless otherwise noted.
I am Vice President-Law of the Company and have acted as such in
connection with the Offered Certificates and the Underwriting Agreement. I or
attorneys under my supervision have made such examination and investigation as
we have deemed necessary in order to give the following opinion.
Based on the foregoing, it is my opinion that:
(i) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware
and the Company has full corporate power and authority under such laws
to own its properties and to conduct its business as described in the
Prospectus; the Company is a "certificated air carrier" and a "citizen
of the United States" within the meaning of Section 40102(a)(15) of
Title 49 of the United States Code; the Company is duly qualified to do
business and is in good standing in each jurisdiction in which it owns
or leases real property or in which the conduct of its business requires
such qualification, except for such instances which in the aggregate
will not have a material adverse effect on the Company;
(ii) Each subsidiary of the Company which is a significant
subsidiary as defined in Rule 405 of Regulation C of the 1933 Act
Regulations (each a "Significant Subsidiary") has been duly incorporated
and is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and conduct its
business as described in the Registration Statement, and, to the best of
my knowledge, is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, except where the failure to so qualify would
not have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise; all of
the issued and outstanding capital stock of each Significant Subsidiary
has been duly authorized and validly issued and is fully paid and
non-assessable, and all of such capital stock, except for directors'
qualifying shares, is owned by the Company, directly or through
subsidiaries, free and clear of any mortgage, pledge, lien, encumbrance,
claim or equity;
(iii) Except for matters described in the Prospectus (as to which
I can express no opinion at this time concerning the Company's liability
(if any) or the effect of any adverse determination upon the business,
condition (financial or otherwise) or operations of the Company), there
is no pending, or to my knowledge, threatened action or proceeding
before any court or administrative agency which individually (or in the
aggregate in the case of any group of related lawsuits) is expected to
have a material adverse effect on the financial condition of the Company
or the ability of the Company to perform its obligations under the Pass
Through Agreements and the other Operative Agreements to which the
Company is a party;
(iv) The Pass Through Agreements and the other Operative
Agreements to which the Company is a party have been duly and validly
authorized, executed and delivered by the Company;
(v) The Equipment Certificates are in due and proper form and
have been duly and validly authorized by all necessary corporate action;
(vi) The Company possesses all permits, approvals, franchises and
other rights from federal aviation, aeronautical, communications,
transportation and shipping authorities which are requisite for the
conduct of its business as described in the Prospectus or for the
actions contemplated by the Underwriting Agreement and the offering
contemplated by the Prospectus; and the actions contemplated by the
Underwriting Agreement, the Pass Through Agreements, the Participation
Agreements and the other Operative Agreements, and the offering
contemplated by the Prospectus, are not in violation of any federal
statute or regulation relating to aviation, aeronautics, communications,
transportation or shipping;
(vii) The Basic Agreement is qualified under the 1939 Act; I have
reviewed or caused to be reviewed by attorneys under my supervision the
Registration Statement, the Prospectus and each amendment and supplement
thereto (including the documents incorporated by reference) and have no
reason to believe that, as of their respective effective or issue dates,
or as of the Closing Time, either the Registration Statement or the
Prospectus or any such amendment or supplement (or any such documents
incorporated by reference) contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading;
(viii)I do not know of any statute or regulation or legal or
governmental proceeding required to be described in the Prospectus which
is not described as required, nor of any contract or document of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
which is not described and filed as required; and the descriptions in the
Registration Statement and the Prospectus of the contracts and other
documents therein described are accurate and fairly present the
information required to be shown;
(ix) The execution and delivery by the Company of the Underwriting
Agreement, the Pass Through Agreements and the Operative Agreements to
which the Company is a party, the consummation by the Company of the
transactions herein and therein contemplated and compliance with the
terms of the Underwriting Agreement, the Pass Through Agreements and
such Operative Agreements do not and will not conflict with or result in
a breach of any of the terms of the Certificate of Incorporation or
By-laws of the Company, and will not conflict with or result in a breach
of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan, credit or note agreement,
lease or other agreement or instrument material to the Company to which
the Company is a party or by which it or any or its properties are
bound, or any existing applicable law, rule, regulation, judgment, order
or decree of any government, governmental instrumentality or court,
having jurisdiction over the Company or any of its properties;
(x) The statements in the Basic Prospectus under the captions
"Description of the Pass Through Certificates" and "Description of the
Equipment Certificates" and in the Prospectus Supplement under the
captions "Description of the Pass Through Certificates" and "Description
of the Equipment Trust Certificates," insofar as such statements
constitute a summary of the Pass Through Agreements, the Offered
Certificates, the Leases, the Participation Agreements and the
Indentures, are accurate summaries of the material provisions thereof
and fairly present the information called for by the 1933 Act and the
1933 Act Regulations with respect thereto;
(xi) No authorization, approval, consent or license of any
regulatory body or authority (other than under the 1933 Act, the 1939
Act and the securities or Blue Sky laws of the various states) is
required for the valid authorization, issuance, sale and delivery of the
Offered Certificates as herein contemplated or the valid authorization,
execution, delivery and performance by the Company of the Underwriting
Agreement, the Pass Through Agreements and the other Operative
Agreements to which the Company is a party or the consummation by the
Company of the transactions contemplated herein or therein, or, if so
required, all such authorizations, approvals, consents and licenses,
specifying the sale, have been obtained and are in full force and effect;
(xii) The Registration Statement has become effective under the
1933 Act and, to the best of my knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the 1933 Act; the Registration Statement and the
Prospectus, and each amendment or supplement thereto (except for the
financial statements and schedules included therein, as to which I
express no opinion), comply as to form in all material respects to the
requirements of the 1933 Act and the 1933 Act Regulations and, as to
documents incorporated therein, to the requirements of the 1934 Act and
the 1934 Act Regulations in effect at the time such documents were filed
with the Commission; and
(xiii)The Underwriting Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes a
valid and binding agreement of the Company, enforceable in accordance
with its terms, except as enforcement thereof is limited by bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting enforcement of creditors' rights or by general
equity principles and subject to any principles of public policy
limiting the right to enforce the indemnification and contribution
provisions contained in Sections 6 and 7 of the Underwriting Agreement.
In rendering the foregoing opinion, we have assumed that (i) all
signatures on all documents examined by us are genuine and that where any such
signature (other than a signature purporting to have been made on behalf of
the Company) purports to have been made in a corporate, governmental,
fiduciary or other capacity, the person who affixed such signature had the due
authority to do so, (ii) certain factual matters contained in certificates of
public officials are accurate, true and correct, and (iii) photostatic copies
of such documents, records and certificates conform to the originals.
This opinion is intended solely for the benefit of the Underwriters and
is not to be relied on by, and no copies of it are to be delivered to, any
other person without my prior written consent, except that Underwriters'
counsel may rely upon this opinion as to all matters of Tennessee law or
Delaware corporate law in rendering its opinion of even date herewith. I am
not assuming any professional responsibility to any other person by rendering
this opinion. It is understood that this opinion speaks as of the date given,
notwithstanding any delivery as contemplated above on any other date.
_____________________________________
George W. Hearn
Vice President-Law
Schedule I
to
Underwriting
Agreement
Dated: August 16, 1995
FEDERAL EXPRESS CORPORATION
1995 Pass Through Certificates, Series A1
1995 Pass Through Certificates, Series A2
<TABLE>
<CAPTION>
Aggregate Aggregate
Amount of Amount of Total
Series A1 Series A2 Aggregate
Pass Through Pass Through Amount to
Underwriters Certificates Certificates Be Purchased
------------------------------------------------ -------------- -------------- --------------
<S> <C> <C> <C>
MERRILL LYNCH, PIERCE, FENNER & SMITH $67,167,000 $12,663,000 $79,830,000
INCORPORATED
CHASE SECURITIES, INC. $36,167,000 $ 6,819,000 $42,986,000
</TABLE>
Schedule II
to
Underwriting
Agreement
Dated: August 16, 1995
FEDERAL EXPRESS CORPORATION
1995 Pass Through Certificates, Series A1
1995 Pass Through Certificates, Series A2
To: Federal Express Corporation
2005 Corporate Avenue
Memphis, Tennessee 38132
Re: Underwriting Agreement dated August 16, 1995.
Title of Offered Certificates:1995 Pass Through Certificates, Series A1
1995 Pass Through Certificates, Series A2
Current ratings: BBB+/A3
Interest rate: Series A1. 7.63%
Series A2. 8.06%
Interest payable: January 5 and July 5
Public offering price: 100%, plus accrued interest from August 16, 1995
Closing date, time and
location: August 21, 1995, 9:00 A.M., New York City time
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Location for checking Offered
Certificates: New York, New York
Listing requirement: None
Other terms and
conditions: The Offered Certificates will be issued
in fully registered, certificated form.
Exceptions, if any, to Section 3(i) of the
Underwriting Agreement: None
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CHASE SECURITIES, INC.
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By:/s/ Sidney E. Goodfriend
------------------------------------
Sidney E. Goodfriend
Director, Investment Banking
Acting on behalf of themselves and the
other named Underwriter
Accepted:
FEDERAL EXPRESS CORPORATION
By: /s/ Robert D. Henning
---------------------------------------
Robert D. Henning
Managing Director, Structured Finance
__________________________________________
SERIES SUPPLEMENT 1995-A1
Dated August [__], 1995
to
PASS THROUGH TRUST AGREEMENT
Dated as of February 1, 1993
In Each Case Between
NATIONSBANK, NATIONAL ASSOCIATION (CAROLINAS)
as Pass Through Trustee,
and
FEDERAL EXPRESS CORPORATION
$103,334,000
Federal Express Corporation
Pass Through Trust, 1995-A1
Federal Express Corporation
1995 Pass Through Certificates,
Series A1
__________________________________________
TABLE OF CONTENTS
Page
RECITALS............................................................. 1
ARTICLE I
CERTAIN DEFINITIONS
ARTICLE II
DESIGNATIONS; TRUST FORMATION;
ISSUANCE OF PASS THROUGH CERTIFICATES
SECTION 2.01. Designations; Aggregate Amount................... 4
SECTION 2.02. Declaration of Trust; Authorization.............. 4
SECTION 2.03. Issuance of Pass Through Certificates............ 5
SECTION 2.04. Purchase of Equipment Certificates............... 5
SECTION 2.05. Representations and Warranties of the Company.... 5
SECTION 2.06. Conditions Precedent............................. 5
ARTICLE III
DISTRIBUTION AND RECORD DATES;
CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS
SECTION 3.01. Distribution Dates............................... 6
SECTION 3.02. Record Dates..................................... 6
SECTION 3.03. Certificate Account and Special Payments Account. 6
SECTION 3.04. Form of Pass Through Certificates................ 6
SECTION 3.05. Appointment of Authenticating Agent; Paying
Agent and Registrar.............................. 6
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Governing Law; Counterpart Form.................. 7
SECTION 4.02. Reports by the Company........................... 7
SECTION 4.03. Modification and Ratification of Pass Through
Agreement...................................... 8
SECTION 4.04. Termination...................................... 8
EXHIBIT A Form of Pass Through Certificate
SCHEDULE I Equipment Certificates; Related Indenture Documents
SERIES SUPPLEMENT 1995-A1
SERIES SUPPLEMENT 1995-A1, dated August [__], 1995 (this
"Series Supplement"), to the Pass Through Trust Agreement, dated as of
February 1, 1993 (the "Pass Through Agreement"), in each case between FEDERAL
EXPRESS CORPORATION, a Delaware corporation (the "Company") and NATIONSBANK,
NATIONAL ASSOCIATION (CAROLINAS) (formerly known as NationsBank of South
Carolina, National Association), a national banking association organized
under the laws of the United States of America, as Pass Through Trustee (the
"Pass Through Trustee").
RECITALS
WHEREAS, capitalized terms used herein shall have the
respective meanings set forth or referred to in Article I hereof;
WHEREAS, Section 2.01 of the Pass Through Agreement provides,
among other things, that the Company and the Pass Through Trustee may execute
and deliver one or more series supplements, each for the purpose of forming a
separate pass through trust for the benefit of the certificateholders of the
series of pass through certificates to be issued pursuant to such pass through
trust, establishing certain terms of such pass through certificates, and
pursuant to which the pass through certificates of such series shall be
executed and authenticated by the Pass Through Trustee and delivered as
directed by the Company;
WHEREAS, pursuant to the Participation Agreements, the Company
has agreed to cause the Equipment Certificates to be issued and sold to the
Pass Through Trustee, and the Pass Through Trustee has agreed to purchase the
Equipment Certificates, which will be held in trust as Trust Property for the
benefit of the Certificateholders;
WHEREAS, in order to facilitate such sale, the Company has
agreed, pursuant to the Underwriting Agreement, to cause the Pass Through
Trustee to issue and sell the Pass Through Certificates to the Underwriters;
WHEREAS, pursuant to the Pass Through Agreement and the terms
of this Series Supplement, the Pass Through Trustee will execute, authenticate
and deliver the Pass Through Certificates to the Underwriters upon receipt by
the Pass Through Trustee of the purchase price therefor, which will be applied
in accordance with this Series Supplement to purchase the Equipment
Certificates;
WHEREAS, the Pass Through Trustee hereby declares the creation
of this Pass Through Trust for the benefit of the Certificateholders, and the
initial Certificateholders of such Pass Through Certificates, as the grantors
of such Pass Through Trust, by their respective acceptances of such Pass
Through Certificates, join in the creation of such Pass Through Trust;
WHEREAS, to facilitate the sale of the Equipment Certificates
to, and the purchase of the Equipment Certificates by, the Pass Through
Trustee on behalf of this Pass Through Trust, the Company has duly authorized
the execution and delivery of this Series Supplement as the "issuer," as such
term is defined in and solely for purposes of the Securities Act, of the Pass
Through Certificates and as the "obligor," as such term is defined in and
solely for purposes of the Trust Indenture Act, with respect to all such Pass
Through Certificates; and
WHEREAS, this Series Supplement is subject to the provisions of
the Trust Indenture Act and shall, to the extent applicable, be governed by
such provisions;
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
CERTAIN DEFINITIONS
All terms used in this Series Supplement that are defined in
the Pass Through Agreement, either directly or by reference therein, have the
meanings assigned to them therein as supplemented by this Article I, if
applicable, except to the extent the context clearly requires otherwise. Any
such defined term that is defined in the Pass Through Agreement as relating to
a particular Pass Through Trust or Series rather than to any Pass Through
Trust or Series generally shall, when used in this Series Supplement, relate
solely to the Federal Express Corporation Pass Through Trust, 1995-A1, or the
Federal Express Corporation 1995 Pass Through Certificates, Series A1, as the
case may be, whether or not expressly so stated herein.
"Authenticating Agent" has the meaning set forth in Section
3.05 hereof.
"Certificate Account" means the Certificate Account specified
in Section 3.03 hereof.
"Certificateholders" means the Certificateholders of the Series
of Pass Through Certificates designated in Section 2.01 hereof.
"Cut-off Date" is inapplicable.
"Delivery Date" means, for any Equipment Certificates,
the Refunding Date (as such term is defined in the related Participation
Agreement) for such Equipment Certificates.
"Equipment Certificates" means those Equipment Trust
Certificates listed in Schedule I hereto.
"Issuance Date" means the date defined as the Closing Time in
the Underwriting Agreement.
"Participation Agreements" means those Participation Agreements
listed in Schedule I hereto.
"Pass Through Certificates" means the Pass Through Certificates
designated in Section 2.01 hereof.
"Pass Through Trust," "this Pass Through Trust" and other like
words means the Pass Through Trust designated in Section 2.01 hereof.
"Paying Agent" means the Person specified as such in Section
3.05 hereof.
"Record Date" means any Record Date specified in Section 3.02
hereof.
"Registrar" means the Person specified as such in Section 3.05
hereof.
"Regular Distribution Date" means any Regular Distribution Date
specified in Section 3.01 hereof.
"Special Distribution Date" means, for any Special Payment, the
Special Distribution Date for such Special Payment specified in Section 3.01
hereof.
"Special Payments Account" means the Special Payments Account
specified in Section 3.03 hereof.
"Trust Property" means all money, instruments, including the
Equipment Certificates that have been issued by the related Owner Trustee and
delivered to and accepted by the Pass Through Trustee for the benefit of the
Certificateholders, and other property held as the property of this Pass
Through Trust, including all distributions thereon and proceeds thereof.
"Underwriters" means the several Underwriters named in the
Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement dated
August 16, 1995 among the Company and Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Chase Securities, Inc.
ARTICLE II
DESIGNATIONS; TRUST FORMATION;
ISSUANCE OF PASS THROUGH CERTIFICATES
SECTION 2.01. Designations; Aggregate Amount. The Pass
Through Trust created hereby shall be designated Federal Express
Corporation Pass Through Trust, 1995-A1 (herein sometimes called this "Pass
Through Trust"). The Pass Through Certificates evidencing Fractional
Undivided Interests in such Pass Through Trust shall be designated as the
Federal Express Corporation 1995 Pass Through Certificates, Series A1
(herein sometimes called the "Series A1 Pass Through Certificates"). The
Series A1 Pass Through Certificates shall be the only instruments
evidencing a fractional undivided interest in such Pass Through Trust.
Except as provided in Section 2.09 of the Pass Through
Agreement, the aggregate amount of Series A1 Pass Through Certificates that
may be authenticated, delivered and outstanding under this Series Supplement
is limited to $103,334,000.
SECTION 2.02. Declaration of Trust; Authorization. Each
initial Certificateholder, by its payment for and acceptance of any Series A1
Pass Through Certificate is hereby deemed (1) as grantor, to join in the
creation and declaration of this Pass Through Trust and (2) as beneficiary of
such Pass Through Trust, to authorize and direct the Pass Through Trustee to
execute and deliver all documents to which the Pass Through Trustee is a party
that may be necessary or desirable to consummate the transactions contemplated
hereby and to exercise its rights and perform its duties under the
Participation Agreements, the Indentures, the Pass Through Agreement and this
Series Supplement.
The Pass Through Trustee hereby acknowledges and accepts this
grant of trust and declares that it will hold the Trust Property as Pass
Through Trustee upon this Pass Through Trust for the use and benefit of the
Certificateholders.
SECTION 2.03. Issuance of Pass Through Certificates. Subject
to the terms set forth herein, on the Issuance Date (i) the Company shall
direct the Underwriters to execute a wire transfer or intra-bank transfer to
the Pass Through Trustee in the amount of the total proceeds payable by such
Underwriters pursuant to the Underwriting Agreement with respect to the Series
A1 Pass Through Certificates and (ii) the Pass Through Trustee shall deliver
the Series A1 Pass Through Certificates to the Underwriters as provided in the
Underwriting Agreement upon receipt by the Pass Through Trustee of such
proceeds.
SECTION 2.04. Purchase of Equipment Certificates. On the
Issuance Date, the Pass Through Trustee shall purchase, in accordance with
Section 2.02 of the Pass Through Agreement, each of the Equipment
Certificates upon the satisfaction or waiver of the conditions for such
purchase by the Pass Through Trustee set forth in the related Participation
Agreement.
SECTION 2.05. Representations and Warranties of the Company.
All of the representations and warranties of the Company set forth or
incorporated by reference in Section 1 of the Underwriting Agreement are
incorporated by reference in this Series Supplement as if set forth herein and
the Company represents and warrants that such representations and warranties
are true and correct on the date hereof, except to the extent that such
representations and warranties expressly relate solely to an earlier date or
later date (in which case such representations and warranties were correct on
and as of such earlier date or will be correct on and as of such later date,
as the case may be).
SECTION 2.06. Conditions Precedent. The obligations of the
Pass Through Trustee to participate in the transactions described in Sections
2.03 and 2.04 hereof are subject to (i) receipt by the Pass Through Trustee of
a certificate of the Company to the same effect as the certificate of the
Company delivered to the Underwriters pursuant to Section 5(c) of the
Underwriting Agreement, and (ii) satisfaction or waiver of the conditions for
the purchase by the Underwriters of the Pass Through Certificates set forth in
Section 5 of the Underwriting Agreement, which satisfaction or waiver for the
purposes hereof shall be conclusively demonstrated by the receipt by the Pass
Through Trustee of the total proceeds payable by such Underwriters pursuant to
the Underwriting Agreement with respect to the Series A1 Pass Through
Certificates.
ARTICLE III
DISTRIBUTION AND RECORD DATES;
CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS
SECTION 3.01. Distribution Dates. The Regular Distribution
Dates are January 5 and July 5, commencing on January 5, 1996. The Special
Distribution Date for any month in which a Special Payment is to be
distributed will be the fifth day of such month, except that the Special
Distribution Date for any Special Payment received by the Pass Through
Trustee in connection with a prepayment of any Equipment Certificate
pursuant to Section 6.02(a)(i) or 6.02(a)(v) of the related Indenture will
correspond to the date of the receipt of such Special Payment by the Pass
Through Trustee. Notice of such Special Payment shall be mailed as soon as
practicable after receipt by the Pass Through Trustee of the notice of such
prepayment.
SECTION 3.02. Record Dates. The Record Dates for the Regular
Distribution Dates are December 21 and June 20, respectively, and the Record
Date for any Special Distribution Date is the fifteenth day preceding such
Special Distribution Date, in any event, whether or not such date is a
Business Day.
SECTION 3.03. Certificate Account and Special Payments
Account. In accordance with Section 5.01(a) of the Pass Through Agreement and
upon receipt of any Scheduled Payment, the Pass Through Trustee shall
immediately deposit such Scheduled Payment into the Certificate Account, a
separate and non-interest bearing account designated by the Pass Through
Trustee to be used for such purpose. In accordance with Section 5.01(b) of
the Pass Through Agreement and upon receipt of any Special Payment, the Pass
Through Trustee shall immediately deposit such Special Payment into the
Special Payments Account, a separate and, except as provided in Section 5.04
of the Pass Through Agreement, non-interest bearing account designated by the
Pass Through Trustee to be used for such purpose.
SECTION 3.04. Form of Pass Through Certificates. Subject to
Section 2.07 of the Pass Through Agreement, each of the Series A1 Pass Through
Certificates will be substantially in the form of Exhibit A hereto.
SECTION 3.05. Appointment of Authenticating Agent; Paying
Agent and Registrar. (a) The Pass Through Trustee may appoint an
authenticating agent (the "Authenticating Agent") with respect to the Pass
Through Certificates which shall be authorized to act on behalf of the Pass
Through Trustee to authenticate the Pass Through Certificates issued upon
original issue and upon exchange or registration of transfer thereof or
pursuant to Section 2.09 of the Pass Through Agreement. Pass Through
Certificates so authenticated shall be entitled to the benefits of the Pass
Through Agreement and this Series Supplement and shall be valid and obligatory
for all purposes as if authenticated by the Pass Through Trustee. Whenever
reference is made in the Pass Through Agreement or this Series Supplement to
the authentication and delivery of Pass Through Certificates by the Pass
Through Trustee or the Pass Through Trustee's certificate of authentication,
such reference shall be deemed to include authentication and delivery on
behalf of the Pass Through Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Pass Through Trustee
by an Authenticating Agent.
(b) The Paying Agent, Registrar and Authenticating Agent for
the Series A1 Pass Through Certificates initially shall be NationsBank of
Georgia, National Association ("NationsBank of Georgia"), 600 Peachtree
Street, N.E., Suite 900, Atlanta, Georgia 30308. The Company, the Pass
Through Trustee and NationsBank of Georgia have entered into a Registrar,
Authenticating and Paying Agency Agreement dated the date hereof which sets
forth the rights, duties and obligations of the parties thereto with respect
to the appointment of NationsBank of Georgia as Paying Agent, Registrar and
Authenticating Agent for the Series A1 Pass Through Certificates.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Governing Law; Counterpart Form. AS PROVIDED
IN SECTION 13.14 OF THE PASS THROUGH AGREEMENT, THIS SERIES SUPPLEMENT AND
EACH SERIES A1 PASS THROUGH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
This Series Supplement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall
be an original, but all such counterparts shall together constitute but one
and the same instrument.
SECTION 4.02. Reports by the Company. In addition to the
reports required to be provided by the Company pursuant to Section 4.03 of the
Pass Through Agreement, the Company agrees to furnish to the Pass Through
Trustee from time to time, such other financial information as the Pass
Through Trustee may reasonably request.
SECTION 4.03. Modification and Ratification of Pass Through
Agreement. The Pass Through Agreement is incorporated herein by reference in
its entirety, and shall be deemed to be a part of this Series Supplement as if
set forth in full herein, and is in all respects ratified and confirmed, as
supplemented and modified by this Series Supplement.
SECTION 4.04. Termination. In no event shall this Pass
Through Trust continue beyond the expiration of 21 years after the death of
the last survivor of George Pataki, Governor of New York State, living on
the date of this Series Supplement.
IN WITNESS WHEREOF, the parties have caused their names to be
signed hereto by their respective officers thereunto duly authorized, all on
the day and year first above written.
FEDERAL EXPRESS CORPORATION
By: _________________________________________
Name: Robert D. Henning
Title:Assistant Treasurer and Managing
Director - Structured Finance
NATIONSBANK, NATIONAL ASSOCIATION
(CAROLINAS),
as Pass Through Trustee
By: _________________________________________
Name:
Title:
Exhibit A to
Series Supplement
FORM OF PASS THROUGH CERTIFICATE
FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 1995-A1
1995 Pass Through Certificate, Series A1
Final Scheduled Regular Distribution Date: January 5, 2014
evidencing a fractional undivided interest in a pass through trust,
the property of which includes certain Equipment Certificates.
Certificate No. _______
Applicable interest rate on Equipment Certificates held in
Pass Through Trust, 1995-A1: 7.63%.
$___________ Fractional Undivided Interest representing __________ of the
Pass Through Trust per $1,000 face amount.
THIS CERTIFIES THAT ______________, for value received, is the
registered owner of a $_________ (_____________ dollars) Fractional
Undivided Interest in the Federal Express Corporation Pass Through Trust,
1995-A1 (the "Pass Through Trust") created and declared by NationsBank,
National Association (Carolinas), formerly known as NationsBank of South
Carolina, National Association, as pass through trustee (the "Pass Through
Trustee"), pursuant to the Pass Through Trust Agreement dated as of
February 1, 1993 (the "Pass Through Agreement"), as supplemented by Series
Supplement 1995-A1 thereto dated August __, 1995 (the "Series Supplement")
between the Pass Through Trustee and Federal Express Corporation, a
Delaware corporation (the "Company"), a summary of certain of the pertinent
provisions of which is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings
assigned to them in the Pass Through Agreement and the Series Supplement.
This Pass Through Certificate is one of the duly authorized Pass Through
Certificates designated as "Federal Express Corporation 1995 Pass Through
Certificates, Series A1." This Pass Through Certificate is issued under and
is subject to the terms, provisions and conditions of the Pass Through
Agreement and the Series Supplement, to which the Certificateholder of this
Pass Through Certificate by virtue of the acceptance hereof assents and by
which such Certificateholder is bound. The property of the Pass Through
Trust (the "Trust Property") includes certain Equipment Certificates (the
"Equipment Certificates"). Each series of Equipment Certificates is
secured by a security interest in an aircraft leased to or owned by the
Company. The Pass Through Certificates represent fractional undivided
interests in the Pass Through Trust and the Trust Property, and have no
rights, benefits or interests in respect of any other separate trust
established pursuant to the terms of the Pass Through Agreement for any
other Series of Pass Through Certificates issued pursuant thereto.
Subject to and in accordance with the terms of the Pass Through
Agreement and the Series Supplement, from funds then available to the Pass
Through Trustee, there will be distributed on each January 5 and July 5 (a
"Regular Distribution Date"), commencing on January 5, 1996, to the Person in
whose name this Pass Through Certificate is registered at the close of
business on the 15th day preceding the applicable Regular Distribution
Date, an amount in respect of the Scheduled Payments on the
Equipment Certificates due on such Regular Distribution Date, equal to the
product of the percentage interest in the Pass Through Trust evidenced by this
Pass Through Certificate and an amount equal to the sum of such Scheduled
Payments. Subject to and in accordance with the terms of the Pass Through
Agreement and the Series Supplement, if Special Payments on the Equipment
Certificates are received by the Pass Through Trustee, from funds then
available to the Pass Through Trustee, there shall be distributed on the
applicable Special Distribution Date, to the Person in whose name this Pass
Through Certificate is registered at the close of business on the 15th day
preceding such Special Distribution Date, an amount in respect of such Special
Payments on the Equipment Certificates, equal to the product of the percentage
interest in the Pass Through Trust evidenced by this Pass Through Certificate
and an amount equal to the sum of such Special Payments so received.
If a Distribution Date is not a Business Day, distribution
shall be made on the immediately following Business Day with the same force
and effect as if made on such Distribution Date and no interest shall accrue
during the intervening period. The Special Distribution Date shall be the
fifth day of the month determined as provided in the Pass Through Agreement
and the Series Supplement, except in certain circumstances, in which case it
will be the date of receipt of proceeds by the Pass Through Trustee as
provided in the Series Supplement. The Pass Through Trustee shall mail notice
of each Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Pass Through Certificate.
Distributions on this Pass Through Certificate will be made by
the Pass Through Trustee to the Person entitled thereto, without the
presentation or surrender of this Pass Through Certificate or the making of
any notation hereon. Except as otherwise provided in the Pass Through
Agreement and notwithstanding the above, the final distribution on this Pass
Through Certificate will be made after notice is mailed by the Pass Through
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Pass Through Certificate at the office or agency of the Pass
Through Trustee specified in such notice.
NO EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR INDIVIDUAL
RETIREMENT ACCOUNT OR PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (HEREINAFTER COLLECTIVELY REFERRED TO AS AN "ERISA
PLAN"), MAY ACQUIRE OR HOLD ANY OF THE PASS THROUGH CERTIFICATES. THE
PURCHASE BY ANY PERSON OF ANY PASS THROUGH CERTIFICATE CONSTITUTES A
REPRESENTATION BY SUCH PERSON TO FEDERAL EXPRESS CORPORATION, THE RELATED
OWNER PARTICIPANTS, THE RELATED OWNER TRUSTEES, THE RELATED INDENTURE TRUSTEES
AND THE PASS THROUGH TRUSTEE OR THEIR RESPECTIVE SUCCESSORS, AS THE CASE MAY
BE, THAT SUCH PERSON IS NOT AN ERISA PLAN AND THAT SUCH PERSON IS NOT
ACQUIRING, AND HAS NOT ACQUIRED, SUCH PASS THROUGH CERTIFICATE WITH ASSETS OF
AN ERISA PLAN.
This Pass Through Certificate shall be governed by and
construed in accordance with the laws of the State of New York.
Reference is hereby made to the further provisions of this Pass
Through Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by the Pass Through Trustee, by manual signature, this Pass Through
Certificate shall not be entitled to any benefit under the Pass Through Trust
or be valid for any purpose.
IN WITNESS WHEREOF, the Pass Through Trustee has caused this
Pass Through Certificate to be duly executed.
FEDERAL EXPRESS CORPORATION
PASS THROUGH TRUST, 1995-A1
By: NATIONSBANK, NATIONAL ASSOCIATION
(CAROLINAS)
as Pass Through Trustee
By: _______________________________
Authorized Signatory
[FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Dated:
This is one of the Pass Through Certificates referred to in the
within-mentioned Pass Through Agreement and the Series Supplement.
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION
as Registrar, Paying Agent
and Authenticating Agent
By: _______________________
Authorized Signatory
[Reverse of Pass Through Certificate].
The Pass Through Certificates do not represent a direct obligation
of, or an obligation guaranteed by, or an interest in, the Company or the
Pass Through Trustee or any affiliate thereof. The Pass Through
Certificates are limited in right of payment, all as more specifically set
forth on the face hereof and in the Pass Through Agreement and the Series
Supplement. All payments or distributions made to Certificateholders under
the Pass Through Agreement shall be made only from the Trust Property and
only to the extent that the Pass Through Trustee shall have sufficient
income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Pass Through Agreement and the Series
Supplement. Each Certificateholder of this Pass Through Certificate, by
its acceptance hereof, agrees that it will look solely to the income and
proceeds from the Trust Property to the extent available for distribution
to such Certificateholder as provided in the Pass Through Agreement and the
Series Supplement. In connection with withholding taxes, under certain
circumstances the Pass Through Trustee may retain certain amounts otherwise
distributable to a Certificateholder. The purchase by any
Certificateholder of any Pass Through Certificate constitutes the consent
of such Certificateholder to such retention in accordance with the terms of
the Pass Through Agreement. This Pass Through Certificate does not purport
to summarize the Pass Through Agreement and the Series Supplement and
reference is made to the Pass Through Agreement and the Series Supplement
for information with respect to the interests, rights, benefits,
obligations, proceeds and duties evidenced hereby. A copy of the Pass
Through Agreement may be examined by any Certificateholder upon request
during normal business hours at the principal office of the Pass Through
Trustee, and at such other places designated by the Pass Through Trustee.
As of the date of issuance of this Pass Through Certificate, and
assuming that no prepayment, purchase or default in respect of payment on
the Equipment Certificates shall occur, the aggregate scheduled repayments
of principal on the Equipment Certificates for the Pass Through Trust and the
resulting Pool Factors for the Pass Through Trust after taking into account
each such repayment are set forth below:
Pass Through Trust, 1995-A1
Scheduled Principal
Payments on
Regular Equipment Trust
Distribution Dates Certificates Pool Factor
---------------------- --------------------- ---------------------
January 5, 1996 $ 0 1.0000000
July 5, 1996 1,109,050 0.9892673
January 5, 1997 1,240,454 0.9772630
July 5, 1997 1,201,660 0.9656341
January 5, 1998 1,335,101 0.9527139
July 5, 1998 1,293,350 0.9401977
January 5, 1999 1,437,284 0.9262885
July 5, 1999 1,392,030 0.9128174
January 5, 2000 7,059,211 0.8445029
July 5, 2000 0 0.8445029
January 5, 2001 3,725,626 0.8084487
July 5, 2001 0 0.8084487
January 5, 2002 6,013,300 0.7502558
July 5, 2002 50,770 0.7497645
January 5, 2003 2,457,289 0.7259844
July 5, 2003 0 0.7259844
January 5, 2004 3,870,331 0.6885299
July 5, 2004 0 0.6885299
January 5, 2005 2,976,916 0.6597212
July 5, 2005 0 0.6597212
January 5, 2006 4,411,107 0.6170333
July 5, 2006 0 0.6170333
January 5, 2007 6,864,418 0.5506039
July 5, 2007 0 0.5506039
January 5, 2008 5,364,067 0.4986939
July 5, 2008 0 0.4986939
January 5, 2009 7,220,880 0.4288149
July 5, 2009 0 0.4288149
January 5, 2010 9,207,660 0.3397091
July 5, 2010 0 0.3397091
January 5, 2011 10,592,503 0.2372016
July 5, 2011 0 0.2372016
January 5, 2012 11,432,768 0.1265627
July 5, 2012 0 0.1265627
January 5, 2013 11,024,870 0.0198710
July 5, 2013 0 0.0198710
January 5, 2014 2,053,355 0.0000000
The Pass Through Agreement and the Series Supplement permit, with
certain exceptions provided therein, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of
the Certificateholders under the Pass Through Trust at any time by the Company
and the Pass Through Trustee with the consent of the Majority In Interest of
Certificateholders in the Pass Through Trust. Any such consent by the
Certificateholder of this Pass Through Certificate shall be conclusive and
binding on such Certificateholder and upon all future Certificateholders of
this Pass Through Certificate and of any Pass Through Certificate issued upon
the transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Pass Through Certificate. The Pass
Through Agreement and the Series Supplement also permit the amendment thereof,
in certain limited circumstances, without the consent of the
Certificateholders of any of the Pass Through Certificates.
As provided in the Pass Through Agreement and the Series Supplement
and subject to certain limitations set forth therein, the transfer of this
Pass Through Certificate is registrable in the Register upon surrender of this
Pass Through Certificate for registration of transfer to the Pass Through
Trustee in its capacity as Registrar, or by any successor Registrar, duly
endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Pass Through Trustee and the Registrar duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Pass Through Certificates
of authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Pass Through Trust will be issued to the designated transferee
or transferees.
The Pass Through Certificates are issuable only as registered Pass
Through Certificates without coupons in minimum denominations of $1,000
Fractional Undivided Interest and integral multiples thereof. As provided in
the Pass Through Agreement and the Series Supplement and subject to certain
limitations set forth therein, the Pass Through Certificates are exchangeable
for new Pass Through Certificates of authorized denominations evidencing the
same aggregate Fractional Undivided Interest in the Pass Through Trust, as
requested by the Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Pass Through Trustee shall require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Pass Through Trustee, the Registrar, and any agent of the Pass
Through Trustee or the Registrar may treat the person in whose name this Pass
Through Certificate is registered as the owner hereof for all purposes, and
neither the Pass Through Trustee, the Registrar, nor any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Pass Through
Agreement and the Series Supplement and the Pass Through Trust created thereby
shall terminate upon the distribution to Certificateholders of all amounts
required to be distributed to them pursuant to the Pass Through Agreement and
the Series Supplement and the disposition of all property held as part of the
Trust Property.
Schedule I to
Series Supplement
Federal Express Corporation
Pass Through Trust, 1995-A1
Equipment Certificates;
Related Indenture Documents
1. Equipment Trust Certificates (Federal Express Corporation Trust No. N658FE)
Interest Rate: 7.63%
Maturity: January 5, 2013
Principal Amount: $48,360,000
Related Indenture Documents:
Trust Indenture and Security Agreement (Federal Express Corporation Trust
No. N658FE) dated as of May 1, 1995, amended and restated as of August 1,
1995, between First Security Bank of Utah, National Association, as Owner
Trustee, and NationsBank of Georgia, National Association, as Indenture
Trustee;
Participation Agreement (Federal Express Corporation Trust No. N658FE)
dated as of May 1, 1995, amended and restated as of August 1, 1995, among
Federal Express Corporation, as Lessee, AmSouth Leasing Corporation, as
Owner Participant, First Security Bank of Utah, National Association, as
Owner Trustee, NationsBank of Georgia, National Association, as Indenture
Trustee, NationsBank, National Association (Carolinas), as Pass Through
Trustee and The Chase Manhattan Bank (National Association), Bank of
America NT & SA, CIBC Inc. and The First National Bank of Chicago, as
Original Loan Participants;
Trust Agreement (Federal Express Corporation Trust No. N658FE) dated as of
May 1, 1995, amended and restated as of August 1, 1995, between AmSouth
Leasing Corporation, as Owner Participant and First Security Bank of Utah,
National Association, as Owner Trustee; and
Lease Agreement (Federal Express Corporation Trust No. N658FE) dated as of
May 1, 1995, amended and restated as of August 1, 1995, between First
Security Bank of Utah, National Association, as Owner Trustee and Lessor,
and Federal Express Corporation, as Lessee.
2. Equipment Trust Certificates (Federal Express Corporation Trust No. N659FE)
Interest Rate: 7.63%
Maturity: January 5, 2014
Principal Amount: $54,974,000
Related Indenture Documents:
Trust Indenture and Security Agreement (Federal Express Corporation Trust
No. N659FE) dated as of July 1, 1995, amended and restated as of August 1,
1995, between First Security Bank of Utah, National Association, as Owner
Trustee, and NationsBank of Georgia, National Association, as Indenture
Trustee;
Participation Agreement (Federal Express Corporation Trust No. N659FE)
dated as of June 1, 1995, amended and restated as of August 1, 1995, among
Federal Express Corporation, as Lessee, Shawmut Bank, National Association,
as Owner Participant, First Security Bank of Utah, National Association, as
Owner Trustee, NationsBank of Georgia, National Association, as Indenture
Trustee, NationsBank, National Association (Carolinas), as Pass Through
Trustee and The Chase Manhattan Bank (National Association), Bank of
America NT & SA, CIBC Inc. and The First National Bank of Chicago, as
Original Loan Participants;
Trust Agreement (Federal Express Corporation Trust No. N659FE) dated as of
June 1, 1995, amended and restated as of August 1, 1995, between Shawmut
Bank, National Association, as Owner Participant and First Security Bank of
Utah, National Association, as Owner Trustee; and
Lease Agreement (Federal Express Corporation Trust No. N659FE) dated as of
July 1, 1995, amended and restated as of August 1, 1995, between First
Security Bank of Utah, National Association, as Owner Trustee and Lessor,
and Federal Express Corporation, as Lessee.
__________________________________________
SERIES SUPPLEMENT 1995-A2
Dated August [__], 1995
to
PASS THROUGH TRUST AGREEMENT
Dated as of February 1, 1993
In Each Case Between
NATIONSBANK, NATIONAL ASSOCIATION (CAROLINAS)
as Pass Through Trustee,
and
FEDERAL EXPRESS CORPORATION
$19,482,000
Federal Express Corporation
Pass Through Trust, 1995-A2
Federal Express Corporation
1995 Pass Through Certificates,
Series A2
__________________________________________
TABLE OF CONTENTS
Page
RECITALS............................................................. 1
ARTICLE I
CERTAIN DEFINITIONS
ARTICLE II
DESIGNATIONS; TRUST FORMATION;
ISSUANCE OF PASS THROUGH CERTIFICATES
SECTION 2.01. Designations; Aggregate Amount........................... 4
SECTION 2.02. Declaration of Trust; Authorization...................... 4
SECTION 2.03. Issuance of Pass Through Certificates.................... 5
SECTION 2.04. Purchase of Equipment Certificates....................... 5
SECTION 2.05. Representations and Warranties of the Company............ 5
SECTION 2.06. Conditions Precedent..................................... 5
ARTICLE III
DISTRIBUTION AND RECORD DATES;
CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS
SECTION 3.01. Distribution Dates....................................... 6
SECTION 3.02. Record Dates............................................. 6
SECTION 3.03. Certificate Account and Special Payments Account......... 6
SECTION 3.04. Form of Pass Through Certificates........................ 6
SECTION 3.05. Appointment of Authenticating Agent; Paying
Agent and Registrar................................... 6
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Governing Law; Counterpart Form.......................... 7
SECTION 4.02. Reports by the Company................................... 7
SECTION 4.03. Modification and Ratification of Pass Through
Agreement.............................................. 8
SECTION 4.04. Termination.............................................. 8
EXHIBIT A Form of Pass Through Certificate
SCHEDULE I Equipment Certificates; Related Indenture Documents
SERIES SUPPLEMENT 1995-A2
SERIES SUPPLEMENT 1995-A2, dated August [__], 1995 (this "Series
Supplement"), to the Pass Through Trust Agreement, dated as of February 1,
1993 (the "Pass Through Agreement"), in each case between FEDERAL EXPRESS
CORPORATION, a Delaware corporation (the "Company") and NATIONSBANK,
NATIONAL ASSOCIATION (CAROLINAS) (formerly known as NationsBank of South
Carolina, National Association), a national banking association organized
under the laws of the United States of America, as Pass Through Trustee
(the "Pass Through Trustee").
RECITALS
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, Section 2.01 of the Pass Through Agreement provides, among
other things, that the Company and the Pass Through Trustee may execute and
deliver one or more series supplements, each for the purpose of forming a
separate pass through trust for the benefit of the certificateholders of the
series of pass through certificates to be issued pursuant to such pass through
trust, establishing certain terms of such pass through certificates, and
pursuant to which the pass through certificates of such series shall be
executed and authenticated by the Pass Through Trustee and delivered as
directed by the Company;
WHEREAS, pursuant to the Participation Agreements, the Company has
agreed to cause the Equipment Certificates to be issued and sold to the Pass
Through Trustee, and the Pass Through Trustee has agreed to purchase the
Equipment Certificates, which will be held in trust as Trust Property for the
benefit of the Certificateholders;
WHEREAS, in order to facilitate such sale, the Company has agreed,
pursuant to the Underwriting Agreement, to cause the Pass Through Trustee to
issue and sell the Pass Through Certificates to the Underwriters;
WHEREAS, pursuant to the Pass Through Agreement and the terms of this
Series Supplement, the Pass Through Trustee will execute, authenticate and
deliver the Pass Through Certificates to the Underwriters upon receipt by the
Pass Through Trustee of the purchase price therefor, which will be applied in
accordance with this Series Supplement to purchase the Equipment Certificates;
WHEREAS, the Pass Through Trustee hereby declares the creation of
this Pass Through Trust for the benefit of the Certificateholders, and the
initial Certificateholders of such Pass Through Certificates, as the
grantors of such Pass Through Trust, by their respective acceptances of
such Pass Through Certificates, join in the creation of such Pass Through
Trust;
WHEREAS, to facilitate the sale of the Equipment Certificates to, and
the purchase of the Equipment Certificates by, the Pass Through Trustee on
behalf of this Pass Through Trust, the Company has duly authorized the
execution and delivery of this Series Supplement as the "issuer," as such term
is defined in and solely for purposes of the Securities Act, of the Pass
Through Certificates and as the "obligor," as such term is defined in and
solely for purposes of the Trust Indenture Act, with respect to all such Pass
Through Certificates; and
WHEREAS, this Series Supplement is subject to the provisions of the
Trust Indenture Act and shall, to the extent applicable, be governed by such
provisions;
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE I
CERTAIN DEFINITIONS
All terms used in this Series Supplement that are defined in the Pass
Through Agreement, either directly or by reference therein, have the meanings
assigned to them therein as supplemented by this Article I, if applicable,
except to the extent the context clearly requires otherwise. Any such defined
term that is defined in the Pass Through Agreement as relating to a particular
Pass Through Trust or Series rather than to any Pass Through Trust or Series
generally shall, when used in this Series Supplement, relate solely to the
Federal Express Corporation Pass Through Trust, 1995-A2, or the Federal
Express Corporation 1995 Pass Through Certificates, Series A2, as the case may
be, whether or not expressly so stated herein.
"Authenticating Agent" has the meaning set forth in Section 3.05
hereof.
"Certificate Account" means the Certificate Account specified in
Section 3.03 hereof.
"Certificateholders" means the Certificateholders of the Series of
Pass Through Certificates designated in Section 2.01 hereof.
"Cut-off Date" is inapplicable.
"Delivery Date" means, for any Equipment Certificates, the
Refunding Date (as such term is defined in the related Participation
Agreement) for such Equipment Certificates.
"Equipment Certificates" means those Equipment Trust Certificates
listed in Schedule I hereto.
"Issuance Date" means the date defined as the Closing Time in the
Underwriting Agreement.
"Participation Agreements" means those Participation Agreements
listed in Schedule I hereto.
"Pass Through Certificates" means the Pass Through Certificates
designated in Section 2.01 hereof.
"Pass Through Trust," "this Pass Through Trust" and other like words
means the Pass Through Trust designated in Section 2.01 hereof.
"Paying Agent" means the Person specified as such in Section 3.05
hereof.
"Record Date" means any Record Date specified in Section 3.02 hereof.
"Registrar" means the Person specified as such in Section 3.05
hereof.
"Regular Distribution Date" means any Regular Distribution Date
specified in Section 3.01 hereof.
"Special Distribution Date" means, for any Special Payment, the
Special Distribution Date for such Special Payment specified in Section 3.01
hereof.
"Special Payments Account" means the Special Payments Account
specified in Section 3.03 hereof.
"Trust Property" means all money, instruments, including the
Equipment Certificates that have been issued by the related Owner Trustee
and delivered to and accepted by the Pass Through Trustee for the benefit
of the Certificateholders, and other property held as the property of this
Pass Through Trust, including all distributions thereon and proceeds
thereof.
"Underwriters" means the several Underwriters named in the
Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement dated
August 16, 1995 among the Company and Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Chase Securities, Inc.
ARTICLE II
DESIGNATIONS; TRUST FORMATION;
ISSUANCE OF PASS THROUGH CERTIFICATES
SECTION 2.01. Designations; Aggregate Amount. The Pass Through
Trust created hereby shall be designated Federal Express Corporation Pass
Through Trust, 1995-A2 (herein sometimes called this "Pass Through Trust").
The Pass Through Certificates evidencing Fractional Undivided Interests in
such Pass Through Trust shall be designated as the Federal Express
Corporation 1995 Pass Through Certificates, Series A2 (herein sometimes
called the "Series A2 Pass Through Certificates"). The Series A2 Pass
Through Certificates shall be the only instruments evidencing a fractional
undivided interest in such Pass Through Trust.
Except as provided in Section 2.09 of the Pass Through Agreement, the
aggregate amount of Series A2 Pass Through Certificates that may be
authenticated, delivered and outstanding under this Series Supplement is
limited to $19,482,000.
SECTION 2.02. Declaration of Trust; Authorization. Each initial
Certificateholder, by its payment for and acceptance of any Series A2 Pass
Through Certificate is hereby deemed (1) as grantor, to join in the creation
and declaration of this Pass Through Trust and (2) as beneficiary of such Pass
Through Trust, to authorize and direct the Pass Through Trustee to execute and
deliver all documents to which the Pass Through Trustee is a party that may be
necessary or desirable to consummate the transactions contemplated hereby and
to exercise its rights and perform its duties under the Participation
Agreements, the Indentures, the Pass Through Agreement and this Series
Supplement.
The Pass Through Trustee hereby acknowledges and accepts this grant
of trust and declares that it will hold the Trust Property as Pass Through
Trustee upon this Pass Through Trust for the use and benefit of the
Certificateholders.
SECTION 2.03. Issuance of Pass Through Certificates. Subject to the
terms set forth herein, on the Issuance Date (i) the Company shall direct the
Underwriters to execute a wire transfer or intra-bank transfer to the Pass
Through Trustee in the amount of the total proceeds payable by such
Underwriters pursuant to the Underwriting Agreement with respect to the Series
A2 Pass Through Certificates and (ii) the Pass Through Trustee shall deliver
the Series A2 Pass Through Certificates to the Underwriters as provided in the
Underwriting Agreement upon receipt by the Pass Through Trustee of such
proceeds.
SECTION 2.04. Purchase of Equipment Certificates. On the Issuance
Date, the Pass Through Trustee shall purchase, in accordance with Section 2.02
of the Pass Through Agreement, each of the Equipment Certificates upon the
satisfaction or waiver of the conditions for such purchase by the Pass Through
Trustee set forth in the related Participation Agreement.
SECTION 2.05. Representations and Warranties of the Company. All of
the representations and warranties of the Company set forth or incorporated by
reference in Section 1 of the Underwriting Agreement are incorporated by
reference in this Series Supplement as if set forth herein and the Company
represents and warrants that such representations and warranties are true and
correct on the date hereof, except to the extent that such representations and
warranties expressly relate solely to an earlier date or later date (in which
case such representations and warranties were correct on and as of such
earlier date or will be correct on and as of such later date, as the case may
be).
SECTION 2.06. Conditions Precedent. The obligations of the Pass
Through Trustee to participate in the transactions described in Sections 2.03
and 2.04 hereof are subject to (i) receipt by the Pass Through Trustee of a
certificate of the Company to the same effect as the certificate of the
Company delivered to the Underwriters pursuant to Section 5(c) of the
Underwriting Agreement, and (ii) satisfaction or waiver of the conditions for
the purchase by the Underwriters of the Pass Through Certificates set forth in
Section 5 of the Underwriting Agreement, which satisfaction or waiver for the
purposes hereof shall be conclusively demonstrated by the receipt by the Pass
Through Trustee of the total proceeds payable by such Underwriters pursuant to
the Underwriting Agreement with respect to the Series A2 Pass Through
Certificates.
ARTICLE III
DISTRIBUTION AND RECORD DATES;
CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS
SECTION 3.01. Distribution Dates. The Regular Distribution Dates
are January 5 and July 5, commencing on January 5, 1996. The Special
Distribution Date for any month in which a Special Payment is to be
distributed will be the fifth day of such month, except that the Special
Distribution Date for any Special Payment received by the Pass Through
Trustee in connection with a prepayment of any Equipment Certificate
pursuant to Section 6.02(a)(i) or 6.02(a)(v) of the related Indenture will
correspond to the date of the receipt of such Special Payment by the Pass
Through Trustee. Notice of such Special Payment shall be mailed as soon as
practicable after receipt by the Pass Through Trustee of the notice of such
prepayment.
SECTION 3.02. Record Dates. The Record Dates for the Regular
Distribution Dates are December 21 and June 20, respectively, and the Record
Date for any Special Distribution Date is the fifteenth day preceding such
Special Distribution Date, in any event, whether or not such date is a
Business Day.
SECTION 3.03. Certificate Account and Special Payments Account. In
accordance with Section 5.01(a) of the Pass Through Agreement and upon receipt
of any Scheduled Payment, the Pass Through Trustee shall immediately deposit
such Scheduled Payment into the Certificate Account, a separate and
non-interest bearing account designated by the Pass Through Trustee to be used
for such purpose. In accordance with Section 5.01(b) of the Pass Through
Agreement and upon receipt of any Special Payment, the Pass Through Trustee
shall immediately deposit such Special Payment into the Special Payments
Account, a separate and, except as provided in Section 5.04 of the Pass
Through Agreement, non-interest bearing account designated by the Pass Through
Trustee to be used for such purpose.
SECTION 3.04. Form of Pass Through Certificates. Subject to Section
2.07 of the Pass Through Agreement, each of the Series A2 Pass Through
Certificates will be substantially in the form of Exhibit A hereto.
SECTION 3.05. Appointment of Authenticating Agent; Paying Agent and
Registrar. (a) The Pass Through Trustee may appoint an authenticating agent
(the "Authenticating Agent") with respect to the Pass Through Certificates
which shall be authorized to act on behalf of the Pass Through Trustee to
authenticate the Pass Through Certificates issued upon original issue and upon
exchange or registration of transfer thereof or pursuant to Section 2.09 of
the Pass Through Agreement. Pass Through Certificates so authenticated shall
be entitled to the benefits of the Pass Through Agreement and this Series
Supplement and shall be valid and obligatory for all purposes as if
authenticated by the Pass Through Trustee. Whenever reference is made in the
Pass Through Agreement or this Series Supplement to the authentication and
delivery of Pass Through Certificates by the Pass Through Trustee or the Pass
Through Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Pass Through
Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Pass Through Trustee by an Authenticating Agent.
(b) The Paying Agent, Registrar and Authenticating Agent for the
Series A2 Pass Through Certificates initially shall be NationsBank of Georgia,
National Association ("NationsBank of Georgia"), 600 Peachtree Street, N.E.,
Suite 900, Atlanta, Georgia 30308. The Company, the Pass Through Trustee and
NationsBank of Georgia have entered into a Registrar, Authenticating and
Paying Agency Agreement dated the date hereof which sets forth the rights,
duties and obligations of the parties thereto with respect to the appointment
of NationsBank of Georgia as Paying Agent, Registrar and Authenticating Agent
for the Series A2 Pass Through Certificates.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Governing Law; Counterpart Form. AS PROVIDED IN
SECTION 13.14 OF THE PASS THROUGH AGREEMENT, THIS SERIES SUPPLEMENT AND EACH
SERIES A2 PASS THROUGH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
This Series Supplement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute but one and
the same instrument.
SECTION 4.02. Reports by the Company. In addition to the reports
required to be provided by the Company pursuant to Section 4.03 of the Pass
Through Agreement, the Company agrees to furnish to the Pass Through Trustee
from time to time, such other financial information as the Pass Through
Trustee may reasonably request.
SECTION 4.03. Modification and Ratification of Pass Through
Agreement. The Pass Through Agreement is incorporated herein by reference in
its entirety, and shall be deemed to be a part of this Series Supplement as if
set forth in full herein, and is in all respects ratified and confirmed, as
supplemented and modified by this Series Supplement.
SECTION 4.04. Termination. In no event shall this Pass Through
Trust continue beyond the expiration of 21 years after the death of the
last survivor of George Pataki, Governor of New York State, living on the
date of this Series Supplement.
IN WITNESS WHEREOF, the parties have caused their names to be signed
hereto by their respective officers thereunto duly authorized, all on the day
and year first above written.
FEDERAL EXPRESS CORPORATION
By: _________________________________________
Name: Robert D. Henning
Title:Assistant Treasurer and Managing
Director - Structured Finance
NATIONSBANK, NATIONAL ASSOCIATION
(CAROLINAS),
as Pass Through Trustee
By: _________________________________________
Name:
Title:
Exhibit A to
Series Supplement
FORM OF PASS THROUGH CERTIFICATE
FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 1995-A2
1995 Pass Through Certificate, Series A2
Final Scheduled Regular Distribution Date: January 5, 2016
evidencing a fractional undivided interest in a pass through trust, the
property of which includes certain Equipment Certificates.
Certificate No. _______
Applicable interest rate on Equipment Certificates held in
Pass Through Trust, 1995-A2: 8.06%.
$___________ Fractional Undivided Interest representing __________ of the
Pass Through Trust per $1,000 face amount.
THIS CERTIFIES THAT ______________, for value received, is the
registered owner of a $_________ (_____________ dollars) Fractional Undivided
Interest in the Federal Express Corporation Pass Through Trust, 1995-A2 (the
"Pass Through Trust") created and declared by NationsBank, National
Association (Carolinas), formerly known as NationsBank of South Carolina,
National Association, as pass through trustee (the "Pass Through Trustee"),
pursuant to the Pass Through Trust Agreement dated as of February 1, 1993 (the
"Pass Through Agreement"), as supplemented by Series Supplement 1995-A2
thereto dated August __, 1995 (the "Series Supplement") between the Pass
Through Trustee and Federal Express Corporation, a Delaware corporation (the
"Company"), a summary of certain of the pertinent provisions of which is set
forth below. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in the Pass Through
Agreement and the Series Supplement. This Pass Through Certificate is one of
the duly authorized Pass Through Certificates designated as "Federal Express
Corporation 1995 Pass Through Certificates, Series A2." This Pass Through
Certificate is issued under and is subject to the terms, provisions and
conditions of the Pass Through Agreement and the Series Supplement, to which
the Certificateholder of this Pass Through Certificate by virtue of the
acceptance hereof assents and by which such Certificateholder is bound. The
property of the Pass Through Trust (the "Trust Property") includes certain
Equipment Certificates (the "Equipment Certificates"). Each series of
Equipment Certificates is secured by a security interest in an aircraft leased
to or owned by the Company. The Pass Through Certificates represent
fractional undivided interests in the Pass Through Trust and the Trust
Property, and have no rights, benefits or interests in respect of any other
separate trust established pursuant to the terms of the Pass Through Agreement
for any other Series of Pass Through Certificates issued pursuant thereto.
Subject to and in accordance with the terms of the Pass Through
Agreement and the Series Supplement, from funds then available to the Pass
Through Trustee, there will be distributed on each January 5 and July 5 (a
"Regular Distribution Date"), commencing on January 5, 1996, to the Person in
whose name this Pass Through Certificate is registered at the close of
business on the 15th day preceding the applicable Regular
Distribution Date, an amount in respect of the Scheduled
Payments on the Equipment Certificates due on such Regular Distribution Date,
equal to the product of the percentage interest in the Pass Through Trust
evidenced by this Pass Through Certificate and an amount equal to the sum of
such Scheduled Payments. Subject to and in accordance with the terms of the
Pass Through Agreement and the Series Supplement, if Special Payments on the
Equipment Certificates are received by the Pass Through Trustee, from funds
then available to the Pass Through Trustee, there shall be distributed on the
applicable Special Distribution Date, to the Person in whose name this Pass
Through Certificate is registered at the close of business on the 15th day
preceding such Special Distribution Date, an amount in respect of such Special
Payments on the Equipment Certificates, equal to the product of the percentage
interest in the Pass Through Trust evidenced by this Pass Through Certificate
and an amount equal to the sum of such Special Payments so received.
If a Distribution Date is not a Business Day, distribution shall be
made on the immediately following Business Day with the same force and effect
as if made on such Distribution Date and no interest shall accrue during the
intervening period. The Special Distribution Date shall be the fifth day of
the month determined as provided in the Pass Through Agreement and the Series
Supplement, except in certain circumstances, in which case it will be the date
of receipt of proceeds by the Pass Through Trustee as provided in the Series
Supplement. The Pass Through Trustee shall mail notice of each Special
Payment and the Special Distribution Date therefor to the Certificateholder of
this Pass Through Certificate.
Distributions on this Pass Through Certificate will be made by the
Pass Through Trustee to the Person entitled thereto, without the presentation
or surrender of this Pass Through Certificate or the making of any notation
hereon. Except as otherwise provided in the Pass Through Agreement and
notwithstanding the above, the final distribution on this Pass Through
Certificate will be made after notice is mailed by the Pass Through Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Pass Through Certificate at the office or agency of the Pass Through
Trustee specified in such notice.
NO EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR INDIVIDUAL
RETIREMENT ACCOUNT OR PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (HEREINAFTER COLLECTIVELY REFERRED TO AS AN "ERISA
PLAN"), MAY ACQUIRE OR HOLD ANY OF THE PASS THROUGH CERTIFICATES. THE
PURCHASE BY ANY PERSON OF ANY PASS THROUGH CERTIFICATE CONSTITUTES A
REPRESENTATION BY SUCH PERSON TO FEDERAL EXPRESS CORPORATION, THE RELATED
OWNER PARTICIPANTS, THE RELATED OWNER TRUSTEES, THE RELATED INDENTURE TRUSTEES
AND THE PASS THROUGH TRUSTEE OR THEIR RESPECTIVE SUCCESSORS, AS THE CASE MAY
BE, THAT SUCH PERSON IS NOT AN ERISA PLAN AND THAT SUCH PERSON IS NOT
ACQUIRING, AND HAS NOT ACQUIRED, SUCH PASS THROUGH CERTIFICATE WITH ASSETS OF
AN ERISA PLAN.
This Pass Through Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
Reference is hereby made to the further provisions of this Pass
Through Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Pass Through Trustee, by manual signature, this Pass Through Certificate shall
not be entitled to any benefit under the Pass Through Trust or be valid for
any purpose.
IN WITNESS WHEREOF, the Pass Through Trustee has caused this Pass
Through Certificate to be duly executed.
FEDERAL EXPRESS CORPORATION
PASS THROUGH TRUST, 1995-A2
By: NATIONSBANK, NATIONAL ASSOCIATION
(CAROLINAS)
as Pass Through Trustee
By: _______________________________
Authorized Signatory
[FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Dated:
This is one of the Pass Through Certificates referred to in the
within-mentioned Pass Through Agreement and the Series Supplement.
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION
as Registrar, Paying Agent
and Authenticating Agent
By: _______________________
Authorized Signatory
[Reverse of Pass Through Certificate].
The Pass Through Certificates do not represent a direct obligation
of, or an obligation guaranteed by, or an interest in, the Company or the
Pass Through Trustee or any affiliate thereof. The Pass Through
Certificates are limited in right of payment, all as more specifically set
forth on the face hereof and in the Pass Through Agreement and the Series
Supplement. All payments or distributions made to Certificateholders under
the Pass Through Agreement shall be made only from the Trust Property and
only to the extent that the Pass Through Trustee shall have sufficient
income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Pass Through Agreement and the Series
Supplement. Each Certificateholder of this Pass Through Certificate, by
its acceptance hereof, agrees that it will look solely to the income and
proceeds from the Trust Property to the extent available for distribution
to such Certificateholder as provided in the Pass Through Agreement and the
Series Supplement. In connection with withholding taxes, under certain
circumstances the Pass Through Trustee may retain certain amounts otherwise
distributable to a Certificateholder. The purchase by any
Certificateholder of any Pass Through Certificate constitutes the consent
of such Certificateholder to such retention in accordance with the terms of
the Pass Through Agreement. This Pass Through Certificate does not purport
to summarize the Pass Through Agreement and the Series Supplement and
reference is made to the Pass Through Agreement and the Series Supplement
for information with respect to the interests, rights, benefits,
obligations, proceeds and duties evidenced hereby. A copy of the Pass
Through Agreement may be examined by any Certificateholder upon request
during normal business hours at the principal office of the Pass Through
Trustee, and at such other places designated by the Pass Through Trustee.
As of the date of issuance of this Pass Through Certificate, and
assuming that no prepayment, purchase or default in respect of payment on
the Equipment Certificates shall occur, the aggregate scheduled repayments of
principal on the Equipment Certificates for the Pass Through Trust and the
resulting Pool Factors for the Pass Through Trust after taking into account
each such repayment are set forth below:
Pass Through Trust, 1995-A2
Scheduled Principal
Payments on
Regular Equipment Trust
Distribution Dates Certificates Pool Factor
------------------------- --------------------- -------------
July 5, 2014 $ 0 1.0000000
January 5, 2015 12,683,540 0.3489611
July 5, 2015 0 0.3489611
January 5, 2016 6,798,460 0.0000000
The Pass Through Agreement and the Series Supplement permit, with
certain exceptions provided therein, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of
the Certificateholders under the Pass Through Trust at any time by the Company
and the Pass Through Trustee with the consent of the Majority In Interest of
Certificateholders in the Pass Through Trust. Any such consent by the
Certificateholder of this Pass Through Certificate shall be conclusive and
binding on such Certificateholder and upon all future Certificateholders of
this Pass Through Certificate and of any Pass Through Certificate issued upon
the transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Pass Through Certificate. The Pass
Through Agreement and the Series Supplement also permit the amendment thereof,
in certain limited circumstances, without the consent of the
Certificateholders of any of the Pass Through Certificates.
As provided in the Pass Through Agreement and the Series Supplement
and subject to certain limitations set forth therein, the transfer of this
Pass Through Certificate is registrable in the Register upon surrender of this
Pass Through Certificate for registration of transfer to the Pass Through
Trustee in its capacity as Registrar, or by any successor Registrar, duly
endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Pass Through Trustee and the Registrar duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Pass Through Certificates
of authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Pass Through Trust will be issued to the designated transferee
or transferees.
The Pass Through Certificates are issuable only as registered Pass
Through Certificates without coupons in minimum denominations of $1,000
Fractional Undivided Interest and integral multiples thereof. As provided in
the Pass Through Agreement and the Series Supplement and subject to certain
limitations set forth therein, the Pass Through Certificates are exchangeable
for new Pass Through Certificates of authorized denominations evidencing the
same aggregate Fractional Undivided Interest in the Pass Through Trust, as
requested by the Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Pass Through Trustee shall require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Pass Through Trustee, the Registrar, and any agent of the Pass
Through Trustee or the Registrar may treat the person in whose name this Pass
Through Certificate is registered as the owner hereof for all purposes, and
neither the Pass Through Trustee, the Registrar, nor any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Pass Through
Agreement and the Series Supplement and the Pass Through Trust created thereby
shall terminate upon the distribution to Certificateholders of all amounts
required to be distributed to them pursuant to the Pass Through Agreement and
the Series Supplement and the disposition of all property held as part of the
Trust Property.
Schedule I to
Series Supplement
Federal Express Corporation
Pass Through Trust, 1995-A2
Equipment Certificates;
Related Indenture Documents
1. Equipment Trust Certificates (Federal Express Corporation Trust No. N658FE)
Interest Rate: 8.06%
Maturity: January 5, 2016
Principal Amount: $13,166,000
Related Indenture Documents:
Trust Indenture and Security Agreement (Federal Express Corporation Trust
No. N658FE) dated as of May 1, 1995, amended and restated as of August 1,
1995, between First Security Bank of Utah, National Association, as Owner
Trustee, and NationsBank of Georgia, National Association, as Indenture
Trustee;
Participation Agreement (Federal Express Corporation Trust No. N658FE)
dated as of May 1, 1995, amended and restated as of August 1, 1995, among
Federal Express Corporation, as Lessee, AmSouth Leasing Corporation, as
Owner Participant, First Security Bank of Utah, National Association, as
Owner Trustee, NationsBank of Georgia, National Association, as Indenture
Trustee, NationsBank, National Association (Carolinas), as Pass Through
Trustee and The Chase Manhattan Bank (National Association), Bank of
America NT & SA, CIBC Inc. and The First National Bank of Chicago, as
Original Loan Participants;
Trust Agreement (Federal Express Corporation Trust No. N658FE) dated as of
May 1, 1995, amended and restated as of August 1, 1995, between AmSouth
Leasing Corporation, as Owner Participant and First Security Bank of Utah,
National Association, as Owner Trustee; and
Lease Agreement (Federal Express Corporation Trust No. N658FE) dated as of
May 1, 1995, amended and restated as of August 1, 1995, between First
Security Bank of Utah, National Association, as Owner Trustee and Lessor,
and Federal Express Corporation, as Lessee.
2. Equipment Trust Certificates (Federal Express Corporation Trust No. N659FE)
Interest Rate: 8.06%
Maturity: January 5, 2015
Principal Amount: $6,316,000
Related Indenture Documents:
Trust Indenture and Security Agreement (Federal Express Corporation Trust
No. N659FE) dated as of July 1, 1995, amended and restated as of August 1,
1995, between First Security Bank of Utah, National Association, as Owner
Trustee, and NationsBank of Georgia, National Association, as Indenture
Trustee;
Participation Agreement (Federal Express Corporation Trust No. N659FE)
dated as of June 1, 1995, amended and restated as of August 1, 1995, among
Federal Express Corporation, as Lessee, Shawmut Bank, National Association,
as Owner Participant, First Security Bank of Utah, National Association, as
Owner Trustee, NationsBank of Georgia, National Association, as Indenture
Trustee, NationsBank, National Association (Carolinas), as Pass Through
Trustee and The Chase Manhattan Bank (National Association), Bank of
America NT & SA, CIBC Inc. and The First National Bank of Chicago, as
Original Loan Participants;
Trust Agreement (Federal Express Corporation Trust No. N659FE) dated as of
June 1, 1995, amended and restated as of August 1, 1995, between Shawmut
Bank, National Association, as Owner Participant and First Security Bank of
Utah, National Association, as Owner Trustee; and
Lease Agreement (Federal Express Corporation Trust No. N659FE) dated as of
July 1, 1995, amended and restated as of August 1, 1995, between First
Security Bank of Utah, National Association, as Owner Trustee and Lessor,
and Federal Express Corporation, as Lessee.
TRUST INDENTURE AND SECURITY AGREEMENT
(Federal Express Corporation Trust No. N658FE)
Dated as of May 1, 1995
Amended and Restated as of August 1, 1995
between
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
Not in its Individual
Capacity, but solely
As Owner Trustee,
Owner Trustee
and
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION,
Indenture Trustee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 752, REGISTRATION NO. N658FE
TABLE OF CONTENTS
Page
Initial Recitals......................................................... 1
Granting Clause.......................................................... 2
Habendum Clause.......................................................... 5
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.............................................. 7
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF CERTIFICATES
SECTION 2.01. Authentication and Delivery of Certificates.............. 8
SECTION 2.02. Execution of Certificates................................ 8
SECTION 2.03. Certificate of Authentication............................ 8
SECTION 2.04. Form and Terms of Certificates; Payments of Principal,
Make-Whole Premium and Interest.......................... 9
SECTION 2.05. Payments from Trust Indenture Estate Only................ 10
SECTION 2.06. Registration, Transfer and Exchange...................... 11
SECTION 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Certificates............................................. 12
SECTION 2.08. Cancellation of Certificates; Destruction Thereof........ 13
SECTION 2.09. Temporary Certificates................................... 13
SECTION 2.10. Termination of Interest in Trust Indenture Estate........ 14
SECTION 2.11. Certificates in Respect of Replacement Aircraft.......... 14
SECTION 2.12. Assumption of Obligations Under Certificates and Other
Operative Agreements..................................... 14
ARTICLE III
COVENANTS
SECTION 3.01. Payment of Principal, Make-Whole Premium and Interest.... 15
SECTION 3.02. Offices for Payments, etc................................ 15
SECTION 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee.................................................. 15
SECTION 3.04. Paying Agents............................................ 15
SECTION 3.05. Covenants of FSBU and the Owner Trustee.................. 16
SECTION 3.06. [Intentionally Left Blank.].............................. 17
SECTION 3.07. Disposal of Trust Indenture Estate....................... 17
SECTION 3.08. No Representations or Warranties as to Aircraft or
Documents................................................ 17
SECTION 3.09. Further Assurances; Financing Statements................. 17
ARTICLE IV
HOLDER LISTS
SECTION 4.01. Holder Lists; Ownership of Certificates.................. 18
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 5.01. Basic Rent Distribution.................................. 18
SECTION 5.02. Event of Loss and Replacement; Prepayment................ 18
SECTION 5.03. Payment After Indenture Event of Default, etc............ 19
SECTION 5.04. Certain Payments......................................... 20
SECTION 5.05. Other Payments........................................... 21
SECTION 5.06. Payments to Owner Trustee................................ 21
SECTION 5.07. Application of Payments.................................. 21
SECTION 5.08. Investment of Amounts Held by Indenture Trustee.......... 22
SECTION 5.09. Withholding Taxes........................................ 22
ARTICLE VI
PREPAYMENT OF CERTIFICATES
SECTION 6.01. No Prepayment Prior to Maturity.......................... 23
SECTION 6.02. Prepayment of Certificates............................... 23
SECTION 6.03. Notice of Prepayment to Holders.......................... 25
SECTION 6.04. Deposit of Prepayment Price and Sinking Fund Redemption
Price.................................................... 25
SECTION 6.05. Certificates Payable on Prepayment Date.................. 26
SECTION 6.06. Mandatory Sinking Fund Redemption........................ 26
ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
SECTION 7.01. Indenture Event of Default............................... 28
SECTION 7.02. Remedies................................................. 30
SECTION 7.03. Return of Aircraft, etc.................................. 32
SECTION 7.04. Indenture Trustee May Prove Debt......................... 35
SECTION 7.05. Remedies Cumulative...................................... 37
SECTION 7.06. Suits for Enforcement.................................... 37
SECTION 7.07. Discontinuance of Proceedings............................ 37
SECTION 7.08. Limitations on Suits by Holders.......................... 38
SECTION 7.09. Unconditional Right of Holders to Receive Principal,
Interest and Make-Whole Premium, and to Institute Certain
Suits.................................................... 38
SECTION 7.10. Control by Holders....................................... 38
SECTION 7.11. Waiver of Past Indenture Default......................... 39
SECTION 7.12. Notice of Indenture Default.............................. 39
SECTION 7.13. Waiver of Appraisement, etc.; Laws....................... 40
ARTICLE VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
SECTION 8.01. Certain Rights of Owner Trustee and Owner Participant.... 40
SECTION 8.02. Owner Participant's Right to Elect to Prepay or Purchase
the Certificates......................................... 44
SECTION 8.03. Certain Rights of Owner Participant...................... 45
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
SECTION 9.01. Acceptance of Trusts..................................... 46
SECTION 9.02. Duties and Responsibilities of the Indenture Trustee;
During an Indenture Event of Default; Prior to an
Indenture Event of Default............................... 47
SECTION 9.03. Certain Rights of the Indenture Trustee.................. 49
SECTION 9.04. Indenture Trustee Not Responsible for Recitals, Disposition
of Certificates or Application of Proceeds Thereof....... 50
SECTION 9.05. Indenture Trustee and Agents May Hold Certificates;
Collections, etc......................................... 50
SECTION 9.06. Moneys Held by Indenture Trustee......................... 50
SECTION 9.07. Right of Indenture Trustee to Rely on Officers',
certificate, etc......................................... 50
SECTION 9.08. Replacement Airframes and Replacement Engines............ 51
SECTION 9.09. Indenture and Security Agreement Supplement for
Replacements............................................. 54
SECTION 9.10. Effect of Replacement.................................... 54
SECTION 9.11. Compensation............................................. 54
ARTICLE X
CONCERNING THE HOLDERS
SECTION 10.01. Evidence of Action Taken by Holders..................... 55
SECTION 10.02. Proof of Execution of Instruments and of Holding of
Certificates............................................ 55
SECTION 10.03. Holders to Be Treated as Owners......................... 56
SECTION 10.04. Certificates Owned by Owner Trustee and the Lessee
Deemed Not Outstanding.................................. 56
SECTION 10.05. Right of Revocation of Action Taken..................... 57
SECTION 10.06. ERISA Plan Prohibition.................................. 57
ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
ARTICLE XII
SUCCESSOR TRUSTEES
SECTION 12.01. Notice of Successor Owner Trustee....................... 59
SECTION 12.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor................................ 59
SECTION 12.03. Persons Eligible for Appointment as Indenture Trustee... 60
SECTION 12.04. Acceptance of Appointment by Successor Trustee.......... 60
SECTION 12.05. Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee........................... 61
SECTION 12.06. Appointment of Separate Trustees........................ 62
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
SECTION 13.01. Supplemental Indentures Without Consent of Holders...... 64
SECTION 13.02. Supplemental Indentures With Consent of Holders......... 65
SECTION 13.03. Effect of Supplemental Indenture........................ 67
SECTION 13.04. Documents to Be Given to Indenture Trustee.............. 67
SECTION 13.05. Notation on Certificates in Respect of Supplemental
Indentures.............................................. 67
SECTION 13.06. No Request Necessary for Lease Supplement or Indenture
and Security Agreement Supplement....................... 67
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 14.01. Satisfaction and Discharge of Indenture; Termination of
Indenture............................................... 68
SECTION 14.02. Application by Indenture Trustee of Funds Deposited for
Payment of Certificates................................. 69
SECTION 14.03. Repayment of Moneys Held by Paying Agent................ 69
SECTION 14.04. Transfer of Moneys Held by Indenture Trustee and Paying
Agent Unclaimed for Two Years and Eleven Months......... 69
ARTICLE XV
MISCELLANEOUS
SECTION 15.01. Capacity in Which Acting................................ 70
SECTION 15.02. No Legal Title to Trust Indenture Estate in Holders..... 70
SECTION 15.03. Sale of Trust Indenture Estate by Indenture Trustee is
Binding................................................. 70
SECTION 15.04. Indenture for Benefit of Owner Trustee, Indenture Trustee,
Trustee Owner Participant and Holders................... 70
SECTION 15.05. No Action Contrary to the Lessee's Rights Under the
Lease................................................... 71
SECTION 15.06. Notices................................................. 71
SECTION 15.07. Officers' Certificates and Opinions of Counsel; Statements
to Be Contained Therein................................. 72
SECTION 15.08. Severability............................................ 72
SECTION 15.09. No Oral Modifications or Continuing Waivers............. 73
SECTION 15.10. Successors and Assigns.................................. 73
SECTION 15.11. Headings................................................ 73
SECTION 15.12. Normal Commercial Relations............................. 73
SECTION 15.13. Governing Law; Counterparts............................. 73
Exhibit A -- Form of Indenture and Security Agreement Supplement
Exhibit B -- Form of Certificate
Schedule I -- [Intentionally Left Blank]
Schedule II -- Definitions
Schedule III -- Description of Original Indenture
TRUST INDENTURE AND SECURITY AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N658FE)
TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION
TRUST NO. N658FE) dated as of May 1, 1995 as amended and restated as of August
1, 1995 (the "Indenture"), between First Security Bank of Utah, National
Association, a national banking association, not in its individual capacity,
except as otherwise specifically set forth herein (when acting in such
individual capacity, "FSBU"), but solely as owner trustee (the "Owner
Trustee") under the Trust Agreement, as defined herein, and NationsBank of
Georgia, National Association, a national banking association, as Indenture
Trustee hereunder (the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and FSBU entered into the Original
Trust Agreement whereby, among other things, the Owner Trustee declared a
certain trust for the use and benefit of the Owner Participant, subject,
however, to the Lien of the Original Indenture;
WHEREAS, the Owner Trustee and the Indenture Trustee entered into the
Original Indenture for the benefit and security of the Original Loan
Participants and pursuant to which the Owner Trustee issued to the Original
Loan Participants the Original Loan Certificates as evidence of the loan made
by the Original Loan Participants to the Owner Trustee, the proceeds of which
were used by the Owner Trustee to pay a portion of the Purchase Price for the
Aircraft;
WHEREAS, the Original Indenture was recorded by the FAA and assigned
a Conveyance Number as more particularly described on Schedule III attached
hereto;
WHEREAS, pursuant to Section 15 of the Original Participation
Agreement, the parties hereto desire to refinance the Original Loan
Certificates with the proceeds of the Certificates to be issued hereunder;
WHEREAS, in connection with the refinancing of the Original Loan
Certificates, the parties hereto desire to amend and restate the Original
Indenture in its entirety as this Indenture sets forth, in order to provide,
among other things, (i) for the issuance by the Owner Trustee of the
Certificates, as provided in the Participation Agreement, and (ii) for the
assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee,
as part of the Trust Indenture Estate hereunder, among other things, of
certain of the Owner Trustee's right, title and interest in and to the
Aircraft, the Lease and payments and other amounts received hereunder or
thereunder in accordance with the terms hereof (other than Excepted Payments),
as security for the Owner Trustee's obligations to the Holders and for the
ratable benefit and security of such Holders;
WHEREAS, the Owner Participant and FSBU, prior to the execution and
delivery of this Indenture, entered into the Trust Agreement whereby the
Original Trust Agreement was amended and restated and pursuant to which, among
other things, the Owner Trustee is authorized and directed to execute and
deliver this Indenture;
WHEREAS, all things have been done to make the Certificates, when
executed by the Owner Trustee, and authenticated, issued and delivered
hereunder, the valid obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Indenture the valid,
binding and legal obligation of the Owner Trustee, enforceable in accordance
with its terms, have been done and performed and have happened.
NOW, THEREFORE, the parties agree that such Original Indenture be and
the same is hereby amended and restated to read in its entirety as follows:
GRANTING CLAUSE
NOW, THEREFORE, in consideration of the mutual promises contained
herein and to secure (i) the prompt payment of the principal of and Make-Whole
Premium, if any, and interest on, and all other amounts due with respect to,
all the Certificates from time to time outstanding under this Indenture and
all other amounts due hereunder and (ii) the performance and observance by the
Owner Trustee of all the agreements, covenants and provisions in this
Indenture, in the Certificates, in the Participation Agreement and in the
Lease contained for the benefit of the Holders of the Certificates, and the
prompt payment of any and all amounts from time to time owing under the
Participation Agreement by the Owner Trustee, the Owner Participant or the
Lessee to the Holders and for the uses and purposes and subject to the terms
and provisions of this Indenture, and in consideration of the premises and of
the covenants in this Indenture and in the Certificates and of the purchase of
the Certificates by their Holders, and of the sum of $1 paid to the Owner
Trustee by the Indenture Trustee at or before the delivery of this Indenture,
the receipt and sufficiency of which is hereby acknowledged, the Owner Trustee
has granted, bargained, sold, assigned, transferred, conveyed, mortgaged,
pledged, granted a security interest in and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and grant a security
interest in and confirm to the Indenture Trustee, its successors and assigns,
in trust for the equal and ratable security and benefit of the Holders from
time to time of the Certificates, a first priority security interest in and
first mortgage Lien on all estate, right, title and interest of the Owner
Trustee in, to and under the following described property, rights and
privileges other than Excepted Payments, which collectively, excluding
Excepted Payments but including all property specifically subjected to the
Lien of this Indenture by the terms hereof, by any Indenture and Security
Agreement Supplement or any mortgage supplemental to this Indenture, are
included within the Trust Indenture Estate, subject always to the rights
granted to the Owner Trustee or the Owner Participant hereunder and to the
other terms and conditions of this Indenture:
(1) The Airframe, as the same is more particularly described in the
Indenture and Security Agreement Supplement and any airframe substituted in
replacement thereof pursuant to the provisions of this Indenture; the Engines,
as the same are more particularly described in the Indenture and Security
Agreement Supplement, whether or not such Engines shall be installed in or
attached to the Airframe or any other airframe, and any Replacement Engine
therefor; and all Parts in respect of the Airframe and the Engines and all
records, logs and other documents at any time maintained with respect to the
foregoing property;
(2) The Lease and all Rent thereunder, including, without limitation,
all amounts of Basic Rent and Supplemental Rent, and payments of any kind
thereunder and including all rights of the Owner Trustee to execute any
election or option or to give or receive any notice, consent, waiver or
approval under or in respect of the Lease or to accept any surrender of the
Aircraft or any part thereof as well as any rights, powers or remedies on the
part of the Owner Trustee, whether arising under the Lease or by statute or at
law or in equity or otherwise arising out of any Event of Default;
(3) The Purchase Agreement, the Purchase Agreement Assignment, the
AVSA Consent and Agreement, the Consent and Agreement, the Consent and
Guaranty, the GTA, the Engine Warranty Assignment and the Engine Consent,
AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus Guaranty and
the Participation Agreement (to the extent of amounts payable to the Owner
Trustee thereunder) (collectively, and together with the Lease, the Trust
Agreement and the Certificates, the "Indenture Documents"), including all
rights of the Owner Trustee to execute any election or option or to give or
receive any notice, consent, waiver or approval under or in respect of any of
the foregoing documents and instruments;
(4) All the tolls, rents, issues, profits, products, revenues and
other income (including sales proceeds) of the property subjected or required
to be subjected to the Lien of this Indenture, and all of the estate, right,
title and interest of the Owner Trustee in and to the same and every part of
said property;
(5) All moneys and securities (including Permitted Investments) now
or hereafter paid or deposited or required to be paid or deposited to or
with the Indenture Trustee by or for the account of the Owner Trustee
pursuant to any term of any Operative Agreement, except the Tax Indemnity
Agreement, and held or required to be held by the Indenture Trustee
hereunder;
(6) All requisition proceeds with respect to the Aircraft or any part
thereof (to the extent of the Owner Trustee's interest therein pursuant to the
terms of the Lease) and all insurance proceeds with respect to the Aircraft or
any part thereof from insurance required to be maintained by the Lessee under
Section 13 of the Lease, but excluding any insurance maintained by the Lessee
and not required under Section 13 of the Lease; and
(7) All proceeds of the foregoing.
Notwithstanding the foregoing provisions:
(a) (i) whether or not an Indenture Event of Default shall occur and
be continuing, the Owner Trustee and the Owner Participant shall at all times
retain the right, to the exclusion of the Indenture Trustee, (A) to Excepted
Payments and to commence an action at law to obtain such Excepted Payments and
(B) to adjust Basic Rent and the percentages relating to Stipulated Loss Value
and Termination Value and the EBO Price as provided in Section 3.04 of the
Lease and Section 15.01 of the Participation Agreement, (C) to exercise any
election or option to make any decision or determination, or to give or
receive any notice, consent, waiver or approval, or to take any other action
in respect of, but in each case only to the extent relating to, Excepted
Payments (except for, in respect of Basic Rent constituting an Excepted
Payment, the manner by which such amount is paid), (D) to retain the rights of
the "Lessor" with respect to solicitations of bids, and the election to retain
the Aircraft, pursuant to Article 10 of the Lease, (E) to retain the right of
"Lessor" to determine the Fair Market Rental or Fair Market Value pursuant to
Article 4 of the Lease, (F) to retain all rights with respect to insurance
maintained for its own account which Section 13.05 of the Lease specifically
confers on the "Lessor" and (G) to exercise, to the extent necessary to enable
it to exercise its rights under Section 8.03 hereof, the rights of the
"Lessor" under Section 17.04 of the Lease;
(ii)whether or not an Indenture Event of Default shall occur and be
continuing, the Owner Trustee and the Indenture Trustee shall each have the
rights separately but not to the exclusion of the other (agreement of both
required in the case of clause (E) below), (A) to receive from the Lessee all
notices, certificates, reports, filings, opinions of counsel, copies of all
documents and all information which the Lessee is permitted or required to
give or furnish to the "Lessor" pursuant to the Lease or to the Owner Trustee
pursuant to any other Operative Agreement, (B) to exercise inspection rights
pursuant to Section 14.01 of the Lease (provided that if an Indenture Event of
Default shall be continuing, no inspection right of the Owner Trustee shall
interfere with the efforts of the Indenture Trustee to exercise remedies under
the Lease or this Indenture), (C) to maintain separate insurance pursuant to
Section 13.05 of the Lease and to retain all rights with respect to such
insurance maintained for its own account, (D) to give any notice of default
under Section 16.01 of the Lease and to declare the Lease in default in
respect thereof, and (E) the right to consent to changes to the list of
countries on Schedule III to the Participation Agreement;
(iii)(A) so long as no Indenture Event of Default shall have occurred
and be continuing (but subject to the provisions of Section 8.01 hereof), the
Owner Trustee shall retain the right, to the exclusion of the Indenture
Trustee, to approve as satisfactory any accountants, engineers, appraisers or
counsel to render services for or issue appraisals, reports, certificates or
opinions to the Owner Trustee pursuant to express provisions of the Operative
Agreements, and (B) so long as no Indenture Event of Default not constituting
an Event of Default shall have occurred and be continuing (but subject to the
provisions of Section 8.01 hereof), the Owner Trustee shall retain the right,
jointly with the Indenture Trustee (agreement of both not being required), to
further assurances and financial information from the Lessee pursuant to
Section 19.01 of the Lease (other than the right to receive any funds to be
delivered to the "Lessor" under the Lease (except funds delivered with respect
to Excepted Payments) and under the Purchase Agreement; and
(iv)at all times the Owner Trustee shall have the right as Lessor,
but not to the exclusion of the Indenture Trustee, to seek specific
performance of the covenants of the Lessee under the Lease relating to the
protection, insurance, maintenance, possession and use of the Aircraft.
(b) The leasehold interest granted to the Lessee by the Lease shall
not be subject to the security interest granted by this Indenture, and nothing
in this Indenture shall affect the rights of the Lessee under the Lease so
long as no Event of Default has occurred and is continuing.
HABENDUM CLAUSE
TO HAVE AND TO HOLD the aforesaid property unto the Indenture
Trustee, its successors and assigns, in trust for the equal and ratable
benefit and security of the Holders from time to time of the Certificates,
without any priority of any one Certificate over any other and for the uses
and purposes and subject to the terms and conditions set forth in this
Indenture.
It is expressly agreed that anything contained in this Indenture to
the contrary notwithstanding, the Owner Trustee shall remain liable under the
Indenture Documents to perform all of the obligations assumed by it under any
of those documents, all in accordance with and pursuant to the terms and
provisions of those documents, and the Indenture Trustee and the Holders of
the Certificates shall have no obligation or liability under the Indenture
Documents by reason of or arising out of the assignment under this Indenture,
nor shall the Indenture Trustee or the Holders of the Certificates be required
or obligated in any manner to perform or fulfill any obligations of the Owner
Trustee under or pursuant to the Indenture Documents or, except as expressly
provided in this Indenture, to make any payment, or to make any inquiry as to
the nature or sufficiency of any payment received by it, or present or file
any claim, or take any action to collect or enforce the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time
or times.
Effective upon the occurrence and continuance of an Indenture Event
of Default, the Owner Trustee hereby constitutes the Indenture Trustee the
true and lawful attorney of the Owner Trustee, irrevocably, with full power
(in the name of the Owner Trustee or otherwise), subject to the terms and
conditions of this Indenture, to ask, require, demand, receive, compound
and give acquittance for any and all Basic Rent, Supplemental Rent payable
to the Owner Trustee, Stipulated Loss Value and Termination Value payments,
insurance proceeds and any and all moneys and claims for moneys due and to
become due under or arising out of the Lease (subject to Section 8.01
hereof) or the other Indenture Documents (other than Excepted Payments), to
endorse any checks or other instruments or orders in connection with the
same and to file any claims, take any action or institute any proceeding
which the Indenture Trustee may deem to be necessary or advisable in the
premises.
Under the Lease the Lessee is directed to make all payments of Rent
(other than Excepted Payments not constituting Basic Rent) payable to the
Owner Trustee and all other amounts (other than Excepted Payments not
constituting Basic Rent) which are required to be paid to or deposited with
the Owner Trustee pursuant to the Lease directly to the Indenture Trustee at
such address in the United States of America as the Indenture Trustee shall
specify for application as provided in this Indenture. The Owner Trustee
agrees that if, notwithstanding such provision, it shall have received any
such amounts, promptly on receipt of any such payment, it will transfer to the
Indenture Trustee any and all moneys from time to time received by the Owner
Trustee constituting part of the Trust Indenture Estate for distribution by
the Indenture Trustee pursuant to this Indenture, except that the Owner
Trustee shall accept for distribution pursuant to the Trust Agreement (i) any
amounts distributed to it by the Indenture Trustee under this Indenture, and
(ii) any Excepted Payments not constituting Basic Rent.
The Owner Trustee agrees that at any time and from time to time, upon
the written request of the Indenture Trustee, the Owner Trustee will promptly
and duly execute and deliver or cause to be duly executed and delivered any
and all such further instruments and documents as the Indenture Trustee may
reasonably deem desirable in obtaining the full benefits of the assignment
hereunder and of the rights and powers herein granted; provided, however, that
the Owner Trustee shall have no obligation to execute and deliver or cause to
be executed or delivered to the Indenture Trustee any such instrument or
document if such execution and delivery would result in the imposition of
additional liabilities on the Owner Trustee or the Owner Participant or would
result in a burden on the Owner Participant's business activities, unless the
Owner Trustee or the Owner Participant, as the case may be, is indemnified to
its reasonable satisfaction against any losses, liabilities and expenses
incurred in connection with such execution and delivery.
The Owner Trustee does hereby warrant and represent that it has not
assigned, pledged or otherwise disposed of, and hereby covenants that it will
not assign or pledge or otherwise dispose of, so long as the assignment
hereunder shall remain in effect, any of its right, title or interest hereby
assigned, to anyone other than the Indenture Trustee, and that it will not,
except in respect of Excepted Payments or otherwise as provided in or
permitted by this Indenture, accept any payment from the Lessee or any
sublessee, enter into an agreement amending or supplementing any of the
Operative Agreements, execute any waiver or modification of, or consent under
the terms of any of the Operative Agreements, settle or compromise any claim
(other than claims in respect of Excepted Payments) against the Lessee arising
under any of the Operative Agreements, or submit or consent to the submission
of any dispute, difference or other matter arising under or in respect of any
of the Operative Agreements, to arbitration thereunder.
Concurrently with the delivery of this Indenture, the Owner Trustee
has delivered to the Indenture Trustee executed counterparts of the Trust
Agreement and the chattel paper original counterpart of the Lease.
It is hereby further covenanted and agreed by and between the parties
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Unless the context otherwise requires,
capitalized terms utilized herein shall have the meanings set forth in
Schedule II hereto for all purposes of this Indenture and shall be equally
applicable to both the singular and plural forms of the terms defined.
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF CERTIFICATES
SECTION 2.01. Authentication and Delivery of Certificates.
Forthwith upon the execution and delivery of this Indenture, and from time to
time thereafter, Certificates in an aggregate principal amount not in excess
of the amount specified in Section 2.04 hereof (except as otherwise provided
in Sections 2.06 and 2.07 hereof) shall be executed by the Owner Trustee and
delivered to the Indenture Trustee for authentication, and the Indenture
Trustee shall thereupon authenticate and deliver said Certificates to or upon
the oral or written order of the Owner Trustee, signed, if written, by an
authorized officer of the Owner Trustee, without any further action by the
Owner Trustee.
SECTION 2.02. Execution of Certificates. The Certificates shall be
signed on behalf of the Owner Trustee by an authorized officer of FSBU. Such
signatures may be the manual or facsimile signatures of such officer and minor
errors or defects in any reproduction of any such signature shall not affect
the validity or enforceability of any Certificate which has been duly
authenticated and delivered by the Indenture Trustee.
In case any officer of FSBU who shall have signed any of the
Certificates shall cease to be such officer before the Certificate so signed
shall be authenticated and delivered by the Indenture Trustee or disposed of
by FSBU, such Certificate nevertheless may be authenticated and delivered or
disposed of as though the person who signed such Certificate had not ceased to
be such officer of FSBU; and any Certificate may be signed on behalf of the
Owner Trustee by such person or persons as, at the actual date of the
execution of such Certificate, shall be the proper officers of FSBU, although
at the date of the execution and delivery of this Indenture any such person
was not such an officer. Certificates bearing the facsimile signatures of
individuals who were authorized officers of FSBU at the time such Certificates
were issued shall bind the Owner Trustee, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold such offices
at the respective dates of such Certificates.
SECTION 2.03. Certificate of Authentication. Only such Certificates
as shall bear thereon a certificate of authentication substantially in the
form set forth in Exhibit B, executed by the Indenture Trustee by manual
signature of one of its authorized officers, shall be entitled to the security
and benefits of this Indenture or be valid or obligatory for any purpose.
Such certificate by the Indenture Trustee upon any Certificate executed by the
Owner Trustee shall be conclusive evidence that the Certificate so
authenticated has been duly authenticated and delivered hereunder and that the
Holder, as evidenced on the Register, is entitled to the security and benefits
of this Indenture.
SECTION 2.04. Form and Terms of Certificates; Payments of Principal,
Make-Whole Premium and Interest. The Certificates and the Indenture Trustee's
certificate of authentication shall be substantially in the form set forth in
Exhibit B hereto. Certificates may differ with respect to Maturity and as to
other terms. The Certificates shall be issuable as registered securities
without coupons and shall be numbered, lettered, or otherwise distinguished in
such manner or in accordance with such plans as the Owner Trustee executing
the same may determine with the approval of the Indenture Trustee.
The aggregate principal amount of Certificates that may be
authenticated and delivered under this Indenture is limited as provided in the
form of Certificate attached as Exhibit B hereto. The Certificates shall be
issued in registered form only and in denominations of $1,000 and any integral
multiple thereof, shall be dated the Refunding Date, and shall be issued in
the Maturities and principal amounts, and shall bear interest at the rates per
annum, specified in the form of Certificate set forth in Exhibit B.
Any of the Certificates may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the
provisions of this Indenture, as may be required to comply with any law or
with any rules or regulations pursuant thereto, or with the rules of any
securities market in which the Certificates are admitted to trading, or to
conform to general usage.
Each Certificate shall bear interest from the date of original
issuance thereof or from the most recent date to which interest has been paid
and duly provided for, as the case may be, which shall be payable on the dates
specified on the face of the form of Certificate set forth in Exhibit B hereto
until the principal thereof is paid. Interest shall be calculated on the
basis of a 360-day year of twelve 30-day months.
Notwithstanding the preceding paragraph, each Certificate shall bear
interest at the Past Due Rate on any principal, interest and any other amount
payable hereunder or under such Certificate, which shall not be paid in full
when due (whether at stated maturity, by acceleration, by mandatory prepayment
or otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full, payable from time to time on
demand of the Indenture Trustee.
The principal of, and Make-Whole Premium, if any, and interest on,
the Certificates shall be payable at the Corporate Trust Office of the
Indenture Trustee or at any office or agency maintained for such purpose
pursuant to Section 3.02 hereof; provided, however, that interest may be
payable at the option of the Indenture Trustee or its Paying Agent, as
defined in Section 3.04, by mailing checks for such interest payable to or
upon the written order of the Holders entitled thereto as they shall appear
on the Register. If any amount payable under the Certificates, or under
this Indenture, falls due on a day that is not a Business Day, then such
sum shall be payable on the next succeeding Business Day, without (provided
that payment is made on such next succeeding Business Day) additional
interest thereon for the period of such extension.
The Holder at the close of business on any Record Date with respect
to any Payment Date shall be entitled to receive the interest if any payable
on such Payment Date notwithstanding any transfer or exchange of such
Certificate subsequent to the Record Date and prior to such Payment Date,
except if and to the extent the Owner Trustee shall default in the payment of
the interest due on such Payment Date, in which case such defaulted interest
shall be paid to the Holder at the close of business on a subsequent Record
Date (which shall be not less than five (5) or more than fifteen (15) Business
Days prior to the date of payment of such defaulted interest) established by
notice given by mail by or on behalf of the Owner Trustee to the Holders not
less than fifteen (15) days preceding such subsequent Record Date.
SECTION 2.05. Payments from Trust Indenture Estate Only. All
payments to be made by the Owner Trustee under this Indenture shall be made
only from the income and the proceeds from the Lessor's Estate to the extent
included in the Trust Indenture Estate and from any other amounts of the type
described in Section 5.01 hereof to the extent actually received by the
Indenture Trustee and only to the extent that the Owner Trustee shall have
sufficient income or proceeds from the Lessor's Estate to the extent included
in the Trust Indenture Estate (and such other amounts) to enable the Indenture
Trustee to make distributions of the amounts due in respect of the
Certificates in accordance with the terms hereof and thereof. Each Holder by
its acceptance of a Certificate agrees that it will look solely to the income
and proceeds from the Trust Indenture Estate (and such other amounts of the
type described in Section 5.01 hereof to the extent actually received by the
Indenture Trustee) to the extent available for distribution to it as provided
herein and that neither the Owner Participant, the Owner Trustee, FSBU nor the
Indenture Trustee is personally liable to such Holder for any amounts payable
under this Indenture or such Certificate or for any amounts payable or
liability under any Certificate or this Indenture, except as expressly
provided herein in the case of FSBU, the Owner Trustee or the Indenture
Trustee.
FSBU is not personally liable to any Holder, the Lessee, the Owner
Participant or the Indenture Trustee for any amounts payable under this
Indenture or for any liability under this Indenture or the Certificates,
except as a result of FSBU's gross negligence or willful misconduct, or as
otherwise expressly provided herein or in the Participation Agreement.
If (1) all or any part of the Lessor's Estate becomes the property of
a debtor subject to the reorganization provisions of the Bankruptcy Code, (2)
pursuant to such reorganization provisions the Owner Participant is required,
by reason of the Owner Participant being held to have recourse liability to
the debtor or the trustee of the debtor directly or indirectly, to make
payment on account of any amount payable as principal of or interest,
Make-Whole Premium or other amounts payable on the Certificates, and (3) the
Indenture Trustee actually receives any Recourse Amount which reflects any
payment by the Owner Participant on account of (2) above, then the Indenture
Trustee shall promptly refund to the Owner Participant such Recourse Amount.
Nothing contained in this paragraph shall prevent the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds
thereof) of the Owner Participant under the Participation Agreement, or from
retaining any amount paid by the Owner Participant under Sections 5.01, 8.02
and 8.03 hereof.
SECTION 2.06. Registration, Transfer and Exchange. The Indenture
Trustee will keep, on behalf of the Owner Trustee, at each office or agency to
be maintained for the purpose as provided in Section 3.02 hereof a Register or
Registers on which, subject to such reasonable regulations as it may
prescribe, it will register, and will register the transfer of, Certificates
as provided in this Article. Such Register shall be in written form in the
English language or in any other form capable of being converted into such
form within a reasonable time.
Upon due presentation for registration of transfer of any Certificate
at any such office or agency, the Owner Trustee shall execute and the
Indenture Trustee shall authenticate and deliver in the name of the transferee
or transferees a new Certificate or Certificates of the same Maturity and
interest rate and in authorized denominations for an equal aggregate principal
amount.
Any Certificate or Certificates may be exchanged for a Certificate or
Certificates of the same Maturity and interest rate but in other authorized
denominations, in an equal aggregate principal amount. Certificates to be
exchanged shall be surrendered at any office or agency to be maintained by the
Indenture Trustee for the purpose as provided in Section 3.02 hereof, and the
Owner Trustee shall execute and the Indenture Trustee shall authenticate and
deliver in exchange therefor the Certificate or Certificates which the Holder
making the exchange shall be entitled to receive, bearing numbers not
contemporaneously or previously outstanding.
All Certificates presented for registration of transfer, exchange,
prepayment or payment shall (if so required by the Owner Trustee or the
Indenture Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Owner
Trustee and the Indenture Trustee duly executed by the Holder or its attorney
duly authorized in writing and (except in the case of transfers pursuant to
Section 15.01 of the Participation Agreement) the Indenture Trustee may
require evidence satisfactory to it as to the compliance of any such transfer
with the Securities Act.
The Indenture Trustee may require payment from the Holder of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any exchange or registration of transfer of
Certificates. No service charge shall be levied for any such transaction.
The Indenture Trustee shall not be required to exchange or register a
transfer of any Certificates (a) for a period of fifteen (15) days immediately
preceding the first mailing of notice of prepayment of such Certificates or
(b) with respect to which notice of prepayment has been given pursuant to
Section 6.03 hereof and such notice has not been revoked.
All Certificates issued upon any transfer or exchange of Certificates
shall be valid obligations of the Owner Trustee, evidencing the same debt, and
entitled to the same security and benefits under this Indenture, as the
Certificates surrendered upon such transfer or exchange.
SECTION 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Certificates. In case any temporary or definitive Certificate shall become
mutilated, defaced or be apparently destroyed, lost or stolen, the Owner
Trustee in its discretion may execute, and upon the oral or written request
of any officer of FSBU, the Indenture Trustee shall authenticate and
deliver, a new Certificate of like Maturity, bearing a number not
contemporaneously or previously outstanding, in exchange and substitution
for the mutilated or defaced Certificate, or in lieu of and substitution
for the Certificate so apparently destroyed, lost or stolen. In case of
any Certificate so apparently destroyed, lost or stolen, the applicant for
a substitute Certificate shall furnish to the Owner Trustee and to the
Indenture Trustee such security or indemnity as may be required by them to
indemnify and defend and to save each of them harmless and evidence to
their satisfaction of the apparent destruction, loss or theft of such
Certificate and of the ownership thereof.
Upon the issuance of any substitute Certificate, the Owner Trustee or
the Indenture Trustee may require payment from the Holder of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses connected therewith. In case any
Certificate which has matured or is about to mature, or has been called for
prepayment in full, shall become mutilated or defaced or be apparently
destroyed, lost or stolen, the Owner Trustee may, instead of issuing a
substitute Certificate, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated or defaced Certificate),
if the applicant of any Certificate so apparently destroyed, lost or stolen,
for such payment shall furnish to the Owner Trustee and to the Indenture
Trustee such security or indemnity as any of them may require to save each of
them harmless and the applicant shall also furnish to the Owner Trustee and
the Indenture Trustee evidence to their satisfaction of the apparent
destruction, loss or theft of such Certificate and of the ownership thereof.
Every substitute Certificate issued pursuant to the provisions of
this Section by virtue of the fact that any Certificate is apparently
destroyed, lost or stolen shall constitute an original additional contractual
obligation of the Owner Trustee, whether or not the apparently destroyed, lost
or stolen Certificate shall be enforceable at any time by anyone and shall be
entitled to all the security and benefits of (but shall be subject to all the
limitations of rights set forth in) this Indenture equally and proportionately
with any and all other Certificates duly authenticated and delivered
hereunder. All Certificates shall be held and owned upon the express
condition that, to the extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, defaced, or
apparently destroyed, lost or stolen Certificates and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment
of negotiable instruments or other securities without their surrender.
SECTION 2.08. Cancellation of Certificates; Destruction Thereof.
All Certificates surrendered for payment, prepayment, registration of
transfer or exchange, if surrendered to the Owner Trustee or any agent of
the Owner Trustee or the Indenture Trustee, shall be delivered to the
Indenture Trustee for cancellation or, if surrendered to the Indenture
Trustee, shall be cancelled by it; and no Certificates shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Indenture. The Indenture Trustee shall destroy cancelled Certificates held
by it and deliver a certificate of destruction to the Owner Trustee. If
the Owner Trustee shall acquire any of the Certificates, such acquisition
shall not operate as a prepayment or satisfaction of the indebtedness
represented by such Certificates unless and until the same are delivered to
the Indenture Trustee for cancellation.
SECTION 2.09. Temporary Certificates. Pending the preparation of
definitive Certificates, the Owner Trustee may execute and, upon the oral or
written request of an officer of FSBU, the Indenture Trustee shall
authenticate and deliver temporary Certificates (printed, lithographed,
typewritten or otherwise reproduced, in each case in form satisfactory to the
Indenture Trustee). Temporary Certificates shall be issuable as registered
Certificates without coupons, of any authorized denomination, and
substantially in the form of the definitive Certificates but with such
omissions, insertions and variations as may be appropriate for temporary
Certificates, all as may be determined by the Owner Trustee with the
concurrence of the Indenture Trustee. Temporary Certificates may contain such
reference to any provisions of this Indenture as may be appropriate. Every
temporary Certificate shall be executed by the Owner Trustee and, upon the
oral or written request of an authorized officer of the Owner Trustee, be
authenticated by the Indenture Trustee upon the same conditions and in
substantially the same manner, and with like effect, as the definitive
Certificates. Without unreasonable delay the Owner Trustee shall execute and
shall furnish definitive Certificates and thereupon temporary Certificates
shall be surrendered in exchange therefor without charge at any office or
agency to be maintained by the Indenture Trustee for the purpose pursuant to
Section 3.02 hereof, and, upon the oral or written request of an authorized
officer of the Owner Trustee, the Indenture Trustee shall authenticate and
deliver in exchange for such temporary Certificates an equal aggregate
principal amount of definitive Certificates of the same Maturities and
interest rates and in authorized denominations. Until so exchanged,
temporary Certificates shall be entitled to the same security and benefits
under this Indenture as definitive Certificates.
SECTION 2.10. Termination of Interest in Trust Indenture Estate. A
Holder shall not, as such, have any further interest in, or other right with
respect to, the Trust Indenture Estate when and if the principal amount of and
Make-Whole Premium, if any, and interest on and other amounts due under all
Certificates held by such Holder and all other sums payable to such Holder
hereunder shall have been paid in full.
SECTION 2.11. Certificates in Respect of Replacement Aircraft. Upon
the execution and delivery of an Indenture and Security Agreement Supplement
covering a replacement airframe and/or Replacement Engine, as provided in
Section 9.09 hereof, each Certificate shall be deemed to have been issued in
connection with such replacement airframe and/or Replacement Engine and each
Certificate issued thereafter upon a transfer or exchange of, or as a
replacement for, a Certificate, shall be designated as having been issued in
connection with such replacement airframe and/or Replacement Engine, but
without any other change therein except as provided for in this Article II.
SECTION 2.12. Assumption of Obligations Under Certificates and Other
Operative Agreements. If, in accordance with and subject to the satisfaction
of the conditions set forth in Section 7.11 of the Participation Agreement,
the Lessee shall assume all of the obligations of the Owner Trustee hereunder,
under the Certificates and all other Operative Agreements, the Owner
Participant and the Owner Trustee shall be released and discharged from any
further obligations hereunder and under the
Certificates and all other Operative Agreements (except any obligations that
have accrued prior to such assumption).
ARTICLE III
COVENANTS
SECTION 3.01. Payment of Principal, Make-Whole Premium and Interest.
The Owner Trustee covenants and agrees that it will, subject to Section 2.05
hereof, duly and punctually pay or cause to be paid the principal of, and
interest and Make-Whole Premium, if any, and all other amounts due on, each of
the Certificates and under this Indenture at the place or places, at the
respective times and in the manner provided in this Indenture and in the
Certificates.
Principal and interest and other amounts due hereunder or under the
Certificates shall be payable in Dollars on the due date thereof, to the
Indenture Trustee at the Corporate Trust Office (or such other account at such
other financial institution as the Indenture Trustee may designate for the
purpose). If any amount payable under the Certificates or under this
Indenture falls due on a day which is not a Business Day, then such sum shall
be payable on the next succeeding Business Day, without (provided that payment
is made on such next succeeding Business Day) additional interest thereon for
the period of such extension.
SECTION 3.02. Offices for Payments, etc. So long as any of the
Certificates remain outstanding, the Indenture Trustee will maintain the
following: (a) an office or agency where the Certificates may be presented
for payment and (b) a facility or agency in New York, New York where the
Certificates may be presented for registration of transfer and for exchange
and for prepayment as provided in this Indenture (the "Registrar"). The
Registrar shall keep a register (the "Register") with respect to the
Certificates and their transfer and exchange. The Indenture Trustee may
appoint one or more co-registrars ("Co-Registrars") for the Certificates and
may terminate any such appointment at any time upon written notice. The term
"Registrar" includes any Co-Registrar.
The Indenture Trustee shall initially act as Registrar.
SECTION 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee. The Owner Trustee, whenever necessary to avoid or fill a vacancy in
the office of Indenture Trustee, will, with the consent of the Lessee,
appoint, in the manner provided in Section 12.02 hereof, an Indenture Trustee,
so that there shall at all times be an Indenture Trustee hereunder.
SECTION 3.04. Paying Agents. Whenever the Indenture Trustee in its
sole discretion shall appoint a paying agent (the "Paying Agent"), it will
cause the Paying Agent to execute and deliver an instrument in which the
Paying Agent shall agree with the Indenture Trustee, subject to the provisions
of this Section:
(a) that it will hold all sums received by it as such agent for the
payment of the principal of, and interest and Make-Whole Premium, if any,
on the Certificates (whether such sums have been paid to it by the
Indenture Trustee or the Owner Trustee) in trust for the benefit of the
Holders or of the Indenture Trustee, and
(b) that it will give the Indenture Trustee notice of any failure by
the Owner Trustee to make any payment of the principal of or interest or
Make-Whole Premium, if any, on the Certificates when the same shall be due
and payable.
Anything in this Section to the contrary notwithstanding, the
agreements to hold sums in trust as provided in this Section are subject to
the provisions of Sections 14.03 and 14.04 hereof.
SECTION 3.05. Covenants of FSBU and the Owner Trustee.
(a) FSBU hereby covenants and agrees to perform its covenants set
forth in Sections 7.04(b) and 7.04(c) of the Participation Agreement.
(b) The Owner Trustee hereby covenants and agrees as follows:
(i) in the event a Responsible Officer of the Owner Trustee shall
have actual knowledge of an Indenture Event of Default, an Indenture
Default or an Event of Loss, the Owner Trustee will give prompt written
notice of such Indenture Event of Default, Indenture Default or Event of
Loss to the Indenture Trustee, the Lessee and the Owner Participant;
(ii)the Owner Trustee will furnish to the Indenture Trustee, promptly
upon receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and other instruments
furnished to the Owner Trustee under the Lease, including, without
limitation, a copy of each report or notice received pursuant to Section 11
of the Lease, to the extent that the same shall not have been furnished to
the Indenture Trustee;
(iii)the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to the Lessee and the carrying out of the transactions contemplated
hereby and by the Lease, the Participation Agreement, the Trust Agreement
and the other Indenture Documents; and
(iv)except as contemplated by the Operative Agreements, the Owner
Trustee will not contract for, create, incur or assume any debt, and will
not guarantee (directly or indirectly or by an instrument having the effect
of assuring another's payment or performance on any obligation or
capability of so doing, or otherwise), endorse or otherwise take action to
become contingently liable, directly or indirectly, in connection with the
debt of any other Person.
SECTION 3.06. [Intentionally Left Blank.]
SECTION 3.07. Disposal of Trust Indenture Estate. At any time and
from time to time any part of the Trust Indenture Estate may be sold or
disposed of in accordance with the provisions of this Indenture and the Lease.
The Indenture Trustee shall, from time to time, release any part of the Trust
Indenture Estate so sold or disposed of or as to which an Event of Loss has
occurred or as to which the Lease has been terminated from the Lien of this
Indenture. In addition, to the extent that such property constitutes an
Airframe or Engine, the further requirements of Section 9.08 hereof shall be
complied with.
SECTION 3.08. No Representations or Warranties as to Aircraft or
Documents. NEITHER THE INDENTURE TRUSTEE NOR THE OWNER TRUSTEE NOR FSBU NOR
THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP,
VALUE, CONDITION, DESIGN, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR USE OR
PURPOSE OF THE AIRCRAFT OR ANY ENGINE, OR ANY OTHER REPRESENTATION OR WARRANTY
WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE WHATSOEVER, except that FSBU
warrants that on the Delivery Date (a) the Owner Trustee shall have received
whatever title was conveyed to it by the Lessee, and (b) the Aircraft shall be
free and clear of Lessor's Liens attributable to FSBU. Neither FSBU, the
Indenture Trustee nor the Owner Participant makes or shall be deemed to have
made any representation or warranty as to the validity, legality or
enforceability of this Indenture, the Trust Agreement, the Certificates or any
Indenture Document or as to the correctness of any statement contained in any
thereof, except for the representations and warranties of FSBU, the Indenture
Trustee and the Owner Participant made under this Indenture or in the
Participation Agreement.
SECTION 3.09. Further Assurances; Financing Statements. At any time
and from time to time, upon the request of the Indenture Trustee or the
Lessee, the Owner Trustee shall promptly and duly execute and deliver any and
all such further instruments and documents as may be specified in such request
and as are necessary or advisable to perfect, preserve or protect the Liens
and assignments created or intended to be created hereby, or to obtain for the
Indenture Trustee the full benefit of the specific rights and powers granted
herein, including, without limitation, the execution and delivery of Uniform
Commercial Code financing statements and continuation statements with respect
thereto, or similar instruments relating to the perfection of the Liens or
assignments created or intended to be created hereby.
ARTICLE IV
HOLDER LISTS
SECTION 4.01. Holder Lists; Ownership of Certificates. (a) The
Indenture Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Indenture Trustee is not the Registrar, the Registrar
shall furnish to the Indenture Trustee semi-annually not more than fifteen
(15) days after each Record Date, as of such Record Date, or at such other
times as the Indenture Trustee may request in writing, a list, in such form
and as of such date as the Indenture Trustee may reasonably require,
containing all the information in the possession or control of the Registrar
as to the names and addresses of the Holders and the amounts and Maturities of
the Certificates held by such Holders.
(b) Ownership of the Certificates shall be proved by the Register
kept by the Registrar.
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 5.01. Basic Rent Distribution. Except as otherwise provided
in Section 5.03 hereof, each installment of Basic Rent, any amount paid by the
Owner Participant under Section 2.03 of the Participation Agreement, any
payment of interest on overdue installments of Basic Rent and any payment
received by the Indenture Trustee pursuant to Section 8.03(a) hereof shall be
promptly distributed in the following order of priority: first, so much of
such installment or payment as shall be required to pay in full the aggregate
amount of the payment or payments of principal and interest and other amounts
(as well as any interest on overdue principal and, to the extent permitted by
law, on Make-Whole Premium, if any, interest and other amounts) then due under
all Certificates shall be distributed to the Holders ratably, without priority
of one over the other, in the proportion that the amount of such payment or
payments then due under each such Certificate bears to the aggregate amount of
the payments then due under all such Certificates, and, second, the balance
if any of such installment or payment remaining thereafter shall be
distributed to the Owner Trustee, or as the Owner Trustee may request, for
distribution pursuant to the Trust Agreement.
SECTION 5.02. Event of Loss and Replacement; Prepayment. (a)
Except as otherwise provided in Section 5.03 hereof, any payment received by
the Indenture Trustee as the result of an Event of Loss with respect to the
Aircraft (including pursuant to Section 11.03(e) of the Lease, but, in the
case of said Section 11.03(e), subject to the time limits specified therein)
or as the result of, or in connection with any event under the Lease giving
rise to, a prepayment pursuant to Section 6.02 hereof, shall be promptly
distributed by the Indenture Trustee in the following order of priority:
first, to reimburse the Indenture Trustee for any costs or expenses reasonably
incurred in connection with such prepayment, second, as provided in clause
"second" of Section 5.03 hereof (without giving effect to the parenthetical at
the end thereof), and third, as provided in clause "third" of Section 5.03
hereof; provided that if a replacement airframe shall be substituted for an
Airframe subject to an Event of Loss as provided in Section 11.03 of the Lease
and Section 9.08 hereof, any proceeds which result from such Event of Loss and
are paid to the Indenture Trustee shall be held by the Indenture Trustee as
part of the Trust Indenture Estate and, unless otherwise applied pursuant to
Section 5.01 or 5.03 hereof, such proceeds shall be released to the Lessee
upon the release of such damaged Airframe and the replacement thereof as
herein provided.
(b) Any amounts received directly or indirectly from any
governmental authority, insurer or other party pursuant to any provision of
Article 11 or 13 of the Lease as the result of loss or damage not
constituting an Event of Loss with respect to the Aircraft, or as a result
of such loss or damage constituting an Event of Loss (x) if and to the
extent that such amounts would at the time be required to be paid to the
Lessee pursuant to said Article 11 or 13 but for the fact that an Event of
Default shall have occurred and be continuing or (y) are pledged to the
Lessor as security in connection with an Event of Loss in accordance with
Section 11.03(e) of the Lease, shall be held by the Indenture Trustee as
security for the obligations of the Lessee under the Lease and the
Participation Agreement and shall be invested in accordance with the terms
of Section 5.08 hereof and at such time as the conditions for payment to
the Lessee specified in said Article 11 or 13, as the case may be, shall be
fulfilled and there shall not be continuing any Event of Default, such
amount, and the proceeds of any investment thereof, shall, to the extent
not theretofore applied, be paid to the Lessee to the extent provided in
the Lease.
SECTION 5.03. Payment After Indenture Event of Default, etc. Except
as otherwise provided in Sections 5.02(b), 5.04(b), 5.04(c) and 5.05 hereof,
all payments (other than Excepted Payments) received and all amounts held or
realized by the Indenture Trustee (a) after an Indenture Event of Default
shall have occurred and so long as such an Indenture Event of Default shall be
continuing, and after the Indenture Trustee has received a request in
accordance with Section 7.10 hereof, or (b) after the Certificates shall have
become due and payable as provided in Section 7.02(b) or (c) hereof, shall be
promptly distributed by the Indenture Trustee in the following order of
priority:
first, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any tax, expense, charge or other loss
(including, without limitation, all amounts to be expended at the expense
of, or charged upon the tolls, rents, revenues, issues, products and
profits of, the property included in the Trust Indenture Estate pursuant to
Section 7.03(b) hereof) incurred by the Indenture Trustee (to the extent
not previously reimbursed) (including, without limitation, the expenses of
any sale, taking or other proceeding, attorneys' fees and expenses, court
costs, and any other expenditures incurred or expenditures or advances made
by the Indenture Trustee in the protection, exercise or enforcement of any
right, power or remedy or any damages sustained by the Indenture Trustee,
liquidated or otherwise, upon such Indenture Event of Default) shall be
applied by the Indenture Trustee in reimbursement of such expenses;
second, so much of such payments or amounts as shall be required to
pay in full the aggregate unpaid principal amount of all Outstanding
Certificates, all accrued but unpaid interest thereon to the date of
distribution and all other amounts due hereunder and thereunder, shall be
distributed to the Holders, and if the aggregate amount so to be
distributed shall be insufficient to pay all such amounts in full as
aforesaid, then such amount shall be distributed ratably, without priority
of one over the other, in the proportion that the aggregate unpaid
principal amount of all Certificates held by each such Holder, the accrued
but unpaid interest thereon to the date of distribution and all other
amounts due hereunder and thereunder, bears to the aggregate unpaid
principal amount of all Outstanding Certificates, plus accrued but unpaid
interest thereon to the date of distribution and all other amounts due
hereunder and thereunder (it being understood that amounts payable
hereunder shall not include Make-Whole Premium); and
third, the balance, if any of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee for distribution
pursuant to the Trust Agreement.
SECTION 5.04. Certain Payments. (a) Except as otherwise provided
in this Indenture, any payments received by the Indenture Trustee which are to
be applied according to any provision in any other Indenture Document shall be
applied thereunder in accordance therewith.
(b) The Indenture Trustee will distribute, promptly upon receipt,
any Excepted Payment (including, without limitation, any such payment
constituting Basic Rent) received by it from the Owner Trustee or the
Lessee pursuant to Article 8 or Article 9 of the Participation Agreement or
as Supplemental Rent, directly to the Person (which may include the
Indenture Trustee) entitled thereto.
(c) Notwithstanding anything to the contrary contained herein, any
sums received by the Indenture Trustee which constitute Excepted Payments
shall be distributed promptly upon receipt by the Indenture Trustee directly
to the Person or Persons entitled thereto.
SECTION 5.05. Other Payments. Any payments received by the
Indenture Trustee for which no provision as to the application thereof is
made elsewhere in this Indenture or in any other Indenture Document
(including without limitation Section 9 of the Lease) shall be distributed
by the Indenture Trustee (a) to the extent received or realized at any time
prior to the payment in full of all obligations to the Holders, in the
order of priority specified in Section 5.01 hereof, and (b) to the extent
received or realized at any time after payment in full of all obligations
to the Holders, in the following order of priority: first, in the manner
provided in clause "first" of Section 5.03 hereof and second, in the manner
provided in clause "third" of Section 5.03 hereof.
SECTION 5.06. Payments to Owner Trustee. Any amounts distributed
hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the
Owner Trustee by wire transfer of immediately available funds of the type
received by the Indenture Trustee at such office and to such account or
accounts of such entity or entities as shall be designated by notice from the
Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee
hereby notifies the Indenture Trustee that unless and until the Indenture
Trustee receives notice to the contrary from the Owner Trustee, all amounts to
be distributed to the Owner Trustee hereunder for distribution in accordance
with the Trust Agreement shall be distributed by wire transfer of immediately
available funds of the type received by the Indenture Trustee to such account
of the Owner Participant as may be specified pursuant to Section 2.06 of the
Trust Agreement.
SECTION 5.07. Application of Payments. Each payment of principal of
and interest or other amounts due on each Certificate shall, except as
otherwise provided herein, be applied, first, to the payment of interest on
such Certificate due and payable to the date of such payment, as provided in
such Certificate, as well as any interest on overdue principal and Make-Whole
Premium, if any, and, to the extent permitted by law, interest and other
amounts due thereunder, second, to the payment of any other amount (other than
the principal of such Certificate) due hereunder to the Holder of such
Certificate or under such Certificate, third, to the payment of the principal
of such Certificate if then due hereunder or under such Certificate and
fourth, the balance, if any remaining thereafter, to the payment of the
principal of such Certificate remaining unpaid (provided that such Certificate
shall not be subject to prepayment without the consent of the affected Holder
except as permitted by Sections 6.02, 6.06 and 8.02 hereof); provided that,
solely for the purpose of determining whether an Indenture Event of Default
shall have occurred and be continuing, each such payment shall be deemed
applied in the following order of priority: first, in the manner provided in
clause "first" above, second, in the manner provided in clause "third" above,
third, in the manner provided in clause "second" above and fourth, in the
manner provided in clause "fourth" above.
SECTION 5.08. Investment of Amounts Held by Indenture Trustee.
Amounts held by the Indenture Trustee pursuant to Section 5.02(b) hereof or
pursuant to any provision of any Indenture Document providing for investment
by the Indenture Trustee of sums pursuant to Section 23.01 of the Lease or
this Section 5.08 shall be invested by the Indenture Trustee from time to time
in securities selected by (i) so long as no Event of Default shall have
occurred and be continuing, the Lessee (and in the absence of written
direction by the Lessee, the Indenture Trustee shall invest such monies in
direct obligations of the United States of America) or (ii) so long as an
Event of Default shall have occurred and be continuing, the Indenture
Trustee and in each case shall be of the type listed in clauses (i) through
(iv) of Section 23.01 of the Lease. Unless otherwise expressly provided in
this Indenture, any income realized as a result of any such investment, net
of the Indenture Trustee's reasonable fees and expenses in making such
investment, shall be held and applied by the Indenture Trustee in the same
manner as the principal amount of such investment is to be applied and any
losses, net of earnings and such reasonable fees and expenses, shall be
charged against the principal amount invested. The Lessee shall be
responsible for and will promptly pay to the Indenture Trustee or the
Lessor, as the case may be, on demand, the amount of any loss realized as
the result of any such investment (together with any fees, commissions and
other costs and expenses, if any, incurred by the Indenture Trustee or the
Lessor in connection with such investment), such amount to be disposed of
in accordance with the terms hereof or the Lease, as the case may be. The
Indenture Trustee shall not be liable for any loss resulting from any
investment made by it under this Indenture in accordance with instructions
from the Lessee other than by reason of its willful misconduct or gross
negligence, and any such investment may be sold (without regard to its
maturity) by the Indenture Trustee without instructions whenever the
Indenture Trustee reasonably believes such sale is necessary to make a
distribution required by this Indenture.
Unless otherwise confirmed in writing, an account statement delivered
by the Indenture Trustee to the Owner Trustee (with a copy to the Lessee)
shall be deemed written confirmation by the Owner Trustee that the investment
transactions identified therein accurately reflect the investment directions
given to the Indenture Trustee by or on behalf of the Owner Trustee, unless
the Owner Trustee (or the Lessee on its behalf) notifies the Indenture Trustee
in writing to the contrary within 30 days of the date of receipt of such
statement.
SECTION 5.09. Withholding Taxes. The Indenture Trustee shall
withhold any Taxes required to be withheld, except to the extent that the
Holder has furnished evidence satisfactory to the Indenture Trustee of any
exemption from withholding claimed by such Holder and under no circumstances
shall the failure of any such Holder to receive any amounts so withheld
constitute an Indenture Event of Default. Notwithstanding any provision to
the contrary in Sections 5.01 through 5.05 hereof and subject to Article 8 of
the Participation Agreement, if the Lessee is required to pay any such Tax, or
any interest or penalty thereon, or to indemnify the Owner Participant or the
Owner Trustee with respect thereto pursuant to Section 8.01(c) of the
Participation Agreement, the Lessee shall be entitled to receive any payments
otherwise distributable to the Holder of any Certificate who was subject to
such Tax pursuant to Sections 5.01 to 5.05 hereof until the foregoing amounts
shall have been recovered in full by the Lessee.
ARTICLE VI
PREPAYMENT OF CERTIFICATES
SECTION 6.01. No Prepayment Prior to Maturity. Except as provided
in Sections 6.02, 6.06 and 8.02 hereof, the Certificates may not be prepaid
prior to their respective Maturities.
SECTION 6.02. Prepayment of Certificates. (a) The Outstanding
Certificates shall be prepaid in full (and not in part):
(i) If an Event of Loss occurs with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe (unless pursuant to Section 11.03 of the Lease and Section 9.08
hereof replacement equipment is substituted therefor).
(ii)If the Lessee, pursuant to Section 4.02(a) of the Lease, gives
notice of purchase of the Aircraft (and Section 2.12 hereof shall not be
applicable in connection with such purchase).
(iii)If the Owner Participant or the Owner Trustee on behalf of the
Owner Participant gives notice of prepayment to the Indenture Trustee
pursuant to Section 8.02 hereof.
(iv)If the Lessee, pursuant to Section 10.01 of the Lease, gives
notice of a voluntary termination for obsolescence or surplus, but subject
to Section 6.02(c) below.
(v) Pursuant to Section 15.01 of the Participation Agreement in
connection with a refinancing of the Certificates.
(b) In the event of a prepayment of the Certificates pursuant to
Sections 6.02(a)(ii), (iv) and (v) above, the Owner Trustee, having received
notice from the Lessee in accordance with and subject to the terms of Section
4.02(a) or 10.01 of the Lease or Section 15 of the Participation Agreement, as
the case may be, shall give irrevocable (subject to clause (c) below) written
notice to the Indenture Trustee and to the Holders of all of the Certificates
specifying the Business Day on which the Certificates shall be prepaid. In
the case of a prepayment of the Certificates pursuant to Section 6.02(a)(i)
above, the Certificates shall be prepaid in full on the Loss Payment Date as
defined in Section 11.02 of the Lease. In the case of a prepayment of the
Certificates pursuant to Section 6.02(a)(iii) above, the Certificates shall be
prepaid in full on the date so designated in the notice referred to in Section
8.02 hereof. In the case of a prepayment of the Certificates pursuant to
Section 6.02(a)(ii) or (iv) above, the Certificates shall be prepaid in full
on the Termination Date. In the case of a prepayment of the Certificates
pursuant to Section 6.02(a)(v) above, the Certificates shall be prepaid on the
effective date of the Refinancing. The day on which the Certificates are to
be prepaid pursuant to this Section 6.01(b) is herein referred to as the
"Prepayment Date".
On or prior to the Prepayment Date, immediately available funds shall
be deposited with the Indenture Trustee in an amount in respect of the
Certificates equal to:
(1) in the event of a prepayment of the Certificates pursuant to
Section 6.02(a)(i), 6.02(a)(iii) (if clause (i) of the first sentence of
Section 8.02(a) hereof is applicable) or, if such prepayment is made on or
after the applicable Premium Termination Date, 6.02(a)(ii), 6.02(a)(iii)
(if clause (ii) of the first sentence of Section 8.02(a) hereof is
applicable), 6.02(a)(iv) or 6.02(a)(v) above, the sum of (A) the aggregate
principal amount of such Certificates then Outstanding, (B) accrued
interest on the Certificates to the Prepayment Date and (C) all other
aggregate sums due the Indenture Trustee hereunder or under the
Participation Agreement or the Lease, but excluding any Make-Whole Premium
or other premium or penalty, or
(2) if such prepayment is made prior to the applicable Premium
Termination Date, in the event of a prepayment of the Certificates pursuant
to Section 6.02(a)(ii), 6.02(a)(iii) (if clause (ii) of the first sentence
of Section 8.02(a) hereof is applicable), 6.02(a)(iv) or 6.02(a)(v) above,
the sum of the amounts specified in clauses (A), (B) and (C) of the
preceding clause (1) plus any Make-Whole Premium payable in respect of all
Certificates with respect to which the Premium Termination Date therefor
has not occurred
(the aggregate amount required to be paid pursuant to this sentence being
herein referred to as the "Prepayment Price").
(c) If, pursuant to the last paragraph of Section 10.01(f) of the
Lease, no Termination Date shall occur, or if no refinancing shall occur
pursuant to Section 15.01 of the Participation Agreement, the Lessee shall
give notice thereof to the Indenture Trustee, and the prepayment proposed to
be effected in respect thereof shall not occur.
SECTION 6.03. Notice of Prepayment to Holders. In order to effect
any prepayment set forth in Section 6.02(a) hereof, the Indenture Trustee
shall give prompt notice by first class mail of prepayment to each Holder of
an Outstanding Certificate. Such notice may be revoked by the Owner Trustee
at any time on or before the Prepayment Date by prompt notice to the Holders
except as otherwise provided in the Lease or the Participation Agreement.
All notices of prepayment shall state:
(1) the Prepayment Date,
(2) the applicable basis for determining the Prepayment Price,
(3) that on the Prepayment Date, subject to the provisions hereof,
the Prepayment Price will become due and payable, and that interest
on the Certificates shall cease to accrue on and after such
Prepayment Date, and
(4) the place or places where such Certificates are to be
surrendered for payment.
SECTION 6.04. Deposit of Prepayment Price and Sinking Fund
Redemption Price. On the Prepayment Date or the Sinking Fund Redemption
Date (as defined in Section 6.06 hereof), the Owner Trustee shall, to the
extent an amount equal to the Prepayment Price or the Sinking Fund
Redemption Price (as defined in Section 6.06 hereof), as the case may be,
shall not then be held in cash or Permitted Investments (marked-to-market
net of all costs and expenses of liquidation thereof) by the Indenture
Trustee in immediately available funds and deposited for the purpose, pay
to the Indenture Trustee an amount equal to the difference between (a) the
amount then so held and (b) the Prepayment Price or the Sinking Fund
Redemption Price, as the case may be. If there shall so be on deposit
and/or deposited the applicable Prepayment Price or Sinking Fund Redemption
Price on or prior to a Prepayment Date or Sinking Fund Redemption Date,
interest shall cease to accrue in respect of all or, in the case of a
mandatory sinking fund redemption, the relevant portion being prepaid of,
the Outstanding Certificates on and after such Prepayment Date or such
Sinking Fund Redemption Date.
SECTION 6.05. Certificates Payable on Prepayment Date. On the
Prepayment Date, the Outstanding Certificates shall (except (A) if the Owner
Trustee has requested the Indenture Trustee to revoke such notice of
prepayment in accordance with Section 6.03 hereof or (B) as otherwise provided
in the Lease) become due and payable and from and after such Prepayment Date
(unless there shall be a default in the payment of the Prepayment Price) such
Certificates shall cease to bear interest. Upon surrender by any Holder of
its Certificate for prepayment in accordance with said notice, such Holder
shall be paid the principal amount of its Certificate then outstanding,
accrued interest thereon to the Prepayment Date, all other sums due to such
Holder hereunder, under the Participation Agreement or the Lease, plus, if a
Make-Whole Premium is payable pursuant to Section 6.02(b) hereof, the
Make-Whole Premium in respect of such Certificate.
If any Certificate called for prepayment shall not be so paid upon
surrender thereof for prepayment, the principal shall, until paid, continue to
bear interest from the Prepayment Date at the interest rate applicable to such
Certificate.
SECTION 6.06. Mandatory Sinking Fund Redemption. The Certificates
with a Maturity of January 5, 2013 and the Certificates with a Maturity of
January 5, 2016 shall be subject to partial redemption, at the aggregate
principal amount set forth for the Certificates of the respective Maturity,
on a pro rata basis, on each date specified in this Section (a "Sinking
Fund Redemption Date") for such payment on the Certificates of such
Maturity. The Owner Trustee shall deposit funds sufficient to pay the
Sinking Fund Redemption Price with the Indenture Trustee as provided in
Section 6.04 hereof. The Indenture Trustee shall pay from the amounts so
deposited on each applicable Sinking Fund Redemption Date to the Holders of
each Certificate then Outstanding on a pro rata basis the aggregate
principal amount set forth below, together with accrued interest to such
Sinking Fund Redemption Date, but without Make-Whole Premium (the "Sinking
Fund Redemption Price"):
Principal Amount
Certificates Certificates
with a Maturity with a Maturity
Sinking Fund Redemption Date of January 5, 2013 of January 5, 2016
------------------------------ -------------------- --------------------
January 5, 1996 $ 0 $ 0
July 5, 1996 1,109,050 0
January 5, 1997 0 0
July 5, 1997 1,201,660 0
January 5, 1998 0 0
July 5, 1998 1,293,350 0
January 5, 1999 0 0
July 5, 1999 1,392,030 0
January 5, 2000 1,557,670 0
July 5, 2000 0 0
January 5, 2001 1,681,230 0
July 5, 2001 0 0
January 5, 2002 3,806,730 0
July 5, 2002 50,770 0
January 5, 2003 75,680 0
July 5, 2003 0 0
January 5, 2004 1,762,440 0
July 5, 2004 0 0
January 5, 2005 1,384,680 0
July 5, 2005 0 0
January 5, 2006 2,747,460 0
July 5, 2006 0 0
January 5, 2007 3,110,340 0
July 5, 2007 0 0
January 5, 2008 2,672,530 0
July 5, 2008 0 0
January 5, 2009 4,408,670 0
July 5, 2009 0 0
January 5, 2010 4,758,400 0
July 5, 2010 0 0
January 5, 2011 5,135,860 0
July 5, 2011 0 0
January 5, 2012 5,543,270 0
July 5, 2012 0 0
January 5, 2013 4,668,180 0
July 5, 2013 0 0
January 5, 2014 0 0
July 5, 2014 0 0
January 5, 2015 0 6,367,540
July 5, 2015 0 0
January 5, 2016 0 6,798,460
-------------------- --------------------
Total $48,360,000 $13,166,000
ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
SECTION 7.01. Indenture Event of Default. "Indenture Event of
Default" means any of the following events (whatever the reason for such
Indenture Event of Default and whether it shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) any Event of Default specified in Article 16 of the Lease (other
than an Event of Default arising solely as the result of the failure to
make an Excepted Payment unless the Owner Participant shall notify the
Indenture Trustee in writing that such failure shall constitute an
Indenture Event of Default); or
(ii)any failure of the Owner Trustee to (A) observe any of its
covenants in the fifth paragraph following the Habendum Clause hereof or
Section 3.05(b)(iii) hereof or Section 7.02(b) of the Participation
Agreement (unless otherwise removed as Owner Trustee within 10 days after
notice thereof to the Owner Participant) or (B) observe or perform any
other covenant or obligation of the Owner Trustee in this Indenture (other
than any such failure arising by reason of an Event of Default or specified
in clause (iii) below) and the continuance of such failure for a period of
thirty (30) days or, if such covenant is capable of cure and the Owner
Trustee is diligently proceeding to effect such cure, 120 days, after
written notice thereof identified as a "Notice of Indenture Event of
Default" to the Owner Trustee and the Owner Participant by the Indenture
Trustee or by the Holders of not less than 25% in aggregate principal
amount of Outstanding Certificates specifying such failure to so observe or
perform and requiring it to be remedied; or
(iii)the failure of the Owner Trustee other than by reason of a
Default or an Event of Default (i) to pay principal, interest or Make-Whole
Premium, if any, on any Certificate when due, and such failure shall have
continued unremedied for ten (10) Business Days after the date when due or
(ii) to pay any other amounts hereunder or under the Certificates when due
and such failure shall have continued unremedied for a period of thirty
(30) days after the Owner Trustee and the Owner Participant shall receive
written demand therefor from the Indenture Trustee or by the Holders of not
less than 25% in aggregate principal amount of Outstanding Certificates; or
(iv)(A) any representation or warranty made by FSBU, the Owner
Trustee, the Owner Participant or the Owner Participant Guarantor or any
Owner Trustee Guarantor, in Article 7 of the Participation Agreement, in
Section 5.01 of the Lease, in the Owner Participant Guaranty or in any
certificate of FSBU, the Owner Trustee, the Owner Participant, or the Owner
Participant Guarantor furnished to the Indenture Trustee or any Holder in
connection herewith or therewith or pursuant hereto or thereto shall prove
to have been incorrect when made and was and remains in any respect
material to the Holders, and such misrepresentation shall not have been
corrected within 30 days following notice thereof identified as a "Notice
of Indenture Event of Default" being given to the Owner Trustee and the
Owner Participant by the Indenture Trustee or by the Holders of not less
than 25% in aggregate principal amount of Outstanding Certificates; or
(B) any covenant made by FSBU or the Owner Trustee in the
Participation Agreement, or by the Owner Participant or the Owner
Participant Guarantor in Article 7 of the Participation Agreement or in the
Owner Participant Guaranty shall be breached in any respect and such breach
shall remain unremedied for a period of thirty (30) days after there has
been given to the Owner Trustee and the Owner Participant by the Indenture
Trustee or by Certificate Holders of not less than 25% in aggregate
principal amount of Outstanding Certificates a written notice identified as
a "Notice of Indenture Event of Default" specifying such breach and
requiring it to be remedied; or
(v) the Owner Trustee, the Lessor's Estate, any Owner Trustee
Guarantor, the Owner Participant or the Owner Participant Guarantor shall
file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future bankruptcy, insolvency or similar
statute, law or regulation;
(vi)an order for relief shall be entered in respect of the Owner
Trustee or the Lessor's Estate or any Owner Trustee Guarantor or the Owner
Participant or the Owner Participant Guarantor by a court having
jurisdiction in the premises in an involuntary case under the federal
bankruptcy laws as now or hereafter in effect; or the Owner Trustee or the
Lessor's Estate or any Owner Trustee Guarantor or the Owner Participant or
the Owner Participant Guarantor shall file any answer admitting or not
contesting the material allegations of a petition filed against the Owner
Trustee or the Lessor's Estate or any Owner Trustee Guarantor or the Owner
Participant or the Owner Participant Guarantor in any proceeding referred
to in clause (vi) below or seek or consent or acquiesce in the appointment
of any trustee, custodian, receiver or liquidator of the Owner Trustee or
the Lessor's Estate or any Owner Trustee Guarantor or the Owner Participant
or the Owner Participant Guarantor, as the case may be, or of all or any
substantial part of its properties; or
(vi)without the consent or acquiescence of the Owner Trustee or the
Lessor's Estate or any Owner Trustee Guarantor or the Owner Participant or
the Owner Participant Guarantor, as the case may be, an order shall be
entered constituting an order for relief or approving a petition for relief
or reorganization or any other petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or other
similar relief under any present or future bankruptcy, insolvency or
similar statute, law or regulation, or if any such petition shall be filed
against the Owner Trustee or the Lessor's Estate or any Owner Trustee
Guarantor or the Owner Participant or the Owner Participant Guarantor, as
the case may be, and such petition shall not be dismissed within 90 days,
or if, without the consent or acquiescence of the Owner Trustee or the
Lessor's Estate or any Owner Trustee Guarantor or the Owner Participant or
the Owner Participant Guarantor, as the case may be, an order shall be
entered appointing a trustee, custodian, receiver or liquidator of the
Owner Trustee or the Lessor's Estate or any Owner Trustee Guarantor or the
Owner Participant or the Owner Participant Guarantor, as the case may be,
or of all or any substantial part of the properties of the Owner Trustee or
the Lessor's Estate or any Owner Trustee Guarantor or the Owner Participant
or the Owner Participant Guarantor, as the case may be, and such order
shall not be dismissed within 90 days; or
(viii)any Owner Trustee Guaranty or Owner Participant Guaranty shall
cease to be a valid and enforceable obligation of any Owner Trustee
Guarantor or the Owner Participant Guarantor, as the case may be, or
otherwise shall not be in full force and effect.
SECTION 7.02. Remedies. (a) If an Indenture Event of Default shall
have occurred and be continuing and so long as the same shall be continuing
unremedied, then and in every such case, the Indenture Trustee may, and when
required by the provisions of Article IX or Section 7.02(c) hereof, shall (i)
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article VII and (ii) in the event such Indenture
Event of Default is an Indenture Event of Default referred to in clause (i) of
Section 7.01 hereof, exercise any and all of the remedies pursuant to Article
17 of the Lease; provided that such exercise of remedies shall not occur until
after the latest date on which the Owner Trustee may cure the related Event of
Default pursuant to Section 8.03 hereof. The Indenture Trustee may take
possession of all or any part of the properties covered or intended to be
covered by the Lien and security interest created hereby or pursuant hereto
and may exclude the Owner Participant, the Owner Trustee, the Lessee and any
transferee of the Lessee and all Persons claiming under any of them wholly or
partly therefrom. In addition, the Indenture Trustee may exercise any other
right or remedy in lieu of or in addition to the foregoing that may be
available to it under applicable law, or proceed by appropriate court action
to enforce the terms hereof, of the Lease, or both, or to rescind the Lease.
Without limiting any of the foregoing, it is understood and agreed that the
Indenture Trustee may exercise any right of sale of the Aircraft available to
it, even though it shall not have taken possession of the Aircraft and shall
not have possession thereof at the time of such sale.
Notwithstanding the foregoing, it is understood and agreed that if
the Indenture Trustee shall proceed to foreclose the Lien of this
Indenture, it shall substantially simultaneously therewith, to the extent
the Indenture Trustee is then entitled to do so hereunder and under the
Lease, and is not then stayed or otherwise prevented from doing so, proceed
(to the extent it has not already done so) to declare the Lease in default
and commence the exercise in good faith of one or more of the remedies
under Section 17.01(a)(i), (ii), or (vi) of the Lease (as it shall
determine in its sole discretion). It is further understood and agreed
that if the Indenture Trustee is unable to exercise one or more remedies
under Section 17 of the Lease because of any stay or operation or law or
otherwise, the Indenture Trustee shall not be entitled to foreclose the
Lien of this Indenture (A) until the earlier of (i) 60 days from the date
of any such stay or applicable order under Section 1110 of the Bankruptcy
Code including any extension consented to by the Indenture Trustee or the
Holders of Certificates of such period permitted under Section 1110(b) of
the Bankruptcy Code and (ii) the date of actual repossession of the
Aircraft by the Indenture Trustee or (B) if the Lessee has agreed to
perform or assume the Lease and no Event of Default other than as specified
in Section 16.01(e), (f) or (g) of the Lease shall be continuing. For the
avoidance of doubt, it is expressly understood and agreed that except as
aforesaid the above-described inability of the Indenture Trustee to
exercise any right or remedy under the Lease shall in no event and under no
circumstances prevent the Indenture Trustee from exercising all of its
rights, powers and remedies under this Indenture, including, without
limitation, this Article VII. The Indenture Trustee further agrees that
notice of intent to foreclose shall be given to the Owner Trustee at the
earlier of the commencement of any proceeding or at least 30 days prior to
the consummation of foreclosure of the Lien of this Indenture.
(b) If an Indenture Event of Default under clause (v), (vi) or (vii)
of Section 7.01 hereof shall occur and be continuing, the unpaid principal of
all Outstanding Certificates, together with interest accrued but unpaid
thereon and all other amounts due thereunder, but without Make-Whole Premium,
shall immediately become due and payable, without presentment, demand, protest
or notice, all of which are hereby waived.
(c) If any Indenture Event of Default not described in the preceding
paragraph (b) shall have occurred and be continuing, then and in every such
case, the Indenture Trustee may on its own accord or at the direction of
Holders of not less than 25% in aggregate principal amount of Outstanding
Certificates, at any time, by written notice to the Owner Trustee and the
Lessee, declare the principal of all the Certificates to be due and payable,
whereupon the unpaid principal amount of all Outstanding Certificates,
together with accrued interest thereon and all other amounts due thereunder,
but without Make-Whole Premium, shall immediately become due and payable
without presentment, demand, protest or other notice, all of which are hereby
waived. At any time after such declaration and prior to the sale or
disposition of the Trust Indenture Estate, however, the Holders of not less
than 50% in aggregate principal amount of Outstanding Certificates, by notice
to the Indenture Trustee, the Owner Trustee and the Lessee, may rescind such
declaration, whether made by the Indenture Trustee on its own accord or as
directed, if (x) there has been paid or deposited with the Indenture Trustee a
sum sufficient to pay all overdue installments of interest on all Certificates
(together, to the extent permitted by law, with interest on such overdue
installments of interest), the principal on any Certificates that has become
due otherwise than by such declaration of acceleration, all sums paid or
advanced by the Indenture Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its agents and
counsel, or (y) all Indenture Events of Default (other than the nonpayment of
principal that has become due solely because of such acceleration) have been
either cured or waived as provided in Section 7.11 hereof. No such rescission
shall affect any subsequent default or impair any right consequent thereon.
(d) Each Holder shall be entitled at any sale to a credit against
any purchase price bid at such sale by such Holder all or any part of the
unpaid obligations owing to such Holder secured by the Lien of this Indenture.
SECTION 7.03. Return of Aircraft, etc. Subject to Section 7.02
hereof: (a) If an Indenture Event of Default shall have occurred and be
continuing, at the request of the Indenture Trustee, the Owner Trustee shall
promptly execute and deliver to the Indenture Trustee such documents as the
Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify,
to obtain possession of all or any part of the Trust Indenture Estate to which
the Indenture Trustee shall at the time be entitled under this Indenture.
Subject to the foregoing, if the Owner Trustee shall for any reason fail to
execute and deliver such documents after such request by the Indenture
Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the
Indenture Trustee or an agent or representative designated by the Indenture
Trustee, the right to immediate possession and requiring the Owner Trustee to
execute and deliver such instruments and documents to the Indenture Trustee or
an agent or representative designated by the Indenture Trustee, to the entry
of which judgment the Owner Trustee hereby specifically consents, and (ii)
pursue all or part of such Trust Indenture Estate wherever it may be found and
enter any of the premises of the Lessee or the Owner Trustee wherever such
Trust Indenture Estate may be or be supposed to be and search for such Trust
Indenture Estate and take possession of and remove such Trust Indenture
Estate. All expenses of obtaining such judgment or of pursuing, searching for
and taking such Trust Indenture Estate shall, until paid, be secured by the
Lien of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may,
from time to time, at the expense of the Trust Indenture Estate, make all such
expenditures for maintenance, insurance and repairs to and of such Trust
Indenture Estate, as the Indenture Trustee may reasonably deem proper. In
each case subject to Section 7.02 hereof, the Indenture Trustee shall have the
right to maintain, use, operate, store, lease, control or manage the Trust
Indenture Estate and to carry on the business and to exercise all rights and
powers of the Owner Trustee relating to the Trust Indenture Estate, as the
Indenture Trustee may reasonably deem best, including the right to enter into
any and all such agreements with respect to the maintenance, insurance, use,
operation, storage, leasing, control, management or disposition of all or any
part of the Trust Indenture Estate as the Indenture Trustee may determine.
Further, the Indenture Trustee shall be entitled to collect and receive
directly all tolls, rents (including Rent), revenues, issues, income, products
and profits of the Trust Indenture Estate other than Excepted Payments,
without prejudice, however, to the right of the Indenture Trustee under any
provision of this Indenture to collect and receive all cash held by, or
required to be deposited with, the Indenture Trustee under this Indenture.
Such tolls, rents (including Rent), revenues, issues, income, products and
profits shall be applied to pay the expenses of the use, operation, storage,
leasing, control, management, or disposition of the Trust Indenture Estate,
and of all maintenance and repairs, and to make all payments which the
Indenture Trustee may be required or may reasonably elect to make for any
taxes, assessments, insurance or other proper charges upon the Trust Indenture
Estate (including the employment of engineers and accountants to examine,
inspect and make reports upon the properties and books and records of the
Owner Trustee and the Lessee), and all other payments which the Indenture
Trustee may be required or authorized to make under any provision of this
Indenture, as well as just and reasonable compensation for the services of the
Indenture Trustee and of all persons properly engaged and employed for such
purposes by the Indenture Trustee; provided, that any excess amounts shall be
promptly distributed in accordance with Section 5.03 hereof.
(c) If an Indenture Event of Default shall have occurred and be
continuing and the Indenture Trustee shall be entitled to exercise remedies
hereunder, and subject to Article VIII hereof, the Indenture Trustee, either
with or without taking possession, and either before or after taking
possession, and without instituting any legal proceedings whatsoever, may
sell, assign, transfer and deliver the whole or, from time to time, to the
extent permitted by law, any part of the Trust Indenture Estate, or any part
thereof, or interest therein, at any private sale or public auction, with or
without demand, advertisement or notice, except as expressly provided for
below in this Section 7.03(c), for cash or credit or for other property, for
immediate or future delivery, and for such price or prices and on such terms
as the Indenture Trustee in its sole discretion may determine; provided, that
any such action shall be at the time lawful and that all mandatory legal
requirements shall be complied with. Any notice required pursuant to the
terms hereof in the case of a public sale, shall state the time and place
fixed for such sale. Any such public sale shall be held at such time or times
within ordinary business hours as the Indenture Trustee shall fix in the
notice of such sale. At any such sale, the Trust Indenture Estate may be sold
in one lot as an entirety or in separate lots. The Indenture Trustee shall
not be obligated to make any sale pursuant to such notice. The Indenture
Trustee may, without notice or publication, adjourn any public or private sale
or cause the same to be adjourned from time to time by announcement at the
time and place fixed for such sale, and any such sale may be made at any time
or place to which the same may be so adjourned without further notice or
publication. The Indenture Trustee may exercise such right of sale without
possession or production of the Certificates or proof of ownership thereof,
and as representative of the Holders may exercise such right without notice to
the Holders or without including the Holders as parties to any suit or
proceedings relating to the foreclosure of any part of the Trust Indenture
Estate. The Owner Trustee shall execute any and all such bills of sale,
assignments and other documents, and perform and do all other acts and things
requested by the Indenture Trustee in order to permit consummation of any sale
of the Trust Indenture Estate in accordance with this Section 7.03(c) and to
effectuate the transfer or conveyance referred to in the first sentence of
this Section 7.03(c). Notwithstanding any other provision of this Indenture,
the Indenture Trustee shall not sell the Trust Indenture Estate or any part
thereof unless the Certificates shall have been accelerated.
(d) To the extent permitted by applicable law, the Indenture Trustee
or any Holder may be a purchaser of the Trust Indenture Estate or any part
thereof or any interest therein at any sale thereof, whether pursuant to
foreclosure or power of sale or otherwise. The Indenture Trustee may apply
against the purchase price therefor the amount then due hereunder or under any
of the Certificates secured hereby and any Holder may apply against the
purchase price therefor the amount then due to it hereunder, under any other
Indenture Document or under the Certificates held by such Holder to the extent
that such portion of the purchase price as it would have received had it been
entitled to share any distribution thereof. The Indenture Trustee or any
Holder or nominee thereof shall, upon any such purchase, acquire good title to
the property so purchased, free of the Lien of this Indenture and, to the
extent permitted by applicable law, free of all rights of redemption in the
Owner Trustee or the Owner Participant in respect of the property so
purchased.
(e) Subject to Article VIII hereof, and effective upon the
occurrence and continuance of an Indenture Event of Default, the Owner Trustee
hereby irrevocably appoints and constitutes the Indenture Trustee the true and
lawful attorney-in-fact of the Owner Trustee in its name and stead and on its
behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Indenture, whether pursuant
to foreclosure or power of sale or otherwise, to execute and deliver all such
bills of sale, assignments and other instruments as the Indenture Trustee may
consider necessary or appropriate, with full power of substitution, and the
Owner Trustee hereby ratifies and confirms all that such attorney or any
substitute shall lawfully do by virtue hereof. Nevertheless, if so requested
by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and
confirm any such sale, assignment, transfer or delivery, by executing and
delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
(f) The Indenture Trustee shall, as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any
successor or nominee) for all or any part of the Trust Indenture Estate,
whether such receivership be incidental to a proposed sale of the Trust
Indenture Estate or the taking of possession thereof or otherwise, and the
Owner Trustee hereby consents to the appointment of such receiver and will not
oppose any such appointment. Any receiver appointed for all or any part of
the Trust Indenture Estate shall be entitled to exercise all of the rights and
powers of the Indenture Trustee with respect to the Trust Indenture Estate.
(g) Any sale of the Trust Indenture Estate or any part thereof or
any interest therein, whether pursuant to foreclosure or power of sale or
otherwise hereunder, shall be a perpetual bar against the Owner Trustee after
the expiration of the period, if any, during which the Owner Trustee shall
have the benefit of prepayment laws which may not be waived pursuant to
Section 7.13 hereof.
SECTION 7.04. Indenture Trustee May Prove Debt. If the Owner
Trustee shall fail to pay any amount payable hereunder or under the
Certificates, the Indenture Trustee, in its own name and as trustee of an
express trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceedings to judgment or final
decree, and may enforce any such judgment or final decree against the Owner
Trustee and collect in the manner provided by law out of the property of the
Owner Trustee wherever situated, the moneys adjudged or decreed to be payable;
provided, that any sale of any portion of the Trust Indenture Estate shall be
done in accordance with Section 7.03(c) hereof.
In case there shall be pending proceedings relative to the Owner
Trustee under the Bankruptcy Code or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or in case a receiver, assignee
or trustee in bankruptcy or reorganization, liquidator, sequestrator or
similar official shall have been appointed for or taken possession of the
Owner Trustee or its property, or in case of any other comparable judicial
proceedings relative to the Owner Trustee, or to the creditors or property of
the Owner Trustee, the Indenture Trustee, irrespective of whether the
principal of the Certificates shall then be due and payable as therein or
herein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal, interest and other amounts owing and unpaid in respect of the
Certificates or hereunder, and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee (including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence or bad faith) and of the Holders allowed in any judicial
proceedings relative to the Owner Trustee or to the creditors or
property of the Owner Trustee,
(b) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders in any election of a trustee or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
proceedings or person performing similar functions in comparable
proceedings, and
(c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Holders and of the Indenture Trustee on their
behalf;
and any trustee, receiver, or liquidator, custodian or other similar official
is hereby authorized by each of the Holders to make payments to the Indenture
Trustee, and, in the event that the Indenture Trustee shall consent to the
making of payments directly to the Holders, to pay to the Indenture Trustee
such amounts as shall be sufficient to cover reasonable compensation to the
Indenture Trustee, each predecessor Indenture Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Indenture Trustee and each predecessor
Indenture Trustee except as a result of negligence or willful misconduct.
Nothing contained herein shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Certificates or the rights of any Holder thereof, or to
authorize the Indenture Trustee to vote in respect of the claim of any Holder
in any such proceeding except, as aforesaid, to vote for the election of a
trustee in bankruptcy or similar person.
All rights of action and rights to assert claims under this
Indenture, or under any of the Certificates, may be enforced by the Indenture
Trustee without the possession of such Certificates on any trial or other
proceedings instituted by the Indenture Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment, subject to
the payment of the expenses, disbursements and compensation of the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents and
attorneys, shall be for the ratable benefit of the Holders, as provided
herein.
In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party) the Indenture Trustee shall be
held to represent all the Holders of the Certificates, and it shall not be
necessary to make any Holders parties to such proceedings.
SECTION 7.05. Remedies Cumulative. Each and every right, power and
remedy given to the Indenture Trustee in this Indenture shall be cumulative
and shall be in addition to every other right, power and remedy specifically
given herein or now or hereafter existing at law, in equity or by statute, and
each and every right, power and remedy whether specifically given herein or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by the Indenture Trustee or the Holders, and
the exercise or the beginning of the exercise of any power or remedy shall not
be construed to be a waiver of the right to exercise at the same time or later
any other right, power or remedy. No delay or omission by the Indenture
Trustee or of any Holder in the exercise of any right, remedy or power or in
the pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or
the Lessee or to be an acquiescence in any such default.
SECTION 7.06. Suits for Enforcement. If an Indenture Event of
Default has occurred, has not been waived and is continuing, the Indenture
Trustee may in its discretion and subject to its rights of appropriate
indemnification under Sections 7.08 and 9.03 and Article XI hereof proceed to
protect and enforce its rights and rights of the Holders by such appropriate
judicial proceedings as the Indenture Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant
or agreement contained in this Indenture or in aid of the exercise of any
power granted in this Indenture or to enforce any other legal or equitable
right vested in the Indenture Trustee or the Holders by this Indenture or by
law; provided, that any sale of any portion of the Trust Indenture Estate
shall be done in accordance with Section 7.03(c) hereof.
SECTION 7.07. Discontinuance of Proceedings. In case the Indenture
Trustee or any Holder shall have instituted any proceeding to enforce any
right, power or remedy under this Indenture by foreclosure, entry or
otherwise, and such proceeding shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Indenture Trustee or
such Holder, then the Owner Trustee, the Indenture Trustee, the Owner
Participant, the Holders and the Lessee shall, subject to any binding
determination in such proceeding, be restored to their former positions and
rights under this Indenture with respect to the Trust Indenture Estate, and
all rights, remedies and powers of the Indenture Trustee and the Holders
shall continue as if no such proceeding had been instituted.
SECTION 7.08. Limitations on Suits by Holders. No Holder of any
Certificate shall have any right by virtue or by availing of any provision of
this Indenture to institute any action or proceeding at law or in equity or in
bankruptcy or otherwise upon or under or with respect to this Indenture, or
for the appointment of a trustee, receiver, liquidator, custodian or other
similar official or for any other remedy hereunder, unless such Holder
previously shall have given to the Indenture Trustee written notice of an
Indenture Event of Default shall then have occurred and be continuing, as
hereinbefore provided, and the Holders of not less than 25% in aggregate
principal amount of Outstanding Certificates shall have made written request
upon the Indenture Trustee to institute such action or proceedings in its own
name as trustee hereunder and shall have offered to the Indenture Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby and the Indenture Trustee for 60
days after its receipt of such notice, request and offer of indemnity shall
have failed to institute any such action or proceedings and no direction
inconsistent with such written request shall have been given to the Indenture
Trustee pursuant to Section 7.10 hereof; it being understood and intended, and
being expressly covenanted by the Holder of each Certificate with every other
Holder of each other Certificate and the Indenture Trustee, that no one or
more Holders shall have any right in any manner whatever to affect, disturb or
prejudice the rights of any other Holder or the Lien of this Indenture or any
part of the Trust Indenture Estate or to obtain or seek to obtain priority
over or preference to any other such Holder or to enforce any right under this
Indenture, except in the manner provided herein and for the equal, ratable and
common benefit of all Holders. For the protection and enforcement of the
provisions of this Section, each and every Holder and the Indenture Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 7.09. Unconditional Right of Holders to Receive Principal,
Interest and Make-Whole Premium, and to Institute Certain Suits.
Notwithstanding any other provision in this Indenture and any provision of any
Certificate, the right of any Holder to receive payment of the principal of
and interest and Make-Whole Premium, if any, on such Certificate on or after
the respective due dates and in the manner expressed in such Certificate, or,
subject to Section 7.08 hereof, to institute suit for the enforcement of any
such payment on or after such respective dates as provided herein, shall not
be impaired or affected without the consent of such Holder.
SECTION 7.10. Control by Holders. The Majority in Interest of
Certificate Holders shall have the right to direct the Indenture Trustee as to
the time, method, and place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising any trust or power conferred
on the Indenture Trustee by this Indenture; provided that such direction shall
not be otherwise than in accordance with law and the provisions of this
Indenture and the Indenture Trustee shall have received, to the extent
provided in Sections 7.08 and 9.03 and Article XI hereof, such reasonable
indemnification as it may require against the costs, expenses and liabilities
to be incurred by the Indenture Trustee; and provided further that (subject to
the provisions of Section 9.02 hereof) the Indenture Trustee shall have the
right to decline to follow any such direction if the Indenture Trustee, being
advised by counsel, shall determine that the action or proceeding so directed
may not lawfully be taken or if the Indenture Trustee in good faith by its
board of directors, the executive committee, or a trust committee of directors
or Responsible Officers of the Indenture Trustee shall determine that the
action or proceedings so directed would involve the Indenture Trustee in
personal liability or if the Indenture Trustee in good faith shall so
determine that the actions or forebearances specified in or pursuant to such
direction shall be unduly prejudicial to the interests of Holders not joining
in the giving of said direction, it being understood that (subject to Section
9.02 hereof) the Indenture Trustee shall have no duty to ascertain whether or
not such actions or forebearances are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Indenture
Trustee in its discretion to take any action deemed proper by the Indenture
Trustee and which is not inconsistent with the direction by the Majority in
Interest of Certificate Holders.
SECTION 7.11. Waiver of Past Indenture Default. Upon written
instructions from the Majority in Interest of Certificate Holders, the
Indenture Trustee shall waive any past Indenture Default and its consequences
and upon any such waiver such Indenture Default shall cease to exist and any
Indenture Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Indenture, but no such waiver shall extend to
any subsequent or other Indenture Default or impair any right consequent
thereon; provided, however, that in the absence of written instructions from
all Holders, the Indenture Trustee shall not waive any Indenture Default (a)
in the payment of the principal of or Make-Whole Premium, if any, or interest
on, or other amounts due under, any Certificate then Outstanding, or (b) in
respect of a covenant or provision of this Indenture which, under Article XIII
hereof, cannot be modified or amended without the consent of each Holder.
SECTION 7.12. Notice of Indenture Default. The Indenture Trustee
shall transmit to the Owner Trustee, the Holders and to the Owner Participant
notice of any Indenture Defaults actually known to a Responsible Officer of
the Indenture Trustee, such notice to be transmitted by mail to the Holders
within 90 days, and to the Owner Trustee and the Owner Participant promptly
after the occurrence thereof, unless such Indenture Default shall have been
cured before the giving of such notice; provided that under no circumstances
shall the Indenture Trustee give such notice to the Holders until the
expiration of a period of 60 days from the occurrence of such Indenture
Default; and provided further that, except in the case of default in the
payment of the principal of or interest on or any other amount due under any
of the Certificates, the Indenture Trustee shall be protected in withholding
such notice to the Holders if and so long as the board of directors, the
executive committee, or a trust committee of directors or trustees and/or
Responsible Officers of the Indenture Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders.
SECTION 7.13. Waiver of Appraisement, etc.; Laws. The Owner Trustee
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any appraisement, valuation, stay, extension or
prepayment law wherever enacted, now or at any time hereafter in force, in
order to prevent or hinder the enforcement of this Indenture or the execution
of any power granted herein to the Indenture Trustee, or the absolute sale of
the Trust Indenture Estate, or any part thereof, or the possession thereof by
any purchaser at any sale under this Article VII; and the Owner Trustee for
itself and all who may claim under it, so far as it or any of them now or
hereafter lawfully may, hereby waives the benefit of all such laws. The Owner
Trustee for itself and all who may claim under it waives, to the extent that
it lawfully may, all right to have the property in the Trust Indenture Estate
marshalled upon any foreclosure hereof, and agrees that any court having
jurisdiction to foreclose this Indenture may order the sale of the Trust
Indenture Estate as an entirety.
If any law referred to in this Section 7.13 and now in force, of
which the Owner Trustee or its successors might take advantage despite this
Section 7.13, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the contract herein
contained or to preclude the application of this Section 7.13.
ARTICLE VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
SECTION 8.01. Certain Rights of Owner Trustee and Owner Participant.
(a) Subject to Section 13.01 hereof, without the consent of a Majority in
Interest of Certificate Holders, the respective parties to the Indenture
Documents may not modify, amend or supplement any of said agreements, or give
any consent, waiver, authorization or approval thereunder, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions thereof or of modifying in any manner the rights of the respective
parties thereunder; provided, however, that the actions specified in
subsection (b) of this Section 8.01 may be taken without the consent of the
Indenture Trustee or any Holder.
(b) Subject to the provisions of subsection (c) of this Section
8.01, the respective parties to the Indenture Documents, at any time and from
time to time, without the consent of the Indenture Trustee or of any Holder,
may:
(1) so long as no Indenture Event of Default shall have occurred and
be continuing, modify, amend or supplement the Lease, or give any waiver
with respect thereto, except that without compliance with subsection (a) of
this Section 8.01 the parties to the Lease shall not modify, amend or
supplement, or give any waiver for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions thereof or
of modifying in any manner the rights of the respective parties thereunder,
with respect to the following provisions of the Lease as in effect on the
effective date hereof: Article 2 (provided that, if in respect of the
Term, the result thereof would not be to shorten the Term of the Lease to a
period shorter than the period ending with the Maturity of any
Certificate), Section 3.03 (except to the extent such Section relates to
amounts payable (whether directly or pursuant to this Indenture) to Persons
other than Holders and the Indenture Trustee in its individual capacity),
Section 3.05, Section 3.06 (except insofar as it relates to the address or
account information of the Owner Trustee or the Indenture Trustee) (other
than as such Sections 3.03, 3.05 and 3.06 may be amended pursuant to
Section 3.04 of the Lease as in effect on the effective date hereof),
Section 5.01, Article 6, Article 10 (except that further restrictions may
be imposed on the Lessee), Article 11 (except that additional
requirements may be imposed on the Lessee), Article 13 (except for
Section 13.05 and except that additional insurance requirements may be
imposed on the Lessee), Article 14 (except in order to increase the
Lessee's liabilities or enhance the Lessor's rights thereunder), Article
15 (except in the case of an assignment by the Lessor in circumstances
where the Aircraft shall remain registrable under the Federal Aviation
Act), Section 16.01 (except to impose additional or more stringent
Events of Default), Article 17 (except to impose additional remedies),
Section 19.01 (except to impose additional requirements on the Lessee),
Section 20.01, Article 22, Section 23.01, Section 26.03 and any
definition of terms used in the Lease, to the extent that any
modification of such definition would result in a modification of the
Lease not permitted pursuant to this subsection (b); provided that the
parties to the Lease may take any such action without the consent of the
Indenture Trustee or any Holder to the extent such action relates to the
payment of amounts constituting, or the Owner Trustee's, the Owner
Participant's or the Lessee's rights or obligations with respect to,
Excepted Payments (other than the place, time and manner of payment of
Basic Rent constituting an Excepted Payment);
(2) modify, amend or supplement the Trust Agreement and any other
Indenture Document (other than the Lease and the Participation Agreement),
or give any consent, waiver, authorization or approval with respect
thereto, in each case only to the extent any such action shall not
adversely impact the interests of the Holders;
(3) modify, amend or supplement the Participation Agreement, or give
any consent, waiver, authorization or approval with respect thereto, except
that without compliance with subsection (a) of this Section 8.01 the
parties to the Participation Agreement shall not modify, amend or
supplement, or give any consent, waiver, authorization or approval for the
purpose of adding provisions to or changing in any manner or eliminating
any of the provisions thereof or of modifying in any manner the rights of
the respective parties thereunder, with respect to the following provisions
of the Participation Agreement as in effect on the effective date hereof:
Articles 6, 8 and 9 and Section 10.01(b) (insofar as such Articles 6, 8 and
9 and Section 10.01(b) relate to the Indenture Trustee, the Pass Through
Trustee and the Holders), Article 7 and Sections 15.01 and 17.11 and any
definition of terms used in the Participation Agreement, to the extent that
any modification of such definition would result in a modification of the
Participation Agreement not permitted pursuant to this subsection (b); and
(4) modify, amend or supplement any of said agreements in order to
cure any ambiguity, to correct or supplement any provisions thereof which
may be defective or inconsistent with any other provision thereof or of any
provision of this Indenture, or to make any other provision with respect to
matters or questions arising thereunder or under this Indenture which shall
not be inconsistent with the provisions of this Indenture, provided the
making of any such other provision shall not adversely affect the interests
of the Holders.
(c) No modification, amendment, supplement, consent, waiver,
authorization or approval with respect to the Lease or the Participation
Agreement, whether effected pursuant to subsection (a) or pursuant to
subsection (b) of this Section 8.01 and anything in such subsections or
elsewhere in this Indenture to the contrary notwithstanding, shall, without
the consent of the Holder of each Outstanding Certificate affected thereby,
(1) modify, amend or supplement the Lease in such a way as to extend
the time of payment of Basic Rent, Stipulated Loss Value or any other
amounts payable to the Indenture Trustee for its own account or for the
account of the Holders (subject in any event to Section 3.05 of the Lease)
upon the occurrence of an Event of Loss or Termination Value and any other
amounts payable to the Indenture Trustee for its own account or for the
account of the Holders (subject in any event to Section 3.05 of the Lease)
upon termination of the Lease with respect to the Aircraft payable under,
or as provided in, the Lease as in effect on the effective date hereof, or
reduce the amount of any installment of Basic Rent or Supplemental Rent so
that the same is less than the payment of principal of, and interest on the
Certificates and Make-Whole Premium, if any, as the case may be, to be made
from such installment of Basic Rent or Supplemental Rent, or reduce the
aggregate amount of Stipulated Loss Value, or any other amounts payable
under, or as provided in, the Lease as in effect on the effective date
hereof upon the occurrence of an Event of Loss so that the same is less
than the accrued interest on and the principal as of the Loss Payment Date,
of the Certificates at the time Outstanding or reduce the amount of
Termination Value and any other amounts payable under, or as provided in,
the Lease as in effect on the effective date hereof upon termination of the
Lease with respect to the Aircraft so that the same is less than the
accrued interest on and principal as of the Lease Termination Date and
Make-Whole Premium, if any, of Certificates at the time Outstanding, or
(2) modify, amend or supplement the Lease in such a way as to, or
consent to any assignment of the Lease or give any consent, waiver,
authorization or approval which would, release the Lessee from its
obligations in respect of payment of Basic Rent or Supplemental Rent, or
Stipulated Loss Value and any other amounts payable to the Indenture
Trustee for its own account or the account of the Holders (subject in any
event to 3.05 of the Lease) upon the occurrence of an Event of Loss, or
Termination Value and any other amounts payable to the Indenture Trustee
for its own account or the account of the Holders (subject in any event to
3.05 of the Lease) of the Lease with respect to the Aircraft, payable
under, or as provided in, the Lease as in effect on the effective date
hereof, except for any such assignment pursuant to Section 2.12 hereof, and
except as provided in the Lease as in effect on the effective date hereof.
(d) At all times so long as this Indenture is in effect, the consent
of the Owner Trustee (at the direction of the Owner Participant) shall be
required in order (i) to amend, modify or supplement the Lease or any other
Operative Document to which the Owner Trustee is a party or to waive
compliance by the Lessee with any of its obligations thereunder, (ii) to grant
any consent requested under the Lease and (iii) to exercise discretion on the
Lessee's option to substitute a replacement airframe or Replacement Engines
after an Event of Loss pursuant to the Lease.
Notwithstanding the foregoing, but subject always to the provision of Section
15.05 hereof, the Indenture Trustee shall at all times have the right, to the
exclusion of the Owner Trustee and the Owner Participant, to (A) declare the
lease to be in default under Article 17 (other than with respect to Excepted
Payments) thereof and (B) subject only to the provisions of this Indenture
exercise the remedies set forth in such Article 17 of the Lease (other than in
connection with Excepted Payments) and in Article 7 hereof.
Nothing in this Indenture shall be deemed to prohibit the Owner
Participant or the Owner Trustee from making demand on the Lessee for, or from
commencing an action at law to obtain the payment of, or from receiving
payment of, any Excepted Payment; provided, however, that if the Owner Trustee
is proceeding under the Lease, the Owner Trustee shall proceed pursuant to
Section 17.01(a)(v), and only Section 17.01(a)(v), of the Lease.
SECTION 8.02. Owner Participant's Right to Elect to Prepay or
Purchase the Certificates. (a) If (i) an Event of Default shall have occurred
and be continuing for more than 180 days or the Certificates shall have become
due and payable pursuant to Section 7.02(b) or (c) hereof or (ii) an Event of
Default shall have occurred and be continuing for not more than 180 days and
the Certificates shall not have become due and payable pursuant to Section
7.02(b) or (c) hereof, the Owner Participant (or the Owner Trustee on behalf
of the Owner Participant) may, but shall be under no obligation to, do either
of the following:
(1) direct the Owner Trustee to cause the prepayment of all, but not
less than all, of the Certificates then Outstanding by notifying the
Indenture Trustee of such election, which notice in order to be effective
shall state that it is irrevocable and shall designate a Prepayment Date
which shall be a Rent Payment Date or monthly anniversary thereof and which
shall be not less than 30 days after the date of such notice on which the
Owner Trustee shall, in the manner provided for in Section 6.04 hereof,
deposit the sum of amounts contemplated by paragraph "first" under Section
5.03 and the aggregate Prepayment Price of all such Certificates with the
Indenture Trustee. If such payment by the Owner Trustee to the Indenture
Trustee is made, the Certificates shall cease to accrue interest from and
after the Prepayment Date, and after distribution of such payment to the
Holders, the Indenture Trustee shall release the Trust Indenture Estate
from the Lien of this Indenture; or
(2) purchase all, but not less than all, of the Outstanding
Certificates by notifying the Indenture Trustee of such election, which
notice in order to be effective shall state that it is irrevocable and
shall designate a date which shall be a Rent Payment Date or monthly
anniversary thereof and which shall be not less than 30 days after the date
of such notice on which the Owner Trustee shall pay to the Indenture
Trustee an amount equal to the aggregate unpaid principal amount of all
Outstanding Certificates, together with accrued interest on such amount to
the date of purchase, the aggregate amount of any Make-Whole Premium
applicable to each Outstanding Certificate (if such purchase occurs prior
to the Premium Termination Date for such Outstanding Certificate) in the
case of a purchase pursuant to clause (a)(ii) above, plus all other sums
due any Holder or the Indenture Trustee hereunder or under the
Participation Agreement or the Lease. Upon receipt of the Indenture
Trustee of such amount, each Holder will be deemed, whether or not
Certificates shall have been delivered to the Indenture Trustee on such
date, to have thereupon sold, assigned, transferred and conveyed (and shall
promptly take such actions as the Owner Participant shall reasonably
request to evidence such sale, assignment, transfer and conveyance) to the
Owner Participant (without recourse or warranty of any kind except for its
own acts), all of the right, title and interest of such Holder in and to
the Trust Indenture Estate and this Indenture and all Certificates held by
such Holder and the former Holders shall not be entitled to receive any
interest on the principal amount of such Certificates after the purchase
date, and the Owner Participant shall be deemed to have assumed (and shall
promptly take such actions as any Holder shall reasonably request to
evidence such assumption) all of such Holder's obligations under the
Participation Agreement and this Indenture arising subsequent to such sale.
If the Owner Trustee shall so request, such Holder will comply with all the
provisions of Section 2.06 of this Indenture to enable new Certificates to
be issued to the Owner Participant in such authorized denominations as the
Owner Participant shall request. All charges and expenses required
pursuant to Section 2.06 hereof in connection with the issuance of any such
new Certificates shall be borne by the Owner Participant.
(b) From and after the deposit by the Owner Trustee of the
applicable Prepayment Price or purchase price with the Indenture Trustee
pursuant to Section 8.02(a) hereof, the Owner Trustee shall be entitled to
exercise all remedies of the Indenture Trustee under Article VII hereof as
well as of the Lessor under the Lease.
SECTION 8.03. Certain Rights of Owner Participant. (a) If (A)
there shall occur an Event of Default under the Lease as a result of the
Lessee's failure to make any payment of an installment of Basic Rent, and (B)
the Owner Trustee shall have paid or caused to be paid on or prior to the date
which is 15 Business Days after such Event of Default all principal and
interest on the Certificates then due (as well as any interest on overdue
principal and (to the extent permitted by applicable law) interest), but not
including any principal or interest becoming due on account of such Event of
Default, then the failure of the Lessee to make the payment of such
installment of Basic Rent or of interest on account of such installment's
being overdue shall not constitute or result in an Indenture Event of Default
under this Indenture and any declaration based solely on the same shall be
deemed to be automatically rescinded. Nothing contained in the preceding
sentence shall be deemed to entitle the Owner Trustee to exercise any rights
and powers or pursue any remedies pursuant to Article 17 of the Lease or
otherwise except as set forth in this Indenture, and except that the Owner
Trustee or the Owner Participant may attempt to recover any amount paid by it
or them under this Indenture by demanding of the Lessee payment of such
amount, or by commencing an action at law against the Lessee for the payment
of such amount or taking appropriate action in a pending action at law against
the Lessee pursuant to Section 17.01(a)(v), but only said Section 17.01(a)(v),
of the Lease. Upon curing any such Event of Default pursuant to this Section
8.03, the Owner Trustee or the Owner Participant, as the case may be, shall,
so long as no Indenture Event of Default shall have occurred and be
continuing, be subrogated on an unsecured basis to all the rights of the
Indenture Trustee under the Lease in respect of the payment giving rise to
such Event of Default, and any right to any interest in respect of the same,
and shall be entitled to any payment of Basic Rent (or interest thereon)
actually made by the Lessee in respect of such cured payment upon receipt by
the Indenture Trustee; provided that no such amount shall be paid to the Owner
Trustee or the Owner Participant until all amounts then due and payable to
each Certificate Holder hereunder and thereunder shall have been paid in full
and no Indenture Event of Default shall have occurred and be continuing.
Notwithstanding anything in this Indenture or the Lease to the contrary, the
Owner Participant and the Owner Trustee collectively, shall not be entitled to
cure more than six (6) Events of Default (no more than three (3) of which may
be consecutive) occasioned by defaults in the payment of Basic Rent.
(b) If (A) there shall occur an Event of Default under the Lease for
any reason other than the Lessee's failure to make any payment of an
installment of Basic Rent and (B) the Owner Trustee shall have taken or caused
to be taken such action necessary to cure and shall have cured such Event of
Default prior to the date which is 15 Business Days after such Event of
Default, then the failure of the Lessee to perform such covenant, condition or
agreement, the observance or performance of which was accomplished by the
Owner Trustee hereunder shall not constitute or result in an Indenture Event
of Default under this Indenture and any declaration based solely on the same
shall be deemed to be automatically rescinded. Nothing contained in the
preceding sentence shall be deemed to entitle the Owner Trustee or the Owner
Participant to exercise any rights and powers or pursue any remedies pursuant
to Article 17 of the Lease or otherwise except as set forth in this Indenture,
and except that the Owner Trustee or the Owner Participant may attempt to
recover any amount paid by it or them in effecting such cure by demanding of
the Lessee payment of such amount, plus any interest due, or by commencing an
action at law against the Lessee for the payment of such amount or taking
appropriate action in a pending action at law against the Lessee pursuant to
Section 17.01(a)(v), but only said Section 17.01(a)(v), of the Lease. Upon
curing any such Event of Default pursuant to this Section 8.03(b), the Owner
Trustee or the Owner Participant, as the case may be, shall be subrogated to
all the rights of the Indenture Trustee under the Lease in respect of the
payment, agreement or covenant giving rise to such Event of Default, and any
right to any interest in respect of the same, and shall be entitled to any
payment or other performance upon receipt by the Indenture Trustee; provided
that no such amount shall be paid to the Owner Trustee or the Owner
Participant until all amounts then due and payable to each Certificate Holder
hereunder and thereunder shall have been paid in full and no Indenture Event
of Default shall have occurred and be continuing.
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
SECTION 9.01. Acceptance of Trusts. The Indenture Trustee hereby
accepts the trusts imposed upon it by this Indenture, and covenants and agrees
to perform the same as expressed herein and agrees to receive and disburse all
moneys constituting part of the Trust Indenture Estate in accordance with the
terms hereof.
SECTION 9.02. Duties and Responsibilities of the Indenture Trustee;
During an Indenture Event of Default; Prior to an Indenture Event of Default.
(a) The Indenture Trustee, prior to the occurrence of an Indenture Event of
Default and after the curing or waiving of all Indenture Events of Default
which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Indenture
Event of Default has occurred (which has not been cured or waived) the
Indenture Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the circumstances in the conduct
of his own affairs. No provision of this Indenture shall be construed to
relieve the Indenture Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Indenture Event of Default and
after the curing or waiving of all Indenture Events of Default which may have
occurred:
(x) the duties and obligations of the Indenture trustee shall be
determined solely by the express provisions of this Indenture, and the
Indenture Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read in to this Indenture against
the Indenture Trustee; and
(y) in the absence of bad faith on the part of the Indenture
Trustee, the Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
statements, certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture; but in the case of any such
statements, certificate or opinions which by any provision hereof are
specifically required to be furnished to the Indenture Trustee, the Indenture
Trustee shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture;
(ii)the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Responsible Officers
of the Indenture Trustee, unless it shall be proved that the Indenture Trustee
was negligent in ascertaining the pertinent facts; and
(iii)the Indenture Trustee shall not be liable with respect to any
action taken or not taken by it in good faith in accordance with the direction
of the Holders of not less than a majority in aggregate principal amount of
Outstanding Certificates relating to the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred upon the Indenture Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Indenture Trustee shall have determined
in good faith that the repayment of such funds or adequate indemnity against
such liability is not reasonably assured to it.
The Indenture Trustee will execute and the Owner Trustee will file or
cause to be filed such continuation statements with respect to financing
statements relating to the security interest created hereunder in the Trust
Indenture Estate as may be specified from time to time in written instructions
of the Holders of not less than 25% in aggregate principal amount of
Certificates (which instructions may, by their terms, be operative only at a
future date and which shall be accompanied by the execution form of such
continuation statement so to be filed); provided that, notwithstanding the
foregoing, the Indenture Trustee may execute and file or cause to be filed any
financing statement which it from time to time deems appropriate.
(b) If any Event of Default shall have occurred and be continuing
and, after the latest date on which the Owner Trustee may cure such Event of
Default pursuant to Section 8.03 hereof, on request of the Holders of not less
than 25% in aggregate principal amount of Outstanding Certificates and subject
to indemnification, to the extent provided in Sections 7.08 and 9.03 and
Article XI hereof, as it may require against the costs, expenses and
liabilities to be incurred, the Indenture Trustee shall exercise such remedies
under Article 17 of the Lease as shall be specified in such request.
(c) The Indenture Trustee agrees that it will, in its individual
capacity and at its own cost and expense (but without any right of indemnity
in respect of any such cost or expense under Article XI hereof) promptly take
such action as may be necessary duly to discharge all Liens on any part of the
Trust Indenture Estate which result from claims against it in its individual
capacity not related to the administration of the Trust Indenture Estate or
any other transaction pursuant to this Indenture or any document included in
the Trust Indenture Estate.
(d) The Indenture Trustee will execute and deliver to the Lessee for
filing in accordance with Section 18 of the Lease any properly presented
document, instrument or financing or continuation statement specified in any
opinion delivered pursuant to Section 6.03(e) of the Participation Agreement.
The Indenture Trustee may rely on the act of presentation of any such
document, instrument, financing or continuation statement as evidencing the
fact that it is properly prepared and presented, provided that the Indenture
Trustee shall promptly correct any error in any such document, instrument,
financing or continuation statement of which a Responsible Officer of the
Indenture Trustee has actual knowledge.
(e) The Indenture Trustee will furnish to each Holder promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and other instruments furnished to
the Indenture Trustee, to the extent that the same shall not have been
otherwise furnished to such Holder pursuant to this Indenture or to the extent
the Indenture Trustee does not reasonably believe that the same shall have
been furnished by the Lessee directly to such Holder.
SECTION 9.03. Certain Rights of the Indenture Trustee. Subject to
Section 9.02 hereof:
(a) the Indenture Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, Officers' Certificate or any
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, note, coupon, security or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request, direction, order or demand of the Owner Trustee
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed) upon which the Indenture Trustee may rely to prove
or establish a matter set forth therein;
(c) the Indenture Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(d) the Indenture Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Indenture at the request,
order or direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Indenture Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred therein or thereby;
(e) the Indenture Trustee shall not be liable for any action taken
or omitted by it in good faith and believed by it to be authorized or
within the discretion, rights or powers conferred upon it by this
Indenture;
(f) prior to the occurrence of an Indenture Event of Default
hereunder and after the curing or waiving of all Indenture Events of
Default, the Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
appraisal, bond, debenture, note, coupon, security, or other paper or
document unless requested in writing to do so by the Majority in Interest
of Certificate Holders; provided that, if the payment within a reasonable
time to the Indenture Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation is, in the opinion
of the Indenture Trustee, not reasonably assured to the Indenture Trustee
by the security afforded to it by the terms of this Indenture, the
Indenture Trustee may require reasonable indemnity against such expenses or
liabilities as a condition to proceeding; the reasonable expenses of every
such examination shall be paid by the Owner Trustee or, if paid by the
Indenture Trustee or any predecessor trustee, shall be repaid by the Owner
Trustee upon demand; and
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ and the Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of
any such agent or attorney appointed with due care by it hereunder.
SECTION 9.04. Indenture Trustee Not Responsible for Recitals,
Disposition of Certificates or Application of Proceeds Thereof. The Indenture
Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates, except the Indenture Trustee's
certificates of authentication. The Indenture Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Certificates. The Indenture Trustee shall not be accountable for the use or
application by the Owner Trustee of any of the Certificates or of the proceeds
thereof.
SECTION 9.05. Indenture Trustee and Agents May Hold Certificates;
Collections, etc. The Indenture Trustee or any agent of the Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not the Indenture
Trustee or such agent and may otherwise deal with the Owner Trustee and
receive, collect, hold and retain collections from the Owner Trustee with the
same rights it would have if it were not the Indenture Trustee or such agent.
SECTION 9.06. Moneys Held by Indenture Trustee. Subject to Sections
5.08 hereof and 14.04 hereof, all moneys received by the Indenture Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated from other
funds except to the extent required by mandatory provisions of law. Neither
the Owner Trustee nor, subject to Section 5.08 hereof, the Indenture Trustee
nor any agent thereof shall be under any liability for interest on any moneys
received by it hereunder.
SECTION 9.07. Right of Indenture Trustee to Rely on Officers'
Certificate, etc. Subject to Sections 9.02 and 9.03 hereof, whenever in the
administration of the trusts of this Indenture the Indenture Trustee shall
deem it necessary or desirable that a matter be proved or established prior to
taking or suffering or omitting any action hereunder, such matter (unless
other evidence in respect thereof be specifically prescribed herein) may, in
the absence of bad faith on the part of the Indenture Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to
the Indenture Trustee, and such certificate, in the absence of bad faith on
the part of the Indenture Trustee, shall be full warrant to the Indenture
Trustee for any action taken, suffered or omitted by it under the provisions
of this Indenture upon the faith thereof.
SECTION 9.08. Replacement Airframes and Replacement Engines. At any
time and from time to time any Airframe or Engine which has been subject to an
Event of Loss and may, or is required to, be replaced under Section 10.03,
11.03 or 11.04 of the Lease by a replacement airframe or Replacement Engine,
as the case may be, shall be replaced in accordance with the provisions of
this Section 9.08 and the provisions of said Sections of the Lease, the Owner
Trustee shall, from time to time, direct the Indenture Trustee to execute and
deliver to or as directed in writing by the Owner Trustee an appropriate
instrument releasing such Airframe and/or Engine as appropriate from the Lien
of this Indenture and the Indenture Trustee shall execute and deliver such
instrument as aforesaid without recourse or warranty, but only upon receipt by
or deposit with the Indenture Trustee of the following:
(1) A written request from the Owner Trustee requesting such release
and specifically describing the Airframe and/or Engine(s) to be so released.
(2) A certificate signed by a duly authorized officer of the Lessee
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe subject to the Event of Loss
including the manufacturer, model, FAA registration number (or other
applicable registration information) and manufacturer's serial
number;
(ii)a description of the replacement airframe, including the
manufacturer, model, FAA registration number (or other applicable
registration information) and manufacturer's serial number;
(iii)that on the date of the Indenture and Security Agreement
Supplement relating to the replacement airframe the Owner Trustee
will be the legal owner of and have good and marketable title to
such replacement airframe free and clear of all Liens except Liens
permitted under Section 6.01 of the Lease, that such replacement
airframe will on such date be in at least as good operating
condition and repair as required by the terms of the Lease, and
that such replacement airframe has been or, substantially
concurrently with such replacement, will be duly registered in the
name of the Owner Trustee under the Aviation Act or under the law
then applicable to the registration of the Airframe subject to the
Event of Loss and that an airworthiness certificate has been duly
issued under the Aviation Act (or such other applicable law) with
respect to such replacement airframe and that such registration
and certificate is, or will be, in full force and effect, and that
the Lessee will have the full right and authority to use such
replacement airframe;
(iv)that the insurance required by Article 13 of the Lease is in full
force and effect with respect to such replacement airframe and all
premiums then due thereon have been paid in full;
(v) that the replacement airframe is of the same or an improved make
or model as the Airframe requested to be released from this
Indenture;
(vi)that the value of the replacement airframe as of the date of such
certificate is not less than the value of the Airframe requested to
be released (assuming such Airframe was in the condition and repair
required to be maintained under the Lease);
(vii)that no Event of Default has occurred and is continuing or would
result from the making and granting of the request for release and
the addition of a replacement airframe;
(viii)that the release of the Airframe subject to the Event of Loss
will not impair the security of the Indenture in contravention of any
of the provisions of this Indenture;
(ix)that upon such replacement, the Lien of this Indenture will apply
to the replacement airframe and such Lien will be a first priority
security interest in favor of the Indenture Trustee; and
(x) that each of the conditions specified in Section 11.03 of the
Lease with respect to such replacement airframe has been satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine subject to the Event of Loss
including the manufacturer's serial number;
(ii)a description of the Replacement Engine including the
manufacturer's name, the engine model and serial number;
(iii)that on the date of the Indenture and Security Agreement
Supplement relating to the Replacement Engine the Owner Trustee will
be the legal owner of such Replacement Engine free and clear of all
Liens except Liens permitted under Section 6.01 of the Lease, and
that such Replacement Engine will on such date be in at least as good
operating condition and repair as required by the terms of the Lease;
(iv)that the value of the Replacement Engine as of the date of such
certificate is not less than the value of the Engine to be released
(assuming such Engine was in the condition and repair required to be
maintained under the Lease);
(v) that the release of the Engine subject to the Event of Loss will
not impair the security of the Indenture in contravention of any of
the provisions of this Indenture;
(vi)that upon such replacement, the Lien of this Indenture will apply
to the Replacement Engine; and
(vii)that each of the conditions specified in Section 10.03, 11.03 or
11.04 of the Lease with respect to such Replacement Engine has been
satisfied.
(3) The appropriate instruments (i) transferring to the Owner
Trustee title to the replacement airframe or Replacement Engine to be received
as consideration for the Airframe or Engine to be released and (ii) assigning
to the Owner Trustee the benefit of all manufacturer's and vendor's
warranties, if any, generally available with respect to such replacement
airframe or Replacement Engine, and an Indenture and Security Agreement
Supplement subjecting such replacement airframe or Replacement Engine to the
Trust Agreement and to the Lien of this Indenture.
(4) A certificate from a firm of independent aircraft appraisers of
national standing satisfactory to the Indenture Trustee and the Owner Trustee
confirming the accuracy of the information set forth in clause (2)A.(vi) of
this Section 9.08.
(5) The opinion of Davis Polk & Wardwell, special counsel to the
Lessee, or other counsel reasonably satisfactory to the Indenture Trustee,
stating that:
(i) the certificates, opinions and other instruments and/or property
which have been or are therewith delivered to and deposited with the
Indenture Trustee conform to the requirements of this Indenture and the
Lease and, upon the basis of such application, the property so sold or
disposed of may be properly released from the Lien of this Indenture and
all conditions precedent herein provided for relating to such release have
been complied with; and
(ii)the replacement airframe or Replacement Engine has been validly
subjected to the Lien of this Indenture and covered by the Lease, the
instruments subjecting such replacement airframe or Replacement Engine to
the Lease and to the Lien of this Indenture, as the case may be, have been
duly filed for recordation pursuant to the Aviation Act or any other law
then applicable to the registration of the Aircraft, and no further action,
filing or recording of any document is necessary or advisable in order to
establish and perfect the title of the Owner Trustee to and the Lien of
this Indenture on such replacement airframe or Replacement Engine and the
Indenture Trustee would be entitled to the benefits of Section 1110 of the
Bankruptcy Code with respect to such replacement airframe or Replacement
Engine, provided, that such opinion need not be to the effect specified in
the foregoing clause to the extent that the benefits of such Section 1110
would not have been, by reason of a change in law or governmental
interpretation thereof after the date hereof, available to the Indenture
Trustee with respect to the Aircraft immediately prior to such substitution
had such Event of Loss not occurred.
SECTION 9.09. Indenture and Security Agreement Supplement for
Replacements. In the event of the substitution of a replacement airframe or a
Replacement Engine as contemplated by Section 10.03 or Article 11 of the
Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of
the Holders and the Lessee, subject to fulfillment of the conditions precedent
and compliance by the Lessee with its obligations set forth in Section 10.03
or Article 11 of the Lease, to execute and deliver an Indenture and Security
Agreement Supplement as contemplated by Section 9.08(3) hereof and, provided
no Event of Default shall have occurred and be continuing, execute and deliver
to the Lessee an appropriate instrument releasing the Airframe or Engine being
replaced from the Lien of this Indenture.
SECTION 9.10. Effect of Replacement. In the event of the
substitution of a replacement airframe or a Replacement Engine as contemplated
by Section 10.01 or Article 11 of the Lease and Section 9.08 hereof, all
provisions of this Indenture relating to the Airframe or Engine or Engines
being replaced shall be applicable to such replacement airframe or Replacement
Engine or Engines with the same force and effect as if such replacement
airframe or Replacement Engine or Engines were the same Airframe or engine or
engines, as the case may be, as the Airframe or Engine or Engines being
replaced but for the Event of Loss with respect to the Airframe or Engine or
Engines being replaced.
SECTION 9.11. Compensation. The Owner Trustee covenants and agrees
to pay, and the Indenture Trustee shall be entitled to receive, reasonable
compensation and payment or reimbursement for its reasonable advances,
expenses and disbursements (including the reasonable compensation and expenses
and disbursements of its counsel, agents and other persons not regularly in
its employ) in connection with its services rendered hereunder or in any way
relating to or arising out of the administration of the Trust Indenture Estate
and shall have a priority claim on the Trust Indenture Estate for the payment
of such compensation, advances, expenses and disbursements to the extent that
such compensation, advances, expenses and disbursements shall not be paid by
the Lessee, and shall have the right to use or apply any moneys held by it
hereunder in the Trust Indenture Estate toward such payments; provided that,
so long as the Lease is in effect, the Indenture Trustee shall not make any
claim for payment under this Section 9.11 against the Owner Trustee without
first making demand on the Lessee for payment of such claim. The Indenture
Trustee agrees that it shall have no right against any Holder, FSBU or the
Owner Participant for any fee as compensation for its services as trustee
under this Indenture.
ARTICLE X
CONCERNING THE HOLDERS
SECTION 10.01. Evidence of Action Taken by Holders. (a) Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in
writing, and, except as otherwise expressly provided herein, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee and, if expressly required herein, to the Owner Trustee.
Proof of execution of any instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Sections
9.02 and 9.03 hereof) conclusive in favor of the Indenture Trustee and the
Owner Trustee, if made in the manner provided in this Article.
(b) For the purpose of determining the Holders entitled to vote or
consent to any direction, waiver or other action of such Holders under Section
7.10 or 7.11 hereof, the Lessee may set a record date for such vote or consent
by specifying such record date in an Officer's Certificate delivered to the
Indenture Trustee. Such record date shall be a date not more than 15 days
prior to the first solicitation of such vote or consent.
SECTION 10.02. Proof of Execution of Instruments and of Holding of
Certificates. Subject to Sections 9.02 and 9.03 hereof, the execution of any
instrument by a Holder or his agent or proxy may be proved in accordance with
such reasonable rules and regulations as may be prescribed by the Indenture
Trustee. The holding of Certificates shall be proved by the Register or by a
certificate of the
Registrar.
SECTION 10.03. Holders to Be Treated as Owners. Prior to due
presentment for registration of transfer of any Certificate, the Owner
Trustee, the Indenture Trustee, any agent of the Owner Trustee or the
Indenture Trustee, the Paying Agent, if any, the Registrar and the Lessee may
deem and treat the Person in whose name such Certificate shall be registered
upon the Register as the absolute owner of such Certificate (whether or not
such Certificate shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of and, subject to the provisions of this
Indenture, interest on such Certificate and for all other purposes; and
neither the Owner Trustee nor the Indenture Trustee (nor any agent of the
Owner Trustee or the Indenture Trustee) nor the Paying Agent, if any, nor the
Registrar nor the Lessee shall be affected by any notice to the contrary. All
such payments so made to any such person, or upon his order, shall be valid,
and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Certificate.
SECTION 10.04. Certificates Owned by Owner Trustee and the Lessee
Deemed Not Outstanding. In determining whether the Holders of the requisite
aggregate principal amount of Certificates have concurred in any direction,
consent or waiver under this Indenture, Certificates which are owned by the
Owner Trustee, the Owner Participant, FSBU, the Lessee or by any Affiliate
thereof shall be disregarded and deemed not to be Outstanding for the purpose
of any such determination; provided that for the purpose of determining
whether the Indenture Trustee shall be protected in relying on any such
direction, consent or waiver, only if a Responsible Officer of the Indenture
Trustee has actual knowledge that certain Certificates are so owned by any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Owner Trustee, the Owner Participant, FSBU
shall such Certificates be so disregarded; and provided further that if all
Certificates which would be deemed Outstanding in the absence of the foregoing
provision are owned by the Owner Trustee or the Owner Participant or by any
Affiliate thereof, then such Certificates shall be deemed Outstanding for the
purpose of any such determination. Certificates so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Indenture Trustee the pledgee's right
so to act with respect to such Certificates and that the pledgee is not the
Owner Trustee, the Owner Participant, FSBU or the Lessee or any Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with the Owner Trustee, the Owner Participant, FSBU
or the Lessee. In case of a dispute as to such right, the advice of
counsel shall be full protection in respect of any decision made by the
Indenture Trustee in accordance with such advice, unless the Lessee, the
Owner Trustee, FSBU, or the Owner Participant are actually named in the
Register. Upon request of the Indenture Trustee, the Owner Trustee, the
Owner Participant, FSBU and the Lessee shall furnish to the Indenture
Trustee promptly an Officers' Certificate listing and identifying all
Certificates, if any, known by the Owner Trustee, the Owner Participant,
FSBU or the Lessee to be owned or held by or for the account of any of the
above-described persons; and, subject to Sections 9.02 and 9.03 hereof, the
Indenture Trustee shall be entitled to accept such Officers' Certificate as
conclusive evidence of the facts set forth therein and of the fact that all
Certificates not listed therein are outstanding for the purpose of any such
determination.
SECTION 10.05. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided
in Section 10.01, of the taking of any action by the Holders of the percentage
in aggregate principal amount of the Certificates specified in this Indenture
in connection with such action, any Holder of a Certificate, the serial number
of which is shown by the evidence to be included among the serial numbers of
the Certificates the Holders of which have consented to such action, may, by
filing written notice at the Corporate Trust Office and upon proof of holding
as provided in this Article, revoke such action so far as concerns such
Certificate. Except as aforesaid, any such action taken by the Holder shall
be conclusive and binding upon such Holder and upon all future Holders and
owners of such Certificate and of any Certificates issued in exchange or
substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon any such Certificate or otherwise. Any action taken by
the Holders of the percentage in aggregate principal amount of the
Certificates specified in this Indenture in connection with such action shall
be conclusively binding upon the Owner Trustee, the Indenture Trustee and the
Holders of all the Certificates.
Section 10.06. ERISA Plan Prohibition. No employee benefit plan
subject to Title I of ERISA, or individual retirement account or plan subject
to Section 4975 of the Code, or any trust established under any such plan or
account (hereinafter collectively referred to as an "ERISA Plan"), may acquire
or hold any of the Certificates (or participation interest therein). The
purchase by any Person of any Certificate (or participation interest therein)
constitutes a representation by such Person to the Owner Trustee, the Lessee,
the Owner Participant and the Indenture Trustee that such Person is not an
ERISA Plan and that such Person is not acquiring, and has not acquired, such
Certificate (or participation interest therein) with assets of an ERISA Plan.
Any transfer of a Certificate not permitted by this paragraph shall be void,
and the transferor shall retain all the benefits of such Certificate under the
Indenture, and the transferee shall not be entitled to any benefits under the
Indenture.
ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
The Owner Trustee, not individually but solely in its capacity as
Owner Trustee under the Trust Agreement, hereby agrees, whether or not any of
the transactions contemplated hereby shall be consummated, to assume liability
for, and does hereby indemnify, protect, save and keep harmless the Indenture
Trustee, in its individual capacity, and its successors, assigns, agents and
servants solely from the Lessor's Estate, with respect to the claims of the
Indenture Trustee for payment or reimbursement under Section 9.11 hereof and
from and against any and all liabilities, obligations, losses, damages,
penalties, taxes (excluding any taxes payable by the Indenture Trustee on or
measured by any compensation received by the Indenture Trustee for its
services under this Indenture), claims, actions, suits, costs, expenses or
disbursements (including legal fees and expenses) of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the
Indenture Trustee (whether or not also agreed to be indemnified against by any
other person under any other document) in any way relating to or arising out
of this Indenture, or any other Indenture Documents or the enforcement of any
of the terms of any thereof, or in any way relating to or arising out of the
manufacture, purchase, acceptance, nonacceptance, rejection, ownership,
delivery, lease, possession, use, operation, condition, sale, return or other
disposition of the Aircraft or any Engine (including, without limitation,
latent and other defects, whether or not discoverable, and any claim for
patent, trademark or copyright infringement), or in any way relating to or
arising out of the administration of the Trust Indenture Estate or the action
or inaction of the Indenture Trustee hereunder, except only (a) in the case of
willful misconduct or gross negligence of the Indenture Trustee in the
performance of its duties hereunder, (b) as may result from the inaccuracy of
any representation or warranty of the Indenture Trustee in the Participation
Agreement, (c) as otherwise provided in Section 9.02(c) hereof or (d) as
otherwise excluded by the terms of Article 8 or Article 9 of the Participation
Agreement from the Lessee's indemnity to the Indenture Trustee under said
Articles; provided that so long as the Lease is in effect, the Indenture
Trustee shall not make any claim under this Article XI for any claim or
expense indemnified by the Lessee under the Participation Agreement without
first making demand on the Lessee for payment of such claim or expense. The
Indenture Trustee shall be entitled to indemnification, from the Trust
Indenture Estate, for any liability, obligation, loss, damage, penalty, claim,
action, suit, cost, expense or disbursement indemnified against pursuant to
this Article XI to the extent not reimbursed by the Lessee or others, but
without releasing any of them from their respective agreements of
reimbursement; and to secure the same the Indenture Trustee shall have a prior
Lien on the Trust Indenture Estate. The indemnities contained in this Article
XI shall survive the termination of this Indenture and the resignation or
removal of the Indenture Trustee. Upon payment in full by the Owner Trustee
of any indemnity pursuant to this Article XI, the Owner Trustee shall, so long
as no Indenture Event of Default shall have occurred and be continuing, be
subrogated to the rights of the Indenture Trustee, if any, in respect of the
matter as to which the indemnity was paid.
ARTICLE XII
SUCCESSOR TRUSTEES
SECTION 12.01. Notice of Successor Owner Trustee. In the case of
any appointment of a successor to the Owner Trustee pursuant to the Trust
Agreement or any merger, conversion, consolidation or sale of substantially
all of the corporate trust business of the Owner Trustee pursuant to the
Trust Agreement, the successor Owner Trustee shall give prompt written
notice thereof to the Indenture Trustee.
SECTION 12.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto
may resign at any time without cause by giving at least 30 days' prior written
notice to the Owner Trustee, the Owner Participant, the Lessee and each
Holder, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, the Majority in
Interest of the Certificate Holders or the Owner Trustee, with the consent of
the Lessee and the Majority in Interest of the Certificate Holders may at any
time remove the Indenture Trustee without cause by an instrument in writing
delivered to the Lessee, the Owner Trustee, the Owner Participant, and the
Indenture Trustee, and the Indenture Trustee shall promptly notify each Holder
thereof in writing, such removal to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In the case of the resignation
or removal of the Indenture Trustee, the Majority in Interest of the
Certificate Holders, or the Owner Trustee, with the consent of the Lessee and
the Majority in Interest of the Certificate Holders, may appoint a successor
Indenture Trustee by an instrument signed by such Holders. If a successor
Indenture Trustee shall not have been appointed within 30 days after such
notice of resignation or removal, the Indenture Trustee, the Owner Trustee,
the Lessee, the Owner Participant, or any Holder may apply to any court of
competent jurisdiction to appoint a successor Indenture Trustee to act
until such time, if any, as a successor shall have been appointed as
provided above. The successor Indenture Trustee so appointed by such court
shall immediately and without further act be superseded by any successor
Indenture Trustee appointed as provided above.
(b) In case at any time any of the following shall occur:
(i) the Indenture Trustee shall cease to be eligible in accordance
with the provisions of Section 12.03 hereof and shall fail to resign after
written request therefor by the Owner Trustee or by any such Holder; or
(ii)the Indenture Trustee shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or a receiver or liquidator of the
Indenture Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Indenture Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation;
then the Owner Trustee may remove the Indenture Trustee and, with the consent
of the Lessee, appoint a successor trustee by written instrument, in
duplicate, executed by a Responsible Officer of the Owner Trustee, one copy of
which instrument shall be delivered to the Indenture Trustee so removed and
one copy to the successor trustee, or, subject to the provisions of Section
7.13 hereof, any Holder who has been a bona fide Holder for at least six
months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Indenture Trustee
and the appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, remove the Indenture
Trustee and appoint a successor trustee, which removal and appointment shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 12.04 hereof. The successor Indenture Trustee so
appointed by such court shall immediately and without further act be
superseded by any successor Indenture Trustee appointed as provided above
within one year from the date of appointment by such court.
SECTION 12.03. Persons Eligible for Appointment as Indenture
Trustee. There shall at all times be an Indenture Trustee hereunder which
shall be (i)(x) a bank or trust company organized and doing business under the
laws of the United States of America or any state or the District of Columbia
having a combined capital and surplus of at least $100,000,000 or (y) a bank
or trust company whose obligations hereunder are fully guaranteed by a direct
or indirect parent thereof having a combined capital and surplus of at
least $100,000,000 and (ii) a Citizen of the United States authorized under
applicable law to exercise corporate trust powers and subject to
supervision of examination by Federal, state or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section,
the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Indenture Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Indenture Trustee shall resign immediately in the manner and with the
effect specified in Section 12.02 hereof.
SECTION 12.04. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 12.02 hereof shall execute
and deliver to the Owner Trustee, the Lessee, and to its predecessor trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become vested with all rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as trustee
herein; but, nevertheless, on the written request of the Owner Trustee or of
the successor trustee, upon payment of its charges then unpaid, the trustee
ceasing to act shall, subject to Section 14.04 hereof, pay over to the
successor trustee all moneys at the time held by it hereunder and shall
execute and deliver an instrument transferring to such successor trustee all
such rights, powers, duties and obligations. Upon request of any such
successor trustee, the Owner Trustee shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such
successor trustee all such rights and powers. Any trustee ceasing to act
shall, nevertheless, retain a prior claim upon all property or funds held or
collected by such trustee to secure any amounts then due it pursuant to the
provisions of Article XI hereof.
No successor trustee shall accept appointment as provided in this
Section 12.04 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 12.03 hereof.
Upon acceptance of appointment by a successor trustee as provided in
this Section 12.04, the successor trustee shall mail notice thereof by
first-class mail to the Holders at their last addresses as they shall appear
in the Register, and shall mail a copy of such notice to the Lessee and the
Owner Trustee. If the acceptance of appointment is substantially
contemporaneous with the resignation, then the notice called for by the
preceding sentence may be combined with the notice called for by Section 12.02
hereof.
SECTION 12.05. Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee. Any corporation into which the Indenture
Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to
which the Indenture Trustee shall be a party, or any corporation succeeding to
the corporate trust business of the Indenture Trustee, shall be the successor
to the Indenture Trustee hereunder, provided that, anything herein to the
contrary notwithstanding, such corporation shall be eligible under the
provisions of Section 12.03 hereof, without the execution or filing of any
paper or any further act on the part of any of the parties hereto.
In case at the time such successor to the Indenture Trustee shall
succeed to the trusts created by this Indenture any of the Certificates shall
have been authenticated but not delivered, any such successor to the Indenture
Trustee may adopt the certificate of authentication of any predecessor
Indenture Trustee and deliver such Certificates so authenticated; and, in case
at that time any of the Certificates shall not have been authenticated, any
successor to the Indenture Trustee may authenticate such Certificates either
in the name of any predecessor hereunder or in the name of the successor
Indenture Trustee; and in all such cases such certificate shall have the full
force which it is anywhere in the Certificates or in this Indenture provided
that the certificate of the Indenture Trustee shall have; provided, that the
right to adopt the certificate of authentication of any predecessor Indenture
Trustee or to authenticate Certificates in the name of any predecessor
Indenture Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.
SECTION 12.06. Appointment of Separate Trustees. (a) At any time
or times, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust Indenture Estate may at the
time be located or in which any action of the Indenture Trustee may be
required to be performed or taken, the Indenture Trustee, by an instrument
in writing signed by it, may appoint one or more individuals or
corporations to act as a separate trustee or separate trustees or co-
trustee, acting jointly with the Indenture Trustee, of all or any part of
the Trust Indenture Estate, to the full extent that local law makes it
necessary for such separate trustee or separate trustees or co-trustee
acting jointly with the Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction
or by any such separate trustee or separate trustees or co-trustee for the
purpose of more fully confirming such title, rights or duties to such separate
trustee or separate trustees or co-trustee. Upon the acceptance in writing of
such appointment by any such separate trustee or separate trustees or
co-trustee, it, he or they shall be vested with such title to the Trust
Indenture Estate or any part thereof, and with such rights, powers, duties and
obligations, as shall be specified in the instrument of appointment, and such
rights, powers, duties and obligations shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee, or the Indenture Trustee and
such separate trustee or separate trustees or co-trustee jointly with the
Indenture Trustee subject to all the terms of this Indenture, except to the
extent that under any law of any jurisdiction in which any particular act or
acts are to be performed the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations shall be exercised and performed by such separate
trustee or separate trustees or co-trustee, as the case may be. Any separate
trustee or separate trustees or co-trustee may, at any time by an instrument
in writing, constitute the Indenture Trustee its or his attorney-in-fact and
agent with full power and authority to do all acts and things and to exercise
all discretion on its or his behalf and in its or his name. In case any such
separate trustee or co-trustee shall die, become incapable of acting, resign
or be removed, the title to the Trust Indenture Estate and all assets,
property, rights, powers, duties and obligations and duties of such separate
trustee or co-trustee shall, so far as permitted by law, vest in and be
exercised by the Indenture Trustee, without the appointment of a successor to
such separate trustee or co-trustee unless and until a successor is appointed.
(c) All provisions of this Indenture which are for the benefit of
the Indenture Trustee (including without limitation Article XI hereof) shall
extend to and apply to each separate trustee or co-trustee appointed pursuant
to the foregoing provisions of this Section 12.06.
(d) Every additional trustee and separate trustee hereunder shall,
to the extent permitted by law, be appointed and act and the Indenture Trustee
shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon the
Indenture Trustee in respect of the receipt, custody, investment and
payment of moneys shall be exercised solely by the Indenture Trustee;
(ii)all other rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed and
exercised or performed by the Indenture Trustee and such additional trustee
or trustees and separate trustee or trustees jointly except to the extent
that under any law of any jurisdiction in which any particular act or acts
are to be performed, the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
Indenture Estate in any such jurisdiction) shall be exercised and performed
by such additional trustee or trustees or separate trustee or trustees;
(iii)no power hereby given to, or exercisable by, any such additional
trustee or separate trustee shall be exercised hereunder by such additional
trustee or separate trustee except jointly with, or with the consent of,
the Indenture Trustee; and
(iv)no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder.
If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law, the Indenture Trustee shall
execute and deliver an indenture supplemental hereto and all other instruments
and agreements necessary or proper to remove any additional trustee or
separate trustee.
(e) Any request, approval or consent in writing by the Indenture
Trustee to any additional trustee or separate trustee shall be sufficient
warrant to such additional trustee or separate trustee, as the case may be, to
take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 12.06, the
powers of any additional trustee or separate trustee shall not exceed those of
the Indenture Trustee hereunder.
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
SECTION 13.01. Supplemental Indentures Without Consent of Holders.
The Owner Trustee (when authorized by the Owner Participant) and the Indenture
Trustee, without consent of the Holders, may enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge any property or
assets to the Indenture Trustee as security for the Certificates;
(b) to evidence the succession of another corporation to the Owner
Trustee or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Owner
Trustee herein and in the Certificates;
(c) to add to the covenants of the Owner Trustee such further
covenants, restrictions, conditions or provisions as it and the Indenture
Trustee shall consider to be for the protection of the Holders, and to make
the occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions, conditions or provisions an Indenture
Event of Default permitting the enforcement of all or any of the several
remedies provided herein; provided, that in respect of any such additional
covenant, restriction, condition or provision such supplemental indenture
may provide for a particular period of grace after default (which period
may be shorter or longer than that allowed in the case of other defaults)
or may provide for an immediate enforcement upon such an Indenture Event of
Default or may limit the remedies available to the Indenture Trustee upon
such an Indenture Event of Default or may limit the right of not less than
the Majority in Interest of Certificate Holders to waive such an Indenture
Event of Default;
(d) to surrender any right or power conferred herein upon the Owner
Trustee or the Owner Participant;
(e) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture; or to make such other provisions in regard to
matters or questions arising under this Indenture or under any supplemental
indenture as the Owner Trustee may deem necessary or desirable and which
shall not adversely affect the interests of the Holders;
(f) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Indenture or to subject replacement airframe or
Replacement Engines to the Lien of this Indenture in accordance with the
provisions hereof or with the Lease or to release from the Lien of this
Indenture property that has been substituted on or removed from the
Aircraft as contemplated in Section 3.07 hereof; provided that supplements
to this Indenture entered into for the purpose of subjecting replacement
airframe or Replacement Engines to the Lien of this Indenture need only be
executed by the Owner Trustee and the Indenture Trustee;
(g) to provide for the issuance under this Indenture of Certificates
in coupon form (including Certificates registrable as to principal only)
and to provide for exchangeability of such Certificates with Certificates
issued hereunder in fully registered form, and to make all appropriate
changes for such purpose;
(h) to effect the re-registration of the Aircraft pursuant to
Section 6.03(b) of the Participation Agreement; and
(i) to add, eliminate or change any provision hereunder so long as
such action shall not adversely affect the interests of the Holders.
The Indenture Trustee is hereby authorized to join in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be contained therein and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Indenture Trustee shall not be obligated to enter into any such supplemental
indenture which adversely affects the Indenture Trustee's own rights, duties
or immunities under this Indenture or otherwise.
Any supplemental indenture may be executed without the consent of the
Holders of Outstanding Certificates, notwithstanding any of the provisions of
Section 13.02 hereof.
SECTION 13.02. Supplemental Indentures With Consent of Holders.
With the consent (evidenced as provided in Article X) of the Majority in
Interest of Certificate Holders, the Owner Trustee (when authorized by the
Owner Participant) and the Indenture Trustee may, from time to time and at
any time, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders;
provided, however, that, without the consent of each Holder, no such
amendment of or supplement to this Indenture or any indenture supplemental
hereto, or modification of the terms of, or consent under, any thereof,
shall (a) modify any of the provisions of Section 7.11 hereof or this
Section 13.02, (b) reduce the amount or extend the time of payment of any
amount owing or payable under any Certificate or reduce the interest
payable on any Certificate (except that only the consent of the Holder
shall be required for any decrease in any amounts of or the rate of
interest payable on such Certificate or any extension for the time of
payment of any amount payable under such Certificate), or alter or modify
the provisions of Article V hereof with respect to the order of priorities
in which distributions thereunder shall be made as between the Holder and
the Owner Trustee or the Owner Participant or with respect to the amount or
time of payment of any such distribution, or alter or modify the
circumstances under which a Make-Whole Premium shall be payable, or alter
the currency in which any amount payable under any Certificate is to be
paid, or impair the right of any Holder to commence legal proceedings to
enforce a right to receive payment hereunder, (c) reduce, modify or amend
any indemnities in favor of any Holder or in favor of or to be paid by the
Owner Participant (except as consented to by each Person adversely affected
thereby), or (d) create or permit the creation of any Lien on the Trust
Indenture Estate or any part thereof prior to or pari passu with the Lien
of this Indenture, except as expressly permitted herein, or deprive any
Holder of the benefit of the Lien of this Indenture on the Trust Indenture
Estate, except as provided in Section 7.02 hereof or in connection with the
exercise of remedies under Article VII. This Section 13.02 shall not apply
to any indenture or indentures supplemental hereto permitted by, and
complying with the terms of, Section 13.06 hereof.
Upon the request of the Owner Trustee (at the direction of the Owner
Participant) and upon the filing with the Indenture Trustee of evidence of the
consent of Holders and other documents, if any, required by Section 10.01, the
Indenture Trustee shall join with the Owner Trustee and the Lessee in the
execution of such supplemental indenture unless such supplemental indenture
affects the Indenture Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Indenture Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance
thereof.
Promptly after the execution by the Owner Trustee, the Indenture
Trustee and the Lessee of any supplemental indenture pursuant to the
provisions of this Section, the Indenture Trustee shall mail a notice thereof
by first-class mail to the Holders at their addresses as they shall appear on
the registry books of the Registrar, setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture
Trustee to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
SECTION 13.03. Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations,
duties and immunities under this Indenture of the Indenture Trustee, the Owner
Trustee, the Lessee and the Holders shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of
this Indenture for any and all purposes.
SECTION 13.04. Documents to Be Given to Indenture Trustee. The
Indenture Trustee, subject to the provisions of Sections 9.02 and 9.03, may
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental indenture complies with the applicable
provisions of this Indenture.
SECTION 13.05. Notation on Certificates in Respect of Supplemental
Indentures. Certificates authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article may bear
a notation in form approved by the Indenture Trustee as to any matter provided
for by such supplemental indenture. If the Owner Trustee or the Indenture
Trustee shall so determine, new Certificates so modified as to conform, in the
opinion of the Owner Trustee and the Indenture Trustee, to any modification of
this Indenture contained in any such supplemental indenture may be prepared by
the Owner Trustee, authenticated by the Indenture Trustee and delivered in
exchange for the Outstanding Certificates.
SECTION 13.06. No Request Necessary for Lease Supplement or
Indenture and Security Agreement Supplement. Notwithstanding anything
contained in Section 13.02 hereof, no written request or consent of the
Indenture Trustee, any Holder or the Owner Participant pursuant to Section
13.02 hereof shall be required to enable the Owner Trustee to enter into
any supplement to the Lease with the Lessee pursuant to the terms of the
Lease to subject a replacement airframe or Replacement Engine thereto or to
execute and deliver an Indenture and Security Agreement Supplement pursuant
to the terms hereof.
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 14.01. Satisfaction and Discharge of Indenture; Termination
of Indenture. If at any time after (a) the Owner Trustee shall have paid or
caused to be paid the principal of and interest on all the Certificates
outstanding hereunder, as and when the same shall have become due and payable,
or (b) the Owner Trustee shall have delivered to the Indenture Trustee for
cancellation all Certificates theretofore authenticated (other than any
Certificates which shall have been destroyed, lost or stolen and which shall
have been replaced or paid as provided in Section 2.07 hereof) or (c) (i) all
such Certificates not theretofore delivered to the Indenture Trustee for
cancellation shall have become due and payable, or are by their terms to
become due and payable within one year or are to be called for prepayment
within one year under arrangements satisfactory to the Indenture Trustee for
the giving of notice of prepayment by the Indenture Trustee in the name and at
the expense of the Owner Trustee, and (ii) the Owner Trustee shall have
irrevocably deposited or caused to be deposited with the Indenture Trustee as
trust funds the entire amount in cash (other than moneys repaid by the
Indenture Trustee or any paying agent to the Owner Trustee in accordance with
Section 14.04 hereof) or Government obligations maturing as to principal and
interest in such amounts and at such times as will insure the availability of
cash sufficient to pay at maturity all such Certificates not theretofore
delivered to the Indenture Trustee for cancellation, including principal and
interest due or to become due to such date of maturity as the case may be, and
if, in any such case, the Owner Trustee shall also pay or cause to be paid all
other sums then payable hereunder by the Owner Trustee, then this Indenture
shall cease to be of further effect (except as to (A) rights of registration
of transfer and exchange, and the Owner Trustee's right of optional prepayment
pursuant to Section 6.02(a)(ii) hereof, (B) substitution of mutilated,
defaced, destroyed, lost or stolen Certificates, (C) rights of Holders to
receive payments of principal thereof and interest thereon, upon the original
stated due dates therefor (but not upon acceleration), (D) the rights,
obligations, indemnities and immunities of the Indenture Trustee hereunder and
(E) the rights of the Holders as beneficiaries hereof with respect to the
property so deposited with the Indenture Trustee payable to all or any of
them), and the Indenture Trustee, on demand of the Owner Trustee accompanied
by an Officer's Certificate and an Opinion of Counsel (covering such matters
reasonably requested by, and in form and substance reasonably satisfactory to,
the Indenture Trustee) and at the cost and expense of the Owner Trustee, shall
execute proper instruments acknowledging such satisfaction of and discharging
this Indenture. The Owner Trustee agrees to reimburse and indemnify the
Indenture Trustee for any costs or expenses thereafter reasonably and properly
incurred and to compensate the Indenture Trustee for any services thereafter
reasonably and properly rendered by the Indenture Trustee in connection with
this Indenture or the Certificates.
Upon (or at any time after) payment in full to the Indenture Trustee,
as trust funds, of the principal of and interest on and Make-Whole Premium, if
any, and all other amounts due hereunder and under all Certificates and
provided that there shall then be no other amounts due to the Indenture
Trustee hereunder or under the Participation Agreement or otherwise secured
hereby, the Owner Trustee shall direct the Indenture Trustee to execute and
deliver to or as directed in writing by the Owner Trustee an appropriate
instrument releasing the Aircraft from the Lien of this Indenture and
releasing the Indenture Documents from the assignment thereof hereunder, and
the Indenture Trustee shall execute and deliver such instrument as aforesaid
and, at the Owner Trustee's expense, will execute and deliver such other
instruments or documents as may be reasonably requested by the Owner Trustee
to give effect to such release; provided, however, that this Indenture and the
trusts created hereby shall terminate earlier and this Indenture shall be of
no further force or effect upon any sale or other final disposition by the
Indenture Trustee of all property forming a part of the Trust Indenture Estate
and the final distribution by the Indenture Trustee of all moneys or other
property or proceeds constituting part of the Trust Indenture Estate in
accordance with the terms hereof. Except as aforesaid otherwise provided,
this Indenture and the trusts created hereby shall continue in full force
and effect in accordance with the terms hereof.
SECTION 14.02. Application by Indenture Trustee of Funds Deposited
for Payment of Certificates. Subject to Section 14.04 hereof, all moneys
deposited with the Indenture Trustee pursuant to Section 14.01 hereof shall be
held in trust and applied by it to the prompt payment, either directly or
through any Paying Agent, to the Holders of the particular Certificates for
the payment or prepayment of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal,
interest and Make-Whole Premium, if any, but such money need not be segregated
from other funds except to the extent required by law.
SECTION 14.03. Repayment of Moneys Held by Paying Agent. Upon the
satisfaction and discharge of this Indenture all moneys then held by any
Paying Agent under the provisions of this Indenture shall, upon demand of the
Owner Trustee, be repaid to it or paid to the Indenture Trustee and thereupon
such Paying Agent shall be released from all further liability with respect to
such moneys.
SECTION 14.04. Transfer of Moneys Held by Indenture Trustee and
Paying Agent Unclaimed for Two Years and Eleven Months. Any moneys deposited
with or paid to the Indenture Trustee or any Paying Agent for the payment of
the principal of or interest or Make-Whole Premium on any Certificate and not
applied but remaining unclaimed for two years and eleven months after the date
upon which such principal, interest or Make-Whole Premium shall have become
due and payable, shall, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property law, be paid to the
Owner Trustee (or, if the Trust Agreement shall no longer be in effect, to the
Owner Participant) by the Indenture Trustee or such Paying Agent and the
Holder of such Certificate, as a general unsecured creditor, shall, unless
otherwise required by mandatory provisions of applicable escheat or abandoned
or unclaimed property laws, thereafter look only to the Owner Trustee (or the
Owner Participant) for any payment which such Holder may be entitled to
collect, and all liability of the Indenture Trustee, or any Paying Agent with
respect to such moneys shall thereupon cease.
ARTICLE XV
MISCELLANEOUS
SECTION 15.01. Capacity in Which Acting. Each of FSBU (or its
permitted successors or assigns) and the Indenture Trustee acts hereunder not
in its individual capacity but solely as trustee except as expressly provided
herein and in the other Operative Documents, and, in the case of FSBU (or its
permitted successors or assigns), in the Trust Agreement.
SECTION 15.02. No Legal Title to Trust Indenture Estate in Holders.
No Holder shall have legal title to any part of the Trust Indenture Estate.
No transfer, by operation of law or otherwise, of any Certificate or other
right, title and interest of any Holder in and to the Trust Indenture Estate
or hereunder shall operate to terminate this Indenture or entitle such Holder
or any successor or transferee of such Holder to an accounting or to the
transfer to it of legal title to any part of the Trust Indenture Estate.
SECTION 15.03. Sale of Trust Indenture Estate by Indenture Trustee
is Binding. Any sale or other conveyance of all or any part of the Trust
Indenture Estate by the Indenture Trustee made pursuant to the terms of
this Indenture or of the Lease shall bind the Lessee, the Owner Trustee,
the Holders and the Owner Participant and shall be effective to transfer or
convey all right, title and interest of the Indenture Trustee, the Owner
Trustee, the Owner Participant and such Holders therein and thereto. No
purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or
conveyance or as to the application of any sale or other proceeds with
respect thereto by the Indenture Trustee.
SECTION 15.04. Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant and Holders. Nothing in this Indenture, whether
express or implied, shall be construed to give to any person other than FSBU,
the Owner Trustee, the Lessee, the Indenture Trustee, as trustee and in its
individual capacity, the Owner Participant, and the Holders any legal or
equitable right, remedy or claim under or in respect of this Indenture.
SECTION 15.05. No Action Contrary to the Lessee's Rights Under the
Lease. Notwithstanding any of the provisions of this Indenture or the Trust
Agreement to the contrary, so long as no Event of Default shall have occurred
and be continuing, neither the Indenture Trustee nor the Owner Trustee will
take any affirmative acts that interfere with the peaceful and quiet
possession and enjoyment of the Aircraft by the Lessee.
SECTION 15.06. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted by this
Indenture to be made, given, furnished or filed shall be in writing, mailed by
certified mail, postage prepaid, or by confirmed telex or telecopy, and (a) if
to the Owner Trustee, addressed to it at its office at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department (facsimile:
(801) 246-5053) (with a copy to the Owner Participant at the address provided
for notice pursuant to Section 14.01 of the Participation Agreement), (b) if
personally delivered to the Indenture Trustee, addressed to it at its office
at 600 Peachtree Street, N.E., Suite 900, Atlanta, Georgia 30308 (facsimile:
(404) 607-6534), Attention: Corporate Trust Lease Administration or (c) if to
the Owner Participant or the Lessee, addressed to such party at such address
as such party shall have furnished by notice to the Owner Trustee and the
Indenture Trustee, or, until an address is so furnished, addressed to the
address of such party if any, set forth in Section 14.01 of the Participation
Agreement. Any party hereto may change the address to which notices to such
party will be sent by giving notice of such change to the other parties to
this Indenture.
Where this Indenture provides for notice to Holders, such notice
shall be sufficiently given (unless otherwise expressly provided herein) if in
writing and mailed, first-class postage prepaid, to each Holder entitled
thereto, at his last address as it appears in the Register. In any case where
notice to Holders is given by mail, neither the failure to mail such notice,
nor any defect in any notice so mailed, to any particular Holder shall affect
the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers
of notice by Holders shall be filed with the Indenture Trustee, but such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Owner Trustee
and Holders when such notice is required to be given pursuant to any provision
of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Indenture Trustee shall be deemed to be a sufficient
giving of such notice.
SECTION 15.07. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Lessee or the Owner Trustee to the Indenture Trustee to take any action under
any of the provisions of this Indenture, the Lessee or the Owner Trustee, as
the case may be, shall furnish to the Indenture Trustee upon request (a) an
Officers' Certificate stating that all conditions precedent provided for in
this Indenture relating to the proposed action have been complied with and
that the proposed action is in conformity with the requirements of this
Indenture, and (b) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or demand as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or demand, no additional certificate
or opinion need be furnished.
Any certificate, statement or opinion of an officer of FSBU may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous. Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters information with respect to which is
in the possession of the Lessee or FSBU, upon the certificate, statement or
opinion of or representations by an officer or officers of the Lessee or FSBU,
as the case may be, unless such counsel knows that the certificate, statement
or opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or
in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Lessee or
FSBU or of counsel thereto may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant
or firm of accountants employed by the Lessee or the Owner Trustee, as the
case may be, unless such officer or counsel, as the case may be, knows that
the certificate or opinion or representations with respect to the accounting
matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know
that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Indenture Trustee shall contain a statement that
such firm is independent.
SECTION 15.08. Severability. Any provision of this Indenture which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
SECTION 15.09. No Oral Modifications or Continuing Waivers. No
terms or provisions of this Indenture or the Certificates may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party or other person against whom enforcement of the change,
waiver, discharge or termination is sought; and any waiver of the terms hereof
or of any Certificate shall be effective only in the specific instance and for
the specific purpose given.
SECTION 15.10. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of
the parties hereto and the successors and permitted assigns of each, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Holder shall bind the successors and assigns of
such Holder. This Indenture and the Trust Indenture Estate shall not be
affected by any amendment or supplement to the Trust Agreement or by any other
action taken under or in respect of the Trust Agreement, except that each
reference in this Indenture to the Trust Agreement shall mean the Trust
Agreement as amended and supplemented from time to time to the extent
permitted hereby and thereby.
SECTION 15.11. Headings. The headings of the various Articles and
Sections herein and in the table of contents hereto are for the convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 15.12. Normal Commercial Relations. Anything contained in
this Indenture to the contrary notwithstanding, the Owner Participant, the
Indenture Trustee and any Holder, or any bank or other affiliate of any such
party, may conduct any banking or other financial transactions, and have
banking or other commercial relationships, with the Lessee fully to the same
extent as if this Indenture were not in effect, including without limitation
the making of loans or other extensions of credit to the Lessee for any
purpose whatsoever, whether related to any of the transactions contemplated
hereby or otherwise.
SECTION 15.13. Governing Law; Counterparts. THIS INDENTURE AND
EACH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed this ____ day of August, 1995 by their respective officers
thereunto duly authorized and acknowledge that this Indenture has been made
and delivered in the City of New York, and this Indenture shall be effective
only upon such execution and delivery.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee,
By_________________________________
Name:
Title:
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Indenture Trustee,
By_________________________________
Name:
Title:
Exhibit A
to
Trust Indenture and Security Agreement
Indenture and Security Agreement Supplement
Indenture and Security Agreement Supplement (Federal Express
Corporation Trust No. N658FE) dated ________, ____, of FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity but solely as owner trustee (herein called the "Owner
Trustee") under the Trust Agreement dated as of May 1, 1995 as amended and
restated as of August 1, 1995 (as at any time amended, herein called the
"Trust Agreement") between First Security Bank of Utah, National Association
and the Owner Participant named therein.
W I T N E S S E T H :
WHEREAS, the Trust Agreement provides for the execution and delivery
of this Indenture and Security Agreement Supplement which shall particularly
describe the Aircraft and any replacement airframe or Replacement Engine
included in the property covered by the Trust Agreement.
WHEREAS, the Trust Indenture, Mortgage and Security Agreement
(Federal Express Corporation Trust No. N658FE) dated as of May 1, 1995
(herein called the "Original Indenture") between the Owner Trustee and
NationsBank of Georgia, National Association, as Indenture Trustee (herein
called the "Indenture Trustee"), provides for the execution and delivery of
a supplement thereto substantially in the form hereof which shall
particularly describe the Aircraft (such term and other defined terms in
the Indenture being used herein with the same meanings) and any replacement
airframe or Replacement Engine included in the Trust Indenture Estate, and
shall specifically mortgage such Aircraft, replacement airframe or
Replacement Engine, as the case may be, to the Indenture Trustee.
WHEREAS, the Original Indenture dated as of May 1, 1995 which
together with the Indenture and Security Agreement Supplement No. 1
(Federal Express Corporation Trust No. N658FE) dated May 4, 1995 (the
Original Indenture being attached to and made a part of such Indenture and
Security Agreement Supplement and filed therewith) have been duly recorded
pursuant to Subtitle VII of Title 49 of the United States Code on May 5,
1995 as one document and have been assigned Conveyance No. NN008445.
WHEREAS, the Original Indenture, as amended and restated as of August
1, 1995 (herein called the "Indenture"), was duly recorded pursuant to
Subtitle VII of Title 49 of the United States Code on ________________, 1995
and assigned Conveyance No. ____________;
NOW, THEREFORE, this Supplement witnesseth, that, to secure the
prompt payment of the principal of and Make-Whole Premium, if any, and
interest on, and all other amounts due with respect to, all Outstanding
Certificates under the Indenture and all other amounts due hereunder and
the performance and observance by the Owner Trustee of all the agreements,
covenants and provisions for the benefit of the Holders contained in the
Indenture, in the Lease, in the Participation Agreement and the
Certificates, and the prompt payment of any and all amounts from time to
time owing under the Participation Agreement by the Owner Trustee, the
Owner Participant or the Lessee to the Holders and for the uses and
purposes and subject to the terms and provisions of the Indenture and the
Certificates, and in consideration of the premises and of the covenants
contained in the Indenture, and of the purchase of the Certificates by the
Holders, and of the sum of $1 paid to the Owner Trustee by the Indenture
Trustee at or before the delivery of the Indenture, the receipt of which is
hereby acknowledged, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged, granted a security
interest in, and confirmed, and does hereby grant, bargain, sell, assign,
transfer, convey, mortgage, pledge, grant a security interest in, and
confirm, unto the Indenture Trustee, its successors and assigns, in trust
for the equal and ratable security and benefit of the Holders, in the trust
created by the Indenture, and subject to all of the terms, conditions,
provisions and limitations set forth in the Indenture, a first priority
security interest in and mortgage lien on all estate, right, title and
interest of the Owner Trustee in, to and under the following described
property:
Airframe
One (1) Airframe identified as follows:
FAA Manufacturer's
Registration Serial
Manufacturer Model Number Number
together with all appliances, equipment, instruments and accessories
(including, without limitation, radio and radar) from time to time belonging
thereto, owned by the Owner Trustee and installed in or appurtenant to said
aircraft.
AIRCRAFT ENGINES
Two (2) aircraft engines, each such engine having 750 or more rated takeoff
horsepower or the equivalent thereof, identified as follows:
Manufacturer's
Serial
Manufacturer Model Number
together with all equipment and accessories belonging thereto, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to
said aircraft engines.
Together with all substitutions, replacements and renewals of the
property described above, and all property which shall hereafter become
physically attached to or incorporated in the property described above,
whether the same are now owned by the Owner Trustee or shall hereafter be
acquired by it.
As further security for the obligations referred to above and secured
by the Indenture and hereby, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors and assigns, for the
security and benefit of the Holders, in the trust created by the Indenture,
and subject to all of the terms, conditions. provisions and limitations set
forth in the Indenture, all of the estate, right, title and interest of the
Owner Trustee in, to and under the Lease Supplement (other than Excepted
Payments, if any) covering the property described above.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Holders for the uses and purposes and subject to the terms and provisions
set forth in the Indenture.
This Supplement shall be construed as supplemental to the Indenture
and shall form a part thereof, and the Indenture is hereby incorporated by
reference herein and is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft/Engines referred to in this Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee and covered by all the terms and conditions of
the Trust Agreement, subject to the Lien of the Indenture.
IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to
be duly executed as of the date first written above by one of its officers
thereunto duly authorized.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee,
By_________________________________
Name:
Title:
Exhibit B
to
Trust Indenture and Security Agreement
[Form of Certificate]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD OR OFFERED FOR SALE IN CONTRAVENTION OF SAID ACT
No. ______ $_____________
EQUIPMENT TRUST CERTIFICATE
(Federal Express Corporation Trust No. N658FE)
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION
not in its individual capacity but solely as
OWNER TRUSTEE UNDER TRUST AGREEMENT
(Federal Express Corporation Trust No. N658FE)
dated as of May 1, 1995
as amended and restated as of August 1, 1995
Interest Rate Maturity
First Security Bank of Utah, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee
(herein in such capacity called the "Owner Trustee") under that certain Trust
Agreement (Federal Express Corporation Trust No. N658FE) dated as of May 1,
1995 as amended and restated as of August 1, 1995, between the Owner
Participant named therein and First Security Bank of Utah, National
Association (herein as such Trust Agreement may be amended or supplemented
from time to time called the "Trust Agreement"), hereby promises to pay to
NationsBank, National Association (Carolinas), as Pass Through Trustee, or its
registered assigns, the principal sum of ________________ _______________
Dollars, payable as set forth below for the Maturity specified above, in such
coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts, and to pay
interest on the principal outstanding from time to time, semiannually on each
January 5 and July 5, on said principal sum in like coin or currency at the
rate per annum set forth above from the January 5 or the July 5, as the case
may be, next preceding the date of this Certificate to which interest on the
Certificates has been paid or duly provided for, unless the date hereof is a
date to which interest on the Certificates has been paid or duly provided for,
in which case from the date of this Certificate. Notwithstanding the
foregoing, if the date hereof is after any December 21 or June 20 and before
the following January 5 or July 5, as the case may be, this Certificate shall
bear interest from such January 5 or July 5; provided that, if the Owner
Trustee shall default in the payment of interest due on such January 5 or July
5, then this Certificate shall bear interest from the next preceding January 5
or July 5 to which interest on this Certificate has been paid or duly provided
for. The interest so payable on any January 5 or July 5 will, except as
otherwise provided in the Indenture referred to below, be paid to the person
in whose name this Certificate is registered at the close of business on the
December 21 or June 20 preceding such January 5 or July 5, whether or not such
day is a Business Day.
This Certificate shall bear interest at the Past Due Rate on any
principal hereof and on any other amount payable hereunder or under the
Indenture which shall not be paid in full when due (whether at stated
maturity, by acceleration, by mandatory prepayment or otherwise), for the
period from and including the date thereof to but excluding the date the same
is paid in full, payable from time to time on demand of the Indenture Trustee.
Principal and interest and other amounts due hereunder shall be
payable at the office or agency of NationsBank of Georgia, National
Association (the "Indenture Trustee") maintained for such purpose; provided
that, at the option of the Indenture Trustee or its Paying Agent, interest may
be paid by mailing a check therefor payable to or upon the written order of
the registered holder entitled thereto at his last address as it appears on
the Register. If any amount payable under this Certificate, or under the
Indenture, falls due on a day that is not a Business Day, then such sum shall
be payable on the next succeeding Business Day, without (provided that payment
is made on such next succeeding Business Day) additional interest thereon for
the period of such extension.
First Security Bank of Utah, National Association and NationsBank of
Georgia, National Association are not acting individually hereunder, but
solely as Owner Trustee and Indenture Trustee.
No employee benefit plan subject to Title I of ERISA, or individual
retirement account or plan subject to Section 4975 of the Code, or any trust
established under any such plan or account (hereinafter collectively referred
to as an "ERISA Plan"), may acquire or hold any of the Certificates (or
participation interest therein). The purchase by any Person of any
Certificate (or participation interest therein) constitutes a representation
by such Person to the Owner Trustee, the Lessee, the Owner Participant and the
Indenture Trustee that such Person is not an ERISA Plan and that such Person
is not acquiring, and has not acquired, such Certificate (or participation
interest therein) with assets of an ERISA Plan. Any transfer of a Certificate
not permitted by this paragraph shall be void, and the transferor shall retain
all the benefits of such Certificate under the Indenture, and the transferee
shall not be entitled to any benefits under the Indenture.
This Certificate is one of a duly authorized issue of Certificates
issued and to be issued under the Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N658FE) dated as of May 1, 1995 as
amended and restated as of August 1, 1995 (herein as amended, supplemented or
modified from time to time called the "Indenture") between the Owner Trustee
and the Indenture Trustee, designated as Equipment Trust Certificates (Federal
Express Corporation Trust No. N658FE) limited in aggregate initial principal
amount to $61,526,000 consisting of the following aggregate principal amounts
of Certificates with the interest rates per annum and Maturities shown:
Initial
Aggregate
Principal
Maturity Amount Interest Rate
--------------- ------------ -------------
January 5, 2013 $48,360,000 7.63%
January 5, 2016 $13,166,000 8.06%
Reference is made to the Indenture and all supplements and amendments
thereto (a copy of which is on file with the Indenture Trustee at its
principal corporate trust office) for a more complete statement of the terms
and provisions thereof, including a statement of the properties conveyed,
pledged and assigned thereby, the nature and extent of the security, the
respective rights of the Owner Trustee, the Owner Participant, the Lessee, the
Indenture Trustee and the Holders, and the terms upon which the Certificates
are, and are to be, executed and delivered, to all of which terms and
conditions in the Indenture each Holder hereof agrees by its acceptance of
this Certificate.
Capitalized terms not otherwise defined herein shall have the
meanings given to them in the Indenture.
The principal amounts of the Certificates are payable as follows.
The Certificates with a Maturity of January 5, 2013 are subject to
redemption in part, pro rata (based on the face amount thereof) commencing
on July 5, 1996 and the Certificates with a Maturity of January 5, 2016 are
subject to redemption in part, pro rata (based on the face amount thereof),
commencing on January 5, 2015, in each case through mandatory sinking fund
redemptions providing for the redemption on the Sinking Fund Redemption
Dates of the aggregate principal amounts set forth below, together with
interest accrued thereon to the applicable Sinking Fund Redemption Date,
but without Make-Whole Premium.
Principal Amount
Certificates Certificates
with a Maturity with a Maturity
Sinking Fund Redemption Date of January 5, 2013 of January 5, 2016
------------------------------ -------------------- --------------------
January 5, 1996 $ 0 $ 0
July 5, 1996 1,109,050 0
January 5, 1997 0 0
July 5, 1997 1,201,660 0
January 5, 1998 0 0
July 5, 1998 1,293,350 0
January 5, 1999 0 0
July 5, 1999 1,392,030 0
January 5, 2000 1,557,670 0
July 5, 2000 0 0
January 5, 2001 1,681,230 0
July 5, 2001 0 0
January 5, 2002 3,806,730 0
July 5, 2002 50,770 0
January 5, 2003 75,680 0
July 5, 2003 0 0
January 5, 2004 1,762,440 0
July 5, 2004 0 0
January 5, 2005 1,384,680 0
July 5, 2005 0 0
January 5, 2006 2,747,460 0
July 5, 2006 0 0
January 5, 2007 3,110,340 0
July 5, 2007 0 0
January 5, 2008 2,672,530 0
July 5, 2008 0 0
January 5, 2009 4,408,670 0
July 5, 2009 0 0
January 5, 2010 4,758,400 0
July 5, 2010 0 0
January 5, 2011 5,135,860 0
July 5, 2011 0 0
January 5, 2012 5,543,270 0
July 5, 2012 0 0
January 5, 2013 4,668,180 0
July 5, 2013 0 0
January 5, 2014 0 0
July 5, 2014 0 0
January 5, 2015 0 6,367,540
July 5, 2015 0 0
January 5, 2016 0 6,798,460
-------------------- --------------------
Total $48,360,000 $13,166,000
Except as expressly provided in the Indenture, all payments of
principal, Make-Whole Premium, if any, and interest and other amounts to be
made to the Holder hereof by or at the behest of the Owner Trustee hereunder
or under the Indenture shall be made only from the income and proceeds from
the Lessor's Estate to the extent included in the Trust Indenture Estate and
only to the extent that the Owner Trustee shall have sufficient income or
proceeds from the Lessor's Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such distributions in
accordance with the terms of the Indenture; provided that under the Lease, the
Lessee is obligated to pay or cause to be paid, to the extent such payments
are not required to be made from the assets subject to the Lien of this
Indenture or the income and proceeds received by the Indenture Trustee
therefrom, any net loss arising from the investment of funds held by the
Indenture Trustee which but for an Event of Default would be payable to
Lessee, and each Holder hereof, by its acceptance of this Certificate, agrees
that it will (except as aforesaid) look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for distribution to the
Holder hereof as provided above and that neither the Owner Participant, the
Owner Trustee, First Security Bank of Utah, National Association nor the
Indenture Trustee is personally liable to the Holder hereof for any amounts
payable or any liability under this Certificate or under the Indenture, except
as expressly provided in the Indenture, in the case of First Security Bank of
Utah, National Association, the Owner Trustee and the Indenture Trustee.
The Certificates are subject to prepayment in the following
circumstances at the price determined as set forth below.
(i) If an Event of Loss occurs with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe (unless pursuant to Section 11.03 of the Lease and Section 9.08 of
the Indenture replacement equipment is substituted therefor).
(ii)If the Lessee, pursuant to Section 4.02(a) of the Lease, gives
notice of purchase of the Aircraft (and the Lessee shall not have effected
an assumption of the Certificates as provided in Section 2.12 of the
Indenture).
(iii)If the Owner Participant or the Owner Trustee on behalf of the
Owner Participant gives notice of prepayment to the Indenture Trustee
pursuant to Section 8.02 of the Indenture.
(iv)If the Lessee, pursuant to Section 10.01 of the Lease, gives
notice of a voluntary termination for obsolescence or surplus, but subject
to Section 6.02(c) of Indenture.
(v) Pursuant to Section 15.01 of the Participation Agreement in
connection with a Refinancing of the Certificates.
In the case of a prepayment of the Certificates pursuant to clauses
(ii), (iv) and (v) above, the Lessee, in accordance with and subject to the
terms (including timing of notice) of Section 4.02(a) or 10.01 of the Lease or
Section 15 of the Participation Agreement, as the case may be, shall give
irrevocable (subject to Section 6.02(c) of the Indenture) written notice to
the Owner Trustee and the Indenture Trustee and to the Holders of all of the
Certificates specifying the Business Day on which the Owner Trustee is
directed to prepay the Certificates. In the case of a prepayment pursuant to
clause (i) above, the Certificates shall be prepaid on the Loss Payment Date
(as defined in Section 11.02 of the Lease). In the case of a prepayment
pursuant to clause (iii) above, the Certificates shall be prepaid on the date
designated in the notice of prepayment required by Section 8.02 of the
Indenture. In the case of a prepayment of the Certificates pursuant to clauses
(ii) and (iv) above, the Certificates shall be prepaid in full on the
Termination Date. In the case of a prepayment of the Certificates pursuant to
clause (v) above, the Certificates shall be prepaid on the effective date of
the Refinancing. The day on which the Certificates are to be prepaid is
herein referred to as the "Prepayment Date". On or prior to the Prepayment
Date, immediately available funds shall be deposited with the Indenture
Trustee in an amount in respect of the Certificates equal to:
(1) in the event of a prepayment of the Certificates pursuant to
clause (i), (iii) (if clause (i) of the first sentence of Section 8.02(a)
of the Indenture is applicable) or, if such prepayment is made on or after
the applicable Premium Termination Date, clause (ii), (iii) (if clause (ii)
of the first sentence of Section 8.02(a) of the Indenture is applicable),
(iv) or (v) above, the sum of (A) the aggregate principal amount of such
Certificates then Outstanding, (B) accrued interest on the Certificates to
the Prepayment Date and (C) all other aggregate sums due the Indenture
Trustee under the Indenture or under the Participation Agreement or the
Lease, but excluding any Make-Whole Premium or other premium or penalty, or
(2) if such prepayment is made prior to the applicable Premium
Termination Date, in the event of a prepayment of the Certificates pursuant
to clause (ii), (iii) (if clause (ii) of the first sentence of Section
8.02(a) of the Indenture is applicable), (iv) or (v) above, the sum of the
amounts specified in clauses (A), (B) and (C) of the preceding clause (1)
plus any Make-Whole Premium payable in respect of all Certificates with
respect to which the Premium Termination Date therefor has not occurred
(the aggregate amount required to be paid pursuant to this sentence being
herein referred to as the "Prepayment Price").
If, in accordance with and subject to the satisfaction of the
conditions set forth in Section 7.11 of the Participation Agreement, the
Lessee shall assume all of the obligations of the Owner Trustee hereunder,
under the Certificates and all other Operative Agreements, the Owner
Participant and the Owner Trustee shall (except for prior acts) be released
and discharged from any further obligations hereunder and under the
Certificates and all other Operative Agreements (except any obligations that
have accrued prior to such assumption).
If an Indenture Event of Default under the Indenture shall occur and
be continuing, the principal of the Certificates may be declared due and
payable in the manner and with the effect provided in the Indenture. The
Indenture provides that in certain events such declaration and its
consequences may be waived the Majority in Interest of Holders. Any such
consent or waiver shall be conclusive and binding upon the Holder of this
Certificate and upon all future Holders and owners of this Certificate and
any Certificate that may be issued in exchange or substitution therefor,
whether or not any notation thereof is made upon this Certificate or such
other Certificates. Moreover, if, and only if, an Event of Default shall
occur, the Indenture Trustee may declare the Lease to be in default, and
may, to the exclusion of the Owner Trustee, exercise one or more of the
remedies of the Owner Trustee provided in the Lease.
The Owner Trustee or the Owner Participant may cure a default by the
Lessee under the Lease arising from the failure of the Lessee to make any
Basic Rent payments under the Lease, but the Owner Trustee and the Owner
Participant, collectively, may not cure more than three consecutive such
failures or more than six such failures in total. The Owner Trustee or the
Owner Participant may cure any other default by the Lessee in the performance
of its obligations under the Lease.
(A) If an Event of Default shall have occurred and be continuing for
more than 180 days or the Certificates shall have been accelerated or (B) an
Event of Default shall have occurred and be continuing for not more than 180
days and the Certificates shall not have been accelerated, the Owner
Participant (or the Owner Trustee on behalf of the Owner Participant) may:
(1) direct the Owner Trustee to cause the prepayment of all the
Outstanding Certificates by notifying the Indenture Trustee of such
election and depositing the sum of amounts contemplated by paragraph
"first" under Section 5.03 of the Indenture and the aggregate
Prepayment Price of all such Certificates with the Indenture Trustee
for distribution to the Holders; or
(2) purchase all of the Outstanding Certificates by paying to the
Indenture Trustee an amount equal to the aggregate unpaid principal
amount of all Outstanding Certificates, plus accrued interest on such
amount to the date of purchase and any Make-Whole Premium applicable
to each Outstanding Certificate, if such purchase occurs prior to the
Premium Termination Date for such Outstanding Certificate, (in the
case of a purchase pursuant to clause (ii) of the first sentence of
Section 8.02(a) of the Indenture) plus all other sums due any Holder
or the Indenture Trustee under the Indenture, the Participation
Agreement or the Lease.
The right of the Holder hereof to institute an action for any remedy
under the Indenture is subject to certain restrictions specified in the
Indenture, except that the right of the Holder of this Certificate to receive
payment of the principal of and interest and Make-Whole Premium, if any, on
this Certificate on or after the respective due dates, or to institute suit
for the enforcement of any such payment, shall not be impaired or affected
without the consent of such Holder.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 and integral multiples thereof. So long
as any of the Certificates remain Outstanding, the Indenture Trustee will
maintain an office or agency where the Certificates may be presented for
payment and a facility or agency in New York, New York where the
Certificates may be presented for registration of transfer and for exchange
as provided in the Indenture. As provided in the Indenture and subject to
certain limitations therein, this Certificate is transferable, and upon
surrender of this Certificate for registration of transfer at the principal
corporate trust office of the Indenture Trustee, or at the office or agency
maintained for such purposes, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Indenture Trustee duly executed by, the Holder or his attorney duly
authorized in writing, one or more new Certificates of the same Maturity
and interest rate and of authorized denominations and for the same
aggregate principal amount will be issued to the designated transferee or
transferees.
As provided in the Indenture and subject to certain limitations
therein, the Certificates are exchangeable for an equal aggregate principal
amount of Certificates of the same Maturity and interest rate and of
authorized denominations, as requested by the Holder surrendering the same,
upon presentation thereof for such purpose at the principal corporate trust
office of the Indenture Trustee, or at an office or agency maintained for such
purpose.
No service charge shall be levied for any such registration of
transfer or exchange, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Prior to the due presentment for registration of transfer of this
Certificate, the Owner Trustee, the Indenture Trustee, any agent of the Owner
Trustee or the Indenture Trustee, the Paying Agent, if any, the Registrar and
the Lessee may deem and treat the person in whose name this Certificate is
registered as the absolute owner hereof for all purposes whether or not this
Certificate is overdue, and neither the Owner Trustee, the Indenture Trustee
(nor any agent of the Owner Trustee or the Indenture Trustee), nor the Paying
Agent, if any, the Registrar nor the Lessee shall be affected by notice to the
contrary.
As provided in the Indenture, the Indenture and the Certificates
shall be construed in accordance with and governed by the laws of the State of
New York.
This Certificate shall not be secured by or be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose unless
authenticated by the Indenture Trustee as evidenced by the manual signature of
one of its authorized officers on the certificate below.
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Trust
Certificate (Federal Express Corporation Trust No. N658FE) to be duly executed
in its corporate name by its officer thereunto duly authorized.
Dated: FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By____________________________
Name:
Title:
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Equipment Trust Certificates (Federal Express
Corporation Trust No. N658FE) referred to in the within mentioned Indenture.
Dated: NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION,
not in its individual
capacity, but solely as
Indenture Trustee
By___________________________
Title: Authorized Signatory
SCHEDULE I
[Intentionally left blank.]
SCHEDULE II
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Act; Federal Aviation Act. Title 49 of the United States Code
(which, among other things, recodified the Federal Aviation Act of 1958, as
amended to the time of such recodification), as amended and in effect on the
date of the Lease or as subsequently amended, or any successor or substituted
legislation at the time in effect and applicable, and the regulations
promulgated pursuant thereto.
Additional Insureds. As defined in Article 13 of the Lease.
Aeronautics Authority or FAA. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment received or deemed to
have been received by a Person (the "Original Payment") shall be supplemented
by a further payment to such Person so that the sum of the two payments shall
be equal to the Original Payment, after taking into account (x) all Taxes that
would result from the receipt or accrual of such payments and (y) any
reduction in Taxes that would result from such increased Taxes. In the case
of amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is
at all times subject to Federal income tax at the maximum marginal rate
generally applicable to corporations from time to time and actual state, local
and foreign income taxes.
Agent. The Chase Manhattan Bank (National Association) and its
successors and permitted assigns as Agent for the Original Loan Participants
pursuant to Article 16 of the Original Participation Agreement.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by
the Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Act) as to which there is in force a permit granted under
Section 41302 of the Act.
Aircraft. The Airframe (or any permitted substitute airframe)
together with the two Engines (or any Replacement Engine) whether or not any
of such initial or Replacement Engines may from time to time be installed on
such Airframe or may be installed on any other airframe or on any other
aircraft, including any aircraft substituted pursuant to Section 11.03 of the
Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) leased by the Lessor to the
Lessee pursuant to the Lease and the initial Lease Supplement and having
the United States FAA Registration Number and manufacturer's serial number
specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any replacement airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement, dated as of August 1, 1995.
Ancillary Agreement. Any written agreement of the Lessee to which
the Lessor is a party or to which the Lessor has consented in writing
entered into on the Delivery Date or the Refunding Date in connection with
the transactions contemplated by the Operative Agreements, as such
agreement may be amended and supplemented from time to time and delivered
to the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and
the Owner Participant as amended from time to time.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with a copy of such report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
May 1, 1995, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended,
and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or with the giving of notice or lapse of
time or both would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft throughout
the Basic Term pursuant to Section 3.02 of the Lease, adjusted pursuant to
Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on July 5, 2019 or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized
or required to close in New York, New York and Memphis, Tennessee, and so
long as the Lien of the Indenture is in effect, in Atlanta, Georgia,
Columbia, South Carolina and, thereafter, in Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N658FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Act, or any analogous part of any
successor or substituted legislation or regulation at the time in effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, references to the Code shall
mean the Internal Revenue Code of 1986, as amended from time to time.
Commencement Date. July 5, 1995.
Consent and Agreement. The Consent and Agreement dated as of May 1,
1995 executed by the Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Department. The principal office of the Owner
Trustee located at 79 South Main Street, Salt Lake City, Utah 84111 or such
other office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified to the Lessee,
the Indenture Trustee and the Owner Participant.
Corporate Trust Office. The principal office of the Indenture
Trustee located at 600 Peachtree Street, N.E., Suite 900, Atlanta, Georgia
30308, Attention: Corporate Trust Lease Administration or such other office at
which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to the
Lessee, the Owner Participant and the Owner Trustee.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition, which with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. May 4, 1995.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by its manufacturer's serial number in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease,
together with all Parts related thereto. Except as otherwise provided, at
such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of May 1, 1995, executed
by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N658FE), dated as of May 1, 1995 between the
Lessor and the Lessee, as the same may be amended, modified or supplemented
from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. Has the meaning set forth in Section 7.06 of the
Participation Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use
(A) for a period in excess of 30 days due to theft or disappearance or such
longer period not to exceed 60 days from the end of such initial 30-day period
if and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such loss constitutes an Event of Loss under clause (ii)
of this definition) or (B) for a period in excess of 60 days due to the
destruction, damage beyond economic repair or rendition of such property
permanently unfit for normal use by Lessee for any reason whatsoever; (ii) any
damage to such property which results in an insurance settlement with respect
to such property on the basis of a total loss, or constructive or compromised
total loss; (iii) (1) condemnation, confiscation or seizure of, or requisition
of title to such property by the Government, any foreign government or
purported government or any agency or instrumentality thereof, or (2)
condemnation, confiscation, or seizure of, or requisition or taking of, use of
such property (A) by a foreign government or instrumentality or agency of any
such foreign government, for a period in excess of 180 days (or such shorter
period ending on the earlier of the expiration of the Term or on the date on
which an insurance settlement with respect to such property on the basis of a
total loss or constructive or compromised total loss shall occur) or (B) by
the Government for a period extending beyond the Term, provided that no Event
of Loss shall be deemed to have occurred, and the Term shall be extended
automatically for a period of six months (or the date of return of the
Aircraft, if shorter, so long as the Lessor receives at least six months
notice of such date of return) beyond the end of the Term in the event that
the Aircraft, the Airframe or any Engine is requisitioned by the Government
pursuant to an activation as part of the Civil Reserve Air Fleet Program
described in Section 7.02(a)(iv) of the Lease; and (iv) as a result of any
law, rule, regulation, order or other action by the Aeronautics Authority or
other governmental body having jurisdiction, the use of the Aircraft or
Airframe in the normal course of air transportation of cargo shall have been
prohibited by virtue of a condition affecting all Airbus A300F-600 series
aircraft equipped with engines of the same make and model as the Engines for a
period of six (6) consecutive months, unless the Lessee, prior to the
expiration of such six (6) month period, shall be diligently carrying forward
all steps which are necessary or desirable to permit the normal use of the
Aircraft or Airframe or, in any event, if such use of the Aircraft or the
Airframe shall have been prohibited for a period of twelve (12) consecutive
months, unless the Lessee, prior to the expiration of such twelve (12) month
period shall have conformed at least one Airbus A300F-600 series aircraft (but
not necessarily the Aircraft or the Airframe) to the requirements of any such
law, rule, regulation, order, or other action and shall have commenced regular
commercial use and shall be diligently carrying forward, on a
non-discriminatory basis, all steps necessary or desirable to permit the
normal use of the Aircraft by the Lessee. The date of such Event of Loss
shall be (s) the 31st day or the 91st day, as the case may be, following loss
of such property or its use due to theft or disappearance (or the end of the
Term, if earlier); (t) the 61st day following the date of any destruction,
damage beyond economic repair or rendition of such property permanently unfit
for normal use; (u) the date of any insurance settlement on the basis of a
total loss or constructive or compromised total loss; (v) the date of any
condemnation, confiscation, seizure or requisition of title of such property;
(w) the 181st day following condemnation, confiscation, seizure or requisition
for use of such property by a foreign government referred to in clause
(iii)(2)(A) above (or the end of the Term or the date of any insurance
settlement described therein, if earlier than such 181st day); (x) the last
day of the Term in the case of requisition for use of such property by the
Government; (y) the last day of the 6 month or 12 month period, referred to in
clause (iv) above. An Event of Loss with respect to the Aircraft shall be
deemed to have occurred if any Event of Loss occurs with respect to the
Airframe. If an Event of Loss described in any of clauses (i) (A), (iii),
(iv) or (v) above shall occur, Lessor may elect, within 30 days following the
date upon which such Event of Loss is deemed to have occurred, to waive such
Event of Loss and the consequences thereof.
Excepted Payments. Collectively, (i) indemnity or other payments
(and interest thereon to the extent provided in the Operative Agreements)
paid or payable by the Lessee in respect of the Owner Participant, the
Owner Trustee in its individual capacity or any of their respective
successors, permitted assigns, directors, officers, employees, servants and
agents or Affiliates, pursuant to the Participation Agreement or any
indemnity hereafter granted to the Owner Participant or the Owner Trustee
in its individual capacity pursuant to the Lease or the Participation
Agreement, (ii) proceeds of public liability insurance (or government
indemnities in lieu thereof) in respect of the Aircraft payable as a result
of insurance claims paid for the benefit of, or losses suffered by, the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or by the Owner Participant, or their respective successors,
permitted assigns or Affiliates, (iii) proceeds of insurance maintained
with respect to the Aircraft by the Owner Participant (whether directly or
through the Owner Trustee) maintained in accordance with the provisions of
but not required under Section 13 of the Lease, (iv) payments of
Supplemental Rent by the Lessee in respect of any amounts payable under the
Tax Indemnity Agreement, (v) any amounts payable by the Lessee to the Owner
Participant or the Owner Trustee in its individual capacity, after the
release thereof from the Lien of the Indenture, (vi) (x) in the case of
any Basic Rent received by the Indenture Trustee on or in respect of any
Rent Payment Date, subject to receipt by the Indenture Trustee of Basic
Rent due on such Rent Payment Date satisfying Section 3.05 of the Lease,
payments of Basic Rent payable on such Rent Payment Date constituting
increases in Basic Rent attributable to payments arising pursuant to
Section 5 of the Tax Indemnity Agreement and (y) in the case of any Basic
Rent otherwise received by the Indenture Trustee, so long as no Payment
Default or Indenture Event of Default shall have occurred and be
continuing, payments of Basic Rent constituting increases in Basic Rent
attributable to payments arising pursuant to Section 5 of the Tax Indemnity
Agreement, (vii) the payment of incremental out-of-pocket expenses of the
Owner Trustee, the Owner Participant or their respective authorized
representatives payable by the Lessee under Section 6.03(b) of the
Participation Agreement or Section 14.01 of the Lease following any
reregistration of the Aircraft and (viii) any right to demand, collect or
otherwise receive and enforce the payment of any amount described in
clauses (i) through (vii) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
Fair Market Renewal Term. A term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the second
paragraph of Section 4.01(a) thereof and with respect to which the
conditions set forth in such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease. Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal
in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion
to buy and an informed and willing seller unaffiliated with such purchaser
and under no compulsion to sell, assuming that the Aircraft (or other
property) is unencumbered by the Lease. Unless otherwise provided in the
applicable provisions of any Operative Agreement, in such determination it
shall be assumed that the Aircraft is in the condition required under the
Lease in the case of return of the Aircraft pursuant to Article 12 of the
Lease; provided that in connection with any determination pursuant to or
for the purposes of Article 17 of the Lease, the Aircraft shall be
appraised on an "as is, where is" basis. Fair Market Value shall be
determined in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FSBU. First Security Bank of Utah, National Association, a national
banking association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between
the Engine Manufacturer and the Lessee related to the purchase by the
Lessee of the Engines as originally executed or as modified, amended or
supplemented in accordance with the terms thereof, but only insofar as the
General Terms Agreement relates to the Engines, to the extent assigned to
the Owner Trustee pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSBU, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, the Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N658FE), dated as of May 1, 1995, as amended and
restated as of August 1, 1995, between the Lessor and the Indenture Trustee,
as supplemented by the Indenture and Security Agreement Supplement, or amended
including any amendment or supplement thereto entered into from time to time.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N658FE) dated May 4, 1995, as such Indenture and Security Agreement Supplement
shall be amended or supplemented from time to time and any other supplement to
the Indenture, substantially in the form of Exhibit A to the Indenture.
Indenture Default. Any event or condition, which with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. NationsBank of Georgia, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes or Expenses
imposed against the Indenture Trustee which are not required to be indemnified
against by the Lessee pursuant to the Participation Agreement by reason of
Section 8.01(b) or 9.01(b) thereof.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N658FE) dated as of May 1, 1995, as amended and restated as of August 1, 1995,
entered into by the Lessor and the Lessee concurrently with the execution and
delivery of the Indenture, as said Lease may from time to time be supplemented
or amended, or its terms waived or modified, to the extent permitted by, and
in accordance with, the terms of the Indenture, including, without limitation,
supplementation by one or more Lease Supplements entered into pursuant to the
applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N658FE) dated May 4, 1995, as such Lease Supplement
shall be amended or supplemented from time to time and any other supplement
to the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessor. First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), the GTA, the Engine Warranty Assignment, the Engine Consent, any
warranty with respect to the Airframe and the Engines, all amounts of Basic
Rent and Supplemental Rent, including without limitation, insurance proceeds
(other than insurance proceeds payable to or for the benefit of the Owner
Trustee in its individual capacity, the Owner Participant or the Indenture
Trustee) and requisition, indemnity or other payments of any kind for or with
respect to the Aircraft (except amounts owing to the Owner Participant, to the
Indenture Trustee, to the Owner Trustee in its individual capacity, or to any
of their respective directors, officers, employees and agents pursuant to
Articles 8 and 9 of the Participation Agreement). Notwithstanding the
foregoing, "Lessor's Estate" shall (i) not include any Excepted Payment and
(ii) include all property purported to be covered by the Granting Clause of
the Indenture.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, or the Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, (ii)
acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof or which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Articles 7, 8, 9, 10
or 11 of the Lease and other than a transfer pursuant to the exercise of the
remedies set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to an excess of (i) the
present values of all remaining scheduled payments of such principal amount or
portion thereof and interest thereon (excluding interest accrued from the
immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate per semi-annual period equal to the Debt Rate.
Non-U.S. Person. Any Person other than (i) a citizen or resident of
the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which the Lessee in good faith determines to
be obsolete or no longer suitable or appropriate for use on the Airframe or
any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, any Owner Trustee Guaranty,
any Ancillary Agreement entered into by or with the written consent of the
Indenture Trustee, which by its terms is an Operative Agreement, the
Certificates outstanding at the time of reference, the Indenture, the
Indenture and Security Agreement Supplement, the Consent and Agreement, the
AVSA Consent and Agreement, the Consent and Guaranty (to the extent assigned
by the Purchase Agreement Assignment), the Engine Consent and the Tax
Indemnity Agreement, each as amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N658FE) dated as of May 1,
1995 between the Owner Trustee and the Indenture Trustee, which together with
the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N658FE) dated May 4, 1995 attached thereto was recorded
as one instrument by the FAA on May 5, 1995 and assigned Conveyance Number
NN008445.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N658FE) dated as of May 1, 1995 between the Owner Trustee as lessor,
and the Lessee, which together with Lease Supplement No. 1 (Federal Express
Corporation Trust No. N658FE) dated May 4, 1995 attached thereto was recorded
as one instrument by the FAA on May 5, 1995 and assigned Conveyance Number
NN008446.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the first Refinancing after the Delivery
Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N658FE) among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of May 1, 1995.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N658FE) between the Lessee and the
Owner Participant as it was originally executed as of May 1, 1995.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N658FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of May 1, 1995 and filed with the FAA
on May 4, 1995.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Amount. The amount described in Section 2.03 of
the Participation Agreement and set forth on Schedule II to the Lease.
Owner Participant Guarantor. AmSouth Bank of Alabama, its successors
and permitted assigns and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty dated the
Delivery Date, as amended and restated on the Refunding Date substantially in
the form of Exhibit E to the Participation Agreement, as the same may be
amended, modified or supplemented from time to time.
Owner Trustee. FSBU, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash flow during the Interim Term
and the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages and the EBO Price, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N658FE), dated as of May 1, 1995, as amended
and restated as of August 1, 1995, among the Lessee, the Original Loan
Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as trustee, the Owner
Participant, the Pass Through Trustee, not in its individual capacity
except as otherwise expressly provided therein, but solely as pass through
trustee and the Indenture Trustee, not in its individual capacity except as
otherwise expressly stated therein, but solely as indenture trustee, as
amended, modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever
nature (other than complete Engines or engines) which may from time to time
be incorporated or installed in or attached to the Airframe or any Engine
or, prior to replacement thereof in accordance with the Lease, which may be
removed therefrom.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
August 1, 1995 between the Lessee and the Pass Through Trustee, as such Pass
Through Agreement may be modified, supplemented or amended from time to
time in accordance with the provisions thereof.
Pass Through Certificates. Any of the 1995 Pass Through
Certificates, Series A1 or 1995 Pass Through Certificates, Series A2, in
each case as issued by the related Pass Through Trust; and "Pass Through
Certificates" means all of the Pass Through Certificates issued by each of
the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1995-A1
or Federal Express Pass Through Trust, 1995-A2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. NationsBank, National Association (Carolinas),
a national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 5 and July 5 commencing July 5, 1995.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Premium Termination Date. With respect to the Certificates having a
Maturity in 2013, February 22, 2007, and with respect to the Certificates
having a Maturity in 2016, May 4, 2015.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of
the Indenture.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase
Agreement, dated as of July 3, 1991 between AVSA and the Lessee, including
all exhibits, appendices and letter agreements attached thereto as
originally executed or as modified, amended or supplemented in accordance
with the terms thereof, but only to the extent that the foregoing relates
to the Aircraft and to the extent assigned pursuant to the Purchase
Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N658FE), dated as of May 1, 1995
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 21 for January 5
Payment Dates and June 20 for July 5 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least ten Business Days prior
to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of
the products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the
payment due on the Maturity of such Certificate, by (ii) the number of
years (calculated to the nearest one-twelfth) which will elapse between
such determination date, and the date on which such payment is scheduled to
be made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 5 and July 5 commencing July 5,
1995.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of the same or of equal or greater
value, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Department or Corporate
Trust Office (in the Corporate Trust Lease Administration Department), as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, with respect to the Owner Participant, the president or
any vice president with direct responsibility for the transactions
contemplated by the Operative Agreements, and with respect to any other party,
any corporate officer or (except in the case of the Owner Participant) other
employee of a party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Corporation.
Securities Act. The Securities Act of 1933, as amended.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
Series Supplement. The Series Supplement 1995-A1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1995-A2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both of such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value shall
be, under any circumstances and in any event, an amount, together with so much
of the arrears portion of Basic Rent due and owing through the date of payment
of Stipulated Loss Value as does not constitute an Excepted Payment, at least
sufficient to pay in full as of such date of payment the aggregate unpaid
principal amount of and accrued interest on the Certificates outstanding on
such date of payment. Subject to the immediately preceding sentence, it is
understood and agreed that the amounts set forth on Schedule III of the Lease,
for dates other than Rent Payment Dates on which arrears Basic Rent is due,
fully reflect appropriate Basic Rent accruals and credits of unearned Basic
Rent and, accordingly, no further accrual or credit shall be required whenever
Stipulated Loss Value is to be calculated with reference to any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant or
others, including, without limitation, payments of Stipulated Loss Value, EBO
Price and amounts calculated by reference to Termination Value and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after July 5, 2002 in the case of Article 10 of the Lease, and in the
case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling on
January 5, 2011 or January 5, 2014, as the case may be, (ii) Section
4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the
eighth anniversary of the Commencement Date and (iii) Section 4.02(a)(F) of
the Lease, January 5, 2016.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to
be calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N658FE), dated as of May 1, 1995 as amended and restated as of
August 1, 1995, between the Owner Participant and the Owner Trustee in its
individual capacity, as from time to time modified, amended or supplemented
pursuant to its applicable provisions and in accordance with the Operative
Agreements.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. The several Underwriters named in the Underwriting
Agreement.
Underwriting Agreement. The Underwriting Agreement dated August 16,
1995 among the Lessee, Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Chase Securities, Inc.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Federal Aviation Act, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Federal Aviation
Act and Part 121 of the regulations under such Act, for aircraft capable of
carrying ten (10) or more individuals or 6,000 pounds or more of cargo, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provision thereof or in absence thereof.
SCHEDULE III
DESCRIPTION OF ORIGINAL INDENTURE
Trust Indenture, Mortgage and Security Agreement (Federal Express
Corporation Trust No. N658FE) dated as of May 1, 1995 between First Security
Bank of Utah, National Association, as owner trustee under Trust Agreement
(Federal Express Corporation Trust No. N658FE) dated as of May 1, 1995, and
NationsBank of Georgia, National Association, as indenture trustee, recorded
by the Federal Aviation Administration on May 5, 1995 and assigned Conveyance
No. NN008445, as supplemented by the following described instrument:
FAA FAA
Date of Recording Conveyance
Instrument Instrument Date Number
Indenture and Security Agreement
Supplement No. 1
(Federal Express Corporation
Trust No. N658FE) 05/04/95 05/05/95 NN008445
TRUST INDENTURE AND SECURITY AGREEMENT
(Federal Express Corporation Trust No. N659FE)
Dated as of July 1, 1995
Amended and Restated as of August 1, 1995
between
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
Not in its Individual
Capacity, but solely
As Owner Trustee,
Owner Trustee
and
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION,
Indenture Trustee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 757, REGISTRATION NO. N659FE
TABLE OF CONTENTS
Page
Initial Recitals......................................................... 1
Granting Clause.......................................................... 2
Habendum Clause.......................................................... 5
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions........................................ 7
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF CERTIFICATES
SECTION 2.01. Authentication and Delivery of Certificates.............. 8
SECTION 2.02. Execution of Certificates................................ 8
SECTION 2.03. Certificate of Authentication............................ 8
SECTION 2.04. Form and Terms of Certificates; Payments of Principal,
Make-Whole Premium and Interest.......................... 9
SECTION 2.05. Payments from Trust Indenture Estate Only................ 10
SECTION 2.06. Registration, Transfer and Exchange...................... 11
SECTION 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Certificates............................................. 12
SECTION 2.08. Cancellation of Certificates; Destruction Thereof........ 13
SECTION 2.09. Temporary Certificates................................... 13
SECTION 2.10. Termination of Interest in Trust Indenture Estate........ 14
SECTION 2.11. Certificates in Respect of Replacement Aircraft.......... 14
SECTION 2.12. Assumption of Obligations Under Certificates and Other
Operative Agreements..................................... 14
ARTICLE III
COVENANTS
SECTION 3.01. Payment of Principal, Make-Whole Premium and Interest.... 15
SECTION 3.02. Offices for Payments, etc................................ 15
SECTION 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee.................................................. 15
SECTION 3.04. Paying Agents............................................ 15
SECTION 3.05. Covenants of FSBU and the Owner Trustee.................. 16
SECTION 3.06. [Intentionally Left Blank.].............................. 17
SECTION 3.07. Disposal of Trust Indenture Estate....................... 17
SECTION 3.08. No Representations or Warranties as to Aircraft or
Documents................................................ 17
SECTION 3.09. Further Assurances; Financing Statements................. 17
ARTICLE IV
HOLDER LISTS
SECTION 4.01. Holder Lists; Ownership of Certificates.................. 18
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 5.01. Basic Rent Distribution.................................. 18
SECTION 5.02. Event of Loss and Replacement; Prepayment................ 19
SECTION 5.03. Payment After Indenture Event of Default, etc............ 19
SECTION 5.04. Certain Payments......................................... 20
SECTION 5.05. Other Payments........................................... 21
SECTION 5.06. Payments to Owner Trustee................................ 21
SECTION 5.07. Application of Payments.................................. 21
SECTION 5.08. Investment of Amounts Held by Indenture Trustee.......... 22
SECTION 5.09. Withholding Taxes........................................ 22
ARTICLE VI
PREPAYMENT OF CERTIFICATES
SECTION 6.01. No Prepayment Prior to Maturity.......................... 23
SECTION 6.02. Prepayment of Certificates............................... 23
SECTION 6.03. Notice of Prepayment to Holders.......................... 25
SECTION 6.04. Deposit of Prepayment Price and Sinking Fund
Redemption Price......................................... 25
SECTION 6.05. Certificates Payable on Prepayment Date.................. 26
SECTION 6.06. Mandatory Sinking Fund Redemption........................ 26
ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
SECTION 7.01. Indenture Event of Default............................... 28
SECTION 7.02. Remedies................................................. 30
SECTION 7.03. Return of Aircraft, etc.................................. 32
SECTION 7.04. Indenture Trustee May Prove Debt......................... 35
SECTION 7.05. Remedies Cumulative...................................... 37
SECTION 7.06. Suits for Enforcement.................................... 37
SECTION 7.07. Discontinuance of Proceedings............................ 37
SECTION 7.08. Limitations on Suits by Holders.......................... 37
SECTION 7.09. Unconditional Right of Holders to Receive Principal,
Interest and Make-Whole Premium, and to Institute
Certain Suits............................................ 38
SECTION 7.10. Control by Holders....................................... 38
SECTION 7.11. Waiver of Past Indenture Default......................... 39
SECTION 7.12. Notice of Indenture Default.............................. 39
SECTION 7.13. Waiver of Appraisement, etc.; Laws....................... 39
ARTICLE VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
SECTION 8.01. Certain Rights of Owner Trustee and Owner Participant.... 40
SECTION 8.02. Owner Participant's Right to Elect to Prepay or Purchase
the Certificates......................................... 43
SECTION 8.03. Certain Rights of Owner Participant...................... 45
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
SECTION 9.01. Acceptance of Trusts..................................... 46
SECTION 9.02. Duties and Responsibilities of the Indenture Trustee;
During an Indenture Event of Default; Prior to an
Indenture Event of Default............................... 46
SECTION 9.03. Certain Rights of the Indenture Trustee.................. 49
SECTION 9.04. Indenture Trustee Not Responsible for Recitals,
Disposition of Certificates or Application of
Proceeds Thereof......................................... 50
SECTION 9.05. Indenture Trustee and Agents May Hold Certificates;
Collections, etc......................................... 50
SECTION 9.06. Moneys Held by Indenture Trustee......................... 50
SECTION 9.07. Right of Indenture Trustee to Rely on Officers' Certificate,
etc...................................................... 50
SECTION 9.08. Replacement Airframes and Replacement Engines............ 51
SECTION 9.09. Indenture and Security Agreement Supplement for
Replacements............................................. 54
SECTION 9.10. Effect of Replacement.................................... 54
SECTION 9.11. Compensation............................................. 54
ARTICLE X
CONCERNING THE HOLDERS
SECTION 10.01. Evidence of Action Taken by Holders..................... 55
SECTION 10.02. Proof of Execution of Instruments and of Holding of
Certificates............................................ 55
SECTION 10.03. Holders to Be Treated as Owners......................... 55
SECTION 10.04. Certificates Owned by Owner Trustee and the Lessee Deemed
Not Outstanding......................................... 56
SECTION 10.05. Right of Revocation of Action Taken..................... 56
Section 10.06. ERISA Plan Prohibition.................................. 57
ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
ARTICLE XII
SUCCESSOR TRUSTEES
SECTION 12.01. Notice of Successor Owner Trustee....................... 58
SECTION 12.02. Resignation and Removal of Indenture Trustee; Appointment
of Successor............................................ 59
SECTION 12.03. Persons Eligible for Appointment as Indenture Trustee... 60
SECTION 12.04. Acceptance of Appointment by Successor Trustee.......... 60
SECTION 12.05. Merger, Conversion, Consolidation or Succession to Business
of Indenture Trustee.................................... 61
SECTION 12.06. Appointment of Separate Trustees........................ 61
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
SECTION 13.01. Supplemental Indentures Without Consent of Holders...... 63
SECTION 13.02. Supplemental Indentures With Consent of Holders......... 65
SECTION 13.03. Effect of Supplemental Indenture........................ 66
SECTION 13.04. Documents to Be Given to Indenture Trustee.............. 67
SECTION 13.05. Notation on Certificates in Respect of Supplemental
Indentures.............................................. 67
SECTION 13.06. No Request Necessary for Lease Supplement or Indenture and
Security Agreement Supplement........................... 67
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 14.01. Satisfaction and Discharge of Indenture; Termination of
Indenture............................................... 67
SECTION 14.02. Application by Indenture Trustee of Funds Deposited for
Payment of Certificates................................. 69
SECTION 14.03. Repayment of Moneys Held by Paying Agent................ 69
SECTION 14.04. Transfer of Moneys Held by Indenture Trustee and Paying
Agent Unclaimed for Two Years and Eleven Months......... 69
ARTICLE XV
MISCELLANEOUS
SECTION 15.01. Capacity in Which Acting................................ 69
SECTION 15.02. No Legal Title to Trust Indenture Estate in Holders..... 70
SECTION 15.03. Sale of Trust Indenture Estate by Indenture Trustee is
Binding................................................. 70
SECTION 15.04. Indenture for Benefit of Owner Trustee, Indenture Trustee,
Owner Participant and Holders........................... 70
SECTION 15.05. No Action Contrary to the Lessee's Rights Under the
Lease................................................... 70
SECTION 15.06. Notices................................................. 70
SECTION 15.07. Officers' Certificates and Opinions of Counsel; Statements
to Be Contained Therein................................. 71
SECTION 15.08. Severability............................................ 72
SECTION 15.09. No Oral Modifications or Continuing Waivers............. 72
SECTION 15.10. Successors and Assigns.................................. 72
SECTION 15.11. Headings................................................ 73
SECTION 15.12. Normal Commercial Relations............................. 73
SECTION 15.13. Governing Law; Counterparts............................. 73
Exhibit A -- Form of Indenture and Security Agreement Supplement
Exhibit B -- Form of Certificate
Schedule I -- [Intentionally Left Blank]
Schedule II -- Definitions
Schedule III -- Description of Original Indenture
TRUST INDENTURE AND SECURITY AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N659FE)
TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION
TRUST NO. N659FE) dated as of July 1, 1995 as amended and restated as of
August 1, 1995 (the "Indenture"), between First Security Bank of Utah,
National Association, a national banking association, not in its individual
capacity, except as otherwise specifically set forth herein (when acting in
such individual capacity, "FSBU"), but solely as owner trustee (the "Owner
Trustee") under the Trust Agreement, as defined herein, and NationsBank of
Georgia, National Association, a national banking association, as Indenture
Trustee hereunder (the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and FSBU entered into the Original
Trust Agreement whereby, among other things, the Owner Trustee declared a
certain trust for the use and benefit of the Owner Participant, subject,
however, to the Lien of the Original Indenture;
WHEREAS, the Owner Trustee and the Indenture Trustee entered into the
Original Indenture for the benefit and security of the Original Loan
Participants and pursuant to which the Owner Trustee issued to the Original
Loan Participants the Original Loan Certificates as evidence of the loan made
by the Original Loan Participants to the Owner Trustee, the proceeds of which
were used by the Owner Trustee to pay a portion of the Purchase Price for the
Aircraft;
WHEREAS, the Original Indenture was recorded by the FAA and assigned
a Conveyance Number as more particularly described on Schedule III attached
hereto;
WHEREAS, pursuant to Section 15 of the Original Participation
Agreement, the parties hereto desire to refinance the Original Loan
Certificates with the proceeds of the Certificates to be issued hereunder;
WHEREAS, in connection with the refinancing of the Original Loan
Certificates, the parties hereto desire to amend and restate the Original
Indenture in its entirety as this Indenture sets forth, in order to provide,
among other things, (i) for the issuance by the Owner Trustee of the
Certificates, as provided in the Participation Agreement, and (ii) for the
assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee,
as part of the Trust Indenture Estate hereunder, among other things, of
certain of the Owner Trustee's right, title and interest in and to the
Aircraft, the Lease and payments and other amounts received hereunder or
thereunder in accordance with the terms hereof (other than Excepted Payments),
as security for the Owner Trustee's obligations to the Holders and for the
ratable benefit and security of such Holders;
WHEREAS, the Owner Participant and FSBU, prior to the execution and
delivery of this Indenture, entered into the Trust Agreement whereby the
Original Trust Agreement was amended and restated and pursuant to which, among
other things, the Owner Trustee is authorized and directed to execute and
deliver this Indenture;
WHEREAS, all things have been done to make the Certificates, when
executed by the Owner Trustee, and authenticated, issued and delivered
hereunder, the valid obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Indenture the valid,
binding and legal obligation of the Owner Trustee, enforceable in accordance
with its terms, have been done and performed and have happened.
NOW, THEREFORE, the parties agree that such Original Indenture be and
the same is hereby amended and restated to read in its entirety as follows:
GRANTING CLAUSE
NOW, THEREFORE, in consideration of the mutual promises contained
herein and to secure (i) the prompt payment of the principal of and Make-Whole
Premium, if any, and interest on, and all other amounts due with respect to,
all the Certificates from time to time outstanding under this Indenture and
all other amounts due hereunder and (ii) the performance and observance by the
Owner Trustee of all the agreements, covenants and provisions in this
Indenture, in the Certificates, in the Participation Agreement and in the
Lease contained for the benefit of the Holders of the Certificates, and the
prompt payment of any and all amounts from time to time owing under the
Participation Agreement by the Owner Trustee, the Owner Participant or the
Lessee to the Holders and for the uses and purposes and subject to the terms
and provisions of this Indenture, and in consideration of the premises and of
the covenants in this Indenture and in the Certificates and of the purchase of
the Certificates by their Holders, and of the sum of $1 paid to the Owner
Trustee by the Indenture Trustee at or before the delivery of this Indenture,
the receipt and sufficiency of which is hereby acknowledged, the Owner Trustee
has granted, bargained, sold, assigned, transferred, conveyed, mortgaged,
pledged, granted a security interest in and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and grant a security
interest in and confirm to the Indenture Trustee, its successors and assigns,
in trust for the equal and ratable security and benefit of the Holders from
time to time of the Certificates, a first priority security interest in and
first mortgage Lien on all estate, right, title and interest of the Owner
Trustee in, to and under the following described property, rights and
privileges other than Excepted Payments, which collectively, excluding
Excepted Payments but including all property specifically subjected to the
Lien of this Indenture by the terms hereof, by any Indenture and Security
Agreement Supplement or any mortgage supplemental to this Indenture, are
included within the Trust Indenture Estate, subject always to the rights
granted to the Owner Trustee or the Owner Participant hereunder and to the
other terms and conditions of this Indenture:
(1) The Airframe, as the same is more particularly described in the
Indenture and Security Agreement Supplement and any airframe substituted in
replacement thereof pursuant to the provisions of this Indenture; the Engines,
as the same are more particularly described in the Indenture and Security
Agreement Supplement, whether or not such Engines shall be installed in or
attached to the Airframe or any other airframe, and any Replacement Engine
therefor; and all Parts in respect of the Airframe and the Engines and all
records, logs and other documents at any time maintained with respect to the
foregoing property;
(2) The Lease and all Rent thereunder, including, without limitation,
all amounts of Basic Rent and Supplemental Rent, and payments of any kind
thereunder and including all rights of the Owner Trustee to execute any
election or option or to give or receive any notice, consent, waiver or
approval under or in respect of the Lease or to accept any surrender of the
Aircraft or any part thereof as well as any rights, powers or remedies on the
part of the Owner Trustee, whether arising under the Lease or by statute or at
law or in equity or otherwise arising out of any Event of Default;
(3) The Purchase Agreement, the Purchase Agreement Assignment, the
AVSA Consent and Agreement, the Consent and Agreement, the Consent and
Guaranty, the GTA, the Engine Warranty Assignment and the Engine Consent,
AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus Guaranty and
the Participation Agreement (to the extent of amounts payable to the Owner
Trustee thereunder) (collectively, and together with the Lease, the Trust
Agreement and the Certificates, the "Indenture Documents"), including all
rights of the Owner Trustee to execute any election or option or to give or
receive any notice, consent, waiver or approval under or in respect of any of
the foregoing documents and instruments;
(4) All the tolls, rents, issues, profits, products, revenues and
other income (including sales proceeds) of the property subjected or required
to be subjected to the Lien of this Indenture, and all of the estate, right,
title and interest of the Owner Trustee in and to the same and every part of
said property;
(5) All moneys and securities (including Permitted Investments) now
or hereafter paid or deposited or required to be paid or deposited to or
with the Indenture Trustee by or for the account of the Owner Trustee
pursuant to any term of any Operative Agreement, except the Tax Indemnity
Agreement, and held or required to be held by the Indenture Trustee
hereunder;
(6) All requisition proceeds with respect to the Aircraft or any part
thereof (to the extent of the Owner Trustee's interest therein pursuant to the
terms of the Lease) and all insurance proceeds with respect to the Aircraft or
any part thereof from insurance required to be maintained by the Lessee under
Section 13 of the Lease, but excluding any insurance maintained by the Lessee
and not required under Section 13 of the Lease; and
(7) All proceeds of the foregoing.
Notwithstanding the foregoing provisions:
(a) (i) whether or not an Indenture Event of Default shall occur and
be continuing, the Owner Trustee and the Owner Participant shall at all times
retain the right, to the exclusion of the Indenture Trustee, (A) to Excepted
Payments and to commence an action at law to obtain such Excepted Payments and
(B) to adjust Basic Rent and the percentages relating to Stipulated Loss Value
and Termination Value and the EBO Price as provided in Section 3.04 of the
Lease and Section 15.01 of the Participation Agreement, (C) to exercise any
election or option to make any decision or determination, or to give or
receive any notice, consent, waiver or approval, or to take any other action
in respect of, but in each case only to the extent relating to, Excepted
Payments, (D) to retain the rights of the "Lessor" with respect to
solicitations of bids, and the election to retain the Aircraft pursuant to
Article 10 of the Lease, (E) to retain the right of "Lessor" to determine the
Fair Market Rental or Fair Market Value pursuant to Article 4 of the Lease,
(F) to retain all rights with respect to insurance maintained for its own
account which Section 13.05 of the Lease specifically confers on the "Lessor"
and (G) to exercise, to the extent necessary to enable it to exercise its
rights under Section 8.03 hereof, the rights of the "Lessor" under Section
17.04 of the Lease;
(ii)whether or not an Indenture Event of Default shall occur and be
continuing, the Owner Trustee and the Indenture Trustee shall each have the
rights separately but not to the exclusion of the other (agreement of both
required in the case of clause (E) below), (A) to receive from the Lessee all
notices, certificates, reports, filings, opinions of counsel, copies of all
documents and all information which the Lessee is permitted or required to
give or furnish to the "Lessor" pursuant to the Lease or to the Owner Trustee
pursuant to any other Operative Agreement, (B) to exercise inspection rights
pursuant to Section 14.01 of the Lease (provided that if an Indenture Event of
Default shall be continuing, no inspection right of the Owner Trustee shall
interfere with the efforts of the Indenture Trustee to exercise remedies under
the Lease or this Indenture), (C) to maintain separate insurance pursuant to
Section 13.05 of the Lease and to retain all rights with respect to such
insurance maintained for its own account, (D) to give any notice of default
under Section 16.01 of the Lease and to declare the Lease in default in
respect thereof, and (E) the right to consent to changes to the list of
countries on Schedule III to the Participation Agreement;
(iii)(A) so long as no Indenture Event of Default shall have occurred
and be continuing (but subject to the provisions of Section 8.01 hereof), the
Owner Trustee shall retain the right, to the exclusion of the Indenture
Trustee, to approve as satisfactory any accountants, engineers, appraisers or
counsel to render services for or issue appraisals, reports, certificates or
opinions to the Owner Trustee and to exercise all rights, elections and
options of the Lessor in connection with the return of the Aircraft pursuant
to express provisions of the Operative Agreements, and (B) so long as no
Indenture Event of Default not constituting an Event of Default shall have
occurred and be continuing (but subject to the provisions of Section 8.01
hereof), the Owner Trustee shall retain the right, jointly with the Indenture
Trustee (agreement of both not being required), to further assurances and
financial information from the Lessee pursuant to Section 19.01 of the Lease
(other than the right to receive any funds to be delivered to the "Lessor"
under the Lease (except funds delivered with respect to Excepted Payments) and
under the Purchase Agreement;
(iv)at all times the Owner Trustee shall have the right as Lessor,
but not to the exclusion of the Indenture Trustee, to seek specific
performance of the covenants of the Lessee under the Lease relating to the
protection, insurance, maintenance, possession and use of the Aircraft; and
(v) at all times the Owner Trustee and the Owner Participant shall
have the rights granted to them under Articles VI, VIII and X and Section 7.02
hereof.
(b) The leasehold interest granted to the Lessee by the Lease shall
not be subject to the security interest granted by this Indenture, and nothing
in this Indenture shall affect the rights of the Lessee under the Lease so
long as no Event of Default has occurred and is continuing.
HABENDUM CLAUSE
TO HAVE AND TO HOLD the aforesaid property unto the Indenture
Trustee, its successors and assigns, in trust for the equal and ratable
benefit and security of the Holders from time to time of the Certificates,
without any priority of any one Certificate over any other and for the uses
and purposes and subject to the terms and conditions set forth in this
Indenture.
It is expressly agreed that anything contained in this Indenture to
the contrary notwithstanding, the Owner Trustee shall remain liable under the
Indenture Documents to perform all of the obligations assumed by it under any
of those documents, all in accordance with and pursuant to the terms and
provisions of those documents, and the Indenture Trustee and the Holders of
the Certificates shall have no obligation or liability under the Indenture
Documents by reason of or arising out of the assignment under this Indenture,
nor shall the Indenture Trustee or the Holders of the Certificates be required
or obligated in any manner to perform or fulfill any obligations of the Owner
Trustee under or pursuant to the Indenture Documents or, except as expressly
provided in this Indenture, to make any payment, or to make any inquiry as to
the nature or sufficiency of any payment received by it, or present or file
any claim, or take any action to collect or enforce the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time
or times.
Effective upon the occurrence and continuance of an Indenture Event
of Default, the Owner Trustee hereby constitutes the Indenture Trustee the
true and lawful attorney of the Owner Trustee, irrevocably, with full power
(in the name of the Owner Trustee or otherwise), subject to the terms and
conditions of this Indenture, to ask, require, demand, receive, compound
and give acquittance for any and all Basic Rent, Supplemental Rent payable
to the Owner Trustee, Stipulated Loss Value and Termination Value payments,
insurance proceeds and any and all moneys and claims for moneys due and to
become due under or arising out of the Lease (subject to Section 8.01
hereof) or the other Indenture Documents (other than Excepted Payments), to
endorse any checks or other instruments or orders in connection with the
same and to file any claims, take any action or institute any proceeding
which the Indenture Trustee may deem to be necessary or advisable in the
premises.
Under the Lease the Lessee is directed to make all payments of Rent
(other than Excepted Payments) payable to the Owner Trustee and all other
amounts (other than Excepted Payments) which are required to be paid to or
deposited with the Owner Trustee pursuant to the Lease directly to the
Indenture Trustee at such address in the United States of America as the
Indenture Trustee shall specify for application as provided in this Indenture.
The Owner Trustee agrees that if, notwithstanding such provision, it shall
have received any such amounts, promptly on receipt of any such payment, it
will transfer to the Indenture Trustee any and all moneys from time to time
received by the Owner Trustee constituting part of the Trust Indenture Estate
for distribution by the Indenture Trustee pursuant to this Indenture, except
that the Owner Trustee shall accept for distribution pursuant to the Trust
Agreement (i) any amounts distributed to it by the Indenture Trustee under
this Indenture, and (ii) any Excepted Payments.
The Owner Trustee agrees that at any time and from time to time, upon
the written request of the Indenture Trustee, the Owner Trustee will promptly
and duly execute and deliver or cause to be duly executed and delivered any
and all such further instruments and documents as the Indenture Trustee may
reasonably deem desirable in obtaining the full benefits of the assignment
hereunder and of the rights and powers herein granted; provided, however, that
the Owner Trustee shall have no obligation to execute and deliver or cause to
be executed or delivered to the Indenture Trustee any such instrument or
document if such execution and delivery would result in the imposition of
additional liabilities on the Owner Trustee or the Owner Participant or would
result in a burden on the Owner Participant's business activities, unless the
Owner Trustee or the Owner Participant, as the case may be, is indemnified to
its reasonable satisfaction against any losses, liabilities and expenses
incurred in connection with such execution and delivery.
The Owner Trustee does hereby warrant and represent that it has not
assigned, pledged or otherwise disposed of, and hereby covenants that it will
not assign or pledge or otherwise dispose of, so long as the assignment
hereunder shall remain in effect and shall not have been terminated pursuant
to Section 14.01 hereof, any of its right, title or interest hereby assigned,
to anyone other than the Indenture Trustee, and that it will not, except in
respect of Excepted Payments or otherwise as provided in or permitted by this
Indenture, accept any payment from the Lessee or any sublessee (other than
Excepted Payments), enter into an agreement amending or supplementing any of
the Operative Agreements, execute any waiver or modification of, or consent
under the terms of any of the Operative Agreements, settle or compromise any
claim (other than claims in respect of Excepted Payments) against the Lessee
arising under any of the Operative Agreements, or submit or consent to the
submission of any dispute, difference or other matter arising under or in
respect of any of the Operative Agreements, to arbitration thereunder.
Concurrently with the delivery of this Indenture, the Owner Trustee
has delivered to the Indenture Trustee executed counterparts of the Trust
Agreement and the chattel paper original counterpart of the Lease.
It is hereby further covenanted and agreed by and between the parties
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Unless the context otherwise requires,
capitalized terms utilized herein shall have the meanings set forth in
Schedule II hereto for all purposes of this Indenture and shall be equally
applicable to both the singular and plural forms of the terms defined.
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF CERTIFICATES
SECTION 2.01. Authentication and Delivery of Certificates.
Forthwith upon the execution and delivery of this Indenture, and from time to
time thereafter, Certificates in an aggregate principal amount not in excess
of the amount specified in Section 2.04 hereof (except as otherwise provided
in Sections 2.06 and 2.07 hereof) shall be executed by the Owner Trustee and
delivered to the Indenture Trustee for authentication, and the Indenture
Trustee shall thereupon authenticate and deliver said Certificates to or upon
the oral or written order of the Owner Trustee, signed, if written, by an
authorized officer of the Owner Trustee, without any further action by the
Owner Trustee.
SECTION 2.02. Execution of Certificates. The Certificates shall be
signed on behalf of the Owner Trustee by an authorized officer of FSBU. Such
signatures may be the manual or facsimile signatures of such officer and minor
errors or defects in any reproduction of any such signature shall not affect
the validity or enforceability of any Certificate which has been duly
authenticated and delivered by the Indenture Trustee.
In case any officer of FSBU who shall have signed any of the
Certificates shall cease to be such officer before the Certificate so signed
shall be authenticated and delivered by the Indenture Trustee or disposed of
by FSBU, such Certificate nevertheless may be authenticated and delivered or
disposed of as though the person who signed such Certificate had not ceased to
be such officer of FSBU; and any Certificate may be signed on behalf of the
Owner Trustee by such person or persons as, at the actual date of the
execution of such Certificate, shall be the proper officers of FSBU, although
at the date of the execution and delivery of this Indenture any such person
was not such an officer. Certificates bearing the facsimile signatures of
individuals who were authorized officers of FSBU at the time such Certificates
were issued shall bind the Owner Trustee, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold such offices
at the respective dates of such Certificates.
SECTION 2.03. Certificate of Authentication. Only such Certificates
as shall bear thereon a certificate of authentication substantially in the
form set forth in Exhibit B, executed by the Indenture Trustee by manual
signature of one of its authorized officers, shall be entitled to the security
and benefits of this Indenture or be valid or obligatory for any purpose.
Such certificate by the Indenture Trustee upon any Certificate executed by the
Owner Trustee shall be conclusive evidence that the Certificate so
authenticated has been duly authenticated and delivered hereunder and that the
Holder, as evidenced on the Register, is entitled to the security and benefits
of this Indenture.
SECTION 2.04. Form and Terms of Certificates; Payments of Principal,
Make-Whole Premium and Interest. The Certificates and the Indenture Trustee's
certificate of authentication shall be substantially in the form set forth in
Exhibit B hereto. Certificates may differ with respect to Maturity and as to
other terms. The Certificates shall be issuable as registered securities
without coupons and shall be numbered, lettered, or otherwise distinguished in
such manner or in accordance with such plans as the Owner Trustee executing
the same may determine with the approval of the Indenture Trustee.
The aggregate principal amount of Certificates that may be
authenticated and delivered under this Indenture is limited as provided in the
form of Certificate attached as Exhibit B hereto. The Certificates shall be
issued in registered form only and in denominations of $1,000 and any integral
multiple thereof, shall be dated the Refunding Date, and shall be issued in
the Maturities and principal amounts, and shall bear interest at the rates per
annum, specified in the form of Certificate set forth in Exhibit B.
Any of the Certificates may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the
provisions of this Indenture, as may be required to comply with any law or
with any rules or regulations pursuant thereto, or with the rules of any
securities market in which the Certificates are admitted to trading, or to
conform to general usage.
Each Certificate shall bear interest from the date of original
issuance thereof or from the most recent date to which interest has been paid
and duly provided for, as the case may be, which shall be payable on the dates
specified on the face of the form of Certificate set forth in Exhibit B hereto
until the principal thereof is paid. Interest shall be calculated on the
basis of a 360-day year of twelve 30-day months.
Notwithstanding the preceding paragraph, each Certificate shall bear
interest at the Past Due Rate on any principal, interest and any other amount
payable hereunder or under such Certificate, which shall not be paid in full
when due (whether at stated maturity, by acceleration, by mandatory prepayment
or otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full, payable from time to time on
demand of the Indenture Trustee.
The principal of, and Make-Whole Premium, if any, and interest on,
the Certificates shall be payable at the Corporate Trust Office of the
Indenture Trustee or at any office or agency maintained for such purpose
pursuant to Section 3.02 hereof; provided, however, that interest may be
payable at the option of the Indenture Trustee or its Paying Agent, as
defined in Section 3.04, by mailing checks for such interest payable to or
upon the written order of the Holders entitled thereto as they shall appear
on the Register. If any amount payable under the Certificates, or under
this Indenture, falls due on a day that is not a Business Day, then such
sum shall be payable on the next succeeding Business Day, without (provided
that payment is made on such next succeeding Business Day) additional
interest thereon for the period of such extension.
The Holder at the close of business on any Record Date with respect
to any Payment Date shall be entitled to receive the interest if any payable
on such Payment Date notwithstanding any transfer or exchange of such
Certificate subsequent to the Record Date and prior to such Payment Date,
except if and to the extent the Owner Trustee shall default in the payment of
the interest due on such Payment Date, in which case such defaulted interest
shall be paid to the Holder at the close of business on a subsequent Record
Date (which shall be not less than five (5) or more than fifteen (15) Business
Days prior to the date of payment of such defaulted interest) established by
notice given by mail by or on behalf of the Owner Trustee to the Holders not
less than fifteen (15) days preceding such subsequent Record Date.
SECTION 2.05. Payments from Trust Indenture Estate Only. All
payments to be made by the Owner Trustee under this Indenture shall be made
only from the income and the proceeds from the Lessor's Estate to the extent
included in the Trust Indenture Estate and from any other amounts of the type
described in Section 5.01 hereof to the extent actually received by the
Indenture Trustee and only to the extent that the Owner Trustee shall have
sufficient income or proceeds from the Lessor's Estate to the extent included
in the Trust Indenture Estate (and such other amounts) to enable the Indenture
Trustee to make distributions of the amounts due in respect of the
Certificates in accordance with the terms hereof and thereof. Each Holder by
its acceptance of a Certificate agrees that it will look solely to the income
and proceeds from the Trust Indenture Estate (and such other amounts of the
type described in Section 5.01 hereof to the extent actually received by the
Indenture Trustee) to the extent available for distribution to it as provided
herein and that neither the Owner Participant, the Owner Trustee, FSBU nor the
Indenture Trustee is personally liable to such Holder for any amounts payable
under this Indenture or such Certificate or for any amounts payable or
liability under any Certificate or this Indenture, except as expressly
provided herein in the case of FSBU, the Owner Trustee or the Indenture
Trustee.
FSBU is not personally liable to any Holder, the Lessee, the Owner
Participant or the Indenture Trustee for any amounts payable under this
Indenture or for any liability under this Indenture or the Certificates,
except as a result of FSBU's gross negligence or willful misconduct, or as
otherwise expressly provided herein or in the Participation Agreement.
If (1) all or any part of the Lessor's Estate becomes the property of
a debtor subject to the reorganization provisions of the Bankruptcy Code, (2)
pursuant to such reorganization provisions the Owner Participant is required,
by reason of the Owner Participant being held to have recourse liability to
the debtor or the trustee of the debtor directly or indirectly, to make
payment on account of any amount payable as principal of or interest,
Make-Whole Premium or other amounts payable on the Certificates, and (3) the
Indenture Trustee actually receives any Recourse Amount which reflects any
payment by the Owner Participant on account of (2) above, then the Indenture
Trustee shall promptly refund to the Owner Participant such Recourse Amount.
Nothing contained in this paragraph shall prevent the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds
thereof) of the Owner Participant under the Participation Agreement, or from
retaining any amount paid by the Owner Participant under Sections 5.01, 8.02
and 8.03 hereof.
SECTION 2.06. Registration, Transfer and Exchange. The Indenture
Trustee will keep, on behalf of the Owner Trustee, at each office or agency to
be maintained for the purpose as provided in Section 3.02 hereof a Register or
Registers on which, subject to such reasonable regulations as it may
prescribe, it will register, and will register the transfer of, Certificates
as provided in this Article. Such Register shall be in written form in the
English language or in any other form capable of being converted into such
form within a reasonable period of time.
Upon due presentation for registration of transfer of any Certificate
at any such office or agency, the Owner Trustee shall execute and the
Indenture Trustee shall authenticate and deliver in the name of the transferee
or transferees a new Certificate or Certificates of the same Maturity,
principal amount and interest rate and in authorized denominations for an
equal aggregate principal amount; provided, that such Certificate being
transferred shall be cancelled in accordance with Section 2.08 hereof
simultaneously with the issuance of the new Certificate.
Any Certificate or Certificates may be exchanged for a Certificate or
Certificates of the same Maturity and interest rate but in other authorized
denominations, in an equal aggregate principal amount. Certificates to be
exchanged shall be surrendered at any office or agency to be maintained by the
Indenture Trustee for the purpose as provided in Section 3.02 hereof, and the
Owner Trustee shall execute and the Indenture Trustee shall authenticate and
deliver in exchange therefor the Certificate or Certificates which the Holder
making the exchange shall be entitled to receive, bearing numbers not
contemporaneously or previously outstanding.
All Certificates presented for registration of transfer, exchange,
prepayment or payment shall (if so required by the Owner Trustee or the
Indenture Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Owner
Trustee and the Indenture Trustee duly executed by the Holder or its attorney
duly authorized in writing and (except in the case of transfers pursuant to
Section 15.01 of the Participation Agreement) the Indenture Trustee may
require evidence satisfactory to it as to the compliance of any such transfer
with the Securities Act.
The Indenture Trustee may require payment from the Holder of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any exchange or registration of transfer of
Certificates. No service charge shall be levied for any such transaction.
The Indenture Trustee shall not be required to exchange or register a
transfer of any Certificates (a) for a period of fifteen (15) days immediately
preceding the first mailing of notice of prepayment of such Certificates or
(b) with respect to which notice of prepayment has been given pursuant to
Section 6.03 hereof and such notice has not been revoked.
All Certificates issued upon any transfer or exchange of Certificates
shall be valid obligations of the Owner Trustee, evidencing the same debt, and
entitled to the same security and benefits under this Indenture, as the
Certificates surrendered upon such transfer or exchange.
SECTION 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Certificates. In case any temporary or definitive Certificate shall become
mutilated, defaced or be apparently destroyed, lost or stolen, the Owner
Trustee in its discretion may execute, and upon the oral or written request of
any officer of FSBU, the Indenture Trustee shall authenticate and deliver, a
new Certificate of like Maturity, principal amount and interest rate as the
Certificate being replaced, bearing a number not contemporaneously or
previously outstanding, in exchange and substitution for the mutilated or
defaced Certificate, or in lieu of and substitution for the Certificate so
apparently destroyed, lost or stolen. In the case of any Certificate so
apparently destroyed, lost or stolen, the applicant for a substitute
Certificate shall furnish to the Owner Trustee and to the Indenture Trustee
such security or indemnity as may be required by them to indemnify and defend
and to hold each of them harmless and evidence to their satisfaction of the
apparent destruction, loss or theft of such Certificate and of the ownership
thereof.
Upon the issuance of any substitute Certificate, the Owner Trustee or
the Indenture Trustee may require payment from the Holder of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses incurred in connection therewith.
In case any Certificate which has matured or is about to mature, or has been
called for prepayment in full, shall become mutilated or defaced or be
apparently destroyed, lost or stolen, the Owner Trustee may, instead of
issuing a substitute Certificate, pay or authorize the payment of the same
(without surrender thereof except in the case of a mutilated or defaced
Certificate), if the applicant of any Certificate so apparently destroyed,
lost or stolen, for such payment shall furnish to the Owner Trustee and to the
Indenture Trustee such security or indemnity as any of them may require to
hold each of them harmless and the applicant shall also furnish to the Owner
Trustee and the Indenture Trustee evidence to their satisfaction of the
apparent destruction, loss or theft of such Certificate and of the ownership
thereof.
Every substitute Certificate issued pursuant to the provisions of
this Section by virtue of the fact that any Certificate is apparently
destroyed, lost or stolen shall constitute an original additional contractual
obligation of the Owner Trustee, whether or not the apparently destroyed, lost
or stolen Certificate shall be enforceable at any time by anyone and shall be
entitled to all the security and benefits of (but shall be subject to all the
limitations of rights set forth in) this Indenture equally and proportionately
with any and all other Certificates duly authenticated and delivered
hereunder. All Certificates shall be held and owned upon the express
condition that, to the extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, defaced, or
apparently destroyed, lost or stolen Certificates and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment
of negotiable instruments or other securities without their surrender.
SECTION 2.08. Cancellation of Certificates; Destruction Thereof.
All Certificates surrendered for payment, prepayment, registration of
transfer or exchange, if surrendered to the Owner Trustee or any agent of
the Owner Trustee or the Indenture Trustee, shall be delivered to the
Indenture Trustee for cancellation or, if surrendered to the Indenture
Trustee, shall be cancelled by it; and no Certificates shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Indenture. The Indenture Trustee shall destroy cancelled Certificates held
by it and deliver a certificate of destruction to the Owner Trustee. If
the Owner Trustee shall acquire any of the Certificates, such acquisition
shall not operate as a prepayment or satisfaction of the indebtedness
represented by such Certificates unless and until the same are delivered to
the Indenture Trustee for cancellation.
SECTION 2.09. Temporary Certificates. Pending the preparation of
definitive Certificates, the Owner Trustee may execute and, upon the oral or
written request of an officer of FSBU, the Indenture Trustee shall
authenticate and deliver temporary Certificates (printed, lithographed,
typewritten or otherwise reproduced, in each case in form satisfactory to the
Indenture Trustee). Temporary Certificates shall be issuable as registered
Certificates without coupons, of any authorized denomination, and
substantially in the form of the definitive Certificates but with such
omissions, insertions and variations as may be appropriate for temporary
Certificates, all as may be determined by the Owner Trustee with the
concurrence of the Indenture Trustee. Temporary Certificates may contain such
reference to any provisions of this Indenture as may be appropriate. Every
temporary Certificate shall be executed by the Owner Trustee and, upon the
oral or written request of an authorized officer of the Owner Trustee, be
authenticated by the Indenture Trustee upon the same conditions and in
substantially the same manner, and with like effect, as the definitive
Certificates. Without unreasonable delay the Owner Trustee shall execute and
shall furnish definitive Certificates and thereupon temporary Certificates
shall be surrendered in exchange therefor without charge at any office or
agency to be maintained by the Indenture Trustee for the purpose pursuant to
Section 3.02 hereof, and, upon the oral or written request of an authorized
officer of the Owner Trustee, the Indenture Trustee shall authenticate and
deliver in exchange for such temporary Certificates an equal aggregate
principal amount of definitive Certificates of the same Maturities and
interest rates and in authorized denominations. Until so exchanged,
temporary Certificates shall be entitled to the same security and benefits
under this Indenture as definitive Certificates.
SECTION 2.10. Termination of Interest in Trust Indenture Estate. A
Holder shall not, as such, have any further interest in, or other right with
respect to, the Trust Indenture Estate when and if the principal amount of and
Make-Whole Premium, if any, and interest on and other amounts due under all
Certificates held by such Holder and all other sums payable to such Holder
hereunder shall have been paid in full.
SECTION 2.11. Certificates in Respect of Replacement Aircraft. Upon
the execution and delivery of an Indenture and Security Agreement Supplement
covering a replacement airframe and/or Replacement Engine, as provided in
Section 9.09 hereof, each Certificate shall be deemed to have been issued in
connection with such replacement airframe and/or Replacement Engine and each
Certificate issued thereafter upon a transfer or exchange of, or as a
replacement for, a Certificate, shall be designated as having been issued in
connection with such replacement airframe and/or Replacement Engine, but
without any other change therein except as provided for in this Article II.
SECTION 2.12. Assumption of Obligations Under Certificates and Other
Operative Agreements. If, in accordance with and subject to the satisfaction
of the conditions set forth in Section 7.11 of the Participation Agreement,
the Lessee shall assume all of the obligations of the Owner Trustee hereunder,
under the Certificates and all other Operative Agreements, the Owner
Participant and the Owner Trustee shall be released and discharged from any
further obligations hereunder and under the
Certificates and all other Operative Agreements (except any obligations that
have accrued prior to such assumption).
ARTICLE III
COVENANTS
SECTION 3.01. Payment of Principal, Make-Whole Premium and Interest.
The Owner Trustee covenants and agrees that it will, subject to Section 2.05
hereof, duly and punctually pay or cause to be paid the principal of, and
interest and Make-Whole Premium, if any, and all other amounts due on, each of
the Certificates and under this Indenture at the place or places, at the
respective times and in the manner provided in this Indenture and in the
Certificates.
Principal and interest and other amounts due hereunder or under the
Certificates shall be payable in Dollars on the due date thereof, to the
Indenture Trustee at the Corporate Trust Office (or such other account at such
other financial institution as the Indenture Trustee may designate for the
purpose). If any amount payable under the Certificates or under this
Indenture falls due on a day which is not a Business Day, then such sum shall
be payable on the next succeeding Business Day, without (provided that payment
is made on such next succeeding Business Day) additional interest thereon for
the period of such extension.
SECTION 3.02. Offices for Payments, etc. So long as any of the
Certificates remain outstanding, the Indenture Trustee will maintain the
following: (a) an office or agency where the Certificates may be presented
for payment and (b) a facility or agency in New York, New York where the
Certificates may be presented for registration of transfer and for exchange
and for prepayment as provided in this Indenture (the "Registrar"). The
Registrar shall keep a register (the "Register") with respect to the
Certificates and their transfer and exchange. The Indenture Trustee may
appoint one or more co-registrars ("Co-Registrars") for the Certificates and
may terminate any such appointment at any time upon written notice. The term
"Registrar" includes any Co-Registrar.
The Indenture Trustee shall initially act as Registrar.
SECTION 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee. The Owner Trustee, whenever necessary to avoid or fill a vacancy in
the office of Indenture Trustee, will, with the consent of the Lessee,
appoint, in the manner provided in Section 12.02 hereof, an Indenture Trustee,
so that there shall at all times be an Indenture Trustee hereunder.
SECTION 3.04. Paying Agents. Whenever the Indenture Trustee in its
sole discretion shall appoint a paying agent (the "Paying Agent"), it will
cause the Paying Agent to execute and deliver an instrument in which the
Paying Agent shall agree with the Indenture Trustee, subject to the provisions
of this Section:
(a) that it will hold all sums received by it as such agent for the
payment of the principal of, and interest and Make-Whole Premium, if any,
on the Certificates (whether such sums have been paid to it by the
Indenture Trustee or the Owner Trustee) in trust for the benefit of the
Holders or of the Indenture Trustee, and
(b) that it will give the Indenture Trustee notice of any failure by
the Owner Trustee to make any payment of the principal of or interest or
Make-Whole Premium, if any, on the Certificates when the same shall be due
and payable.
Anything in this Section to the contrary notwithstanding, the
agreements to hold sums in trust as provided in this Section are subject to
the provisions of Sections 14.03 and 14.04 hereof.
SECTION 3.05. Covenants of FSBU and the Owner Trustee.
(a) FSBU hereby covenants and agrees to perform its covenants set
forth in Sections 7.04(b) and 7.04(c) of the Participation Agreement.
(b) The Owner Trustee hereby covenants and agrees as follows:
(i) in the event a Responsible Officer of the Owner Trustee shall
have actual knowledge of an Indenture Event of Default, an Indenture
Default or an Event of Loss, the Owner Trustee will give prompt written
notice of such Indenture Event of Default, Indenture Default or Event of
Loss to the Indenture Trustee, the Lessee and the Owner Participant;
(ii)the Owner Trustee will furnish to the Indenture Trustee, promptly
upon receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and other instruments
furnished to the Owner Trustee under the Lease, including, without
limitation, a copy of each report or notice received pursuant to Section 11
of the Lease, to the extent that the same shall not have been furnished to
the Indenture Trustee;
(iii)the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to the Lessee and the carrying out of the transactions contemplated
hereby and by the Lease, the Participation Agreement, the Trust Agreement
and the other Indenture Documents; and
(iv)except as contemplated by the Operative Agreements, the Owner
Trustee will not contract for, create, incur or assume any debt, and will
not guarantee (directly or indirectly or by an instrument having the effect
of assuring another's payment or performance on any obligation or
capability of so doing, or otherwise), endorse or otherwise take action to
become contingently liable, directly or indirectly, in connection with the
debt of any other Person.
SECTION 3.06. [Intentionally Left Blank.]
SECTION 3.07. Disposal of Trust Indenture Estate. At any time and
from time to time any part of the Trust Indenture Estate may be sold or
disposed of in accordance with the provisions of this Indenture and the Lease.
The Indenture Trustee shall, from time to time, release any part of the Trust
Indenture Estate so sold or disposed of or as to which an Event of Loss has
occurred or as to which the Lease has been terminated from the Lien of this
Indenture. In addition, to the extent that such property constitutes an
Airframe or Engine, the further requirements of Section 9.08 hereof shall be
complied with.
SECTION 3.08. No Representations or Warranties as to Aircraft or
Documents. NEITHER THE INDENTURE TRUSTEE NOR THE OWNER TRUSTEE NOR FSBU NOR
THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP,
VALUE, CONDITION, DESIGN, COMPLIANCE WITH SPECIFICATIONS, MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO
THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO
THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE
WHATSOEVER, except that FSBU warrants that on the Delivery Date (a) the Owner
Trustee shall have received whatever title was conveyed to it by the Lessee,
and (b) the Aircraft shall be free and clear of Lessor's Liens attributable to
FSBU. Neither FSBU, the Indenture Trustee nor the Owner Participant makes or
shall be deemed to have made any representation or warranty as to the
validity, legality or enforceability of this Indenture, the Trust Agreement,
the Certificates or any Indenture Document or as to the correctness of any
statement contained in any thereof, except for the representations and
warranties of FSBU, the Indenture Trustee and the Owner Participant made under
this Indenture or in the Participation Agreement.
SECTION 3.09. Further Assurances; Financing Statements. At any time
and from time to time, upon the request of the Indenture Trustee or the
Lessee, the Owner Trustee shall promptly and duly execute and deliver any and
all such further instruments and documents as may be specified in such request
and as are necessary or advisable to perfect, preserve or protect the Liens
and assignments created or intended to be created hereby, or to obtain for the
Indenture Trustee the full benefit of the specific rights and powers granted
herein, including, without limitation, the execution and delivery of Uniform
Commercial Code financing statements and continuation statements with respect
thereto, or similar instruments relating to the perfection of the Liens or
assignments created or intended to be created hereby.
ARTICLE IV
HOLDER LISTS
SECTION 4.01. Holder Lists; Ownership of Certificates. (a) The
Indenture Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Indenture Trustee is not the Registrar, the Registrar
shall furnish to the Indenture Trustee semi-annually not more than fifteen
(15) days after each Record Date, as of such Record Date, or at such other
times as the Indenture Trustee may request in writing, a list, in such form
and as of such date as the Indenture Trustee may reasonably require,
containing all the information in the possession or control of the Registrar
as to the names and addresses of the Holders and the amounts and Maturities of
the Certificates held by such Holders.
(b) Ownership of the Certificates shall be proved by the Register
kept by the Registrar.
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 5.01. Basic Rent Distribution. Except as otherwise provided
in Section 5.03 hereof, each installment of Basic Rent, any amount paid by the
Owner Participant under Section 2.03 of the Participation Agreement, any
payment of interest on overdue installments of Basic Rent and any payment
received by the Indenture Trustee pursuant to Section 8.03(a) hereof shall be
promptly distributed on the date such payment is due (or as soon thereafter as
such payment shall be received by the Indenture Trustee) in the following
order of priority: first, so much of such installment or payment as shall be
required to pay in full the aggregate amount of the payment or payments of
principal and interest and other amounts (as well as any interest on overdue
principal and, to the extent permitted by law, on Make-Whole Premium, if any,
interest and other amounts) then due under all Certificates shall be
distributed to the Holders ratably, without priority of one over the other, in
the proportion that the amount of such payment or payments then due under each
such Certificate bears to the aggregate amount of the payments then due under
all such Certificates, and, second, the balance if any of such installment or
payment remaining thereafter shall be distributed to the Owner Trustee, or as
the Owner Trustee may request, for distribution pursuant to the Trust
Agreement.
SECTION 5.02. Event of Loss and Replacement; Prepayment. (a)
Except as otherwise provided in Section 5.03 hereof, any payment received by
the Indenture Trustee as the result of an Event of Loss with respect to the
Aircraft (including pursuant to Section 11.03(e) of the Lease, but, in the
case of said Section 11.03(e), subject to the time limits specified therein)
or as the result of, or in connection with any event under the Lease giving
rise to, a prepayment pursuant to Section 6.02 hereof, shall be promptly
distributed by the Indenture Trustee in the following order of priority:
first, to reimburse the Indenture Trustee for any costs or expenses reasonably
incurred in connection with such prepayment, second, as provided in clause
"second" of Section 5.03 hereof (without giving effect to the parenthetical at
the end thereof), and third, as provided in clause "third" of Section 5.03
hereof; provided that if a replacement airframe shall be substituted for an
Airframe subject to an Event of Loss as provided in Section 11.03 of the Lease
and Section 9.08 hereof, any proceeds which result from such Event of Loss and
are paid to the Indenture Trustee shall be held by the Indenture Trustee as
part of the Trust Indenture Estate and, unless otherwise applied pursuant to
Section 5.01 or 5.03 hereof, such proceeds shall be released to the Lessee
upon the release of such damaged Airframe and the replacement thereof as
herein provided.
(b) Any amounts received directly or indirectly from any
governmental authority, insurer or other party pursuant to any provision of
Article 11 or 13 of the Lease as the result of loss or damage not
constituting an Event of Loss (x) with respect to the Aircraft, or as a
result of such loss or damage constituting an Event of Loss if and to the
extent that such amounts would at the time be required to be paid to the
Lessee pursuant to said Article 11 or 13 but for the fact that an Event of
Default shall have occurred and be continuing or (y) are pledged to the
Lessor as security in connection with an Event of Loss in accordance with
Section 11.03(e) of the Lease, shall be held by the Indenture Trustee as
security for the obligations of the Lessee under the Lease and the
Participation Agreement and shall be invested in accordance with the terms
of Article 5.08 hereof and at such time as the conditions for payment to
the Lessee specified in said Article 11 or 13, as the case may be, shall be
fulfilled and there shall not be continuing any Event of Default, such
amount, and the proceeds of any investment thereof, shall, to the extent
not theretofore applied, be paid to the Lessee to the extent provided in
the Lease.
SECTION 5.03. Payment After Indenture Event of Default, etc. Except
as otherwise provided in Sections 5.02(b), 5.04(b), 5.04(c) and 5.05 hereof,
all payments (other than Excepted Payments) received and all amounts held or
realized by the Indenture Trustee (a) after an Indenture Event of Default
shall have occurred and so long as such an Indenture Event of Default shall be
continuing, and after the Indenture Trustee has received a request in
accordance with Section 7.10 hereof, or (b) after the Certificates shall have
become due and payable as provided in Section 7.02(b) or (c) hereof, shall be
promptly distributed by the Indenture Trustee in the following order of
priority:
first, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any tax, expense, charge or other loss
(including, without limitation, all amounts to be expended at the expense
of, or charged upon the tolls, rents, revenues, issues, products and
profits of, the property included in the Trust Indenture Estate pursuant to
Section 7.03(b) hereof) incurred by the Indenture Trustee (to the extent
not previously reimbursed) (including, without limitation, the expenses of
any sale, taking or other proceeding, attorneys' fees and expenses, court
costs, and any other expenditures incurred or expenditures or advances made
by the Indenture Trustee in the protection, exercise or enforcement of any
right, power or remedy or any damages sustained by the Indenture Trustee,
liquidated or otherwise, upon such Indenture Event of Default) shall be
applied by the Indenture Trustee in reimbursement of such expenses;
second, so much of such payments or amounts as shall be required to
pay in full the aggregate unpaid principal amount of all Outstanding
Certificates, all accrued but unpaid interest thereon to the date of
distribution and all other amounts due hereunder and thereunder, shall be
distributed to the Holders, and if the aggregate amount so to be
distributed shall be insufficient to pay all such amounts in full as
aforesaid, then such amount shall be distributed ratably, without priority
of one over the other, in the proportion that the aggregate unpaid
principal amount of all Certificates held by each such Holder, the accrued
but unpaid interest thereon to the date of distribution and all other
amounts due hereunder and thereunder, bears to the aggregate unpaid
principal amount of all Outstanding Certificates, plus accrued but unpaid
interest thereon to the date of distribution and all other amounts due
hereunder and thereunder (it being understood that amounts payable
hereunder shall not include Make-Whole Premium); and
third, the balance, if any of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee for distribution
pursuant to the Trust Agreement.
SECTION 5.04. Certain Payments. (a) Except as otherwise provided
in this Indenture, any payments received by the Indenture Trustee which are to
be applied according to any provision in any other Indenture Document shall be
applied thereunder in accordance therewith.
(b) The Indenture Trustee will distribute, promptly upon receipt,
any Excepted Payment received by it from the Owner Trustee or the Lessee
pursuant to Article 8 or Article 9 of the Participation Agreement or as
Supplemental Rent, directly to the Person (which may include the Indenture
Trustee) entitled thereto.
(c) Notwithstanding anything to the contrary contained herein, any
sums received by the Indenture Trustee which constitute Excepted Payments
shall be distributed promptly upon receipt by the Indenture Trustee directly
to the Person or Persons entitled thereto.
SECTION 5.05. Other Payments. Any payments received by the
Indenture Trustee for which no provision as to the application thereof is
made elsewhere in this Indenture or in any other Indenture Document
(including without limitation Section 9 of the Lease) shall be distributed
by the Indenture Trustee (a) to the extent received or realized at any time
prior to the payment in full of all obligations to the Holders, in the
order of priority specified in Section 5.01 hereof, and (b) to the extent
received or realized at any time after payment in full of all obligations
to the Holders, in the following order of priority: first, in the manner
provided in clause "first" of Section 5.03 hereof and second, in the manner
provided in clause "third" of Section 5.03 hereof.
SECTION 5.06. Payments to Owner Trustee. Any amounts distributed
hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the
Owner Trustee by wire transfer of immediately available funds of the type
received by the Indenture Trustee at such office and to such account or
accounts of such entity or entities as shall be designated by notice from the
Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee
hereby notifies the Indenture Trustee that unless and until the Indenture
Trustee receives notice to the contrary from the Owner Trustee, all amounts to
be distributed to the Owner Trustee hereunder for distribution in accordance
with the Trust Agreement shall be distributed by wire transfer of immediately
available funds of the type received by the Indenture Trustee to such account
of the Owner Participant as may be specified pursuant to Section 2.06 of the
Trust Agreement.
SECTION 5.07. Application of Payments. Each payment of principal of
and interest or other amounts due on each Certificate shall, except as
otherwise provided herein, be applied, first, to the payment of interest on
such Certificate due and payable to the date of such payment, as provided in
such Certificate, as well as any interest on overdue principal and Make-Whole
Premium, if any, and, to the extent permitted by law, interest and other
amounts due thereunder, second, to the payment of any other amount (other than
the principal of such Certificate) due hereunder to the Holder of such
Certificate or under such Certificate, third, to the payment of the principal
of such Certificate if then due hereunder or under such Certificate and
fourth, the balance, if any remaining thereafter, to the payment of the
principal of such Certificate remaining unpaid (provided that such Certificate
shall not be subject to prepayment without the consent of the affected Holder
except as permitted by Sections 6.02, 6.06 and 8.02 hereof); provided that,
solely for the purpose of determining whether an Indenture Event of Default
shall have occurred and be continuing, each such payment shall be deemed
applied in the following order of priority: first, in the manner provided in
clause "first" above, second, in the manner provided in clause "third" above,
third, in the manner provided in clause "second" above and fourth, in the
manner provided in clause "fourth" above.
SECTION 5.08. Investment of Amounts Held by Indenture Trustee.
Amounts held by the Indenture Trustee pursuant to Section 5.02(b) hereof or
pursuant to any provision of any Indenture Document providing for investment
by the Indenture Trustee of sums pursuant to Section 23.01 of the Lease or
this Section 5.08 shall be invested by the Indenture Trustee from time to time
in securities selected by (i) so long as no Event of Default shall have
occurred and be continuing, the Lessee (and in the absence of written
direction by the Lessee, the Indenture Trustee shall invest such monies in
direct obligations of the United States of America) or (ii) so long as an
Event of Default shall have occurred and be continuing, the Indenture
Trustee and in each case shall be of the type listed in clauses (i) through
(iv) of Section 23.01 of the Lease. Unless otherwise expressly provided in
this Indenture, any income realized as a result of any such investment, net
of the Indenture Trustee's reasonable fees and expenses in making such
investment, shall be held and applied by the Indenture Trustee in the same
manner as the principal amount of such investment is to be applied and any
losses, net of earnings and such reasonable fees and expenses, shall be
charged against the principal amount invested. The Lessee shall be
responsible for and will promptly pay to the Indenture Trustee or the
Lessor, as the case may be, on demand, the amount of any loss realized as
the result of any such investment (together with any fees, commissions and
other costs and expenses, if any, incurred by the Indenture Trustee or the
Lessor in connection with such investment), such amount to be disposed of
in accordance with the terms hereof or the Lease, as the case may be. The
Indenture Trustee shall not be liable for any loss resulting from any
investment made by it under this Indenture in accordance with instructions
from the Lessee other than by reason of its willful misconduct or gross
negligence, and any such investment may be sold (without regard to its
maturity) by the Indenture Trustee without instructions whenever the
Indenture Trustee reasonably believes such sale is necessary to make a
distribution required by this Indenture.
Unless otherwise confirmed in writing, an account statement delivered
by the Indenture Trustee to the Owner Trustee (with a copy to the Lessee)
shall be deemed written confirmation by the Owner Trustee that the investment
transactions identified therein accurately reflect the investment directions
given to the Indenture Trustee by or on behalf of the Owner Trustee, unless
the Owner Trustee (or the Lessee on its behalf) notifies the Indenture Trustee
in writing to the contrary within 30 days of the date of receipt of such
statement.
SECTION 5.09. Withholding Taxes. The Indenture Trustee shall
withhold any Taxes required to be withheld, except to the extent that the
Holder has furnished evidence satisfactory to the Indenture Trustee of any
exemption from withholding claimed by such Holder and under no circumstances
shall the failure of any such Holder to receive any amounts so withheld
constitute an Indenture Event of Default. Notwithstanding any provision to
the contrary in Sections 5.01 through 5.05 hereof and subject to Article 8 of
the Participation Agreement, if the Lessee is required to pay any such Tax, or
any interest or penalty thereon, or to indemnify the Owner Participant or the
Owner Trustee with respect thereto pursuant to Section 8.01(c) of the
Participation Agreement, the Lessee shall be entitled to receive any payments
otherwise distributable to the Holder of any Certificate who was subject to
such Tax pursuant to Sections 5.01 to 5.05 hereof until the foregoing amounts
shall have been recovered in full by the Lessee.
ARTICLE VI
PREPAYMENT OF CERTIFICATES
SECTION 6.01. No Prepayment Prior to Maturity. Except as provided
in Sections 6.02, 6.06 and 8.02 hereof, the Certificates may not be prepaid
prior to their respective Maturities.
SECTION 6.02. Prepayment of Certificates. (a) The Outstanding
Certificates shall be prepaid in full (and not in part):
(i) If an Event of Loss occurs with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe (unless pursuant to Section 11.03 of the Lease and Section 9.08
hereof replacement equipment is substituted therefor).
(ii)If the Lessee, pursuant to Section 4.02(a) of the Lease, gives
notice of purchase of the Aircraft (and Section 2.12 hereof shall not be
applicable in connection with such purchase).
(iii)If the Owner Participant or the Owner Trustee on behalf of the
Owner Participant gives notice of prepayment to the Indenture Trustee
pursuant to Section 8.02 hereof.
(iv)If the Lessee, pursuant to Section 10.01 of the Lease, gives
notice of a voluntary termination for obsolescence or surplus, but subject
to Section 6.02(c) below.
(v) Pursuant to Section 15.01 of the Participation Agreement in
connection with a refinancing of the Certificates.
(b) In the event of a prepayment of the Certificates pursuant to
Sections 6.02(a)(ii), (iv) and (v) above, the Owner Trustee, having received
notice from the Lessee in accordance with and subject to the terms of Section
4.02(a) or 10.01 of the Lease or Section 15 of the Participation Agreement, as
the case may be, shall give irrevocable (subject to clause (c) below) written
notice to the Indenture Trustee and to the Holders of all of the Certificates
specifying the Business Day on which the Certificates shall be prepaid. In
the case of a prepayment of the Certificates pursuant to Section 6.02(a)(i)
above, the Certificates shall be prepaid in full on the Loss Payment Date as
defined in Section 11.02 of the Lease. In the case of a prepayment of the
Certificates pursuant to Section 6.02(a)(iii) above, the Certificates shall be
prepaid in full on the date so designated in the notice referred to in Section
8.02 hereof. In the case of a prepayment of the Certificates pursuant to
Section 6.02(a)(ii) or (iv) above, the Certificates shall be prepaid in full
on the Termination Date. In the case of a prepayment of the Certificates
pursuant to Section 6.02(a)(v) above, the Certificates shall be prepaid on the
effective date of the Refinancing. The day on which the Certificates are to
be prepaid pursuant to this Section 6.01(b) is herein referred to as the
"Prepayment Date".
On or prior to the Prepayment Date, immediately available funds shall
be deposited with the Indenture Trustee in an amount in respect of the
Certificates equal to:
(1) in the event of a prepayment of the Certificates pursuant to
Section 6.02(a)(i), 6.02(a)(iii) (if clause (i) of the first sentence of
Section 8.02(a) hereof is applicable) or, if such prepayment is made on or
after the applicable Premium Termination Date, 6.02(a)(ii), 6.02(a)(iii)
(if clause (ii) of the first sentence of Section 8.02(a) hereof is
applicable), 6.02(a)(iv) or 6.02(a)(v) above, the sum of (A) the aggregate
principal amount of such Certificates then Outstanding, (B) accrued
interest on the Certificates to the Prepayment Date and (C) all other
aggregate sums due the Indenture Trustee hereunder or under the
Participation Agreement or the Lease, but excluding any Make-Whole Premium
or other premium or penalty, or
(2) if such prepayment is made prior to the applicable Premium
Termination Date, in the event of a prepayment of the Certificates pursuant
to Section 6.02(a)(ii), 6.02(a)(iii) (if clause (ii) of the first sentence
of Section 8.02(a) hereof is applicable), 6.02(a)(iv) or 6.02(a)(v) above,
the sum of the amounts specified in clauses (A), (B) and (C) of the
preceding clause (1) plus any Make-Whole Premium payable in respect of all
Certificates with respect to which the Premium Termination Date therefor
has not occurred
(the aggregate amount required to be paid pursuant to this sentence being
herein referred to as the "Prepayment Price").
(c) If, pursuant to the last paragraph of Section 10.01(f) of the
Lease, no Termination Date shall occur, or if no refinancing shall occur
pursuant to Section 15.01 of the Participation Agreement, the Lessee shall
give notice thereof to the Indenture Trustee, and the prepayment proposed to
be effected in respect thereof shall not occur.
SECTION 6.03. Notice of Prepayment to Holders. In order to effect
any prepayment set forth in Section 6.02(a) hereof, the Indenture Trustee
shall give prompt notice by first class mail of prepayment to each Holder of
an Outstanding Certificate. Such notice may be revoked by the Owner Trustee
at any time on or before the Prepayment Date by prompt notice to the Holders
except as otherwise provided in the Lease or the Participation Agreement.
All notices of prepayment shall state:
(1) the Prepayment Date,
(2) the applicable basis for determining the Prepayment Price,
(3) that on the Prepayment Date, subject to the provisions hereof,
the Prepayment Price will become due and payable, and that interest
on the Certificates shall cease to accrue on and after such
Prepayment Date, and
(4) the place or places where such Certificates are to be
surrendered for payment.
SECTION 6.04. Deposit of Prepayment Price and Sinking Fund
Redemption Price. On the Prepayment Date or the Sinking Fund Redemption
Date (as defined in Section 6.06 hereof), the Owner Trustee shall, to the
extent an amount equal to the Prepayment Price or the Sinking Fund
Redemption Price (as defined in Section 6.06 hereof), as the case may be,
shall not then be held in cash or Permitted Investments (marked-to-market
net of all costs and expenses of liquidation thereof) by the Indenture
Trustee in immediately available funds and deposited for the purpose, pay
to the Indenture Trustee an amount equal to the difference between (a) the
amount then so held and (b) the Prepayment Price or the Sinking Fund
Redemption Price, as the case may be. If there shall so be on deposit
and/or deposited the applicable Prepayment Price or Sinking Fund Redemption
Price on or prior to a Prepayment Date or Sinking Fund Redemption Date,
interest shall cease to accrue in respect of all or, in the case of a
mandatory sinking fund redemption, the relevant portion being prepaid of,
the Outstanding Certificates on and after such Prepayment Date or such
Sinking Fund Redemption Date.
SECTION 6.05. Certificates Payable on Prepayment Date. On the
Prepayment Date, the Outstanding Certificates shall (except (A) if the Owner
Trustee has requested the Indenture Trustee to revoke such notice of
prepayment in accordance with Section 6.03 hereof or (B) as otherwise provided
in the Lease) become due and payable and from and after such Prepayment Date
(unless there shall be a default in the payment of the Prepayment Price) such
Certificates shall cease to bear interest. Upon surrender by any Holder of
its Certificate for prepayment in accordance with said notice, such Holder
shall be paid the principal amount of its Certificate then outstanding,
accrued interest thereon to the Prepayment Date, all other sums due to such
Holder hereunder, under the Participation Agreement or the Lease, plus, if a
Make-Whole Premium is payable pursuant to Section 6.02(b) hereof, the
Make-Whole Premium in respect of such Certificate.
If any Certificate called for prepayment shall not be so paid upon
surrender thereof for prepayment, the principal shall, until paid, continue to
bear interest from the Prepayment Date at the interest rate applicable to such
Certificate.
SECTION 6.06. Mandatory Sinking Fund Redemption. The Certificates
with a Maturity of January 5, 2014 and the Certificates with a Maturity of
January 5, 2015 shall be subject to partial redemption, at the aggregate
principal amount set forth for the Certificates of the respective Maturity, on
a pro rata basis, on each date specified in this Section (a "Sinking Fund
Redemption Date") for such payment on the Certificates of such Maturity. The
Owner Trustee shall deposit funds sufficient to pay the Sinking Fund
Redemption Price with the Indenture Trustee as provided in Section 6.04
hereof. The Indenture Trustee shall pay from the amounts so deposited on
each applicable Sinking Fund Redemption Date to the Holders of each
Certificate then Outstanding on a pro rata basis the aggregate principal
amount set forth below, together with accrued interest to such Sinking Fund
Redemption Date, but without Make-Whole Premium (the "Sinking Fund
Redemption Price"):
Principal Amount
Certificates Certificates
with a Maturity with a Maturity
Sinking Fund Redemption Date of January 5, 2014 of January 5, 2015
------------------------------ -------------------- --------------------
January 5, 1996 $ 0 $ 0
July 5, 1996 0 0
January 5, 1997 1,240,454 0
July 5, 1997 0 0
January 5, 1998 1,335,101 0
July 5, 1998 0 0
January 5, 1999 1,437,284 0
July 5, 1999 0 0
January 5, 2000 5,501,541 0
July 5, 2000 0 0
January 5, 2001 2,044,396 0
July 5, 2001 0 0
January 5, 2002 2,206,570 0
July 5, 2002 0 0
January 5, 2003 2,381,609 0
July 5, 2003 0 0
January 5, 2004 2,107,891 0
July 5, 2004 0 0
January 5, 2005 1,592,236 0
July 5, 2005 0 0
January 5, 2006 1,663,647 0
July 5, 2006 0 0
January 5, 2007 3,754,078 0
July 5, 2007 0 0
January 5, 2008 2,691,537 0
July 5, 2008 0 0
January 5, 2009 2,812,210 0
July 5, 2009 0 0
January 5, 2010 4,449,260 0
July 5, 2010 0 0
January 5, 2011 5,456,643 0
July 5, 2011 0 0
January 5, 2012 5,889,498 0
July 5, 2012 0 0
January 5, 2013 6,356,690 0
July 5, 2013 0 0
January 5, 2014 2,053,355 0
July 5, 2014 0 0
January 5, 2015 0 6,316,000
-------------------- --------------------
Total $54,974,000 $6,316,000
ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
SECTION 7.01. Indenture Event of Default. "Indenture Event of
Default" means any of the following events (whatever the reason for such
Indenture Event of Default and whether it shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) any Event of Default specified in Article 16 of the Lease (other
than an Event of Default arising solely as the result of the failure to
make an Excepted Payment unless the Owner Participant shall notify the
Indenture Trustee in writing that such failure shall constitute an
Indenture Event of Default); or
(ii)the failure of the Owner Trustee other than by reason of a
Default or an Event of Default (i) to pay principal, interest or Make-
Whole Premium, if any, on any Certificate when due, and such failure
shall have continued unremedied for ten (10) Business Days after the
date when due or (ii) to pay any other amounts hereunder or under the
Certificates when due and such failure shall have continued unremedied
for a period of thirty (30) days after the Owner Trustee and the Owner
Participant shall receive written demand therefor from the Indenture
Trustee or by the Holders of not less than 25% in aggregate principal
amount of Outstanding Certificates; or
(iii)(A) any representation or warranty made by FSBU, the Owner
Trustee, the Owner Participant or any Owner Participant Guarantor or any
Owner Trustee Guarantor, in any Operative Agreement or in any certificate
of FSBU, the Owner Trustee, the Owner Participant, or any Owner
Participant Guarantor furnished to the Indenture Trustee or any Holder
in connection herewith or therewith or pursuant hereto or thereto shall
prove to have been incorrect when made and was and remains in any
respect material to the Holders and if such misrepresentation is capable
of being corrected as of a subsequent date and if such correction is
being sought diligently, and such misrepresentation shall not have been
corrected within 30 days following notice thereof identified as a
"Notice of Indenture Event of Default" being given to the Owner Trustee
and the Owner Participant by the Indenture Trustee or by a Majority in
Interest of Holders; or
(B) any (x) covenant made by the Owner Trustee in the fifth
paragraph following the Habendum Clause hereof or Section 3.05(b)(iii)
hereof or Section 7.02(b) or 7.04(b) of the Participation Agreement
shall be breached in any respect, (y) covenant made by the Owner
Participant in Section 7.02(c), 7.03(c), 7.03(d) or 7.13 of the
Participation Agreement shall be breached in any respect or (z) other
covenant made by the Owner Trustee, in its individual capacity or as
Owner Trustee, or by any Owner Trustee Guarantor, or by the Owner
Participant or any Owner Participant Guarantor in any Operative
Agreement shall be breached in any respect and such breach shall remain
unremedied for a period of thirty (30) days after there has been given
to the Owner Trustee and the Owner Participant by the Indenture Trustee
or by Certificate Holders of not less than 25% in aggregate principal
amount of Outstanding Certificates a written notice identified as a
"Notice of Indenture Event of Default" specifying such breach and
requiring it to be remedied; or
(iv)the Owner Trustee, the Lessor's Estate, any Owner Trustee
Guarantor, the Owner Participant or any Owner Participant Guarantor shall
file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future bankruptcy, insolvency or similar
statute, law or regulation;
(v) an order for relief shall be entered in respect of the Owner
Trustee or any Owner Trustee Guarantor or the Owner Participant or any
Owner Participant Guarantor or the Lessor's Estate by a court having
jurisdiction in the premises in an involuntary case under the federal
bankruptcy laws as now or hereafter in effect; or the Owner Trustee or
any Owner Trustee Guarantor or the Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate shall file any answer
admitting or not contesting the material allegations of a petition filed
against the Owner Trustee or any Owner Trustee Guarantor or the Owner
Participant or any Owner Participant Guarantor or the Lessor's Estate in
any proceeding referred to in clause (vi) below or seek or consent or
acquiesce in the appointment of any trustee, custodian, receiver or
liquidator of the Owner Trustee or any Owner Trustee Guarantor or the
Owner Participant or any Owner Participant Guarantor or the Lessor's
Estate, as the case may be, or of all or any substantial part of its
properties; or
(vi)without the consent or acquiescence of the Owner Trustee or any
Owner Trustee Guarantor or the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate, as the case may be, an order shall be
entered constituting an order for relief or approving a petition for relief
or reorganization or any other petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or other
similar relief under any present or future bankruptcy, insolvency or
similar statute, law or regulation, or if any such petition shall be filed
against the Owner Trustee or any Owner Trustee Guarantor or the Owner
Participant or any Owner Participant Guarantor or the Lessor's Estate, as
the case may be, and such petition shall not be dismissed within 90 days,
or if, without the consent or acquiescence of the Owner Trustee or any
Owner Trustee Guarantor or the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate, as the case may be, an order shall be
entered appointing a trustee, custodian, receiver or liquidator of the
Owner Trustee or any Owner Trustee Guarantor or the Owner Participant or
any Owner Participant Guarantor or the Lessor's Estate, as the case may be,
or of all or any substantial part of the properties of the Owner Trustee or
any Owner Trustee Guarantor or the Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate, as the case may be, and such
order shall not be dismissed within 90 days; or
(vii)any Owner Trustee Guaranty or any Owner Participant Guaranty
shall cease to be a valid and enforceable obligation of any Owner Trustee
Guarantor or any Owner Participant Guarantor, as the case may be, or
otherwise shall not be in full force and effect.
SECTION 7.02. Remedies. (a) If an Indenture Event of Default shall
have occurred and be continuing and so long as the same shall be continuing
unremedied, then and in every such case, the Indenture Trustee may, and when
required by the provisions of Article IX or Section 7.02(c) hereof, shall (i)
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article VII and (ii) in the event such Indenture
Event of Default is an Indenture Event of Default referred to in clause (i) of
Section 7.01 hereof, exercise any and all of the remedies pursuant to Article
17 of the Lease; provided that such exercise of remedies shall not occur until
after the latest date on which the Owner Trustee may cure the related Event of
Default pursuant to Section 8.03 hereof. The Indenture Trustee may take
possession of all or any part of the properties covered or intended to be
covered by the Lien and security interest created hereby or pursuant hereto
and may exclude the Owner Participant, the Owner Trustee, the Lessee and any
transferee of the Lessee and all Persons claiming under any of them wholly or
partly therefrom. In addition, the Indenture Trustee may exercise any other
right or remedy in lieu of or in addition to the foregoing that may be
available to it under applicable law, or proceed by appropriate court action
to enforce the terms hereof, of the Lease, or both, or to rescind the Lease.
Without limiting any of the foregoing, it is understood and agreed that the
Indenture Trustee may exercise any right of sale of the Aircraft available to
it, even though it shall not have taken possession of the Aircraft and shall
not have possession thereof at the time of such sale.
Notwithstanding the foregoing, it is understood and agreed that if
the Indenture Trustee shall proceed to foreclose the Lien of this
Indenture, it shall substantially simultaneously therewith, to the extent
the Indenture Trustee is then entitled to do so hereunder and under the
Lease, and is not then stayed or otherwise prevented from doing so, proceed
(to the extent it has not already done so) to declare the Lease in default
and commence the exercise in good faith of one or more of the significant
remedies under Section 17 of the Lease (as the Indenture Trustee determines
in its sole discretion). It is further understood and agreed that if the
Indenture Trustee is unable to exercise one or more remedies under Section
17 of the Lease because of any stay or operation or law or otherwise, the
Indenture Trustee shall not be entitled to foreclose the Lien of this
Indenture (A) until the earlier of (i) 60 days from the date of any such
stay or applicable order under Section 1110 of the Bankruptcy Code
including any extension consented to by the Indenture Trustee or the
Holders of Certificates of such period permitted under Section 1110(b) of
the Bankruptcy Code and (ii) the date of actual repossession of the
Aircraft by the Indenture Trustee or (B) if the Lessee has agreed to
perform or assume the Lease and no Event of Default other than as specified
in Section 16.01(e), (f) or (g) of the Lease shall be continuing. For the
avoidance of doubt, it is expressly understood and agreed that except as
aforesaid the above-described inability of the Indenture Trustee to
exercise any right or remedy under the Lease shall in no event and under no
circumstances prevent the Indenture Trustee from exercising all of its
rights, powers and remedies under this Indenture, including, without
limitation, this Article VII. The Indenture Trustee further agrees that
notice of intent to foreclose shall be given to the Owner Trustee at the
earlier of the commencement of any proceeding or at least 30 days prior to
the consummation of foreclosure of the Lien of this Indenture.
(b) If an Indenture Event of Default under clause (iv), (v) or (vi)
of Section 7.01 hereof shall occur and be continuing, the unpaid principal of
all Outstanding Certificates, together with interest accrued but unpaid
thereon and all other amounts due thereunder, but without Make-Whole Premium,
shall immediately become due and payable, without presentment, demand, protest
or notice, all of which are hereby waived.
(c) If any Indenture Event of Default not described in the preceding
paragraph (b) shall have occurred and be continuing, then and in every such
case, the Indenture Trustee may on its own accord or at the direction of
Holders of not less than 25% in aggregate principal amount of Outstanding
Certificates, at any time, by written notice to the Owner Trustee and the
Lessee, declare the principal of all the Certificates to be due and payable,
whereupon the unpaid principal amount of all Outstanding Certificates,
together with accrued interest thereon and all other amounts due thereunder,
but without Make-Whole Premium, shall immediately become due and payable
without presentment, demand, protest or other notice, all of which are hereby
waived. At any time after such declaration and prior to the sale or
disposition of the Trust Indenture Estate, however, the Holders of not less
than 50% in aggregate principal amount of Outstanding Certificates, by notice
to the Indenture Trustee, the Owner Trustee and the Lessee, may rescind such
declaration, whether made by the Indenture Trustee on its own accord or as
directed, if (x) there has been paid or deposited with the Indenture Trustee a
sum sufficient to pay all overdue installments of interest on all Certificates
(together, to the extent permitted by law, with interest on such overdue
installments of interest), the principal on any Certificates that has become
due otherwise than by such declaration of acceleration, all sums paid or
advanced by the Indenture Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee, its agents and
counsel, or (y) all Indenture Events of Default (other than the nonpayment of
principal that has become due solely because of such acceleration) have been
either cured or waived as provided in Section 7.11 hereof. No such rescission
shall affect any subsequent default or impair any right consequent thereon.
(d) Each Holder shall be entitled at any sale to a credit against
any purchase price bid at such sale by such Holder all or any part of the
unpaid obligations owing to such Holder secured by the Lien of this Indenture.
SECTION 7.03. Return of Aircraft, etc. Subject to Section 7.02
hereof: (a) If an Indenture Event of Default shall have occurred and be
continuing, at the request of the Indenture Trustee, the Owner Trustee shall
promptly execute and deliver to the Indenture Trustee such documents as the
Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify,
to obtain possession of all or any part of the Trust Indenture Estate to which
the Indenture Trustee shall at the time be entitled under this Indenture.
Subject to the foregoing, if the Owner Trustee shall for any reason fail to
execute and deliver such documents after such request by the Indenture
Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the
Indenture Trustee or an agent or representative designated by the Indenture
Trustee, the right to immediate possession and requiring the Owner Trustee to
execute and deliver such instruments and documents to the Indenture Trustee or
an agent or representative designated by the Indenture Trustee, to the entry
of which judgment the Owner Trustee hereby specifically consents, and (ii)
pursue all or part of such Trust Indenture Estate wherever it may be found and
enter any of the premises of the Lessee or the Owner Trustee wherever such
Trust Indenture Estate may be or be supposed to be and search for such Trust
Indenture Estate and take possession of and remove such Trust Indenture
Estate. All expenses of obtaining such judgment or of pursuing, searching for
and taking such Trust Indenture Estate shall, until paid, be secured by the
Lien of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may,
from time to time, at the expense of the Trust Indenture Estate, make all such
expenditures for maintenance, insurance and repairs to and of such Trust
Indenture Estate, as the Indenture Trustee may reasonably deem proper. In
each case subject to Section 7.02 hereof, the Indenture Trustee shall have the
right to maintain, use, operate, store, lease, control or manage the Trust
Indenture Estate and to carry on the business and to exercise all rights and
powers of the Owner Participant and the Owner Trustee relating to the Trust
Indenture Estate, as the Indenture Trustee may reasonably deem best, including
the right to enter into any and all such agreements with respect to the
maintenance, insurance, use, operation, storage, leasing, control, management
or disposition of all or any part of the Trust Indenture Estate as the
Indenture Trustee may determine. Further, the Indenture Trustee shall be
entitled to collect and receive directly all tolls, rents (including Rent),
revenues, issues, income, products and profits of the Trust Indenture Estate
other than Excepted Payments, without prejudice, however, to the right of the
Indenture Trustee under any provision of this Indenture to collect and receive
all cash held by, or required to be deposited with, the Indenture Trustee
under this Indenture. Such tolls, rents (including Rent), revenues, issues,
income, products and profits shall be applied to pay the expenses of the use,
operation, storage, leasing, control, management, or disposition of the Trust
Indenture Estate, and of all maintenance and repairs, and to make all payments
which the Indenture Trustee may be required or may reasonably elect to make
for any taxes, assessments, insurance or other proper charges upon the Trust
Indenture Estate (including the employment of engineers and accountants to
examine, inspect and make reports upon the properties and books and records of
the Owner Trustee and the Lessee), and all other payments which the Indenture
Trustee may be required or authorized to make under any provision of this
Indenture, as well as just and reasonable compensation for the services of the
Indenture Trustee and of all persons properly engaged and employed for such
purposes by the Indenture Trustee; provided, that any excess amounts shall be
promptly distributed in accordance with Section 5.03 hereof.
(c) If an Indenture Event of Default shall have occurred and be
continuing and the Indenture Trustee shall be entitled to exercise remedies
hereunder, and subject to Article VIII hereof, the Indenture Trustee, either
with or without taking possession, and either before or after taking
possession, and without instituting any legal proceedings whatsoever, may
sell, assign, transfer and deliver the whole or, from time to time, to the
extent permitted by law, any part of the Trust Indenture Estate, or any part
thereof, or interest therein, at any private sale or public auction to the
highest bidder, with or without demand, advertisement or notice, except that
in respect of any private sale 20 days prior notice will be provided, for cash
or, with the consent of the Owner Trustee, which shall not be unreasonably
withheld, credit or for other property, for immediate or future delivery, and
for such price or prices and on such terms as the Indenture Trustee in
exercising reasonable commercial discretion may determine; provided, that any
such action shall be at the time lawful and that all mandatory legal
requirements shall be complied with. Any notice required pursuant to the
terms hereof in the case of a public sale, shall state the time and place
fixed for such sale. Any such public sale shall be held at such time or times
within ordinary business hours as the Indenture Trustee shall fix in the
notice of such sale. At any such sale, the Trust Indenture Estate may be
sold in one lot as an entirety or in separate lots. The Indenture Trustee
shall not be obligated to make any sale pursuant to such notice. The
Indenture Trustee may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for such sale, and any such sale
may be made at any time or place to which the same may be so adjourned
without further notice or publication. The Indenture Trustee may exercise
such right of sale without possession or production of the Certificates or
proof of ownership thereof, and as representative of the Holders may
exercise such right without notice to the Holders or without including the
Holders as parties to any suit or proceedings relating to the foreclosure
of any part of the Trust Indenture Estate. The Owner Trustee shall execute
any and all such bills of sale, assignments and other documents, and
perform and do all other acts and things requested by the Indenture Trustee
in order to permit consummation of any sale of the Trust Indenture Estate
in accordance with this Section 7.03(c) and to effectuate the transfer or
conveyance referred to in the first sentence of this Section 7.03(c).
Notwithstanding any other provision of this Indenture, the Indenture
Trustee shall not sell the Trust Indenture Estate or any part thereof
unless the Certificates shall have been accelerated.
(d) To the extent permitted by applicable law, the Indenture Trustee
or any Holder may be a purchaser of the Trust Indenture Estate or any part
thereof or any interest therein at any sale thereof, whether pursuant to
foreclosure or power of sale or otherwise. The Indenture Trustee may apply
against the purchase price therefor the amount then due hereunder or under any
of the Certificates secured hereby and any Holder may apply against the
purchase price therefor the amount then due to it hereunder, under any other
Indenture Document or under the Certificates held by such Holder to the extent
that such portion of the purchase price as it would have received had it been
entitled to share any distribution thereof. The Indenture Trustee or any
Holder or nominee thereof shall, upon any such purchase, acquire good title to
the property so purchased, free of the Lien of this Indenture and, to the
extent permitted by applicable law, free of all rights of redemption in the
Owner Trustee or the Owner Participant in respect of the property so
purchased.
(e) Subject to Article VIII hereof, and effective upon the
occurrence and continuance of an Indenture Event of Default, the Owner Trustee
hereby irrevocably appoints and constitutes the Indenture Trustee the true and
lawful attorney-in-fact of the Owner Trustee in its name and stead and on its
behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Indenture, whether pursuant
to foreclosure or power of sale or otherwise, to execute and deliver all such
bills of sale, assignments and other instruments as the Indenture Trustee may
consider necessary or appropriate, with full power of substitution, and the
Owner Trustee hereby ratifies and confirms all that such attorney or any
substitute shall lawfully do by virtue hereof. Nevertheless, if so requested
by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and
confirm any such sale, assignment, transfer or delivery, by executing and
delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
(f) The Indenture Trustee shall, as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any
successor or nominee) for all or any part of the Trust Indenture Estate,
whether such receivership be incidental to a proposed sale of the Trust
Indenture Estate or the taking of possession thereof or otherwise, and the
Owner Trustee hereby consents to the appointment of such receiver and will not
oppose any such appointment. Any receiver appointed for all or any part of
the Trust Indenture Estate shall be entitled to exercise all of the rights and
powers of the Indenture Trustee with respect to the Trust Indenture Estate.
(g) Any sale of the Trust Indenture Estate or any part thereof or
any interest therein, whether pursuant to foreclosure or power of sale or
otherwise hereunder, shall be a perpetual bar against the Owner Trustee after
the expiration of the period, if any, during which the Owner Trustee shall
have the benefit of prepayment laws which may not be waived pursuant to
Section 7.13 hereof.
SECTION 7.04. Indenture Trustee May Prove Debt. If the Owner
Trustee shall fail to pay any amount payable hereunder or under the
Certificates, the Indenture Trustee, in its own name and as trustee of an
express trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceedings to judgment or final
decree, and may enforce any such judgment or final decree against the Owner
Trustee and collect in the manner provided by law out of the property of the
Owner Trustee wherever situated, the moneys adjudged or decreed to be payable;
provided, that any sale of any portion of the Trust Indenture Estate shall be
done in accordance with Section 7.03(c) hereof.
In case there shall be pending proceedings relative to the Owner
Trustee under the Bankruptcy Code or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or in case a receiver, assignee
or trustee in bankruptcy or reorganization, liquidator, sequestrator or
similar official shall have been appointed for or taken possession of the
Owner Trustee or its property, or in case of any other comparable judicial
proceedings relative to the Owner Trustee, or to the creditors or property of
the Owner Trustee, the Indenture Trustee, irrespective of whether the
principal of the Certificates shall then be due and payable as therein or
herein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal, interest and other amounts owing and unpaid in respect of the
Certificates or hereunder, and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee (including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence or bad faith) and of the Holders allowed in any judicial
proceedings relative to the Owner Trustee or to the creditors or
property of the Owner Trustee,
(b) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders in any election of a trustee or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
proceedings or person performing similar functions in comparable
proceedings, and
(c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Holders and of the Indenture Trustee on their
behalf;
and any trustee, receiver, or liquidator, custodian or other similar official
is hereby authorized by each of the Holders to make payments to the Indenture
Trustee, and, in the event that the Indenture Trustee shall consent to the
making of payments directly to the Holders, to pay to the Indenture Trustee
such amounts as shall be sufficient to cover reasonable compensation to the
Indenture Trustee, each predecessor Indenture Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Indenture Trustee and each predecessor
Indenture Trustee except as a result of negligence or willful misconduct.
Nothing contained herein shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Certificates or the rights of any Holder thereof, or to
authorize the Indenture Trustee to vote in respect of the claim of any Holder
in any such proceeding except, as aforesaid, to vote for the election of a
trustee in bankruptcy or similar person.
All rights of action and rights to assert claims under this
Indenture, or under any of the Certificates, may be enforced by the Indenture
Trustee without the possession of such Certificates on any trial or other
proceedings instituted by the Indenture Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment, subject to
the payment of the expenses, disbursements and compensation of the
Indenture Trustee, each predecessor Indenture Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders, as
provided herein.
In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party) the Indenture Trustee shall be
held to represent all the Holders of the Certificates, and it shall not be
necessary to make any Holders parties to such proceedings.
SECTION 7.05. Remedies Cumulative. Each and every right, power and
remedy given to the Indenture Trustee in this Indenture shall be cumulative
and shall be in addition to every other right, power and remedy specifically
given herein or now or hereafter existing at law, in equity or by statute, and
each and every right, power and remedy whether specifically given herein or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by the Indenture Trustee or the Holders, and
the exercise or the beginning of the exercise of any power or remedy shall not
be construed to be a waiver of the right to exercise at the same time or later
any other right, power or remedy. No delay or omission by the Indenture
Trustee or of any Holder in the exercise of any right, remedy or power or in
the pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or
the Lessee or to be an acquiescence in any such default.
SECTION 7.06. Suits for Enforcement. If an Indenture Event of
Default has occurred, has not been waived and is continuing, the Indenture
Trustee may in its discretion and subject to its rights of appropriate
indemnification under Sections 7.08 and 9.03 and Article XI hereof proceed to
protect and enforce its rights and rights of the Holders by such appropriate
judicial proceedings as the Indenture Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant
or agreement contained in this Indenture or in aid of the exercise of any
power granted in this Indenture or to enforce any other legal or equitable
right vested in the Indenture Trustee or the Holders by this Indenture or by
law; provided, that any sale of any portion of the Trust Indenture Estate
shall be done in accordance with Section 7.03(c) hereof.
SECTION 7.07. Discontinuance of Proceedings. In case the Indenture
Trustee or any Holder shall have instituted any proceeding to enforce any
right, power or remedy under this Indenture by foreclosure, entry or
otherwise, and such proceeding shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Indenture Trustee or
such Holder, then the Owner Trustee, the Indenture Trustee, the Owner
Participant, the Holders and the Lessee shall, subject to any binding
determination in such proceeding, be restored to their former positions and
rights under this Indenture with respect to the Trust Indenture Estate, and
all rights, remedies and powers of the Indenture Trustee and the Holders
shall continue as if no such proceeding had been instituted.
SECTION 7.08. Limitations on Suits by Holders. No Holder of any
Certificate shall have any right by virtue or by availing of any provision of
this Indenture to institute any action or proceeding at law or in equity or in
bankruptcy or otherwise upon or under or with respect to this Indenture, or
for the appointment of a trustee, receiver, liquidator, custodian or other
similar official or for any other remedy hereunder, unless such Holder
previously shall have given to the Indenture Trustee written notice that an
Indenture Event of Default shall then have occurred and be continuing, as
hereinbefore provided, and the Holders of not less than 25% in aggregate
principal amount of Outstanding Certificates shall have made written request
upon the Indenture Trustee to institute such action or proceedings in its own
name as trustee hereunder and shall have offered to the Indenture Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby and the Indenture Trustee for 60
days after its receipt of such notice, request and offer of indemnity shall
have failed to institute any such action or proceedings and no direction
inconsistent with such written request shall have been given to the Indenture
Trustee pursuant to Section 7.10 hereof; it being understood and intended, and
being expressly covenanted by the Holder of each Certificate with every other
Holder of each other Certificate and the Indenture Trustee, that no one or
more Holders shall have any right in any manner whatever to affect, disturb or
prejudice the rights of any other Holder or the Lien of this Indenture or any
part of the Trust Indenture Estate or to obtain or seek to obtain priority
over or preference to any other such Holder or to enforce any right under this
Indenture, except in the manner provided herein and for the equal, ratable and
common benefit of all Holders. For the protection and enforcement of the
provisions of this Section, each and every Holder and the Indenture Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 7.09. Unconditional Right of Holders to Receive Principal,
Interest and Make-Whole Premium, and to Institute Certain Suits.
Notwithstanding any other provision in this Indenture and any provision of any
Certificate, the right of any Holder to receive payment of the principal of
and interest and Make-Whole Premium, if any, on such Certificate on or after
the respective due dates and in the manner expressed in such Certificate, or,
subject to Section 7.08 hereof, to institute suit for the enforcement of any
such payment on or after such respective dates as provided herein, shall not
be impaired or affected without the consent of such Holder.
SECTION 7.10. Control by Holders. The Majority in Interest of
Certificate Holders shall have the right to direct the Indenture Trustee as to
the time, method, and place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising any trust or power conferred
on the Indenture Trustee by this Indenture; provided that such direction shall
not be otherwise than in accordance with law and the provisions of this
Indenture and the Indenture Trustee shall have received, to the extent
provided in Sections 7.08 and 9.03 and Article XI hereof, such reasonable
indemnification as it may require against the costs, expenses and liabilities
to be incurred by the Indenture Trustee; and provided further that (subject to
the provisions of Section 9.02 hereof) the Indenture Trustee shall have the
right to decline to follow any such direction if the Indenture Trustee, being
advised by counsel, shall determine that the action or proceeding so directed
may not lawfully be taken or if the Indenture Trustee in good faith by its
board of directors, the executive committee, or a trust committee of directors
or Responsible Officers of the Indenture Trustee shall determine that the
action or proceedings so directed would involve the Indenture Trustee in
personal liability or if the Indenture Trustee in good faith shall so
determine that the actions or forebearances specified in or pursuant to such
direction shall be unduly prejudicial to the interests of Holders not joining
in the giving of said direction, it being understood that (subject to Section
9.02 hereof) the Indenture Trustee shall have no duty to ascertain whether or
not such actions or forebearances are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Indenture
Trustee in its discretion to take any action deemed proper by the Indenture
Trustee and which is not inconsistent with the direction by the Majority in
Interest of Certificate Holders.
SECTION 7.11. Waiver of Past Indenture Default. Upon written
instructions from the Majority in Interest of Certificate Holders, the
Indenture Trustee shall waive any past Indenture Default and its consequences
and upon any such waiver such Indenture Default shall cease to exist and any
Indenture Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Indenture, but no such waiver shall extend to
any subsequent or other Indenture Default or impair any right consequent
thereon; provided, however, that in the absence of written instructions from
all Holders, the Indenture Trustee shall not waive any Indenture Default (a)
in the payment of the principal of or Make-Whole Premium, if any, or interest
on, or other amounts due under, any Certificate then Outstanding, or (b) in
respect of a covenant or provision of this Indenture which, under Article XIII
hereof, cannot be modified or amended without the consent of each Holder.
SECTION 7.12. Notice of Indenture Default. The Indenture Trustee
shall transmit to the Owner Trustee, the Holders and to the Owner Participant
notice of any Indenture Defaults actually known to a Responsible Officer of
the Indenture Trustee, such notice to be transmitted by mail to the Holders
within 90 days, and to the Owner Trustee and the Owner Participant promptly
after the occurrence thereof, unless such Indenture Default shall have been
cured before the giving of such notice; provided that under no circumstances
shall the Indenture Trustee give such notice to the Holders until the
expiration of a period of 60 days from the occurrence of such Indenture
Default; and provided further that, except in the case of default in the
payment of the principal of or interest on or any other amount due under any
of the Certificates, the Indenture Trustee shall be protected in withholding
such notice to the Holders if and so long as the board of directors, the
executive committee, or a trust committee of directors or trustees and/or
Responsible Officers of the Indenture Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders.
SECTION 7.13. Waiver of Appraisement, etc.; Laws. The Owner Trustee
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any appraisement, valuation, stay, extension or
prepayment law wherever enacted, now or at any time hereafter in force, in
order to prevent or hinder the enforcement of this Indenture or the execution
of any power granted herein to the Indenture Trustee, or the absolute sale of
the Trust Indenture Estate, or any part thereof, or the possession thereof by
any purchaser at any sale under this Article VII; and the Owner Trustee for
itself and all who may claim under it, so far as it or any of them now or
hereafter lawfully may, hereby waives the benefit of all such laws. The Owner
Trustee for itself and all who may claim under it waives, to the extent that
it lawfully may, all right to have the property in the Trust Indenture Estate
marshalled upon any foreclosure hereof, and agrees that any court having
jurisdiction to foreclose this Indenture may order the sale of the Trust
Indenture Estate as an entirety.
If any law referred to in this Section 7.13 and now in force, of
which the Owner Trustee or its successors might take advantage despite this
Section 7.13, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the contract herein
contained or to preclude the application of this Section 7.13.
ARTICLE VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
SECTION 8.01. Certain Rights of Owner Trustee and Owner Participant.
(a) Subject to Section 13.01 hereof, without the consent of a Majority in
Interest of Certificate Holders, the respective parties to the Indenture
Documents may not modify, amend or supplement any of said agreements, or give
any consent, waiver, authorization or approval thereunder, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions thereof or of modifying in any manner the rights of the respective
parties thereunder; provided, however, that the actions specified in
subsection (b) of this Section 8.01 may be taken without the consent of the
Indenture Trustee or any Holder.
(b) Subject to the provisions of subsection (c) of this Section
8.01, the respective parties to the Indenture Documents, at any time and from
time to time, without the consent of the Indenture Trustee or of any Holder,
may:
(1) so long as no Indenture Event of Default shall have occurred and
be continuing, modify, amend or supplement the Lease, or give any waiver
with respect thereto, except that without compliance with subsection (a) of
this Section 8.01 the parties to the Lease shall not modify, amend or
supplement, or give any waiver for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions thereof or
of modifying in any manner the rights of the respective parties thereunder,
with respect to the following provisions of the Lease as in effect on the
effective date hereof: Article 2 (provided that, if in respect of the
Term, the result thereof would not be to shorten the Term of the Lease to a
period shorter than the period ending with the Maturity of any
Certificate), Section 3.03 (except to the extent such Section relates to
amounts payable (whether directly or pursuant to this Indenture) to Persons
other than Holders and the Indenture Trustee in its individual capacity),
Section 3.05, Section 3.06 (except insofar as it relates to the address or
account information of the Owner Trustee or the Indenture Trustee) (other
than as such Sections 3.03, 3.05 and 3.06 may be amended pursuant to
Section 3.04 of the Lease as in effect on the effective date hereof),
Section 5.01, Article 6, Article 10 (except that further restrictions
may be imposed on the Lessee), Article 11 (except that additional
requirements may be imposed on the Lessee), Article 13 (except for
Section 13.05 and except that additional insurance requirements may be
imposed on the Lessee), Article 14 (except in order to increase the
Lessee's liabilities or enhance the Lessor's rights thereunder), Article
15 (except in the case of an assignment by the Lessor in circumstances
where the Aircraft shall remain registrable under the Federal Aviation
Act), Section 16.01 (except to impose additional or more stringent
Events of Default), Article 17 (except to impose additional remedies),
Section 19.01 (except to impose additional requirements on the Lessee),
Section 20.01, Article 22, Section 23.01, Section 26.03 and any
definition of terms used in the Lease, to the extent that any
modification of such definition would result in a modification of the
Lease not permitted pursuant to this subsection (b); provided that the
parties to the Lease may take any such action without the consent of the
Indenture Trustee or any Holder to the extent such action relates to the
payment of amounts constituting, or the Owner Trustee's, the Owner
Participant's or the Lessee's rights or obligations with respect to,
Excepted Payments;
(2) modify, amend or supplement the Trust Agreement and any other
Indenture Document (other than the Lease and the Participation Agreement),
or give any consent, waiver, authorization or approval with respect
thereto, in each case only to the extent any such action shall not
adversely impact the interests of the Holders;
(3) modify, amend or supplement the Participation Agreement, or give
any consent, waiver, authorization or approval with respect thereto, except
that without compliance with subsection (a) of this Section 8.01 the
parties to the Participation Agreement shall not modify, amend or
supplement, or give any consent, waiver, authorization or approval for the
purpose of adding provisions to or changing in any manner or eliminating
any of the provisions thereof or of modifying in any manner the rights of
the respective parties thereunder, with respect to the following provisions
of the Participation Agreement as in effect on the effective date hereof:
Articles 6, 8 and 9 and Section 10.01(b) (insofar as such Articles 6, 8 and
9 and Section 10.01(b) relate to the Indenture Trustee, the Pass Through
Trustee and the Holders), Article 7 and Sections 15.01 and 17.11 and any
definition of terms used in the Participation Agreement, to the extent that
any modification of such definition would result in a modification of the
Participation Agreement not permitted pursuant to this subsection (b); and
(4) modify, amend or supplement any of said agreements in order to
cure any ambiguity, to correct or supplement any provisions thereof which
may be defective or inconsistent with any other provision thereof or of any
provision of this Indenture, or to make any other provision with respect to
matters or questions arising thereunder or under this Indenture which shall
not be inconsistent with the provisions of this Indenture, provided the
making of any such other provision shall not adversely affect the interests
of the Holders.
(c) No modification, amendment, supplement, consent, waiver,
authorization or approval with respect to the Lease or the Participation
Agreement, whether effected pursuant to subsection (a) or pursuant to
subsection (b) of this Section 8.01 and anything in such subsections or
elsewhere in this Indenture to the contrary notwithstanding, shall, without
the consent of the Holder of each Outstanding Certificate affected thereby,
(1) modify, amend or supplement the Lease in such a way as to extend
the time of payment of Basic Rent, Stipulated Loss Value or any other
amounts payable to the Indenture Trustee for its own account or for the
account of the Holders (subject in any event to Section 3.05 of the Lease)
upon the occurrence of an Event of Loss or Termination Value and any other
amounts payable to the Indenture Trustee for its own account or for the
account of the Holders (subject in any event to Section 3.05 of the Lease)
upon termination of the Lease with respect to the Aircraft payable under,
or as provided in, the Lease as in effect on the effective date hereof, or
reduce the amount of any installment of Basic Rent or Supplemental Rent so
that the same is less than the payment of principal of, and interest on the
Certificates and Make-Whole Premium, if any, as the case may be, to be made
from such installment of Basic Rent or Supplemental Rent, or reduce the
aggregate amount of Stipulated Loss Value, or any other amounts payable
under, or as provided in, the Lease as in effect on the effective date
hereof upon the occurrence of an Event of Loss so that the same is less
than the accrued interest on and the principal as of the Loss Payment Date,
of the Certificates at the time Outstanding or reduce the amount of
Termination Value and any other amounts payable under, or as provided in,
the Lease as in effect on the effective date hereof upon termination of the
Lease with respect to the Aircraft so that the same is less than the
accrued interest on and principal as of the Lease Termination Date and
Make-Whole Premium, if any, of Certificates at the time Outstanding, or
(2) modify, amend or supplement the Lease in such a way as to, or
consent to any assignment of the Lease or give any consent, waiver,
authorization or approval which would, release the Lessee from its
obligations in respect of payment of Basic Rent or Supplemental Rent, or
Stipulated Loss Value and any other amounts payable to the Indenture
Trustee for its own account or the account of the Holders (subject in any
event to 3.05 of the Lease) upon the occurrence of an Event of Loss, or
Termination Value and any other amounts payable to the Indenture Trustee
for its own account or the account of the Holders (subject in any event to
3.05 of the Lease) of the Lease with respect to the Aircraft, payable
under, or as provided in, the Lease as in effect on the effective date
hereof, except for any such assignment pursuant to Section 2.12 hereof, and
except as provided in the Lease as in effect on the effective date hereof.
(d) At all times so long as this Indenture is in effect, the consent
of the Owner Trustee (at the direction of the Owner Participant) shall be
required in order (i) to amend, modify or supplement the Lease or any other
Operative Document to which the Owner Trustee is a party or to waive
compliance by the Lessee with any of its obligations thereunder and (ii) to
grant any consent requested under the Lease.
Notwithstanding the foregoing, but subject always to the provision of Section
15.05 hereof, the Indenture Trustee shall at all times have the right, to the
exclusion of the Owner Trustee and the Owner Participant, to (A) declare the
lease to be in default under Article 17 (other than with respect to Excepted
Payments) thereof and (B) subject only to the provisions of this Indenture
exercise the remedies set forth in such Article 17 of the Lease (other than in
connection with Excepted Payments) and in Article 7 hereof.
Nothing in this Indenture shall be deemed to prohibit the Owner
Participant or the Owner Trustee from making demand on the Lessee for, or from
commencing an action at law to obtain the payment of, or from receiving
payment of, any Excepted Payment; provided, however, that if the Owner Trustee
is proceeding under the Lease, the Owner Trustee shall proceed pursuant to
Section 17.01(a)(v), and only Section 17.01(a)(v), of the Lease.
SECTION 8.02. Owner Participant's Right to Elect to Prepay or
Purchase the Certificates. (a) If (i) an Event of Default shall have occurred
and be continuing for more than 180 days or the Certificates shall have become
due and payable pursuant to Section 7.02(b) or (c) hereof or (ii) an Event of
Default shall have occurred and be continuing for not more than 180 days and
the Certificates shall not have become due and payable pursuant to Section
7.02(b) or (c) hereof, the Owner Participant (or the Owner Trustee on behalf
of the Owner Participant) may, but shall be under no obligation to, do either
of the following:
(1) direct the Owner Trustee to cause the prepayment of all, but not
less than all, of the Certificates then Outstanding by notifying the
Indenture Trustee of such election, which notice in order to be effective
shall state that it is irrevocable and shall designate a Prepayment Date
which shall be a Rent Payment Date or monthly anniversary thereof and which
shall be not less than 30 days after the date of such notice on which the
Owner Trustee shall, in the manner provided for in Section 6.04 hereof,
deposit the sum of amounts contemplated by paragraph "first" under Section
5.03 and the aggregate Prepayment Price of all such Certificates with the
Indenture Trustee. If such payment by the Owner Trustee to the Indenture
Trustee is made, the Certificates shall cease to accrue interest from and
after the Prepayment Date, and after distribution of such payment to the
Holders, the Indenture Trustee shall release the Trust Indenture Estate
from the Lien of this Indenture; or
(2) purchase all, but not less than all, of the Outstanding
Certificates by notifying the Indenture Trustee of such election, which
notice in order to be effective shall state that it is irrevocable and
shall designate a date which shall be a Rent Payment Date or monthly
anniversary thereof and which shall be not less than 30 days after the date
of such notice on which the Owner Trustee shall pay to the Indenture
Trustee an amount equal to the aggregate unpaid principal amount of all
Outstanding Certificates, together with accrued interest on such amount to
the date of purchase, the aggregate amount of any Make-Whole Premium
applicable to each Outstanding Certificate (if such purchase occurs prior
to the Premium Termination Date for such Outstanding Certificate) in the
case of a purchase pursuant to clause (a)(ii) above, plus all other sums
due any Holder or the Indenture Trustee hereunder or under the
Participation Agreement or the Lease. Upon receipt of the Indenture
Trustee of such amount, each Holder will be deemed, whether or not
Certificates shall have been delivered to the Indenture Trustee on such
date, to have thereupon sold, assigned, transferred and conveyed (and shall
promptly take such actions as the Owner Participant shall reasonably
request to evidence such sale, assignment, transfer and conveyance) to the
Owner Participant (without recourse or warranty of any kind except for its
own acts), all of the right, title and interest of such Holder in and to
the Trust Indenture Estate and this Indenture and all Certificates held by
such Holder and the former Holders shall not be entitled to receive any
interest on the principal amount of such Certificates after the purchase
date, and the Owner Participant shall be deemed to have assumed (and shall
promptly take such actions as any Holder shall reasonably request to
evidence such assumption) all of such Holder's obligations under the
Participation Agreement and this Indenture arising subsequent to such sale.
If the Owner Trustee shall so request, such Holder will comply with all the
provisions of Section 2.06 of this Indenture to enable new Certificates to
be issued to the Owner Participant in such authorized denominations as the
Owner Participant shall request. All charges and expenses required
pursuant to Section 2.06 hereof in connection with the issuance of any such
new Certificates shall be borne by the Owner Participant.
(b) From and after the deposit by the Owner Trustee of the
applicable Prepayment Price or purchase price with the Indenture Trustee
pursuant to Section 8.02(a) hereof, the Owner Trustee shall be entitled to
exercise all remedies of the Indenture Trustee under Article VII hereof as
well as of the Lessor under the Lease.
SECTION 8.03. Certain Rights of Owner Participant. (a) If (A)
there shall occur an Event of Default under the Lease as a result of the
Lessee's failure to make any payment of an installment of Basic Rent, and (B)
the Owner Trustee shall have paid or caused to be paid on or prior to the date
which is 15 Business Days after such Event of Default all principal and
interest on the Certificates then due (as well as any interest on overdue
principal and (to the extent permitted by applicable law) interest), but not
including any principal or interest becoming due on account of such Event of
Default, then the failure of the Lessee to make the payment of such
installment of Basic Rent or of interest on account of such installment's
being overdue shall not constitute or result in an Indenture Event of Default
under this Indenture and any declaration based solely on the same shall be
deemed to be automatically rescinded. Nothing contained in the preceding
sentence shall be deemed to entitle the Owner Trustee to exercise any rights
and powers or pursue any remedies pursuant to Article 17 of the Lease or
otherwise except as set forth in this Indenture, and except that the Owner
Trustee or the Owner Participant may attempt to recover any amount paid by it
or them under this Indenture by demanding of the Lessee payment of such
amount, or by commencing an action at law against the Lessee for the payment
of such amount or taking appropriate action in a pending action at law against
the Lessee pursuant to Section 17.01(a)(v), but only said Section 17.01(a)(v),
of the Lease. Upon curing any such Event of Default pursuant to this Section
8.03, the Owner Trustee or the Owner Participant, as the case may be, shall,
so long as no Indenture Event of Default shall have occurred and be
continuing, be subrogated on an unsecured basis to all the rights of the
Indenture Trustee under the Lease in respect of the payment giving rise to
such Event of Default, and any right to any interest in respect of the same,
and shall be entitled to any payment of Basic Rent (or interest thereon)
actually made by the Lessee in respect of such cured payment upon receipt by
the Indenture Trustee; provided that no such amount shall be paid to the Owner
Trustee or the Owner Participant until all amounts then due and payable to
each Certificate Holder hereunder and thereunder shall have been paid in full
and no Indenture Event of Default shall have occurred and be continuing.
Notwithstanding anything in this Indenture or the Lease to the contrary, the
Owner Participant and the Owner Trustee collectively, shall not be entitled to
cure more than six (6) Events of Default (no more than three (3) of which may
be consecutive) occasioned by defaults in the payment of Basic Rent.
(b) If (A) there shall occur an Event of Default under the Lease for
any reason other than the Lessee's failure to make any payment of an
installment of Basic Rent and (B) the Owner Trustee shall have taken or caused
to be taken such action necessary to cure and shall have cured such Event of
Default prior to the date which is 15 Business Days after such Event of
Default, then the failure of the Lessee to perform such covenant, condition or
agreement, the observance or performance of which was accomplished by the
Owner Trustee hereunder shall not constitute or result in an Indenture Event
of Default under this Indenture and any declaration based solely on the same
shall be deemed to be automatically rescinded. Nothing contained in the
preceding sentence shall be deemed to entitle the Owner Trustee or the Owner
Participant to exercise any rights and powers or pursue any remedies pursuant
to Article 17 of the Lease or otherwise except as set forth in this Indenture,
and except that the Owner Trustee or the Owner Participant may attempt to
recover any amount paid by it or them in effecting such cure by demanding of
the Lessee payment of such amount, plus any interest due, or by commencing an
action at law against the Lessee for the payment of such amount or taking
appropriate action in a pending action at law against the Lessee pursuant to
Section 17.01(a)(v), but only said Section 17.01(a)(v), of the Lease. Upon
curing any such Event of Default pursuant to this Section 8.03(b), the Owner
Trustee or the Owner Participant, as the case may be, shall be subrogated to
all the rights of the Indenture Trustee under the Lease in respect of the
payment, agreement or covenant giving rise to such Event of Default, and any
right to any interest in respect of the same, and shall be entitled to any
payment or other performance upon receipt by the Indenture Trustee; provided
that no such amount shall be paid to the Owner Trustee or the Owner
Participant until all amounts then due and payable to each Certificate Holder
hereunder and thereunder shall have been paid in full and no Indenture Event
of Default shall have occurred and be continuing.
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
SECTION 9.01. Acceptance of Trusts. The Indenture Trustee in its
individual capacity hereby accepts the trusts imposed upon it by this
Indenture, and covenants and agrees to perform the same as expressed herein
and agrees to receive and disburse all moneys constituting part of the Trust
Indenture Estate in accordance with the terms hereof.
SECTION 9.02. Duties and Responsibilities of the Indenture Trustee;
During an Indenture Event of Default; Prior to an Indenture Event of Default.
(a) The Indenture Trustee, prior to the occurrence of an Indenture Event of
Default and after the curing or waiving of all Indenture Events of Default
which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Indenture
Event of Default has occurred (which has not been cured or waived) the
Indenture Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the circumstances in the conduct
of his own affairs. No provision of this Indenture shall be construed to
relieve the Indenture Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Indenture Event of Default and
after the curing or waiving of all Indenture Events of Default which may have
occurred:
(x) the duties and obligations of the Indenture trustee shall be
determined solely by the express provisions of this Indenture, and the
Indenture Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read in to this Indenture against
the Indenture Trustee; and
(y) in the absence of bad faith on the part of the Indenture
Trustee, the Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
statements, certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture; but in the case of any such
statements, certificate or opinions which by any provision hereof are
specifically required to be furnished to the Indenture Trustee, the Indenture
Trustee shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture;
(ii)the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Responsible Officers
of the Indenture Trustee, unless it shall be proved that the Indenture Trustee
was negligent in ascertaining the pertinent facts; and
(iii)the Indenture Trustee shall not be liable with respect to any
action taken or not taken by it in good faith in accordance with the direction
of the Holders of not less than a majority in aggregate principal amount of
Outstanding Certificates relating to the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred upon the Indenture Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Indenture Trustee shall have determined
in good faith that the repayment of such funds or adequate indemnity against
such liability is not reasonably assured to it.
The Indenture Trustee will execute and the Owner Trustee will file or
cause to be filed such continuation statements with respect to financing
statements relating to the security interest created hereunder in the Trust
Indenture Estate as may be specified from time to time in written instructions
of the Holders of not less than 25% in aggregate principal amount of
Certificates (which instructions may, by their terms, be operative only at a
future date and which shall be accompanied by the execution form of such
continuation statement so to be filed); provided that, notwithstanding the
foregoing, the Indenture Trustee may execute and file or cause to be filed any
financing statement which it from time to time deems appropriate.
(b) If any Event of Default shall have occurred and be continuing
and, after the latest date on which the Owner Trustee may cure such Event of
Default pursuant to Section 8.03 hereof, on request of the Holders of not less
than 25% in aggregate principal amount of Outstanding Certificates and subject
to indemnification, to the extent provided in Sections 7.08 and 9.03 and
Article XI hereof, as it may require against the costs, expenses and
liabilities to be incurred, the Indenture Trustee shall exercise such remedies
under Article 17 of the Lease as shall be specified in such request.
(c) The Indenture Trustee agrees that it will, in its individual
capacity and at its own cost and expense (but without any right of indemnity
in respect of any such cost or expense under Article XI hereof) promptly take
such action as may be necessary duly to discharge all Liens on any part of the
Trust Indenture Estate which result from claims against it in its individual
capacity not related to the administration of the Trust Indenture Estate or
any other transaction pursuant to this Indenture or any document included in
the Trust Indenture Estate.
(d) The Indenture Trustee will execute and deliver to the Lessee for
filing in accordance with Section 18 of the Lease any properly presented
document, instrument or financing or continuation statement specified in any
opinion delivered pursuant to Section 6.03(e) of the Participation Agreement.
The Indenture Trustee may rely on the act of presentation of any such
document, instrument, financing or continuation statement as evidencing the
fact that it is properly prepared and presented, provided that the Indenture
Trustee shall promptly correct any error in any such document, instrument,
financing or continuation statement of which a Responsible Officer of the
Indenture Trustee has actual knowledge.
(e) The Indenture Trustee will furnish to each Holder promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and other instruments furnished to
the Indenture Trustee, to the extent that the same shall not have been
otherwise furnished to such Holder pursuant to this Indenture or to the extent
the Indenture Trustee does not reasonably believe that the same shall have
been furnished by the Lessee directly to such Holder.
SECTION 9.03. Certain Rights of the Indenture Trustee. Subject to
Section 9.02 hereof:
(a) the Indenture Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, Officers' Certificate or any
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, note, coupon, security or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request, direction, order or demand of the Owner Trustee
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed) upon which the Indenture Trustee may rely to prove
or establish a matter set forth therein;
(c) the Indenture Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(d) the Indenture Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Indenture at the request,
order or direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Indenture Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred therein or thereby;
(e) the Indenture Trustee shall not be liable for any action taken
or omitted by it in good faith and believed by it to be authorized or
within the discretion, rights or powers conferred upon it by this
Indenture;
(f) prior to the occurrence of an Indenture Event of Default
hereunder and after the curing or waiving of all Indenture Events of
Default, the Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
appraisal, bond, debenture, note, coupon, security, or other paper or
document unless requested in writing to do so by the Majority in Interest
of Certificate Holders; provided that, if the payment within a reasonable
time to the Indenture Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation is, in the opinion
of the Indenture Trustee, not reasonably assured to the Indenture Trustee
by the security afforded to it by the terms of this Indenture, the
Indenture Trustee may require reasonable indemnity against such expenses or
liabilities as a condition to proceeding; the reasonable expenses of every
such examination shall be paid by the Owner Trustee or, if paid by the
Indenture Trustee or any predecessor trustee, shall be repaid by the Owner
Trustee upon demand; and
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ and the Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of
any such agent or attorney appointed with due care by it hereunder.
SECTION 9.04. Indenture Trustee Not Responsible for Recitals,
Disposition of Certificates or Application of Proceeds Thereof. The Indenture
Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates, except the Indenture Trustee's
certificates of authentication. The Indenture Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Certificates. The Indenture Trustee shall not be accountable for the use or
application by the Owner Trustee of any of the Certificates or of the proceeds
thereof.
SECTION 9.05. Indenture Trustee and Agents May Hold Certificates;
Collections, etc. The Indenture Trustee or any agent of the Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not the Indenture
Trustee or such agent and may otherwise deal with the Owner Trustee and
receive, collect, hold and retain collections from the Owner Trustee with the
same rights it would have if it were not the Indenture Trustee or such agent.
SECTION 9.06. Moneys Held by Indenture Trustee. Subject to Sections
5.08 hereof and 14.04 hereof, all moneys received by the Indenture Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated from other
funds except to the extent required by mandatory provisions of law. Neither
the Owner Trustee nor, subject to Section 5.08 hereof, the Indenture Trustee
nor any agent thereof shall be under any liability for interest on any moneys
received by it hereunder.
SECTION 9.07. Right of Indenture Trustee to Rely on Officers'
Certificate, etc. Subject to Sections 9.02 and 9.03 hereof, whenever in the
administration of the trusts of this Indenture the Indenture Trustee shall
deem it necessary or desirable that a matter be proved or established prior to
taking or suffering or omitting any action hereunder, such matter (unless
other evidence in respect thereof be specifically prescribed herein) may, in
the absence of bad faith on the part of the Indenture Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to
the Indenture Trustee, and such certificate, in the absence of bad faith on
the part of the Indenture Trustee, shall be full warrant to the Indenture
Trustee for any action taken, suffered or omitted by it under the provisions
of this Indenture upon the faith thereof.
SECTION 9.08. Replacement Airframes and Replacement Engines. At any
time and from time to time any Airframe or Engine which has been subject to an
Event of Loss and may, or is required to, be replaced under Section 10.03,
11.03 or 11.04 of the Lease by a replacement airframe or Replacement Engine,
as the case may be, shall be replaced in accordance with the provisions of
this Section 9.08 and the provisions of said Sections of the Lease, the Owner
Trustee shall, from time to time, direct the Indenture Trustee to execute and
deliver to or as directed in writing by the Owner Trustee an appropriate
instrument releasing such Airframe and/or Engine as appropriate from the Lien
of this Indenture and the Indenture Trustee shall execute and deliver such
instrument as aforesaid without recourse or warranty, but only upon receipt by
or deposit with the Indenture Trustee of the following:
(1) A written request from the Owner Trustee requesting such release
and specifically describing the Airframe and/or Engine(s) to be so released.
(2) A certificate signed by a duly authorized officer of the Lessee
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe subject to the Event of Loss
including the manufacturer, model, FAA registration number (or other
applicable registration information) and manufacturer's serial
number;
(ii)a description of the replacement airframe, including the
manufacturer, model, FAA registration number (or other applicable
registration information) and manufacturer's serial number;
(iii)that on the date of the Indenture and Security Agreement
Supplement relating to the replacement airframe the Owner Trustee
will be the legal owner of and have good and marketable title to such
replacement airframe free and clear of all Liens except Liens
permitted under Section 6.01 of the Lease, that such replacement
airframe will on such date be in at least as good operating condition
and repair as required by the terms of the Lease, and that such
replacement airframe has been or, substantially concurrently with
such replacement, will be duly registered in the name of the Owner
Trustee under the Aviation Act or under the law then applicable to
the registration of the Airframe subject to the Event of Loss and
that an airworthiness certificate has been duly issued under the
Aviation Act (or such other applicable law) with respect to such
replacement airframe and that such registration and certificate
is, or will be, in full force and effect, and that the Lessee will
have the full right and authority to use such replacement
airframe;
(iv)that the insurance required by Article 13 of the Lease is in full
force and effect with respect to such replacement airframe and all
premiums then due thereon have been paid in full;
(v) that the replacement airframe is of the same or an improved make
or model as the Airframe requested to be released from this
Indenture;
(vi)that the value of the replacement airframe as of the date of such
certificate is not less than the value of the Airframe requested to
be released (assuming such Airframe was in the condition and repair
required to be maintained under the Lease);
(vii)that no Event of Default has occurred and is continuing or would
result from the making and granting of the request for release and
the addition of a replacement airframe;
(viii)that the release of the Airframe subject to the Event of Loss
will not impair the security of the Indenture in contravention of any
of the provisions of this Indenture;
(ix)that upon such replacement, the Lien of this Indenture will apply
to the replacement airframe and such Lien will be a first priority
security interest in favor of the Indenture Trustee; and
(x) that each of the conditions specified in Section 11.03 of the
Lease with respect to such replacement airframe has been satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine subject to the Event of Loss
including the manufacturer's serial number;
(ii)a description of the Replacement Engine including the
manufacturer's name, the engine model and serial number;
(iii)that on the date of the Indenture and Security Agreement
Supplement relating to the Replacement Engine the Owner Trustee will
be the legal owner of such Replacement Engine free and clear of all
Liens except Liens permitted under Section 6.01 of the Lease, and
that such Replacement Engine will on such date be in at least as good
operating condition and repair as required by the terms of the Lease;
(iv)that the value of the Replacement Engine as of the date of such
certificate is not less than the value of the Engine to be released
(assuming such Engine was in the condition and repair required to be
maintained under the Lease);
(v) that the release of the Engine subject to the Event of Loss will
not impair the security of the Indenture in contravention of any of
the provisions of this Indenture;
(vi)that upon such replacement, the Lien of this Indenture will apply
to the Replacement Engine; and
(vii)that each of the conditions specified in Section 10.03, 11.03 or
11.04 of the Lease with respect to such Replacement Engine has been
satisfied.
(3) The appropriate instruments (i) transferring to the Owner
Trustee title to the replacement airframe or Replacement Engine to be received
as consideration for the Airframe or Engine to be released and (ii) assigning
to the Owner Trustee the benefit of all manufacturer's and vendor's
warranties, if any, generally available with respect to such replacement
airframe or Replacement Engine, and an Indenture and Security Agreement
Supplement subjecting such replacement airframe or Replacement Engine to the
Trust Agreement and to the Lien of this Indenture.
(4) A certificate from a firm of independent aircraft appraisers of
national standing satisfactory to the Indenture Trustee and the Owner Trustee
confirming the accuracy of the information set forth in clause (2)A.(vi) of
this Section 9.08.
(5) The opinion of Davis Polk & Wardwell, special counsel to the
Lessee, or other counsel reasonably satisfactory to the Indenture Trustee,
stating that:
(i) the certificates, opinions and other instruments and/or property
which have been or are therewith delivered to and deposited with the
Indenture Trustee conform to the requirements of this Indenture and the
Lease and, upon the basis of such application, the property so sold or
disposed of may be properly released from the Lien of this Indenture and
all conditions precedent herein provided for relating to such release have
been complied with; and
(ii)the replacement airframe or Replacement Engine has been validly
subjected to the Lien of this Indenture and covered by the Lease, the
instruments subjecting such replacement airframe or Replacement Engine to
the Lease and to the Lien of this Indenture, as the case may be, have been
duly filed for recordation pursuant to the Aviation Act or any other law
then applicable to the registration of the Aircraft, and no further action,
filing or recording of any document is necessary or advisable in order to
establish and perfect the title of the Owner Trustee to and the Lien of
this Indenture on such replacement airframe or Replacement Engine and the
Indenture Trustee would be entitled to the benefits of Section 1110 of the
Bankruptcy Code with respect to such replacement airframe or Replacement
Engine, provided, that such opinion need not be to the effect specified in
the foregoing clause to the extent that the benefits of such Section 1110
would not have been, by reason of a change in law or governmental
interpretation thereof after the date hereof, available to the Indenture
Trustee with respect to the Aircraft immediately prior to such substitution
had such Event of Loss not occurred.
SECTION 9.09. Indenture and Security Agreement Supplement for
Replacements. In the event of the substitution of a replacement airframe or a
Replacement Engine as contemplated by Section 10.03 or Article 11 of the
Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of
the Holders and the Lessee, subject to fulfillment of the conditions precedent
and compliance by the Lessee with its obligations set forth in Section 10.03
or Article 11 of the Lease, to execute and deliver an Indenture and Security
Agreement Supplement as contemplated by Section 9.08(3) hereof and, provided
no Event of Default shall have occurred and be continuing, execute and deliver
to the Lessee an appropriate instrument releasing the Airframe or Engine being
replaced from the Lien of this Indenture.
SECTION 9.10. Effect of Replacement. In the event of the
substitution of a replacement airframe or a Replacement Engine as contemplated
by Section 10.01 or Article 11 of the Lease and Section 9.08 hereof, all
provisions of this Indenture relating to the Airframe or Engine or Engines
being replaced shall be applicable to such replacement airframe or Replacement
Engine or Engines with the same force and effect as if such replacement
airframe or Replacement Engine or Engines were the same Airframe or engine or
engines, as the case may be, as the Airframe or Engine or Engines being
replaced but for the Event of Loss with respect to the Airframe or Engine or
Engines being replaced.
SECTION 9.11. Compensation. The Owner Trustee covenants and agrees
to pay, and the Indenture Trustee shall be entitled to receive, reasonable
compensation and payment or reimbursement for its reasonable advances,
expenses and disbursements (including the reasonable compensation and expenses
and disbursements of its counsel, agents and other persons not regularly in
its employ) in connection with its services rendered hereunder or in any way
relating to or arising out of the administration of the Trust Indenture Estate
and shall have a priority claim on the Trust Indenture Estate for the payment
of such compensation, advances, expenses and disbursements to the extent that
such compensation, advances, expenses and disbursements shall not be paid by
the Lessee, and shall have the right to use or apply any moneys held by it
hereunder in the Trust Indenture Estate toward such payments; provided that,
so long as the Lease is in effect, the Indenture Trustee shall not make any
claim for payment under this Section 9.11 against the Owner Trustee without
first making demand on the Lessee for payment of such claim. The Indenture
Trustee agrees that it shall have no right against any Holder, FSBU or the
Owner Participant for any fee as compensation for its services as trustee
under this Indenture.
ARTICLE X
CONCERNING THE HOLDERS
SECTION 10.01. Evidence of Action Taken by Holders. (a) Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in
writing, and, except as otherwise expressly provided herein, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee and, if expressly required herein, to the Owner Trustee.
Proof of execution of any instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Sections
9.02 and 9.03 hereof) conclusive in favor of the Indenture Trustee and the
Owner Trustee, if made in the manner provided in this Article.
(b) For the purpose of determining the Holders entitled to vote or
consent to any direction, waiver or other action of such Holders under Section
7.10 or 7.11 hereof, the Lessee may set a record date for such vote or consent
by specifying such record date in an Officer's Certificate delivered to the
Indenture Trustee. Such record date shall be a date not more than 15 days
prior to the first solicitation of such vote or consent.
SECTION 10.02. Proof of Execution of Instruments and of Holding of
Certificates. Subject to Sections 9.02 and 9.03 hereof, the execution of any
instrument by a Holder or his agent or proxy may be proved in accordance with
such reasonable rules and regulations as may be prescribed by the Indenture
Trustee. The holding of Certificates shall be proved by the Register or by a
certificate of the Registrar.
SECTION 10.03. Holders to Be Treated as Owners. Prior to due
presentment for registration of transfer of any Certificate, the Owner
Trustee, the Indenture Trustee, any agent of the Owner Trustee or the
Indenture Trustee, the Paying Agent, if any, the Registrar and the Lessee may
deem and treat the Person in whose name such Certificate shall be registered
upon the Register as the absolute owner of such Certificate (whether or not
such Certificate shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of and, subject to the provisions of this
Indenture, interest on such Certificate and for all other purposes; and
neither the Owner Trustee nor the Indenture Trustee (nor any agent of the
Owner Trustee or the Indenture Trustee) nor the Paying Agent, if any, nor the
Registrar nor the Lessee shall be affected by any notice to the contrary. All
such payments so made to any such person, or upon his order, shall be valid,
and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Certificate.
SECTION 10.04. Certificates Owned by Owner Trustee and the Lessee
Deemed Not Outstanding. In determining whether the Holders of the requisite
aggregate principal amount of Certificates have concurred in any direction,
consent or waiver under this Indenture, Certificates which are owned by the
Owner Trustee, the Owner Participant, FSBU, the Lessee or by any Affiliate
thereof shall be disregarded and deemed not to be Outstanding for the purpose
of any such determination; provided that for the purpose of determining
whether the Indenture Trustee shall be protected in relying on any such
direction, consent or waiver, only if a Responsible Officer of the Indenture
Trustee has actual knowledge that certain Certificates are so owned by any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Owner Trustee, the Owner Participant, FSBU
shall such Certificates be so disregarded; and provided further that if all
Certificates which would be deemed Outstanding in the absence of the foregoing
provision are owned by the Owner Trustee, FSBU or the Owner Participant or by
any Affiliate thereof, then such Certificates shall be deemed Outstanding for
the purpose of any such determination. Certificates so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Indenture Trustee the pledgee's
right so to act with respect to such Certificates and that the pledgee is
not the Owner Trustee, the Owner Participant, FSBU or the Lessee or any
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Owner Trustee, the Owner Participant,
FSBU or the Lessee. In case of a dispute as to such right, the advice of
counsel shall be full protection in respect of any decision made by the
Indenture Trustee in accordance with such advice, unless the Lessee, the
Owner Trustee, FSBU, or the Owner Participant are actually named in the
Register. Upon request of the Indenture Trustee, the Owner Trustee, the
Owner Participant, FSBU and the Lessee shall furnish to the Indenture
Trustee promptly an Officers' Certificate listing and identifying all
Certificates, if any, known by the Owner Trustee, the Owner Participant,
FSBU or the Lessee to be owned or held by or for the account of any of the
above-described persons; and, subject to Sections 9.02 and 9.03 hereof, the
Indenture Trustee shall be entitled to accept such Officers' Certificate as
conclusive evidence of the facts set forth therein and of the fact that all
Certificates not listed therein are outstanding for the purpose of any such
determination.
SECTION 10.05. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided
in Section 10.01, of the taking of any action by the Holders of the percentage
in aggregate principal amount of the Certificates specified in this Indenture
in connection with such action, any Holder of a Certificate, the serial number
of which is shown by the evidence to be included among the serial numbers of
the Certificates the Holders of which have consented to such action, may, by
filing written notice at the Corporate Trust Office and upon proof of holding
as provided in this Article, revoke such action so far as concerns such
Certificate. Except as aforesaid, any such action taken by the Holder shall
be conclusive and binding upon such Holder and upon all future Holders and
owners of such Certificate and of any Certificates issued in exchange or
substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon any such Certificate or otherwise. Any action taken by
the Holders of the percentage in aggregate principal amount of the
Certificates specified in this Indenture in connection with such action shall
be conclusively binding upon the Owner Trustee, the Indenture Trustee and the
Holders of all the Certificates.
Section 10.06. ERISA Plan Prohibition. No employee benefit plan
subject to Title I of ERISA, or individual retirement account or plan subject
to Section 4975 of the Code, or any trust established under any such plan or
account (hereinafter collectively referred to as an "ERISA Plan"), may acquire
or hold any of the Certificates (or participation interest therein). The
purchase by any Person of any Certificate (or participation interest therein)
constitutes a representation by such Person to the Owner Trustee, the Lessee,
the Owner Participant and the Indenture Trustee that such Person is not an
ERISA Plan and that such Person is not acquiring, and has not acquired, such
Certificate (or participation interest therein) with assets of an ERISA Plan.
Any transfer of a Certificate not permitted by this paragraph shall be void,
and the transferor shall retain all the benefits of such Certificate under the
Indenture, and the transferee shall not be entitled to any benefits under the
Indenture.
ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
The Owner Trustee, not individually but solely in its capacity as
Owner Trustee under the Trust Agreement, hereby agrees, whether or not any of
the transactions contemplated hereby shall be consummated, to assume liability
for, and does hereby indemnify, protect, save and keep harmless the Indenture
Trustee, in its individual capacity, and its successors, assigns, agents and
servants solely from the Lessor's Estate, with respect to the claims of the
Indenture Trustee for payment or reimbursement under Section 9.11 hereof and
from and against any and all liabilities, obligations, losses, damages,
penalties, taxes (excluding any taxes payable by the Indenture Trustee on or
measured by any compensation received by the Indenture Trustee for its
services under this Indenture), claims, actions, suits, costs, expenses or
disbursements (including legal fees and expenses) of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the
Indenture Trustee (whether or not also agreed to be indemnified against by any
other person under any other document) in any way relating to or arising out
of this Indenture, or any other Indenture Documents or the enforcement of any
of the terms of any thereof, or in any way relating to or arising out of the
manufacture, purchase, acceptance, nonacceptance, rejection, ownership,
delivery, lease, possession, use, operation, condition, sale, return or other
disposition of the Aircraft or any Engine (including, without limitation,
latent and other defects, whether or not discoverable, and any claim for
patent, trademark or copyright infringement), or in any way relating to or
arising out of the administration of the Trust Indenture Estate or the action
or inaction of the Indenture Trustee hereunder, except only (a) in the case of
willful misconduct or gross negligence of the Indenture Trustee in the
performance of its duties hereunder, (b) as may result from the inaccuracy of
any representation or warranty of the Indenture Trustee in the Participation
Agreement, (c) as otherwise provided in Section 9.02(c) hereof or (d) as
otherwise excluded by the terms of Article 8 or Article 9 of the Participation
Agreement from the Lessee's general indemnity or general tax indemnity to the
Indenture Trustee under said Section; provided that so long as the Lease is in
effect, the Indenture Trustee shall not make any claim under this Article XI
for any claim or expense indemnified by the Lessee under the Participation
Agreement without first making demand on the Lessee for payment of such claim
or expense. The Indenture Trustee shall be entitled to indemnification, from
the Trust Indenture Estate, for any liability, obligation, loss, damage,
penalty, claim, action, suit, cost, expense or disbursement indemnified
against pursuant to this Article XI to the extent not reimbursed by the Lessee
or others, but without releasing any of them from their respective agreements
of reimbursement; and to secure the same the Indenture Trustee shall have a
prior Lien on the Trust Indenture Estate. The indemnities contained in this
Article XI shall survive the termination of this Indenture and the resignation
or removal of the Indenture Trustee. Upon payment in full by the Owner
Trustee of any indemnity pursuant to this Article XI, the Owner Trustee shall,
so long as no Indenture Event of Default shall have occurred and be
continuing, be subrogated to the rights of the Indenture Trustee, if any, in
respect of the matter as to which the indemnity was paid.
ARTICLE XII
SUCCESSOR TRUSTEES
SECTION 12.01. Notice of Successor Owner Trustee. In the case of
any appointment of a successor to the Owner Trustee pursuant to the Trust
Agreement or any merger, conversion, consolidation or sale of substantially
all of the corporate trust business of the Owner Trustee pursuant to the
Trust Agreement, the successor Owner Trustee shall give prompt written
notice thereof to the Indenture Trustee.
SECTION 12.02. Resignation and Removal of Indenture Trustee;
Appointment of Successor. (a) The Indenture Trustee or any successor thereto
may resign at any time without cause by giving at least 30 days' prior written
notice to the Owner Trustee, the Owner Participant, the Lessee and each
Holder, such resignation to be effective upon the acceptance of the
trusteeship by a successor Indenture Trustee. In addition, the Majority in
Interest of the Certificate Holders or the Owner Trustee, with the consent of
the Lessee and the Majority in Interest of the Certificate Holders may at any
time remove the Indenture Trustee without cause by an instrument in writing
delivered to the Lessee, the Owner Trustee, the Owner Participant, and the
Indenture Trustee, and the Indenture Trustee shall promptly notify each Holder
thereof of such action in writing, such removal to be effective upon the
acceptance of the trusteeship by a successor Indenture Trustee. In the case
of the resignation or removal of the Indenture Trustee, the Majority in
Interest of the Certificate Holders, or the Owner Trustee, with the consent of
the Lessee and the Majority in Interest of the Certificate Holders, may
appoint a successor Indenture Trustee by an instrument signed by such Holders.
If a successor Indenture Trustee shall not have been appointed within 30 days
after such notice of resignation or removal, the Indenture Trustee, the Owner
Trustee, the Lessee, the Owner Participant, or any Holder may apply to any
court of competent jurisdiction to appoint a successor Indenture Trustee to
act until such time, if any, as a successor shall have been appointed as
provided above. The successor Indenture Trustee so appointed by such court
shall immediately and without further act be superseded by any successor
Indenture Trustee appointed as provided above.
(b) In case at any time any of the following shall occur:
(i) the Indenture Trustee shall cease to be eligible in accordance
with the provisions of Section 12.03 hereof and shall fail to resign after
written request therefor by the Owner Trustee or by any such Holder; or
(ii)the Indenture Trustee shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or a receiver or liquidator of the
Indenture Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Indenture Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation;
then the Owner Trustee may remove the Indenture Trustee and, with the consent
of the Lessee, appoint a successor trustee by written instrument, in
duplicate, executed by a Responsible Officer of the Owner Trustee, one copy of
which instrument shall be delivered to the Indenture Trustee so removed and
one copy to the successor trustee, or, subject to the provisions of Section
7.13 hereof, any Holder who has been a bona fide Holder for at least six
months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Indenture Trustee
and the appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, remove the Indenture
Trustee and appoint a successor trustee, which removal and appointment shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 12.04 hereof. The successor Indenture Trustee so
appointed by such court shall immediately and without further act be
superseded by any successor Indenture Trustee appointed as provided above
within one year from the date of appointment by such court.
SECTION 12.03. Persons Eligible for Appointment as Indenture
Trustee. There shall at all times be an Indenture Trustee hereunder which
shall be (i)(x) a bank or trust company organized and doing business under the
laws of the United States of America or any state or the District of Columbia
having a combined capital and surplus of at least $100,000,000 or (y) a bank
or trust company whose obligations hereunder are fully guaranteed by a direct
or indirect parent thereof having a combined capital and surplus of at
least $100,000,000 and (ii) a Citizen of the United States authorized under
applicable law to exercise corporate trust powers and subject to
supervision of examination by Federal, state or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section,
the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Indenture Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Indenture Trustee shall resign immediately in the manner and with the
effect specified in Section 12.02 hereof.
SECTION 12.04. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 12.02 hereof shall execute
and deliver to the Owner Trustee, the Lessee, and to its predecessor trustee
an instrument accepting such appointment hereunder, in form and substance
reasonably satisfactory to the Owner Trustee, and thereupon the resignation or
removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all rights, powers, duties and obligations of its predecessor hereunder, with
like effect as if originally named as trustee herein; but, nevertheless, on
the written request of the Owner Trustee or of the successor trustee, upon
payment of its charges then unpaid, the trustee ceasing to act shall, subject
to Section 14.04 hereof, pay over to the successor trustee all moneys at the
time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Owner Trustee
shall execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and
powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Article XI hereof.
No successor trustee shall accept appointment as provided in this
Section 12.04 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 12.03 hereof.
Upon acceptance of appointment by a successor trustee as provided in
this Section 12.04, the successor trustee shall mail notice thereof by
first-class mail to the Holders at their last addresses as they shall appear
in the Register, and shall mail a copy of such notice to the Lessee and the
Owner Trustee. If the acceptance of appointment is substantially
contemporaneous with the resignation, then the notice called for by the
preceding sentence may be combined with the notice called for by Section 12.02
hereof.
SECTION 12.05. Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee. Any corporation into which the Indenture
Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to
which the Indenture Trustee shall be a party, or any corporation succeeding to
the corporate trust business of the Indenture Trustee, shall be the successor
to the Indenture Trustee hereunder, provided that, anything herein to the
contrary notwithstanding, such corporation shall be eligible under the
provisions of Section 12.03 hereof, without the execution or filing of any
paper or any further act on the part of any of the parties hereto.
In case at the time such successor to the Indenture Trustee shall
succeed to the trusts created by this Indenture any of the Certificates shall
have been authenticated but not delivered, any such successor to the Indenture
Trustee may adopt the certificate of authentication of any predecessor
Indenture Trustee and deliver such Certificates so authenticated; and, in case
at that time any of the Certificates shall not have been authenticated, any
successor to the Indenture Trustee may authenticate such Certificates either
in the name of any predecessor hereunder or in the name of the successor
Indenture Trustee; and in all such cases such certificate shall have the full
force which it is anywhere in the Certificates or in this Indenture provided
that the certificate of the Indenture Trustee shall have; provided, that the
right to adopt the certificate of authentication of any predecessor Indenture
Trustee or to authenticate Certificates in the name of any predecessor
Indenture Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.
SECTION 12.06. Appointment of Separate Trustees. (a) At any time
or times, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust Indenture Estate may at the
time be located or in which any action of the Indenture Trustee may be
required to be performed or taken, the Indenture Trustee, by an instrument
in writing signed by it, may appoint one or more individuals or
corporations to act as a separate trustee or separate trustees or co-
trustee, acting jointly with the Indenture Trustee, of all or any part of
the Trust Indenture Estate, to the full extent that local law makes it
necessary for such separate trustee or separate trustees or co-trustee
acting jointly with the Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction
or by any such separate trustee or separate trustees or co-trustee for the
purpose of more fully confirming such title, rights or duties to such separate
trustee or separate trustees or co-trustee. Upon the acceptance in writing of
such appointment by any such separate trustee or separate trustees or
co-trustee, it, he or they shall be vested with such title to the Trust
Indenture Estate or any part thereof, and with such rights, powers, duties and
obligations, as shall be specified in the instrument of appointment, and such
rights, powers, duties and obligations shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee, or the Indenture Trustee and
such separate trustee or separate trustees or co-trustee jointly with the
Indenture Trustee subject to all the terms of this Indenture, except to the
extent that under any law of any jurisdiction in which any particular act or
acts are to be performed the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations shall be exercised and performed by such separate
trustee or separate trustees or co-trustee, as the case may be. Any separate
trustee or separate trustees or co-trustee may, at any time by an instrument
in writing, constitute the Indenture Trustee its or his attorney-in-fact and
agent with full power and authority to do all acts and things and to exercise
all discretion on its or his behalf and in its or his name. In case any such
separate trustee or co-trustee shall die, become incapable of acting, resign
or be removed, the title to the Trust Indenture Estate and all assets,
property, rights, powers, duties and obligations and duties of such separate
trustee or co-trustee shall, so far as permitted by law, vest in and be
exercised by the Indenture Trustee, without the appointment of a successor to
such separate trustee or co-trustee unless and until a successor is appointed.
(c) All provisions of this Indenture which are for the benefit of
the Indenture Trustee (including without limitation Article XI hereof) shall
extend to and apply to each separate trustee or co-trustee appointed pursuant
to the foregoing provisions of this Section 12.06.
(d) Every additional trustee and separate trustee hereunder shall,
to the extent permitted by law, be appointed and act and the Indenture Trustee
shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon the
Indenture Trustee in respect of the receipt, custody, investment and
payment of moneys shall be exercised solely by the Indenture Trustee;
(ii)all other rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed and
exercised or performed by the Indenture Trustee and such additional trustee
or trustees and separate trustee or trustees jointly except to the extent
that under any law of any jurisdiction in which any particular act or acts
are to be performed, the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
Indenture Estate in any such jurisdiction) shall be exercised and performed
by such additional trustee or trustees or separate trustee or trustees;
(iii)no power hereby given to, or exercisable by, any such additional
trustee or separate trustee shall be exercised hereunder by such additional
trustee or separate trustee except jointly with, or with the consent of,
the Indenture Trustee; and
(iv)no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder.
If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law, the Indenture Trustee shall
execute and deliver an indenture supplemental hereto and all other instruments
and agreements necessary or proper to remove any additional trustee or
separate trustee.
(e) Any request, approval or consent in writing by the Indenture
Trustee to any additional trustee or separate trustee shall be sufficient
warrant to such additional trustee or separate trustee, as the case may be, to
take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 12.06, the
powers of any additional trustee or separate trustee shall not exceed those of
the Indenture Trustee hereunder.
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
SECTION 13.01. Supplemental Indentures Without Consent of Holders.
The Owner Trustee (when authorized by the Owner Participant) and the Indenture
Trustee, without consent of the Holders, may enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge any property or
assets to the Indenture Trustee as security for the Certificates;
(b) to evidence the succession of another corporation to the Owner
Trustee or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Owner
Trustee herein and in the Certificates;
(c) to add to the covenants of the Owner Trustee such further
covenants, restrictions, conditions or provisions as it and the Indenture
Trustee shall consider to be for the protection of the Holders, and to make
the occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions, conditions or provisions an Indenture
Event of Default permitting the enforcement of all or any of the several
remedies provided herein; provided, that in respect of any such additional
covenant, restriction, condition or provision such supplemental indenture
may provide for a particular period of grace after default (which period
may be shorter or longer than that allowed in the case of other defaults)
or may provide for an immediate enforcement upon such an Indenture Event of
Default or may limit the remedies available to the Indenture Trustee upon
such an Indenture Event of Default or may limit the right of not less than
the Majority in Interest of Certificate Holders to waive such an Indenture
Event of Default;
(d) to surrender any right or power conferred herein upon the Owner
Trustee or the Owner Participant;
(e) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture; or to make such other provisions in regard to
matters or questions arising under this Indenture or under any supplemental
indenture as the Owner Trustee may deem necessary or desirable and which
shall not adversely affect the interests of the Holders;
(f) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Indenture or to subject replacement airframe or
Replacement Engines to the Lien of this Indenture in accordance with the
provisions hereof or with the Lease or to release from the Lien of this
Indenture property that has been substituted on or removed from the
Aircraft as contemplated in Section 3.07 hereof; provided that supplements
to this Indenture entered into for the purpose of subjecting replacement
airframe or Replacement Engines to the Lien of this Indenture need only be
executed by the Owner Trustee and the Indenture Trustee;
(g) to provide for the issuance under this Indenture of Certificates
in coupon form (including Certificates registrable as to principal only)
and to provide for exchangeability of such Certificates with Certificates
issued hereunder in fully registered form, and to make all appropriate
changes for such purpose;
(h) to effect the re-registration of the Aircraft pursuant to
Section 6.03(b) of the Participation Agreement; and
(i) to add, eliminate or change any provision hereunder so long as
such action shall not adversely affect the interests of the Holders.
The Indenture Trustee is hereby authorized to join in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be contained therein and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Indenture Trustee shall not be obligated to enter into any such supplemental
indenture which adversely affects the Indenture Trustee's own rights, duties
or immunities under this Indenture or otherwise.
Any supplemental indenture may be executed without the consent of the
Holders of Outstanding Certificates, notwithstanding any of the provisions of
Section 13.02 hereof.
SECTION 13.02. Supplemental Indentures With Consent of Holders.
With the consent (evidenced as provided in Article X) of the Majority in
Interest of Certificate Holders, the Owner Trustee (when authorized by the
Owner Participant) and the Indenture Trustee may, from time to time and at
any time, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders;
provided, however, that, without the consent of each Holder, no such
amendment of or supplement to this Indenture or any indenture supplemental
hereto, or modification of the terms of, or consent under, any thereof,
shall (a) modify any of the provisions of Section 7.11 hereof or this
Section 13.02, (b) reduce the amount or extend the time of payment of any
amount owing or payable under any Certificate or reduce the interest
payable on any Certificate (except that only the consent of the Holder
shall be required for any decrease in any amounts of or the rate of
interest payable on such Certificate or any extension for the time of
payment of any amount payable under such Certificate), or alter or modify
the provisions of Article V hereof with respect to the order of priorities
in which distributions thereunder shall be made as between the Holder and
the Owner Trustee or the Owner Participant or with respect to the amount or
time of payment of any such distribution, or alter or modify the
circumstances under which a Make-Whole Premium shall be payable, or alter
the currency in which any amount payable under any Certificate is to be
paid, or impair the right of any Holder to commence legal proceedings to
enforce a right to receive payment hereunder, (c) reduce, modify or amend
any indemnities in favor of any Holder or in favor of or to be paid by the
Owner Participant (except as consented to by each Person adversely affected
thereby), or (d) create or permit the creation of any Lien on the Trust
Indenture Estate or any part thereof prior to or pari passu with the Lien
of this Indenture, except as expressly permitted herein, or deprive any
Holder of the benefit of the Lien of this Indenture on the Trust Indenture
Estate, except as provided in Section 7.02 hereof or in connection with the
exercise of remedies under Article VII. This Section 13.02 shall not apply
to any indenture or indentures supplemental hereto permitted by, and
complying with the terms of, Section 13.06 hereof.
Upon the request of the Owner Trustee (at the direction of the Owner
Participant) and upon the filing with the Indenture Trustee of evidence of the
consent of Holders and other documents, if any, required by Section 10.01, the
Indenture Trustee shall join with the Owner Trustee and the Lessee in the
execution of such supplemental indenture unless such supplemental indenture
affects the Indenture Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Indenture Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance
thereof.
Promptly after the execution by the Owner Trustee, the Indenture
Trustee and the Lessee of any supplemental indenture pursuant to the
provisions of this Section, the Indenture Trustee shall mail a notice thereof
by first-class mail to the Holders at their addresses as they shall appear on
the registry books of the Registrar, setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture
Trustee to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
SECTION 13.03. Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations,
duties and immunities under this Indenture of the Indenture Trustee, the Owner
Trustee, the Lessee and the Holders shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of
this Indenture for any and all purposes.
SECTION 13.04. Documents to Be Given to Indenture Trustee. The
Indenture Trustee, subject to the provisions of Sections 9.02 and 9.03, may
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental indenture complies with the applicable
provisions of this Indenture.
SECTION 13.05. Notation on Certificates in Respect of Supplemental
Indentures. Certificates authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article may bear
a notation in form approved by the Indenture Trustee as to any matter provided
for by such supplemental indenture. If the Owner Trustee or the Indenture
Trustee shall so determine, new Certificates so modified as to conform, in the
opinion of the Owner Trustee and the Indenture Trustee, to any modification of
this Indenture contained in any such supplemental indenture may be prepared by
the Owner Trustee, authenticated by the Indenture Trustee and delivered in
exchange for the Outstanding Certificates.
SECTION 13.06. No Request Necessary for Lease Supplement or
Indenture and Security Agreement Supplement. Notwithstanding anything
contained in Section 13.02 hereof, no written request or consent of the
Indenture Trustee, any Holder or the Owner Participant pursuant to Section
13.02 hereof shall be required to enable the Owner Trustee to enter into
any supplement to the Lease with the Lessee in accordance with the terms
and conditions of the Lease to subject a replacement airframe or
Replacement Engine thereto or to execute and deliver an Indenture and
Security Agreement Supplement pursuant to the terms hereof.
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 14.01. Satisfaction and Discharge of Indenture; Termination
of Indenture. If at any time after (a) the Owner Trustee shall have paid or
caused to be paid the principal of and interest on all the Certificates
outstanding hereunder, as and when the same shall have become due and payable,
or (b) the Owner Trustee shall have delivered to the Indenture Trustee for
cancellation all Certificates theretofore authenticated (other than any
Certificates which shall have been destroyed, lost or stolen and which shall
have been replaced or paid as provided in Section 2.07 hereof) or (c) (i) all
such Certificates not theretofore delivered to the Indenture Trustee for
cancellation shall have become due and payable, or are by their terms to
become due and payable within one year or are to be called for prepayment
within one year under arrangements satisfactory to the Indenture Trustee for
the giving of notice of prepayment by the Indenture Trustee in the name and at
the expense of the Owner Trustee, and (ii) the Owner Trustee shall have
irrevocably deposited or caused to be deposited with the Indenture Trustee as
trust funds the entire amount in cash (other than moneys repaid by the
Indenture Trustee or any paying agent to the Owner Trustee in accordance with
Section 14.04 hereof) or Government obligations maturing as to principal and
interest in such amounts and at such times as will insure the availability of
cash sufficient to pay at maturity all such Certificates not theretofore
delivered to the Indenture Trustee for cancellation, including principal and
interest due or to become due to such date of maturity as the case may be, and
if, in any such case, the Owner Trustee shall also pay or cause to be paid all
other sums then payable hereunder by the Owner Trustee, then this Indenture
shall cease to be of further effect (except in the case of (c) above as to (A)
rights of registration of transfer and exchange, and the Owner Trustee's right
of optional prepayment pursuant to Section 6.02(a)(ii) hereof, (B)
substitution of mutilated, defaced, destroyed, lost or stolen Certificates,
(C) rights of Holders to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor (but not upon
acceleration), (D) the rights, obligations, indemnities and immunities of the
Indenture Trustee hereunder and (E) the rights of the Holders as beneficiaries
hereof with respect to the property so deposited with the Indenture Trustee
payable to all or any of them), and the Indenture Trustee, on demand of the
Owner Trustee accompanied by an Officer's Certificate and an Opinion of
Counsel (covering such matters reasonably requested by, and in form and
substance reasonably satisfactory to, the Indenture Trustee) and at the cost
and expense of the Owner Trustee, shall execute proper instruments
acknowledging such satisfaction of and discharging this Indenture. The Owner
Trustee agrees to reimburse and indemnify the Indenture Trustee for any costs
or expenses thereafter reasonably and properly incurred and to compensate the
Indenture Trustee for any services thereafter reasonably and properly rendered
by the Indenture Trustee in connection with this Indenture or the
Certificates.
Upon (or at any time after) payment in full to the Indenture Trustee,
as trust funds, of the principal of and interest on and Make-Whole Premium, if
any, and all other amounts due hereunder and under all Certificates and
provided that there shall then be no other amounts due to the Indenture
Trustee hereunder or under the Participation Agreement or otherwise secured
hereby, the Owner Trustee shall direct the Indenture Trustee to execute and
deliver to or as directed in writing by the Owner Trustee an appropriate
instrument releasing the Aircraft from the Lien of this Indenture and
releasing the Indenture Documents from the assignment thereof hereunder, and
the Indenture Trustee shall execute and deliver such instrument as aforesaid
and, at the Owner Trustee's expense, will execute and deliver such other
instruments or documents as may be reasonably requested by the Owner Trustee
to give effect to such release; provided, however, that this Indenture and the
trusts created hereby shall terminate earlier and this Indenture shall be of
no further force or effect upon any sale or other final disposition by the
Indenture Trustee of all property forming a part of the Trust Indenture Estate
and the final distribution by the Indenture Trustee of all moneys or other
property or proceeds constituting part of the Trust Indenture Estate in
accordance with the terms hereof. Except as aforesaid otherwise provided,
this Indenture and the trusts created hereby shall continue in full force
and effect in accordance with the terms hereof.
SECTION 14.02. Application by Indenture Trustee of Funds Deposited
for Payment of Certificates. Subject to Section 14.04 hereof, all moneys
deposited with the Indenture Trustee pursuant to Section 14.01 hereof shall be
held in trust and applied by it to the prompt payment, either directly or
through any Paying Agent, to the Holders of the particular Certificates for
the payment or prepayment of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal,
interest and Make-Whole Premium, if any, but such money need not be segregated
from other funds except to the extent required by law.
SECTION 14.03. Repayment of Moneys Held by Paying Agent. Upon the
satisfaction and discharge of this Indenture all moneys then held by any
Paying Agent under the provisions of this Indenture shall, upon demand of the
Owner Trustee, be repaid to it or paid to the Indenture Trustee and thereupon
such Paying Agent shall be released from all further liability with respect to
such moneys.
SECTION 14.04. Transfer of Moneys Held by Indenture Trustee and
Paying Agent Unclaimed for Two Years and Eleven Months. Any moneys deposited
with or paid to the Indenture Trustee or any Paying Agent for the payment of
the principal of or interest or Make-Whole Premium on any Certificate and not
applied but remaining unclaimed for two years and eleven months after the date
upon which such principal, interest or Make-Whole Premium shall have become
due and payable, shall, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property law, be paid to the
Owner Trustee (or, if the Trust Agreement shall no longer be in effect, to the
Owner Participant) by the Indenture Trustee or such Paying Agent and the
Holder of such Certificate, as a general unsecured creditor, shall, unless
otherwise required by mandatory provisions of applicable escheat or abandoned
or unclaimed property laws, thereafter look only to the Owner Trustee (or the
Owner Participant) for any payment which such Holder may be entitled to
collect, and all liability of the Indenture Trustee, or any Paying Agent with
respect to such moneys shall thereupon cease.
ARTICLE XV
MISCELLANEOUS
SECTION 15.01. Capacity in Which Acting. Each of FSBU (or its
permitted successors or assigns) and the Indenture Trustee acts hereunder not
in its individual capacity but solely as trustee except as expressly provided
herein and in the other Operative Documents, and, in the case of FSBU (or its
permitted successors or assigns), in the Trust Agreement.
SECTION 15.02. No Legal Title to Trust Indenture Estate in Holders.
No Holder shall have legal title to any part of the Trust Indenture Estate.
No transfer, by operation of law or otherwise, of any Certificate or other
right, title and interest of any Holder in and to the Trust Indenture Estate
or hereunder shall operate to terminate this Indenture or entitle such Holder
or any successor or transferee of such Holder to an accounting or to the
transfer to it of legal title to any part of the Trust Indenture Estate.
SECTION 15.03. Sale of Trust Indenture Estate by Indenture Trustee
is Binding. Any sale or other conveyance of all or any part of the Trust
Indenture Estate by the Indenture Trustee made pursuant to the terms of
this Indenture or of the Lease shall bind the Lessee, the Owner Trustee,
the Holders and the Owner Participant and shall be effective to transfer or
convey all right, title and interest of the Indenture Trustee, the Owner
Trustee, the Owner Participant and such Holders therein and thereto. No
purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or
conveyance or as to the application of any sale or other proceeds with
respect thereto by the Indenture Trustee.
SECTION 15.04. Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant and Holders. Nothing in this Indenture, whether
express or implied, shall be construed to give to any person other than FSBU,
the Owner Trustee, the Lessee, the Indenture Trustee, as trustee and in its
individual capacity, the Owner Participant, and the Holders any legal or
equitable right, remedy or claim under or in respect of this Indenture. Upon
termination of this Indenture pursuant to Article XIV hereof, the Indenture
Trustee in connection with the satisfaction of the Indenture shall return to
the Owner Trustee all property (and related documents and instruments)
constituting or evidencing the Trust Indenture Estate.
SECTION 15.05. No Action Contrary to the Lessee's Rights Under the
Lease. Notwithstanding any of the provisions of this Indenture or the Trust
Agreement to the contrary, so long as no Event of Default shall have occurred
and be continuing, neither the Indenture Trustee nor the Owner Trustee will
take any affirmative acts that interfere with the peaceful and quiet
possession and enjoyment of the Aircraft by the Lessee.
SECTION 15.06. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted by this
Indenture to be made, given, furnished or filed shall be in writing, mailed by
certified mail, postage prepaid, or by confirmed telex or telecopy, and (a) if
to the Owner Trustee, addressed to it at its office at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department (facsimile:
(801) 246-5053) (with a copy to the Owner Participant at the address provided
for notice pursuant to Section 14.01 of the Participation Agreement), (b) if
personally delivered to the Indenture Trustee, addressed to it at its office
at 600 Peachtree Street, N.E., Suite 900, Atlanta, Georgia 30308 (facsimile:
(404) 607-6534), Attention: Corporate Trust Lease Administration or (c) if to
the Owner Participant or the Lessee, addressed to such party at such address
as such party shall have furnished by notice to the Owner Trustee and the
Indenture Trustee, or, until an address is so furnished, addressed to the
address of such party if any, set forth in Section 14.01 of the Participation
Agreement. Any party hereto may change the address to which notices to such
party will be sent by giving notice of such change to the other parties to
this Indenture.
Where this Indenture provides for notice to Holders, such notice
shall be sufficiently given (unless otherwise expressly provided herein) if in
writing and mailed, first-class postage prepaid, to each Holder entitled
thereto, at his last address as it appears in the Register. In any case where
notice to Holders is given by mail, neither the failure to mail such notice,
nor any defect in any notice so mailed, to any particular Holder shall affect
the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Indenture Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Owner Trustee
and Holders when such notice is required to be given pursuant to any provision
of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Indenture Trustee shall be deemed to be a sufficient
giving of such notice.
SECTION 15.07. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Lessee or the Owner Trustee to the Indenture Trustee to take any action under
any of the provisions of this Indenture, the Lessee or the Owner Trustee, as
the case may be, shall furnish to the Indenture Trustee upon request (a) an
Officers' Certificate stating that all conditions precedent provided for in
this Indenture relating to the proposed action have been complied with and
that the proposed action is in conformity with the requirements of this
Indenture, and (b) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or demand as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or demand, no additional certificate
or opinion need be furnished.
Any certificate, statement or opinion of an officer of FSBU may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous. Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters information with respect to which is
in the possession of the Lessee or FSBU, upon the certificate, statement or
opinion of or representations by an officer or officers of the Lessee or FSBU,
as the case may be, unless such counsel knows that the certificate, statement
or opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or
in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Lessee or
FSBU or of counsel thereto may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant
or firm of accountants employed by the Lessee or the Owner Trustee, as the
case may be, unless such officer or counsel, as the case may be, knows that
the certificate or opinion or representations with respect to the accounting
matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know
that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Indenture Trustee shall contain a statement that
such firm is independent.
SECTION 15.08. Severability. Any provision of this Indenture which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
SECTION 15.09. No Oral Modifications or Continuing Waivers. No
terms or provisions of this Indenture or the Certificates may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party or other person against whom enforcement of the change,
waiver, discharge or termination is sought; and any waiver of the terms hereof
or of any Certificate shall be effective only in the specific instance and for
the specific purpose given.
SECTION 15.10. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of
the parties hereto and the successors and permitted assigns of each, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Holder shall bind the successors and assigns of
such Holder. This Indenture and the Trust Indenture Estate shall not be
affected by any amendment or supplement to the Trust Agreement or by any other
action taken under or in respect of the Trust Agreement, except that each
reference in this Indenture to the Trust Agreement shall mean the Trust
Agreement as amended and supplemented from time to time to the extent
permitted hereby and thereby.
SECTION 15.11. Headings. The headings of the various Articles and
Sections herein and in the table of contents hereto are for the convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 15.12. Normal Commercial Relations. Anything contained in
this Indenture to the contrary notwithstanding, the Owner Participant, the
Indenture Trustee and any Holder, or any bank or other affiliate of any such
party, may conduct any banking or other financial transactions, and have
banking or other commercial relationships, with the Lessee fully to the same
extent as if this Indenture were not in effect, including without limitation
the making of loans or other extensions of credit to the Lessee for any
purpose whatsoever, whether related to any of the transactions contemplated
hereby or otherwise.
SECTION 15.13. Governing Law; Counterparts. THIS INDENTURE AND
EACH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed this ____ day of August, 1995 by their respective officers
thereunto duly authorized and acknowledge that this Indenture has been made
and delivered in the City of New York, and this Indenture shall be effective
only upon such execution and delivery.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee,
By_________________________________
Name:
Title:
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Indenture Trustee,
By_________________________________
Name:
Title:
Exhibit A
to
Trust Indenture and Security Agreement
Indenture and Security Agreement Supplement
Indenture and Security Agreement Supplement (Federal Express
Corporation Trust No. N659FE) dated ________, ____, of FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity but solely as owner trustee (herein called the "Owner
Trustee") under the Trust Agreement dated as of June 1, 1995 as amended and
restated as of August 1, 1995 (as at any time amended, herein called the
"Trust Agreement") between First Security Bank of Utah, National Association
and the Owner Participant named therein.
W I T N E S S E T H :
WHEREAS, the Trust Agreement provides for the execution and delivery
of this Indenture and Security Agreement Supplement which shall particularly
describe the Aircraft and any replacement airframe or Replacement Engine
included in the property covered by the Trust Agreement.
WHEREAS, the Trust Indenture, Mortgage and Security Agreement
(Federal Express Corporation Trust No. N659FE) dated as of July 1, 1995
(herein called the "Original Indenture") between the Owner Trustee and
NationsBank of Georgia, National Association, as Indenture Trustee (herein
called the "Indenture Trustee"), provides for the execution and delivery of
a supplement thereto substantially in the form hereof which shall
particularly describe the Aircraft (such term and other defined terms in
the Indenture being used herein with the same meanings) and any replacement
airframe or Replacement Engine included in the Trust Indenture Estate, and
shall specifically mortgage such Aircraft, replacement airframe or
Replacement Engine, as the case may be, to the Indenture Trustee.
WHEREAS, the Original Indenture dated as of July 1, 1995 which
together with the Indenture and Security Agreement Supplement No. 1 (Federal
Express Corporation Trust No. N659FE) dated July 31, 1995 (the Original
Indenture being attached to and made a part of such Indenture and Security
Agreement Supplement and filed therewith) have been duly recorded pursuant to
Subtitle VII of Title 49 of the United States Code on August 3, 1995 as one
document and have been assigned Conveyance No. 2A267311.
WHEREAS, the Original Indenture, as amended and restated as of August
1, 1995 (herein called the "Indenture"), was duly recorded pursuant to
Subtitle VII of Title 49 of the United States Code on ______________ and
assigned Conveyance No. ________;
NOW, THEREFORE, this Supplement witnesseth, that, to secure the
prompt payment of the principal of and Make-Whole Premium, if any, and
interest on, and all other amounts due with respect to, all Outstanding
Certificates under the Indenture and all other amounts due hereunder and
the performance and observance by the Owner Trustee of all the agreements,
covenants and provisions for the benefit of the Holders contained in the
Indenture, in the Lease, in the Participation Agreement and the
Certificates, and the prompt payment of any and all amounts from time to
time owing under the Participation Agreement by the Owner Trustee, the
Owner Participant or the Lessee to the Holders and for the uses and
purposes and subject to the terms and provisions of the Indenture and the
Certificates, and in consideration of the premises and of the covenants
contained in the Indenture, and of the purchase of the Certificates by the
Holders, and of the sum of $1 paid to the Owner Trustee by the Indenture
Trustee at or before the delivery of the Indenture, the receipt of which is
hereby acknowledged, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged, granted a security
interest in, and confirmed, and does hereby grant, bargain, sell, assign,
transfer, convey, mortgage, pledge, grant a security interest in, and
confirm, unto the Indenture Trustee, its successors and assigns, in trust
for the equal and ratable security and benefit of the Holders, in the trust
created by the Indenture, and subject to all of the terms, conditions,
provisions and limitations set forth in the Indenture, a first priority
security interest in and mortgage lien on all estate, right, title and
interest of the Owner Trustee in, to and under the following described
property:
Airframe
One (1) Airframe identified as follows:
FAA Manufacturer's
Registration Serial
Manufacturer Model Number Number
together with all appliances, equipment, instruments and accessories
(including, without limitation, radio and radar) from time to time belonging
thereto, owned by the Owner Trustee and installed in or appurtenant to said
aircraft.
AIRCRAFT ENGINES
Two (2) aircraft engines, each such engine having 750 or more rated takeoff
horsepower or the equivalent thereof, identified as follows:
Manufacturer's
Serial
Manufacturer Model Number
together with all equipment and accessories belonging thereto, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to
said aircraft engines.
Together with all substitutions, replacements and renewals of the
property described above, and all property which shall hereafter become
physically attached to or incorporated in the property described above,
whether the same are now owned by the Owner Trustee or shall hereafter be
acquired by it.
As further security for the obligations referred to above and secured
by the Indenture and hereby, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors and assigns, for the
security and benefit of the Holders, in the trust created by the Indenture,
and subject to all of the terms, conditions. provisions and limitations set
forth in the Indenture, all of the estate, right, title and interest of the
Owner Trustee in, to and under the Lease Supplement (other than Excepted
Payments, if any) covering the property described above.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Holders for the uses and purposes and subject to the terms and provisions
set forth in the Indenture.
This Supplement shall be construed as supplemental to the Indenture
and shall form a part thereof, and the Indenture is hereby incorporated by
reference herein and is hereby ratified, approved and confirmed.
This Supplement is being delivered in the State of New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft/Engines referred to in this Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee and covered by all the terms and conditions of
the Trust Agreement, subject to the Lien of the Indenture.
IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to
be duly executed as of the date first written above by one of its officers
thereunto duly authorized.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee,
By_________________________________
Name:
Title:
Exhibit B
to
Trust Indenture and Security Agreement
[Form of Certificate]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD OR OFFERED FOR SALE IN CONTRAVENTION OF SAID ACT
No. ______ $_____________
EQUIPMENT TRUST CERTIFICATE
(Federal Express Corporation Trust No. N659FE)
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION
not in its individual capacity but solely as
OWNER TRUSTEE UNDER TRUST AGREEMENT
(Federal Express Corporation Trust No. N659FE)
dated as of June 1, 1995
as amended and restated as of August 1, 1995
Interest Rate Maturity
First Security Bank of Utah, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee
(herein in such capacity called the "Owner Trustee") under that certain Trust
Agreement (Federal Express Corporation Trust No. N659FE) dated as of June 1,
1995 as amended and restated as of August 1, 1995, between the Owner
Participant named therein and First Security Bank of Utah, National
Association (herein as such Trust Agreement may be amended or supplemented
from time to time called the "Trust Agreement"), hereby promises to pay to
NationsBank, National Association (Carolinas), as Pass Through Trustee, or its
registered assigns, the principal sum of ________________ _______________
Dollars, payable as set forth below for the Maturity specified above, in such
coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts, and to pay
interest on the principal outstanding from time to time, semiannually on each
January 5 and July 5, on said principal sum in like coin or currency at the
rate per annum set forth above from the January 5 or the July 5, as the case
may be, next preceding the date of this Certificate to which interest on the
Certificates has been paid or duly provided for, unless the date hereof is a
date to which interest on the Certificates has been paid or duly provided for,
in which case from the date of this Certificate. Notwithstanding the
foregoing, if the date hereof is after any December 21 or June 20 and before
the following January 5 or July 5, as the case may be, this Certificate shall
bear interest from such January 5 or July 5; provided that, if the Owner
Trustee shall default in the payment of interest due on such January 5 or July
5, then this Certificate shall bear interest from the next preceding January 5
or July 5 to which interest on this Certificate has been paid or duly provided
for. The interest so payable on any January 5 or July 5 will, except as
otherwise provided in the Indenture referred to below, be paid to the person
in whose name this Certificate is registered at the close of business on the
December 21 or June 20 preceding such January 5 or July 5, whether or not such
day is a Business Day.
This Certificate shall bear interest at the Past Due Rate on any
principal hereof and on any other amount payable hereunder or under the
Indenture which shall not be paid in full when due (whether at stated
maturity, by acceleration, by mandatory prepayment or otherwise), for the
period from and including the date thereof to but excluding the date the same
is paid in full, payable from time to time on demand of the Indenture Trustee.
Principal and interest and other amounts due hereunder shall be
payable at the office or agency of NationsBank of Georgia, National
Association (the "Indenture Trustee") maintained for such purpose; provided
that, at the option of the Indenture Trustee or its Paying Agent, interest may
be paid by mailing a check therefor payable to or upon the written order of
the registered holder entitled thereto at his last address as it appears on
the Register. If any amount payable under this Certificate, or under the
Indenture, falls due on a day that is not a Business Day, then such sum shall
be payable on the next succeeding Business Day, without (provided that payment
is made on such next succeeding Business Day) additional interest thereon for
the period of such extension.
First Security Bank of Utah, National Association and NationsBank of
Georgia, National Association are not acting individually hereunder, but
solely as Owner Trustee and Indenture Trustee.
No employee benefit plan subject to Title I of ERISA, or individual
retirement account or plan subject to Section 4975 of the Code, or any trust
established under any such plan or account (hereinafter collectively referred
to as an "ERISA Plan"), may acquire or hold any of the Certificates (or
participation interest therein). The purchase by any Person of any
Certificate (or participation interest therein) constitutes a representation
by such Person to the Owner Trustee, the Lessee, the Owner Participant and the
Indenture Trustee that such Person is not an ERISA Plan and that such Person
is not acquiring, and has not acquired, such Certificate (or participation
interest therein) with assets of an ERISA Plan. Any transfer of a Certificate
not permitted by this paragraph shall be void, and the transferor shall retain
all the benefits of such Certificate under the Indenture, and the transferee
shall not be entitled to any benefits under the Indenture.
This Certificate is one of a duly authorized issue of Certificates
issued and to be issued under the Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N659FE) dated as of July 1, 1995 as
amended and restated as of August 1, 1995 (herein as amended, supplemented or
modified from time to time called the "Indenture") between the Owner Trustee
and the Indenture Trustee, designated as Equipment Trust Certificates (Federal
Express Corporation Trust No. N659FE) limited in aggregate initial principal
amount to $61,290,000 consisting of the following aggregate principal amounts
of Certificates with the interest rates per annum and Maturities shown:
Initial
Aggregate
Principal
Maturity Amount Interest Rate
--------------- ------------ -------------
January 5, 2014 $54,974,000 7.63%
January 5, 2015 $ 6,316,000 8.06%
Reference is made to the Indenture and all supplements and amendments
thereto (a copy of which is on file with the Indenture Trustee at its
principal corporate trust office) for a more complete statement of the terms
and provisions thereof, including a statement of the properties conveyed,
pledged and assigned thereby, the nature and extent of the security, the
respective rights of the Owner Trustee, the Owner Participant, the Lessee, the
Indenture Trustee and the Holders, and the terms upon which the Certificates
are, and are to be, executed and delivered, to all of which terms and
conditions in the Indenture each Holder hereof agrees by its acceptance of
this Certificate.
Capitalized terms not otherwise defined herein shall have the
meanings given to them in the Indenture.
The principal amounts of the Certificates are payable as follows.
The Certificates with a Maturity of January 5, 2014 are subject to
redemption in part, pro rata (based on the face amount thereof) commencing
on July 5, 1996 and the Certificates with a Maturity of January 5, 2015 are
subject to redemption in part, pro rata (based on the face amount thereof),
commencing on January 5, 2015, in each case through mandatory sinking fund
redemptions providing for the redemption on the Sinking Fund Redemption
Dates of the aggregate principal amounts set forth below, together with
interest accrued thereon to the applicable Sinking Fund Redemption Date,
but without Make-Whole Premium.
Principal Amount
Certificates Certificates
with a Maturity with a Maturity
Sinking Fund Redemption Date of January 5, 2014 of January 5, 2015
------------------------------ -------------------- --------------------
January 5, 1996 $ 0 $ 0
July 5, 1996 0 0
January 5, 1997 1,240,454 0
July 5, 1997 0 0
January 5, 1998 1,335,101 0
July 5, 1998 0 0
January 5, 1999 1,437,284 0
July 5, 1999 0 0
January 5, 2000 5,501,541 0
July 5, 2000 0 0
January 5, 2001 2,044,396 0
July 5, 2001 0 0
January 5, 2002 2,206,570 0
July 5, 2002 0 0
January 5, 2003 2,381,609 0
July 5, 2003 0 0
January 5, 2004 2,107,891 0
July 5, 2004 0 0
January 5, 2005 1,592,236 0
July 5, 2005 0 0
January 5, 2006 1,663,647 0
July 5, 2006 0 0
January 5, 2007 3,754,078 0
July 5, 2007 0 0
January 5, 2008 2,691,537 0
July 5, 2008 0 0
January 5, 2009 2,812,210 0
July 5, 2009 0 0
January 5, 2010 4,449,260 0
July 5, 2010 0 0
January 5, 2011 5,456,643 0
July 5, 2011 0 0
January 5, 2012 5,889,498 0
July 5, 2012 0 0
January 5, 2013 6,356,690 0
July 5, 2013 0 0
January 5, 2014 2,053,355 0
July 5, 2014 0 0
January 5, 2015 0 6,316,000
---------------- --------------------
Total $54,974,000 $6,316,000
Except as expressly provided in the Indenture, all payments of
principal, Make-Whole Premium, if any, and interest and other amounts to be
made to the Holder hereof by or at the behest of the Owner Trustee hereunder
or under the Indenture shall be made only from the income and proceeds from
the Lessor's Estate to the extent included in the Trust Indenture Estate and
only to the extent that the Owner Trustee shall have sufficient income or
proceeds from the Lessor's Estate to the extent included in the Trust
Indenture Estate to enable the Indenture Trustee to make such distributions in
accordance with the terms of the Indenture; provided that under the Lease, the
Lessee is obligated to pay or cause to be paid, to the extent such payments
are not required to be made from the assets subject to the Lien of this
Indenture or the income and proceeds received by the Indenture Trustee
therefrom, any net loss arising from the investment of funds held by the
Indenture Trustee which but for an Event of Default would be payable to
Lessee, and each Holder hereof, by its acceptance of this Certificate, agrees
that it will (except as aforesaid) look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for distribution to the
Holder hereof as provided above and that neither the Owner Participant, the
Owner Trustee, First Security Bank of Utah, National Association nor the
Indenture Trustee is personally liable to the Holder hereof for any amounts
payable or any liability under this Certificate or under the Indenture, except
as expressly provided in the Indenture, in the case of First Security Bank of
Utah, National Association, the Owner Trustee and the Indenture Trustee.
The Certificates are subject to prepayment in the following
circumstances at the price determined as set forth below.
(i) If an Event of Loss occurs with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe (unless pursuant to Section 11.03 of the Lease and Section 9.08 of
the Indenture replacement equipment is substituted therefor).
(ii)If the Lessee, pursuant to Section 4.02(a) of the Lease, gives
notice of purchase of the Aircraft (and the Lessee shall not have effected
an assumption of the Certificates as provided in Section 2.12 of the
Indenture).
(iii)If the Owner Participant or the Owner Trustee on behalf of the
Owner Participant gives notice of prepayment to the Indenture Trustee
pursuant to Section 8.02 of the Indenture.
(iv)If the Lessee, pursuant to Section 10.01 of the Lease, gives
notice of a voluntary termination for obsolescence or surplus, but subject
to Section 6.02(c) of Indenture.
(v) Pursuant to Section 15.01 of the Participation Agreement in
connection with a Refinancing of the Certificates.
In the case of a prepayment of the Certificates pursuant to clauses
(ii), (iv) and (v) above, the Lessee, in accordance with and subject to the
terms (including timing of notice) of Section 4.02(a) or 10.01 of the Lease or
Section 15 of the Participation Agreement, as the case may be, shall give
irrevocable (subject to Section 6.02(c) of the Indenture) written notice to
the Owner Trustee and the Indenture Trustee and to the Holders of all of the
Certificates specifying the Business Day on which the Owner Trustee is
directed to prepay the Certificates. In the case of a prepayment pursuant to
clause (i) above, the Certificates shall be prepaid on the Loss Payment Date
(as defined in Section 11.02 of the Lease). In the case of a prepayment
pursuant to clause (iii) above, the Certificates shall be prepaid on the date
designated in the notice of prepayment required by Section 8.02 of the
Indenture. In the case of a prepayment of the Certificates pursuant to clauses
(ii) and (iv) above, the Certificates shall be prepaid in full on the
Termination Date. In the case of a prepayment of the Certificates pursuant to
clause (v) above, the Certificates shall be prepaid on the effective date of
the Refinancing. The day on which the Certificates are to be prepaid is
herein referred to as the "Prepayment Date". On or prior to the Prepayment
Date, immediately available funds shall be deposited with the Indenture
Trustee in an amount in respect of the Certificates equal to:
(1) in the event of a prepayment of the Certificates pursuant to
clause (i), (iii) (if clause (i) of the first sentence of Section 8.02(a)
of the Indenture is applicable) or, if such prepayment is made on or after
the applicable Premium Termination Date, clause (ii), (iii) (if clause (ii)
of the first sentence of Section 8.02(a) of the Indenture is applicable),
(iv) or (v) above, the sum of (A) the aggregate principal amount of such
Certificates then Outstanding, (B) accrued interest on the Certificates to
the Prepayment Date and (C) all other aggregate sums due the Indenture
Trustee under the Indenture or under the Participation Agreement or the
Lease, but excluding any Make-Whole Premium or other premium or penalty, or
(2) if such prepayment is made prior to the applicable Premium
Termination Date, in the event of a prepayment of the Certificates pursuant
to clause (ii), (iii) (if clause (ii) of the first sentence of Section
8.02(a) of the Indenture is applicable), (iv) or (v) above, the sum of the
amounts specified in clauses (A), (B) and (C) of the preceding clause (1)
plus any Make-Whole Premium payable in respect of all Certificates with
respect to which the Premium Termination Date therefor has not occurred
(the aggregate amount required to be paid pursuant to this sentence being
herein referred to as the "Prepayment Price").
If, in accordance with and subject to the satisfaction of the
conditions set forth in Section 7.11 of the Participation Agreement, the
Lessee shall assume all of the obligations of the Owner Trustee hereunder,
under the Certificates and all other Operative Agreements, the Owner
Participant and the Owner Trustee shall (except for prior acts) be released
and discharged from any further obligations hereunder and under the
Certificates and all other Operative Agreements (except any obligations that
have accrued prior to such assumption).
If an Indenture Event of Default under the Indenture shall occur and
be continuing, the principal of the Certificates may be declared due and
payable in the manner and with the effect provided in the Indenture. The
Indenture provides that in certain events such declaration and its
consequences may be waived the Majority in Interest of Holders. Any such
consent or waiver shall be conclusive and binding upon the Holder of this
Certificate and upon all future Holders and owners of this Certificate and
any Certificate that may be issued in exchange or substitution therefor,
whether or not any notation thereof is made upon this Certificate or such
other Certificates. Moreover, if, and only if, an Event of Default shall
occur, the Indenture Trustee may declare the Lease to be in default, and
may, to the exclusion of the Owner Trustee, exercise one or more of the
remedies of the Owner Trustee provided in the Lease.
The Owner Trustee or the Owner Participant may cure a default by the
Lessee under the Lease arising from the failure of the Lessee to make any
Basic Rent payments under the Lease, but the Owner Trustee and the Owner
Participant, collectively, may not cure more than three consecutive such
failures or more than six such failures in total. The Owner Trustee or the
Owner Participant may cure any other default by the Lessee in the performance
of its obligations under the Lease.
(A) If an Event of Default shall have occurred and be continuing for
more than 180 days or the Certificates shall have been accelerated or (B) an
Event of Default shall have occurred and be continuing for not more than 180
days and the Certificates shall not have been accelerated, the Owner
Participant (or the Owner Trustee on behalf of the Owner Participant) may:
(1) direct the Owner Trustee to cause the prepayment of all the
Outstanding Certificates by notifying the Indenture Trustee of such
election and depositing the sum of amounts contemplated by paragraph
"first" under Section 5.03 of the Indenture and the aggregate
Prepayment Price of all such Certificates with the Indenture Trustee
for distribution to the Holders; or
(2) purchase all of the Outstanding Certificates by paying to the
Indenture Trustee an amount equal to the aggregate unpaid principal
amount of all Outstanding Certificates, plus accrued interest on such
amount to the date of purchase and any Make-Whole Premium applicable
to each Outstanding Certificate, if such purchase occurs prior to the
Premium Termination Date for such Outstanding Certificate, (in the
case of a purchase pursuant to clause (ii) of the first sentence of
Section 8.02(a) of the Indenture) plus all other sums due any Holder
or the Indenture Trustee under the Indenture, the Participation
Agreement or the Lease.
The right of the Holder hereof to institute an action for any remedy
under the Indenture is subject to certain restrictions specified in the
Indenture, except that the right of the Holder of this Certificate to receive
payment of the principal of and interest and Make-Whole Premium, if any, on
this Certificate on or after the respective due dates, or to institute suit
for the enforcement of any such payment, shall not be impaired or affected
without the consent of such Holder.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 and integral multiples thereof. So long as
any of the Certificates remain Outstanding, the Indenture Trustee will
maintain an office or agency where the Certificates may be presented for
payment and a facility or agency in New York, New York where the Certificates
may be presented for registration of transfer and for exchange as provided in
the Indenture. As provided in the Indenture and subject to certain
limitations therein, this Certificate is transferable, and upon surrender
of this Certificate for registration of transfer at the principal corporate
trust office of the Indenture Trustee, or at the office or agency
maintained for such purposes, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Indenture Trustee duly executed by, the Holder or his attorney duly
authorized in writing, one or more new Certificates of the same Maturity
and interest rate and of authorized denominations and for the same
aggregate principal amount will be issued to the designated transferee or
transferees.
As provided in the Indenture and subject to certain limitations
therein, the Certificates are exchangeable for an equal aggregate principal
amount of Certificates of the same Maturity and interest rate and of
authorized denominations, as requested by the Holder surrendering the same,
upon presentation thereof for such purpose at the principal corporate trust
office of the Indenture Trustee, or at an office or agency maintained for such
purpose.
No service charge shall be levied for any such registration of
transfer or exchange, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Prior to the due presentment for registration of transfer of this
Certificate, the Owner Trustee, the Indenture Trustee, any agent of the Owner
Trustee or the Indenture Trustee, the Paying Agent, if any, the Registrar and
the Lessee may deem and treat the person in whose name this Certificate is
registered as the absolute owner hereof for all purposes whether or not this
Certificate is overdue, and neither the Owner Trustee, the Indenture Trustee
(nor any agent of the Owner Trustee or the Indenture Trustee), nor the Paying
Agent, if any, the Registrar nor the Lessee shall be affected by notice to the
contrary.
As provided in the Indenture, the Indenture and the Certificates
shall be construed in accordance with and governed by the laws of the State of
New York.
This Certificate shall not be secured by or be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose unless
authenticated by the Indenture Trustee as evidenced by the manual signature of
one of its authorized officers on the certificate below.
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Trust
Certificate (Federal Express Corporation Trust No. N659FE) to be duly executed
in its corporate name by its officer thereunto duly authorized.
Dated: FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By____________________________
Name:
Title:
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Equipment Trust Certificates (Federal Express
Corporation Trust No. N659FE) referred to in the within mentioned Indenture.
Dated: NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION,
not in its individual
capacity, but solely as
Indenture Trustee
By___________________________
Title: Authorized Signatory
SCHEDULE I
[Intentionally left blank.]
SCHEDULE II
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Act; Federal Aviation Act. Title 49 of the United States Code
(which, among other things, recodified the Federal Aviation Act of 1958, as
amended to the time of such recodification), as amended and in effect on the
date of the Lease or as subsequently amended, or any successor or substituted
legislation at the time in effect and applicable, and the regulations
promulgated pursuant thereto.
Additional Insureds. As defined in Article 13 of the Lease.
Aeronautics Authority or FAA. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment received or deemed to
have been received by a Person (the "Original Payment") shall be supplemented
by a further payment to such Person so that the sum of the two payments shall
be equal to the Original Payment, after taking into account (x) all Taxes that
would result from the receipt or accrual of such payments and (y) any
reduction in Taxes that would result from such increased Taxes. In the case
of amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is
at all times subject to Federal income tax at the maximum marginal rate
generally applicable to corporations from time to time and actual state, local
and foreign income taxes.
Agent. The Chase Manhattan Bank (National Association) and its
successors and permitted assigns as Agent for the Original Loan Participants
pursuant to Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Act) as to which there is in force a permit granted under
Section 41302 of the Act.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by
the Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe (or any permitted substitute airframe)
together with the two Engines (or any Replacement Engine or Engines) whether
or not any of such initial or Replacement Engines may from time to time be
installed on such Airframe or may be installed on any other airframe or on any
other aircraft, including any aircraft substituted pursuant to Section 11.03
of the Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) leased by the Lessor to the
Lessee pursuant to the Lease and the initial Lease Supplement and having
the United States FAA Registration Number and manufacturer's serial number
specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any replacement airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement, dated as of August 1, 1995.
Ancillary Agreement. Any written agreement of the Lessee to which
the Lessor is a party or to which the Lessor has consented in writing
entered into on the Delivery Date or the Refunding Date or any date
thereafter in connection with the transactions contemplated by the
Operative Agreements, as such agreement may be amended and supplemented
from time to time with the consent of the Lessor and delivered to the Owner
Trustee, the Indenture Trustee, the Pass Through Trustee and the Owner
Participant.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with a copy of such report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
July 1, 1995, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended,
and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or with the giving of notice or lapse of
time or both would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft throughout
the Basic Term pursuant to Section 3.02 of the Lease, adjusted pursuant to
Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on January 5, 2020, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized
or required to close in New York, New York and Memphis, Tennessee, and so
long as the Lien of the Indenture is in effect, in Atlanta, Georgia,
Columbia, South Carolina and, thereafter, in Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N659FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Act, or any analogous part of any
successor or substituted legislation or regulation at the time in effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, references to the Code shall
mean the Internal Revenue Code of 1986, as amended from time to time.
Commencement Date. January 5, 1996.
Consent and Agreement. The Consent and Agreement dated as of July 1,
1995 executed by the Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Department. The principal office of the Owner
Trustee located at 79 South Main Street, Salt Lake City, Utah 84111 or such
other office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified to the Lessee,
the Indenture Trustee and the Owner Participant.
Corporate Trust Office. The principal office of the Indenture
Trustee located at 600 Peachtree Street, N.E., Suite 900, Atlanta, Georgia
30308, Attention: Corporate Trust Lease Administration or such other office at
which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to the
Lessee, the Owner Participant and the Owner Trustee.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. July 31, 1995.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by its manufacturer's serial number in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease,
together with all Parts related thereto. Except as otherwise provided, at
such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of July 1, 1995,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N659FE), dated as of July 1, 1995 between the
Lessor and the Lessee, as the same may be amended, modified or supplemented
from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. Has the meaning set forth in Section 7.06 of the
Participation Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall
occur) or (B) by the Government for a period extending beyond the Term,
provided that no Event of Loss shall be deemed to have occurred, and the
Term shall be extended automatically for a period of six months (or the
date of return of the Aircraft, if shorter, so long as the Lessor receives
at least six months notice of such date of return) beyond the end of the
Term in the event that the Aircraft, the Airframe or any Engine as of the
end of the Lease Term is requisitioned by the Government pursuant to an
activation as part of the Civil Reserve Air Fleet Program described in
Section 7.02(a)(iv) of the Lease; and (iv) as a result of any law, rule,
regulation, order or other action by the Aeronautics Authority or other
governmental body having jurisdiction, the use of the Aircraft or Airframe
in the normal course of air transportation of cargo shall have been
prohibited by virtue of a condition affecting all Airbus A300F-600 series
aircraft equipped with engines of the same make and model as the Engines
for a period of twelve (12) consecutive months, unless the Lessee, prior to
the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of twenty-
four (24) consecutive months or until the end of the Term, if earlier. The
date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of
diligent efforts to recover such property, if earlier); (t) the 61st day
following the date of any destruction, damage beyond economic repair or
rendition of such property permanently unfit for normal use; (u) the date
of any insurance settlement on the basis of a total loss or constructive or
compromised total loss; (v) the date of any condemnation, confiscation,
seizure or requisition of title of such property; (w) the 181st day
following condemnation, confiscation, seizure or requisition for use of
such property by a foreign government referred to in clause (iii)(2)(A)
above (or the end of the Term or the date of any insurance settlement
described therein, if earlier than such 181st day); (x) the last day of
the Term in the case of requisition for use of such property by the
Government; (y) the last day of the 12 month or 24 month period, referred
to in clause (iv) above (or if earlier, the end of the Term or abandonment
of the Lessee's efforts to restore the normal use of the Aircraft). An
Event of Loss with respect to the Aircraft shall be deemed to have occurred
if any Event of Loss occurs with respect to the Airframe. If an Event of
Loss described in any of clauses (i) (A), (iii) or (iv) above shall occur,
Lessor may elect, within 30 days following the date upon which such Event
of Loss is deemed to have occurred, to waive such Event of Loss and the
consequences thereof.
Excepted Payments. Collectively, (i) indemnity or other payments
(and interest thereon to the extent provided in the Operative Agreements)
paid or payable by the Lessee in respect of the Owner Participant, the
Owner Trustee in its individual capacity or any of their respective
successors, permitted assigns, directors, officers, employees, servants and
agents or Affiliates, pursuant to the Participation Agreement or any
indemnity hereafter granted to the Owner Participant or the Owner Trustee
in its individual capacity pursuant to the Lease or the Participation
Agreement, (ii) proceeds of public liability insurance (or government
indemnities in lieu thereof) in respect of the Aircraft payable as a result
of insurance claims paid for the benefit of, or losses suffered by, the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or by the Owner Participant, or their respective successors,
permitted assigns or Affiliates, (iii) proceeds of insurance maintained
with respect to the Aircraft by the Owner Participant (whether directly or
through the Owner Trustee) maintained in accordance with Section 13.05 of
the Lease but not required under Section 13 of the Lease, (iv) payments of
Supplemental Rent by the Lessee in respect of any amounts payable under the
Tax Indemnity Agreement, (v) payments constituting increases in Basic Rent
attributable to payments arising pursuant to Section 5 of the Tax Indemnity
Agreement and (vi) any right to demand, collect or otherwise receive and
enforce the payment of any amount described in clauses (i) through (v)
above.
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
Fair Market Renewal Term. A term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the second
paragraph of Section 4.01(a) thereof and with respect to which the
conditions set forth in the second paragraph of Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease the Aircraft. In such determination, it shall be assumed that the
Aircraft is in the condition required under the Lease in the case of return of
the Aircraft pursuant to Article 12 of the Lease. Fair Market Rental shall be
determined in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal
in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion
to buy and an informed and willing seller unaffiliated with such purchaser
and under no compulsion to sell, assuming that the Aircraft (or other
property) is unencumbered by the Lease. Unless otherwise provided in the
applicable provisions of any Operative Agreement, in such determination it
shall be assumed that the Aircraft is in the condition required under the
Lease in the case of return of the Aircraft pursuant to Article 12 of the
Lease; provided that in connection with any determination pursuant to or
for the purposes of Article 17 of the Lease, the Aircraft shall be
appraised on an "as is, where is" basis. Fair Market Value shall be
determined in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FSBU. First Security Bank of Utah, National Association, a national
banking association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between
the Engine Manufacturer and the Lessee related to the purchase by the
Lessee of the Engines as originally executed or as modified, amended or
supplemented in accordance with the terms thereof, but only insofar as the
General Terms Agreement relates to the Engines, to the extent assigned to
the Owner Trustee pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSBU, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, any Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N659FE), dated as of July 1, 1995, as amended
and restated as of August 1, 1995, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement,
and as said Indenture may from time to time be further supplemented or
amended, including any amendment or supplement thereto entered into from time
to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N659FE) dated July 31, 1995, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. NationsBank of Georgia, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes or Expenses
imposed against the Indenture Trustee which are not required to be indemnified
against by the Lessee pursuant to the Participation Agreement by reason of
Section 8.01(b) or 9.01(b) thereof.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N659FE) dated as of July 1, 1995, as amended and restated as of August 1,
1995, entered into by the Lessor and the Lessee concurrently with the
execution and delivery of the Indenture, as said Lease may from time to
time be supplemented or amended, or its terms waived or modified, to the
extent permitted by, and in accordance with, the terms of the Indenture,
including, without limitation, supplementation by one or more Lease
Supplements entered into pursuant to the applicable provisions of the
Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N659FE) dated July 31, 1995, as such Lease Supplement
shall be amended or supplemented from time to time and any other supplement to
the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessor. First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), the GTA, the Engine Warranty Assignment, the Engine Consent, any
warranty with respect to the Airframe and the Engines, all amounts of Basic
Rent and Supplemental Rent, including without limitation, insurance proceeds
(other than insurance proceeds payable to or for the benefit of the Owner
Trustee in its individual capacity, the Owner Participant or the Indenture
Trustee) and requisition, indemnity or other payments of any kind for or with
respect to the Aircraft (except amounts owing to the Owner Participant, to the
Indenture Trustee, to the Owner Trustee in its individual capacity, or to any
of their respective directors, officers, employees and agents pursuant to
Articles 8 and 9 of the Participation Agreement). Notwithstanding the
foregoing, "Lessor's Estate" shall (i) not include any Excepted Payment and
(ii) include all property intended to be subjected to the Indenture by the
Granting Clause thereof.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, or the Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, (ii)
acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof and which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Articles 10 or 11 of
the Lease and other than a transfer pursuant to the exercise of the remedies
set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to an excess of (i) the
present values of all remaining scheduled payments of such principal amount or
portion thereof and interest thereon (excluding interest accrued from the
immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate per semi-annual period equal to the Debt Rate.
Non-U.S. Person. Any Person other than (i) a citizen or resident of
the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent and
the Tax Indemnity Agreement, each as amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N659FE) dated as of July 1,
1995 between the Owner Trustee and the Indenture Trustee, which together with
the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N659FE) dated July 31, 1995 attached thereto was
recorded as one instrument by the FAA on August 3, 1995 and assigned
Conveyance Number 2A267311.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N659FE) dated as of July 1, 1995 between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N659FE) dated July 31, 1995 attached thereto was
recorded as one instrument by the FAA on August 7, 1995 and assigned
Conveyance Number HH009756.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the first Refinancing after the Delivery
Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N659FE) among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of June 1, 1995.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N659FE) between the Lessee and the
Owner Participant as it was originally executed as of July 1, 1995.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N659FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of June 1, 1995 and filed with the
FAA on July 31, 1995.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii)Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii)Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Amount. The amount described in Section 2.03 of
the Participation Agreement and set forth on Schedule II to the Lease.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance
with Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSBU, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term and
the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages and the EBO Price, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N659FE), dated as of June 1, 1995, as
amended and restated as of August 1, 1995, among the Lessee, the Original
Loan Participants, the Owner Trustee not in its individual capacity except
as otherwise expressly provided therein, but solely as trustee, the Owner
Participant, the Pass Through Trustee, not in its individual capacity
except as otherwise expressly provided therein, but solely as pass through
trustee and the Indenture Trustee, not in its individual capacity except as
otherwise expressly stated therein, but solely as indenture trustee, as
amended, modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever
nature (other than complete Engines or engines) which may from time to time
be incorporated or installed in or attached to the Airframe or any Engine
or, prior to replacement thereof in accordance with the Lease, which may be
removed therefrom.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
August 1, 1995 between the Lessee and the Pass Through Trustee, as such Pass
Through Agreement may be modified, supplemented or amended from time to
time in accordance with the provisions thereof.
Pass Through Certificates. Any of the 1995 Pass Through
Certificates, Series A1 or 1995 Pass Through Certificates, Series A2, in
each case as issued by the related Pass Through Trust; and "Pass Through
Certificates" means all of the Pass Through Certificates issued by each of
the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1995-A1
or Federal Express Pass Through Trust, 1995-A2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. NationsBank, National Association (Carolinas),
a national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 5 and July 5 commencing January 5, 1996.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Premium Termination Date. With respect to the Certificates having a
Maturity in 2014, February 22, 2007, and with respect to the Certificates
having a Maturity in 2015, May 4, 2015.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of the
Indenture.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase
Agreement, dated as of July 3, 1991 between AVSA and the Lessee, including
all exhibits, appendices and letter agreements attached thereto as
originally executed or as modified, amended or supplemented in accordance
with the terms thereof, but only to the extent that the foregoing relates
to the Aircraft and to the extent assigned pursuant to the Purchase
Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N659FE), dated as of July 1, 1995
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 21 for January 5
Payment Dates and June 20 for July 5 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least ten Business Days prior
to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of
the products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the
payment due on the Maturity of such Certificate, by (ii) the number of
years (calculated to the nearest one-twelfth) which will elapse between
such determination date, and the date on which such payment is scheduled to
be made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 5 and July 5 commencing January 5,
1996.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) manufactured after October 22,
1994 of the same or of equal or greater value, remaining useful life and
utility as the Engine being replaced, together with all Parts relating to such
engine; provided, however, that if such replacement engine is not a General
Electric CF6-80C2-A5F engine, such replacement engine must then be commonly
used in the commercial aviation industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement, in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Department or Corporate
Trust Office (in the Corporate Trust Lease Administration Department), as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, with respect to the Owner Participant, the president or
any vice president with direct responsibility for the transactions
contemplated by the Operative Agreements, and with respect to any other party,
any corporate officer or (except in the case of the Owner Participant) other
employee of a party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Corporation.
Securities Act. The Securities Act of 1933, as amended.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
Series Supplement. The Series Supplement 1995-A1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1995-A2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both of such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value shall
be, under any circumstances and in any event, an amount, together with so much
of the arrears portion of Basic Rent due and owing through the date of payment
of Stipulated Loss Value as does not constitute an Excepted Payment, at least
sufficient to pay in full as of such date of payment the aggregate unpaid
principal amount of and accrued interest on the Certificates outstanding on
such date of payment. Subject to the immediately preceding sentence, it is
understood and agreed that the amounts set forth on Schedule III of the Lease,
for dates other than Rent Payment Dates on which arrears Basic Rent is due,
fully reflect appropriate Basic Rent accruals and credits of unearned Basic
Rent and, accordingly, no further accrual or credit shall be required whenever
Stipulated Loss Value is to be calculated with reference to any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant or
others, including, without limitation, payments of Stipulated Loss Value, EBO
Price and amounts calculated by reference to Termination Value and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after November 2, 2000 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 5, 2010 or January 5, 2012, (ii) Section 4.02(a)(D) or (E) of the
Lease, a Rent Payment Date that is on or after the fifth anniversary of the
Commencement Date and (iii) Section 4.02(a)(F) of the Lease, July 5, 2014.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to
be calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N659FE), dated as of June 1, 1995 as amended and restated as of
August 1, 1995, between the Owner Participant and the Owner Trustee in its
individual capacity, as from time to time modified, amended or supplemented
pursuant to its applicable provisions and in accordance with the Operative
Agreements.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. The several Underwriters named in the Underwriting
Agreement.
Underwriting Agreement. The Underwriting Agreement dated August 16,
1995 among the Lessee, Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Chase Securities, Inc.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Federal Aviation Act, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Federal Aviation
Act and Part 121 of the regulations under such Act, for aircraft capable of
carrying ten (10) or more individuals or 6,000 pounds or more of cargo, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provision thereof or in absence thereof.
SCHEDULE III
DESCRIPTION OF ORIGINAL INDENTURE
Trust Indenture, Mortgage and Security Agreement (Federal Express
Corporation Trust No. N659FE) dated as of July 1, 1995 between First Security
Bank of Utah, National Association, as owner trustee under Trust Agreement
(Federal Express Corporation Trust No. N659FE) dated as of June 1, 1995, and
NationsBank of Georgia, National Association, as indenture trustee, recorded
by the Federal Aviation Administration on August 3, 1995 and assigned
Conveyance No. 2A267311, as supplemented by the following described
instrument:
FAA FAA
Date of Recording Conveyance
Instrument Instrument Date Number
Indenture and Security Agreement
Supplement No. 1
(Federal Express Corporation
Trust No. N659FE) 07/31/95 08/03/95 2A267311
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N658FE)
Dated as of May 1, 1995
Amended and Restated as of August 1, 1995
among
FEDERAL EXPRESS CORPORATION,
Lessee
AMSOUTH LEASING CORPORATION,
Owner Participant
THE ENTITIES LISTED ON SCHEDULE I TO THE
ORIGINAL PARTICIPATION AGREEMENT,
Original Loan Participants
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
Not in Its Individual Capacity Except as Otherwise Expressly
Set Forth Herein, but Solely as Owner Trustee,
Owner Trustee
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION,
Indenture Trustee
and
NATIONSBANK, NATIONAL ASSOCIATION (CAROLINAS),
Pass Through Trustee
______________________________
LEVERAGED LEASE OF ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 752, REGISTRATION NO. N658FE
TABLE OF CONTENTS
Page
Initial Recitals........................................................... 1
ARTICLE 1
DEFINITIONS
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
REFUNDING THE ORIGINAL LOAN CERTIFICATES
Section 2.01. Transfer of Funds........................................ 3
Section 2.02. Certificates............................................. 6
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANTS
Section 3.01. Extent of Interest of Original Loan Participants......... 7
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent..................................... 7
Section 4.02. Opinion of Special Aviation Counsel...................... 16
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............. 16
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties.................. 17
Section 6.02. Offering by Lessee....................................... 22
Section 6.03. Certain Covenants of Lessee.............................. 23
Section 6.04. Survival of Representations and Warranties............... 30
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate................................................. 31
Section 7.02. Citizenship.............................................. 31
Section 7.03. Representations, Warranties and Covenants of the Owner
Participant............................................ 33
Section 7.04. Representations, Covenants and Warranties of FSBU and the
Owner Trustee.......................................... 36
Section 7.05. Representations, Warranties and Covenants of the Indenture
Trustee................................................ 39
Section 7.06. Indenture Trustee's Notice of Default.................... 40
Section 7.07. Releases from Indenture.................................. 40
Section 7.08. Covenant of Quiet Enjoyment.............................. 40
Section 7.09. Original Loan Participants' and Pass Through Trustee's
Representations and Warranties......................... 41
Section 7.10. Survival of Representations, Warranties and Covenants.... 42
Section 7.11. Lessee's Assumption of the Certificates.................. 42
Section 7.12. Indebtedness of Owner Trustee............................ 44
Section 7.13. Compliance with Trust Agreement, Etc..................... 44
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes......................... 45
Section 8.02. After-Tax Basis.......................................... 51
Section 8.03. Time of Payment.......................................... 51
Section 8.04. Contests................................................. 51
Section 8.05. Refunds.................................................. 53
Section 8.06. Lessee's Reports......................................... 54
Section 8.07. Survival of Obligations.................................. 55
Section 8.08. Payment of Taxes......................................... 55
Section 8.09. Reimbursements by Indemnitees Generally.................. 55
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally................................................ 55
Section 9.02. After-Tax Basis.......................................... 59
Section 9.03. Subrogation.............................................. 60
Section 9.04. Notice and Payment....................................... 60
Section 9.05. Refunds.................................................. 60
Section 9.06. Defense of Claims........................................ 61
Section 9.07. Survival of Obligations.................................. 61
Section 9.08. Effect of Other Indemnities.............................. 62
Section 9.09. Interest................................................. 62
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs....................... 62
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee.................. 64
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant.................... 66
Section 12.02. Interest of Holders of Certificates..................... 66
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents.................... 66
Section 13.02. Further Assurances...................................... 67
Section 13.03. No Retroactive Application.............................. 67
ARTICLE 14
NOTICES
Section 14.01. Notices................................................. 67
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing............................................. 68
Section 15.02. Reoptimization.......................................... 71
ARTICLE 16
[INTENTIONALLY LEFT BLANK]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes.......................... 73
Section 17.02. [Intentionally Left Blank].............................. 73
Section 17.03. Counterparts............................................ 73
Section 17.04. No Oral Modifications................................... 73
Section 17.05. Captions................................................ 73
Section 17.06. Successors and Assigns.................................. 74
Section 17.07. Concerning the Owner Trustee, Pass Through Trustee and
Indenture Trustee..................................... 74
Section 17.08. Severability............................................ 75
Section 17.09. Public Release of Information........................... 75
Section 17.10. Certain Limitations on Reorganization................... 75
Section 17.11. GOVERNING LAW........................................... 75
Section 17.12. Section 1110 Compliance................................. 76
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality......................................... 76
SCHEDULE I Certificate Information
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
EXHIBIT A(1)(a) Opinion of Lessee's Counsel
EXHIBIT A(1)(b) Opinion of Lessee's Special Counsel
EXHIBIT A(2)(a) Opinion of Owner Participant's and Owner Participant
Guarantor's Special Counsel
EXHIBIT A(2)(b) Opinion of Owner Participant's and Owner Participant
Guarantor's Counsel
EXHIBIT A(3) Opinion of Indenture Trustee's Special Counsel
EXHIBIT A(4) Opinion of Special Aviation Counsel
EXHIBIT A(5) Opinion of Owner Trustee's Counsel
EXHIBIT A(6) Opinion of Pass Through Trustee's Special Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
EXHIBIT E Form of Owner Participant Guaranty
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N658FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N658FE) dated as of May 1, 1995, as amended and restated as of August 1, 1995
(this "Agreement") among FEDERAL EXPRESS CORPORATION, a Delaware corporation
(herein, together with its successors and permitted assigns, "Lessee"),
AMSOUTH LEASING CORPORATION, an Alabama corporation (herein, together with its
successors and permitted assigns, "Owner Participant"), the entities listed on
Schedule I to the Original Participation Agreement as Loan Participants
(individually, together with its successors and permitted assigns, "Original
Loan Participant" and collectively "Original Loan Participants"), FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association,
not in its individual capacity, except as otherwise expressly stated herein,
but solely as Owner Trustee under the Trust Agreement referred to below (in
such capacity as trustee, together with its successors and permitted assigns,
the "Owner Trustee"), NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, a national
banking association, not in its individual capacity, except as otherwise
expressly stated herein, but solely as trustee under the Indenture referred to
below (in such capacity as trustee, together with its successors and permitted
assigns, the "Indenture Trustee"), and NATIONSBANK, NATIONAL ASSOCIATION
(CAROLINAS), a national banking association, not in its individual capacity,
except as otherwise expressly stated herein, but solely as trustee, as Pass
Through Trustee (in such capacity as trustee, together with its successors and
permitted assigns, the "Pass Through Trustee").
W I T N E S S E T H :
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee entered into the Original
Participation Agreement (such term, and all other terms not heretofore
defined, shall have the meanings assigned thereto as provided in Article 1
below), providing for the sale and lease of the Aircraft that was delivered on
the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant entered into the Original Trust
Agreement relating to the Aircraft with First Security Bank of Utah, National
Association in its individual capacity, pursuant to which First Security Bank
of Utah, National Association agreed, among other things, to hold the Lessor's
Estate in trust for the benefit of the Owner Participant;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Original Indenture, for the benefit of the Original Loan
Participants, pursuant to which the Owner Trustee issued to the Original Loan
Participants the Original Loan Certificates as evidence of the loans made by
the Original Loan Participants to the Owner Trustee, the proceeds of which
were used by the Owner Trustee to pay a portion of the Purchase Price for the
Aircraft;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Lessee entered into the
Original Lease relating to the Aircraft, whereby, subject to the terms and
conditions set forth in said Lease, the Owner Trustee agreed to lease the
Aircraft to the Lessee, and the Lessee agreed to lease the Aircraft from the
Owner Trustee, such lease of the Aircraft being evidenced by the execution and
delivery of the Lease Supplement;
WHEREAS, Article 15 of the Original Participation Agreement permits a
Refinancing of the Original Loan Certificates subject to the satisfaction of
the conditions specified in Section 15.01 thereof, and Section 3.04 of the
Original Lease contemplates the adjustment of the percentages for Basic Rent,
Stipulated Loss Value and Termination Value in the event of such a
Refinancing, and the Lessee has requested that the Owner Trustee effect such a
Refinancing and adjustment;
WHEREAS, in order to facilitate such Refinancing, the Lessee is
concurrently entering into an Underwriting Agreement, which relates to two
series of Pass Through Certificates that will be issued by the Pass Through
Trusts formed to acquire, among other securities, the Certificates bearing a
particular interest rate and having a particular Maturity that will be issued
under the Indenture;
WHEREAS, on the Pass Through Closing Date, a closing will occur with
respect to the public offering of the Pass Through Certificates issued by each
Pass Through Trust, an allocable amount of the proceeds of which offering will
be used by the Pass Through Trustee to purchase for each such Pass Through
Trust the Certificates of the interest rate and Maturity applicable thereto,
the proceeds of which purchase in turn will be applied to the Refinancing in
full of the outstanding principal amount of the Original Loan Certificates;
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee have agreed, subject to
the terms and conditions hereinafter provided, to amend and restate, and to
add the Pass Through Trustee as a party to, the Original Participation
Agreement; and
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee have agreed, to the
extent they are parties thereto and, subject to the terms and conditions
hereinafter provided, to amend and restate the Original Indenture, to amend
and restate the Original Lease, to amend the Original Tax Indemnity Agreement
and to amend and restate the Original Trust Agreement, each such amendment and
restatement to be executed and delivered simultaneously with the purchase of
the Certificates by the Pass Through Trustee for the Pass Through Trusts and
the Refinancing in full of the Original Loan Certificates.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree, subject to the terms and
conditions hereinafter provided, that the Original Participation Agreement be
and the same is hereby amended and restated in its entirety as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise requires, the terms defined in Schedule
II hereto are incorporated herein for all purposes of this Agreement and shall
be equally applicable to both the singular and the plural forms of the terms
so defined.
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
REFUNDING THE ORIGINAL LOAN CERTIFICATES
Section 2.01. Transfer of Funds.
(a) On or before the Pass Through Closing Date, the Pass Through
Trustee and the Lessee, in accordance with the Pass Through Agreement, shall
enter into the Series Supplements, and, subject to the terms and conditions
set forth therein, on the Pass Through Closing Date (i) the Lessee shall
direct the Underwriters to execute a wire transfer or intra-bank transfer to
the Pass Through Trustee in the amount of the total proceeds payable pursuant
to the Underwriting Agreement with respect to the Pass Through Certificates
and (ii) the Pass Through Trustee shall deliver the Pass Through Certificates
to the Underwriters upon receipt by the Pass Through Trustee of such proceeds.
(b) Subject to the satisfaction or waiver of the conditions set
forth herein, on the Refunding Date the following events shall occur in the
order set forth below:
(i) the Lessee shall on behalf of the Owner Trustee execute a wire
transfer or intra-bank transfer in favor of the Agent as Supplemental Rent
in the amount of all accrued and unpaid interest on the Original Loan
Certificates to but excluding the Refunding Date (less an amount equal to
the excess of the proceeds of sale of the related Pass Through Certificates
referred to in paragraph (ii) below over the outstanding principal amount
of the Original Loan Certificates) plus any Breakage Costs required to be
paid pursuant to the Original Indenture which transfer shall constitute the
payment of all accrued and unpaid interest and such Breakage Costs;
(ii) for each Pass Through Trust, from an allocable amount of the
proceeds of the sale of the related Pass Through Certificates, the Pass
Through Trustee shall pay on behalf of the Owner Trustee in the manner
specified in paragraph (iv) below, an amount equal to the principal amount
of Certificates of the Maturity and having the interest rate that relates
to such Pass Through Trust, which amounts in the aggregate shall equal the
aggregate principal amount of the Certificates as specified in Section 2.04
of the Indenture;
(iii) the aggregate amount payable by the Pass Through Trustee
pursuant to paragraph (ii) above shall be payable by wire transfer or
intra-bank transfer in favor of the Agent on behalf of the Owner Trustee in
the amount of the outstanding principal amount of the Original Loan
Certificates plus an amount equal to the excess amount referred to in the
parenthetical phrase in paragraph (i) above;
(iv) the Agent shall apply the amounts received by it under
paragraphs (i), (ii) and (iii) of this subsection (b) to prepay the
Original Loan Certificates in full in accordance with Sections 2.06 and
2.10 of the Original Indenture; and
(v) the Owner Trustee shall cause the Certificates to be delivered
to the applicable Pass Through Trustee in accordance with Section 2.02
hereof.
On the Refunding Date concurrently with the events specified in
clauses (ii) through (iv) of this Section 2.01(b), the parties hereto shall
execute and deliver, to the extent they are parties thereto, and consent to
the execution and delivery of (if they are not a party thereto), the
Indenture, the Lease and the Trust Agreement, and the Owner Trustee shall
execute and deliver to the Indenture Trustee for authentication, and the
Indenture Trustee shall authenticate and deliver to the applicable Pass
Through Trustee, upon the request of the Owner Trustee, the Certificates as
provided in Section 2.02 hereof. The Owner Participant hereby requests and
directs the Owner Trustee to execute and deliver this Participation
Agreement and, subject to the terms hereof, to take the actions specified
herein. The Original Loan Participants by their execution and delivery
hereof, request and direct the Indenture Trustee to execute and deliver
this Agreement and concurrently with the events specified in clauses (ii)
through (iv) of this Section 2.01(b) and subject to the terms and
conditions hereof to take the actions contemplated herein. The parties
hereto, including, without limitation, the Original Loan Participants,
confirm that, as provided in Section 2.06 of the Original Indenture, upon
payment in full of the principal amount, Breakage Costs, if any, and
interest on the Original Loan Certificates and all other sums then payable
to the Original Loan Participants under the Original Agreements to the
extent specified in subsection (c) below, the Original Loan Participants
shall have no further interest in, or other right or obligation with
respect to, the Trust Indenture Estate, the Original Agreements or the
Operative Agreements (it being understood that the foregoing shall not
limit or detract from any claim that any Original Loan Participant may have
under Article 8 or 9 or Section 10.01 hereof or of the Original
Participation Agreement) and, accordingly, have no obligation to, and will
not attempt to direct any future actions of the Indenture Trustee with
respect to the Trust Indenture Estate, provided that the rights and
obligations of the Original Loan Participants shall, until the payment in
full of such amounts to the Agent on behalf of the Original Loan
Participants on the Refunding Date, be governed by the Original
Participation Agreement and the other Operative Agreements contemplated
thereby or in effect immediately prior to the effectiveness of this
Agreement and shall, upon such payment and thereafter, be governed by this
Agreement. The Lessee hereby consents to the foregoing.
(c) Not less than three (3) Business Days prior to the Refunding
Date, the Agent on behalf of the Original Loan Participants shall give notice
in writing to the parties hereto of the principal amount, Breakage Costs, if
any, and interest on and all other amounts due on the Refunding Date under the
Original Loan Certificates and all other sums payable on the Refunding Date to
the Original Loan Participants under the Original Agreements, such notice to
be deemed final and binding on the Original Loan Participants as to the
respective amounts of principal, Breakage Costs, if any, and interest when
given; provided that the expected Refunding Date, at the time such notice is
given, is the same as the Refunding Date.
(d) On the Refunding Date, subject to (i) the giving of at least ten
(10) Business Days' prior written notice to the Indenture Trustee and the
Original Loan Participants, (ii) the receipt by the Original Loan Participants
of the funds referred to in Section 2.01(b)(v) above and (iii) compliance with
the provisions of Section 15 of the Original Participation Agreement and
Section 2.10(c) of the Original Indenture (including the Refinancing in full
of the Original Loan Certificates), the Original Loan Participants shall
deliver the Original Loan Certificates to the Indenture Trustee for
cancellation and delivery to the Owner Trustee.
(e) The closing with respect to the acquisition of the Pass Through
Certificates by the Underwriters and the closing with respect to the
Refinancing of the Original Loan Certificates (together, the "Closings") shall
take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017.
(f) All payments pursuant to this Section 2.01 shall be made in
immediately available funds.
(g) In the event that the Refunding Date and the actions
contemplated to occur on such date pursuant to subsection (d) of this Section
2.01 do not occur on or before August 31, 1995, then the rights and
obligations of the parties to the Original Participation Agreement, including,
without limitation, the Original Loan Participants, shall be governed by the
Original Participation Agreement and the other Operative Agreements
contemplated thereby or in effect immediately prior to the effectiveness of
this Agreement and this Agreement shall be of no further force and effect,
except that the Lessee shall be obligated hereby to pay all fees and expenses
of the Original Loan Participants, the Indenture Trustee, the Owner
Participant, the Owner Trustee, the Pass Through Trustee and their respective
counsel relating to the transactions contemplated hereby. Each of the parties
hereto agrees to execute and deliver to the other parties such documents and
instruments as may be necessary to give effect to the foregoing provisions of
this subsection (g).
Section 2.02. Certificates. Subject to the satisfaction or waiver
of the conditions set forth herein, on the Refunding Date, the Owner Trustee
shall execute and deliver to the Indenture Trustee, and the Indenture Trustee
shall authenticate and deliver, upon the request of the Owner Trustee, to the
Pass Through Trustee for each Pass Through Trust, the Certificate specified
for such Pass Through Trust on Schedule I attached hereto, which (i) shall be
issued in the principal amount and in the Maturity set forth for such
Certificate in Schedule I hereto, (ii) shall bear interest at the interest
rate set forth for such Certificate in Schedule I hereto, (iii) shall be
issued in such form and on such terms as are specified in the Indenture, (iv)
shall be dated and authenticated on the Refunding Date and shall bear interest
from the Refunding Date and (v) shall be registered in the name of the Pass
Through Trustee on behalf of such Pass Through Trust.
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANTS
Section 3.01. Extent of Interest of Original Loan Participants.
Delivery of the Original Loan Certificates by the Original Loan Participants
to the Indenture Trustee for cancellation on the Refunding Date shall be
conclusive evidence of receipt by the Original Loan Participants of all
amounts then due and payable to the Original Loan Participants in respect of
principal of, Breakage Costs, if any, and interest on the Original Loan
Certificates under the Original Agreements (it being understood that the
foregoing shall not limit or detract from any claim any Original Loan
Participant may have under Article 8 or 9 or Section 10.01(a)(ii) hereof or of
the Original Participation Agreement).
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent. The obligations of the Owner
Trustee, the Owner Participant, the Lessee, the Indenture Trustee and the Pass
Through Trustee on behalf of each Pass Through Trust to participate in the
transactions contemplated hereby on the Refunding Date are subject to the
fulfillment to the satisfaction of such party, prior to or on the Refunding
Date, of the following conditions precedent:
(a) Certificates. On the Refunding Date, there shall have been duly
issued and delivered by the Owner Trustee to the Pass Through Trustee
for each Pass Through Trust, against payment therefor, a Certificate,
substantially in the form set forth in Exhibit B to the Indenture, duly
authenticated, dated the Refunding Date and registered in the name of
the Pass Through Trustee on behalf of such Pass Through Trust, in the
principal amounts, Maturity, bearing the interest rate and the other
economic terms specified in the Series Supplements and otherwise as
provided in Section 2.04 of the Indenture. The Pass Through
Certificates shall be registered under the Securities Act, any
applicable state securities laws shall have been complied with, and the
Pass Through Agreement shall have been qualified under the Trust
Indenture Act.
(b) Legal Investment. On the Refunding Date, no fact or condition
shall exist under applicable laws or regulations, or interpretations of any
such laws or regulations by applicable regulatory authorities, which, in
the opinion of the Owner Participant or its special counsel, the Pass
Through Trustee or the Indenture Trustee, would make it illegal for the
Owner Participant, the Lessee, the Owner Trustee, the Pass Through Trustee
or the Indenture Trustee, and no change in circumstances shall have
occurred which would otherwise make it illegal or otherwise in
contravention of guidance issued by regulatory authorities for the Owner
Participant, the Lessee, the Owner Trustee, the Pass Through Trustee or the
Indenture Trustee, to participate in the transaction to be consummated on
the Refunding Date; and no action or proceeding shall have been instituted
nor shall governmental action before any court, governmental authority or
agency be threatened which in the opinion of counsel for the Owner
Participant, the Pass Through Trustee or the Indenture Trustee is not
frivolous, nor shall any order have been issued or proposed to be issued by
any court, or governmental authority or agency, as of the Refunding Date,
to set aside, restrain, enjoin or prevent the consummation of any of the
transactions contemplated by this Agreement or by any of the other
Operative Agreements.
(c) Underwriters. The Underwriters shall have transferred the funds
specified in Section 2.01(a) hereof and all conditions thereunder shall
have been satisfied or waived.
(d) Refunding Documents. This Agreement and the following documents
shall have been duly authorized, executed and delivered by the respective
party or parties thereto, shall each be satisfactory in form and substance
to the Lessee, the Indenture Trustee, the Pass Through Trustee, the Owner
Trustee and the Owner Participant (each acting directly or by authorization
to its special counsel) and shall each be in full force and effect; there
shall not have occurred any default thereunder, or any event which with the
lapse of time or the giving of notice or both would be a default
thereunder, and copies executed or certified as requested by the Lessee,
the Owner Trustee, the Owner Participant, the Indenture Trustee or the Pass
Through Trustee, as the case may be, of such documents shall have been
delivered to the Lessee, the Owner Participant, the Indenture Trustee, the
Pass Through Trustee and the Owner Trustee (provided that the sole executed
original of the Lease shall be delivered to the Indenture Trustee):
(i) the Lease;
(ii) the Indenture;
(iii) the Trust Agreement;
(iv) the Owner Participant Guaranty; and
(v) in the case of the Owner Participant only, Amendment No.
1 to the Original Tax Indemnity Agreement.
(e) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee and the Owner Participant shall have received such evidence as it
deems appropriate, including, without limitation, an independent insurance
broker's report, together with certificates of insurance from such broker,
in form and substance satisfactory to the Indenture Trustee and the Pass
Through Trustee (to the extent of their interests thereunder) or the Owner
Participant, as the case may be, to establish that the insurance required
by Article 13 of the Lease is in effect.
(f) Financing Statements. (i) Uniform Commercial Code ("UCC")
financing statements covering all the security interests (and other
interests) created by or pursuant to the Granting Clause of the Original
Indenture shall have been executed and delivered by the Owner Trustee, as
debtor, and by the Indenture Trustee, as secured party, for and on behalf
of the Original Loan Participants, and such financing statements shall have
been duly filed in the State of Utah; (ii) a form UCC-3 financing statement
to amend and restate each financing statement referred to in the
immediately preceding sentence shall have been executed and delivered by
the Owner Trustee, as debtor, and by the Indenture Trustee as secured
party, and a form UCC-1 financing statement covering all the security
interests (and other interests) created by or pursuant to the Granting
Clause of the Indenture shall have been executed and delivered by the Owner
Trustee, as debtor, and by the Indenture Trustee, as secured party, for and
on behalf of the Holders, and concurrently with the Refinancing of the
Original Loan Certificates such UCC-3 financing statement and UCC-1
financing statement shall have been duly filed or duly submitted for filing
in the State of Utah, and all other actions shall have been taken which, in
the opinion of special counsel for the Pass Through Trustee or for the
Underwriters, are necessary or desirable to maintain the perfection of the
security interest created by or pursuant to the Granting Clause of the
Indenture; (iii) a UCC notice filing describing the Original Lease as a
lease shall have been executed and delivered by the Owner Trustee, as
lessor, and the Lessee, as lessee (which filing shall name the Indenture
Trustee as assignee of the Owner Trustee), and shall have been duly filed
in the State of Tennessee; and (iv) a form UCC-3 financing statement to
amend and restate the UCC notice filing referred to in the immediately
preceding clause (iii) shall have been executed and delivered by the Owner
Trustee, as lessor, and by the Lessee, as lessee (which filing shall name
the Indenture Trustee as assignee of the Owner Trustee), and such notice
filing shall concurrently with the Refinancing of the Original Loan
Certificates have been duly filed in the State of Tennessee, and all other
actions shall have been taken which, in the opinion of the Owner
Participant, Pass Through Trustee and the Underwriters, are necessary to
perfect and protect such security interests and other interests created by
or pursuant to the Granting Clause of the Indenture.
(g) Corporate Documents. Except when such Person is the delivering
party, the Owner Participant, the Owner Trustee, the Lessee, the Original
Loan Participants, the Pass Through Trustee and the Indenture Trustee
(acting directly or by authorization to its counsel) shall have received
the following, in each case in form and substance satisfactory to it:
(i) copies, certified by the Secretary or an Assistant
Secretary of the Lessee as of the Refunding Date, of the certificate
of incorporation and bylaws of the Lessee and of the resolutions of
the Board of Directors of the Lessee duly authorizing the lease by
the Lessee of the Aircraft under the Lease and the execution,
delivery and performance by the Lessee of the Original Agreements to
which it is a party, this Agreement, the Lease, the Tax Indemnity
Agreement, the Pass Through Agreement, the Series Supplements, the
other Operative Agreements to which the Lessee is or is to be a party
and each other document to be executed and delivered by the Lessee in
connection with the transactions contemplated hereby;
(ii) a copy of the articles of incorporation or certificate of
organization, as the case may be, and bylaws of the Owner Participant
and the Owner Participant Guarantor, in each case, certified by the
Secretary or Assistant Secretary of the Owner Participant or the
Owner Participant Guarantor, as the case may be, as of the Refunding
Date, and, in the case of the Owner Participant, a copy of the
resolutions of the board of directors of the Owner Participant,
certified as such as of the Refunding Date by such Secretary or
Assistant Secretary, authorizing the execution and delivery by the
Owner Participant of the Operative Agreements to which the Owner
Participant is or is to be a party, and in the case of the Owner
Participant Guarantor, a copy of the resolutions of the board of
directors of the Owner Participant Guarantor, certified as such as of
the Refunding Date by such Secretary or Assistant Secretary,
authorizing the execution and delivery by the Owner Participant
Guarantor of the Owner Participant Guaranty;
(iii) a copy of the charter and bylaws and other instruments of
First Security Bank of Utah, National Association, certified as of
the Refunding Date by the Secretary or Assistant Secretary of First
Security Bank of Utah, National Association as of the Refunding Date
(or other like instruments satisfactory to the Lessee and the Owner
Participant), and a copy of the resolutions of the board of directors
of First Security Bank of Utah, National Association, certified as
such by such Secretary or Assistant Secretary as of the Refunding
Date, authorizing the execution and delivery by First Security Bank
of Utah, National Association or the Owner Trustee, as the case may
be, of the Original Agreements to which it is a party, the Trust
Agreement and each of the other Operative Agreements to which it is
or is to be a party, whether in its individual capacity or as Owner
Trustee;
(iv) a copy of the charter and bylaws and other instruments of
NationsBank of Georgia, National Association ("NationsBank"),
certified as of the Refunding Date by the Secretary or Assistant
Secretary of NationsBank (or other like instruments satisfactory to
the Lessee and the Owner Participant) which bylaws include a
provision authorizing the execution and delivery by NationsBank or
the Indenture Trustee, as the case may be, of each of the Original
Agreements to which it is a party and each of the other Operative
Agreements to which it is or is to be a party;
(v) a copy of the charter and bylaws and other instruments of
Nationsbank, National Association (Carolinas), certified as of the
Refunding Date by the Secretary or an Assistant Secretary of
Nationsbank, National Association (Carolinas) (or other like
instruments satisfactory to the Lessee and the Owner Participant)
which bylaws include a provision authorizing the execution and
delivery by Nationsbank, National Association (Carolinas) or the Pass
Through Trustee, as the case may be, of this Participation Agreement,
the Pass Through Agreement, the Series Supplements and any other
document executed or authenticated by or on behalf of the Pass
Through Trustee in connection with the transactions contemplated
hereby; and
(vi) such other documents, evidences, materials, and
information with respect to the Lessee, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee, the Owner Participant
and the Owner Participant Guarantor as the Indenture Trustee, the
Pass Through Trustee or the Owner Participant may reasonably request
in order to establish the consummation of the transactions
contemplated by this Agreement.
(h) Title, Airworthiness and Registration. On the Refunding Date,
the following statements shall be true, and the Owner Participant, the
Owner Trustee, the Pass Through Trustee and the Indenture Trustee shall
have received evidence from the Lessee reasonably satisfactory to each such
Person to the effect that:
(i) the Owner Trustee has good and marketable title to the
Aircraft, free and clear of Liens, except the rights of the Owner
Trustee and the Lessee under the Lease and the Lease Supplement
covering the Aircraft, the rights of the Indenture Trustee under the
Indenture and the beneficial interest of the Owner Participant
created by the Trust Agreement and the interest of the Holders
created by the Indenture and the Indenture and Security Supplement
covering the Aircraft;
(ii) the Aircraft has been duly certified by the Aeronautics
Authority as to type and airworthiness in accordance with the terms
of the Operative Agreements;
(iii) the Lease, the Indenture and the Trust Agreement
concurrently with the Refinancing of the Original Loan Certificates
have been duly filed for recordation (or shall be in the process of
being so duly filed for recordation) with the Aeronautics Authority
pursuant to the Act; and
(iv) the Aircraft is registered in the name of the Owner
Trustee and the Lessee shall have permanent authority to operate the
Aircraft.
(i) Officer's Certificate of Lessee. On the Refunding Date, the
following statements shall be true, and the Owner Participant, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee shall have
received a certificate signed by the Vice President and Treasurer or any
other duly authorized officer of the Lessee, dated the Refunding Date,
stating that:
(i) the representations and warranties of the Lessee
contained in the Operative Agreements to which it is a party
(excluding the Tax Indemnity Agreement) and in any certificate
delivered pursuant hereto or thereto are true and correct on and as
of the Refunding Date as though made on and as of such date (except
to the extent that such representations and warranties relate solely
to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as
of such earlier date);
(ii) except for the matters described under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1995, as to which such officer will make
no certification concerning the liability of the Lessee (if any),
or the effect of any adverse determination of any such matters
upon the consolidated financial condition, business or operations
of the Lessee, no material adverse change has occurred in the
financial condition, business or operations of the Lessee from
that shown in the audited financial statements of the Lessee as of
May 31, 1995, and nothing has occurred which will, in the judgment
of such officer, materially adversely affect the ability of the
Lessee to carry on its business or to perform its obligations
under this Agreement and each other Operative Agreement to which
it is a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(j) Officer's Certificate of Owner Participant and the Owner
Participant Guarantor. On the Refunding Date, the following statements
shall be true, and the Lessee, the Pass Through Trustee, the Owner Trustee
and the Indenture Trustee shall have received a certificate from (x) the
Owner Participant, signed by a duly authorized officer of the Owner
Participant dated the Refunding Date, stating that:
(i) the representations and warranties of the Owner
Participant contained in this Agreement, the Trust Agreement and any
other Operative Agreement to which it is a party and in any
certificate delivered pursuant hereto or thereto, are true and
correct on and as of the Refunding Date as though made on and as of
such date (except to the extent that such representations and
warranties relate solely to an earlier date, in which case such
certificate shall state that such representations and warranties were
true and correct on and as of such earlier date);
(ii) no Lessor's Liens attributable to the Owner Participant
exist; and
(iii) no event has occurred and is continuing which
constitutes, due to any action or inaction on the part of the Owner
Participant, an Indenture Default or an Indenture Event of Default.
and (y) from the Owner Participant Guarantor, signed by a duly authorized
officer or agent of the Owner Participant Guarantor dated the Refunding
Date, stating that the representations and warranties of the Owner
Participant Guarantor contained in the Owner Participant Guaranty and in
any certificate delivered pursuant hereto or thereto are true and correct
on and as of the Refunding Date as though made on and as of such date
(except to the extent that such representations and warranties relate
solely to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as of such
earlier date).
(k) Other Officer's Certificates. On the Refunding Date, the
following statements shall be true, and the Owner Participant, the
Lessee, the Pass Through Trustee, the Owner Trustee and the Indenture
Trustee shall have received a certificate from each of First Security
Bank of Utah, National Association and the Owner Trustee (in the case of
the Lessee, the Owner Participant, the Pass Through Trustee and the
Indenture Trustee), NationsBank of Georgia, National Association (in the
case of the Lessee, the Owner Participant, the Pass Through Trustee and
the Owner Trustee) and NationsBank, National Association (Carolinas)
(in the case of the Owner Participant, the Lessee, the Owner Trustee and
the Indenture Trustee) signed by a duly authorized officer of First
Security Bank of Utah, National Association, NationsBank of Georgia,
National Association and NationsBank, National Association (Carolina),
respectively, dated the Refunding Date, stating with respect to First
Security Bank of Utah, National Association and the Owner Trustee,
NationsBank of Georgia, National Association and the Indenture Trustee
and NationsBank, National Association (Carolina) and the Pass Through
Trustee, as the case may be, that:
(i) the representations and warranties of the Owner Trustee
in its individual capacity and as trustee, of the Indenture Trustee
in its individual capacity and as trustee, and of the Pass Through
Trustee in its individual capacity and as trustee contained in this
Agreement, the Lease, the Trust Agreement and the Indenture and in
any certificate delivered pursuant hereto or thereto are true and
correct on and as of the Refunding Date as though made on and as of
such date (except to the extent that such representations and
warranties relate solely to an earlier date, in which case such
certificate shall state that such representations and warranties were
true and correct on and as of such earlier date);
(ii) to the best of its knowledge, no event has occurred and
is continuing, which constitutes or which, but for the lapse of
time or the giving of notice, or both, would constitute, due to
any action or omission on the part of the Owner Trustee in its
individual capacity or as trustee, and of the Indenture Trustee in
its individual capacity or as trustee, an Event of Default or an
Indenture Event of Default; and
(iii) there are no Lessor's Liens attributable to the Owner
Trustee or First Security Bank of Utah, National Association and no
Indenture Trustee's Liens affecting the Trust Indenture Estate or the
Lessor's Estate or any part thereof.
(l) Legal Opinions. The Owner Participant, the Original Loan
Participants, the Lessee, the Owner Trustee, the Indenture Trustee and the
Pass Through Trustee (acting directly or by authorization to its special
counsel) shall have received from the following counsel their respective
legal opinions in each case satisfactory to the Owner Participant, the
Original Loan Participants, the Lessee, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee, as the case may be, as to scope and
substance (and covering such other matters as the recipient may reasonably
request) and dated the Refunding Date:
(i) George W. Hearn, Esq., Vice President, Law - Corporate
and Business Transactions of the Lessee in the form of Exhibit
A(1)(a) hereto and addressed to the Owner Participant, the Owner
Trustee, the Pass Through Trustee, the Indenture Trustee, the
Underwriters and the Original Loan Participants;
(ii) Winston & Strawn, special counsel for the Owner
Participant and the Owner Participant Guarantor, in the form of
Exhibit A(2)(a) hereto and Berkowitz, Lefkovits, Isom & Kushner,
counsel to the Owner Participant and the Owner Participant Guarantor,
in the form of Exhibit A(2)(b) hereto, each addressed to the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, the Lessee, the Underwriters and the Original Loan
Participants;
(iii) Powell, Goldstein, Frazer & Murphy, special counsel for
the Indenture Trustee, in the form of Exhibit A(3) hereto and
addressed to the Owner Participant, the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee, the Lessee, the Underwriters and
the Original Loan Participants;
(iv) Daugherty, Fowler & Peregrin, special aviation counsel,
in the form of Exhibit A(4) hereto and addressed to the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, the Lessee, the Underwriters and the Original Loan
Participants;
(v) [intentionally left blank];
(vi) [intentionally left blank];
(vii) Ray, Quinney & Nebeker, special counsel for the Owner
Trustee, in the form of Exhibit A(5) hereto and addressed to the
Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass Through Trustee, the Lessee, the Underwriters and the
Original Loan Participants;
(viii)Davis Polk & Wardwell, special counsel for the Lessee, in
the form of Exhibit A(1)(b) hereto addressed to the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, the Lessee, the Underwriters and the Original Loan
Participants; and
(ix) Powell, Goldstein, Frazer & Murphy, special counsel for
the Pass Through Trustee in the form of Exhibit A(6) hereto and
addressed to the Owner Participant, the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee, the Lessee, the Underwriters and
the Original Loan Participants.
(m) No Indenture Default. No Indenture Event of Default or
Indenture Default attributable to either First Security Bank of Utah,
National Association or the Owner Trustee has occurred and is
continuing.
(n) No Defaults. No Default or Event of Default under the Lease and
no Event of Loss or event, which with the passage of time or if continued
unremedied or unaltered would constitute an Event of Loss, shall have
occurred or be in existence.
(o) Cancellation. Following the Refinancing of the Original Loan
Certificates, the Original Loan Certificates shall have been duly
delivered by the Original Loan Participants to the Indenture Trustee for
cancellation.
(p) Other Agreements. The Lessee and the Pass Through Trustee shall
have entered into the Pass Through Agreement and the Series Supplements,
all conditions to the effectiveness of each thereof shall have been
satisfied or waived, and the Pass Through Certificates shall have been
issued pursuant to the Series Supplements. The Lessee and the
Underwriters shall have entered into the Underwriting Agreement, all
conditions to the effectiveness thereof shall have been satisfied or
waived, and the Pass Through Certificates shall have been delivered
pursuant to the Underwriting Agreement.
Section 4.02. Opinion of Special Aviation Counsel. Promptly upon
the filing and, where appropriate, recording of the documents specified in
4.01(h)(iii) hereof, pursuant to the Act, the Lessee shall cause Special
Aviation Counsel to deliver to the Owner Participant, the Owner Trustee, the
Pass Through Trustee and the Indenture Trustee an opinion as to (i) the due
recording of such documents and the documents identified in Section 4.01(i) of
the Original Participation Agreement and (ii), subject to customary
qualifications, the lack of any intervening documents with respect to the
Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby is
subject to the conditions that, prior to or on the Refunding Date, the Lessee
shall have received the certificates and other documents which are referred to
in, or the opinions to be addressed to it under, as the case may be,
paragraphs (d), (g)(ii)-(v), (h)(ii)-(iv), (j), (k) and (l) (ii), (iii), (iv),
(vii), (viii) and (ix) of Section 4.01 hereof and the Underwriters shall have
made available the amounts required to be paid by them pursuant to Section
2.01 hereof.
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties. The Lessee
represents and warrants to the Owner Participant, the Owner Trustee (in its
individual capacity and as Owner Trustee), the Pass Through Trustee (in its
individual capacity and as Pass Through Trustee) and the Indenture Trustee (in
its individual capacity and as Indenture Trustee) that, on the date hereof and
as of the Refunding Date:
(a) the Lessee is a corporation duly organized and validly existing
and is in good standing under the laws of the State of Delaware with its
principal place of business and chief executive office in Memphis,
Tennessee, and is duly qualified to do business as a foreign corporation
and is in good standing in all jurisdictions in which it has intrastate
routes, or offices or major overhaul facilities or in which other
activities of the Lessee require such qualification;
(b) the Lessee has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its Properties and to enter into and perform its obligations under
this Agreement, the Original Agreements to which it is a party, the other
Operative Agreements to which it is a party, the Pass Through Agreement and
the Series Supplements (the "Lessee Documents");
(c) the Lessee is an "air carrier" within the meaning of the Act and
a holder of a certificate under Sections 41102(a) and 41103 of the Act and
a "citizen of the United States" within the meaning of Section 40102(a)(15)
of the Act holding an "air carrier operating certificate" issued under
Chapter 447 of the Act for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, and each such certificate is
in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively
"permits") which are material to the operation of the routes flown by it
and the conduct of its business and operations as currently conducted and
each such permit is in full force and effect;
(e) the execution, delivery and performance of the Lessee Documents
by the Lessee have been duly authorized by all necessary corporate action
on the part of the Lessee and do not require any stockholder approval, or
approval or consent of any trustee or holder of any indebtedness or
obligations of the Lessee, and each such document has been duly executed
and delivered by the Lessee and constitutes the legal, valid and binding
obligations of the Lessee enforceable against it in accordance with the
terms thereof except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether enforceability is
considered in a proceeding in equity or at law);
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by the Lessee of the Lessee Documents or for the
use and maintenance of the Aircraft except for such registrations,
applications and recordings referred to in the opinions of Special Aviation
Counsel delivered or to be delivered pursuant to Sections 4.01(l)(iv) and
4.02 hereof and except for the filings referred to in Section 4.01(f)
hereof, all of which shall have been duly obtained or made and shall be in
full force and effect on and as of the Refunding Date or as contemplated by
said Sections;
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent or approval under, any law, governmental rule or
regulation or the charter documents, as amended, or bylaws, as amended, of
the Lessee or any order, writ, injunction or decree of any court or
governmental authority against the Lessee or by which it or any of its
Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Lessee is a party or by which it or
any of its Properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any Lien upon any
of its Properties;
(h) there are no pending or, to the knowledge of the Lessee,
threatened actions, suits, investigations or proceedings (whether or not
purportedly on behalf of the Lessee) against or affecting the Lessee or any
of its Property before or by any court or administrative agency which (A)
involve the Aircraft, (B) except for the matters described under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the fiscal year
ended May 31, 1995, as to which no representation is made concerning the
Lessee's liability (if any) or the effect of any adverse determination upon
the consolidated financial condition, business or operations of the Lessee,
if adversely determined, would materially and adversely affect the
consolidated financial condition, business or operations of the Lessee, or
(C) if adversely determined would adversely affect the ability of the
Lessee to perform its obligations under the Lessee Documents;
(i) the Lessee has filed or caused to be filed all tax returns which
are required to be filed and has paid or caused to be paid all taxes shown
to be due and payable pursuant to such returns or pursuant to any
assessment received by the Lessee (other than assessments the payment of
which is being contested in good faith by the Lessee), and the Lessee has
no knowledge of any related actual or proposed deficiency or additional
assessment which either in any case or in the aggregate would materially
adversely affect the Lessee's consolidated financial condition (other than,
in any such case, assessments, the payment of which is being contested in
good faith by the Lessee and other than the federal transportation excise
tax assessments, the protests against which are described in the Lessee's
Annual Report on Form 10-K for the fiscal year ended May 31, 1995, as to
which no representation is made concerning the Lessee's liability (if any)
or the effect of any adverse determination upon the Lessee's consolidated
financial condition, which assessments are being contested in good faith by
the Lessee);
(j) except for (A) the filing and, where appropriate, recordation
pursuant to the Act of the Indenture, the Trust Agreement and the Lease,
(B) the filing of the financing statements referred to in Section
4.01(f) hereof and (C) the taking of possession by the Indenture Trustee
of the original counterpart of the Lease and maintaining possession of
the original counterpart of the Lease Supplement delivered on the
Delivery Date, no further action, including any filing or recording of
any document, is necessary or advisable in order (i) to establish the
Owner Trustee's title to and interest in the Aircraft and the Lessor's
Estate as against the Lessee and any third parties, or (ii) to perfect
the first security interests in and mortgage Lien on the Trust Indenture
Estate in favor of the Indenture Trustee;
(k) on the Delivery Date, the Owner Trustee received good and
marketable title to the Aircraft, free and clear of all Liens, except the
rights of the Owner Trustee and the Lessee under the Original Lease, the
rights of the Indenture Trustee under the Original Indenture and the
beneficial interest of the Owner Participant created by the Original Trust
Agreement and the interest of the Original Loan Participants created by the
Original Indenture and the Indenture and Security Supplement covering the
Aircraft;
(l) the Lessee has heretofore delivered to the Owner Participant
true and correct copies of the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1995, and of the audited consolidated balance
sheet of the Lessee for the fiscal year ended May 31, 1995, and the related
consolidated statements of income, changes in common stockholders'
investment and cash flows for such fiscal year, accompanied by a report
thereon containing opinions without qualification, except as therein noted,
by Arthur Andersen & Co., independent public accountants; said financial
statements have been prepared in accordance with generally accepted
accounting principles consistently applied and present fairly the financial
position of the Lessee as of such date and the results of its operations
and cash flows for such periods and such Annual Report and financial
statements did not, as of their respective dates of filing with the SEC,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein not misleading;
(m) with respect to ERISA, except as otherwise disclosed:
(i) none of the Pension Plans nor their related trusts have
been terminated in a distress termination pursuant to Section 4041(c)
of ERISA or by the Pension Benefit Guaranty Corporation or any
successor agency or instrumentality thereto (the "PBGC") pursuant to
Section 4042 of ERISA, nor have any actions been taken to so
terminate any Pension Plan or related trust and neither the Lessee
nor any ERISA Affiliate has incurred or could reasonably be expected
to incur any material liability with respect to a Pension Plan under
Section 4062, 4063, 4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such term is
defined in Section 4043(b) of ERISA) with respect to any Pension Plan
which have resulted or could reasonably be expected to result in any
material liability of the Lessee;
(iii) no "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA or Section 412 of the Code) exists
with respect to any Pension Plan, whether or not waived, nor has any
request for a waiver under Section 412(d) of the Code been, or is
reasonably likely to be, filed with respect to any of the Pension
Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed to
make any contribution or payment to any Pension Plan which has
resulted or could reasonably be expected to result in the
imposition of a Lien under Section 302(f) of ERISA or Section
412(n) of the Code;
(v) all Pension Plans are in compliance in all material
respects with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred
or is reasonably likely to incur any material withdrawal liability
pursuant to Section 4201 or 4204 of ERISA or any material liability
under Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither the Lessee
nor any ERISA Affiliate has engaged in a "prohibited transaction"
(within the meaning of Section 4975 of the Code or Section 406 of
ERISA) which could reasonably be expected to subject the Lessee to
the tax or penalties on prohibited transactions imposed by Section
4975 of the Code or Section 502 of ERISA; and
(viii)assuming the truth of the representations contained in
Sections 7.03(a)(viii) and 7.09 hereof and compliance with Section
10.06 of the Indenture, the execution and delivery of this Agreement
and the other Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not involve any
transaction which is prohibited by Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section 4975
of the Code. No part of the funds to be used by the Lessee in
satisfaction of its obligations under this Agreement or any other of
the Operative Agreements to which the Lessee is a party or to which
the Lessee is bound are the assets of any employee benefit plan
subject to Title I of ERISA, or any individual retirement account or
a plan subject to Section 4975 of the Code.
As used in this Section 6.01(m), the term "Pension Plan" means an employee
pension benefit plan as defined in Section 3(2) of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and which is maintained, or contributed to,
by the Lessee or any ERISA Affiliate, and the term "ERISA Affiliate" means
any entity which together with the Lessee would be treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Section 4.01(f) hereof, no
governmental approval of any kind is required of the Owner Participant or
for the Owner Participant's execution of or performance under this
Agreement or any agreement contemplated hereby by reason of any fact or
circumstance of the Lessee, the nature of the Aircraft or the Lessee's
proposed operations or use of the Aircraft;
(p) on the Refunding Date, all premiums with respect to the
insurance required to be provided by the Lessee on or prior to the
Refunding Date under Article 13 of the Lease have been paid by the
Lessee;
(q) on the Refunding Date, all sales or use taxes relating to the
sale of the Aircraft by AVSA to the Owner Trustee which are then or were
theretofore due shall have been paid;
(r) the Lessee is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Lessee is a
party or by which it or any of its Properties or assets may be bound, or in
violation of any applicable law, which default or violation would have a
material adverse effect on the financial condition, business or operations
of the Lessee or its ability to perform any of its obligations under the
Lessee Documents;
(s) no Default or Event of Default or Event of Loss or event, which
with the passage of time or if continued unremedied or unaltered would
constitute an Event of Loss, has occurred or exists;
(t) the Aircraft has been duly certified by the FAA as to type and
airworthiness; there is in effect with respect to the Aircraft a current
and valid airworthiness certificate issued by the FAA pursuant to the Act;
and there is no fact known to the Lessee which materially adversely affects
the value, utility or condition of the Aircraft;
(u) on the Refunding Date, the Lessee shall not be in default in
the performance of any term or condition of the Purchase Agreement, the
Purchase Agreement Assignment, the Engine Warranty Assignment and the
GTA;
(v) the Aircraft is and will be on the Refunding Date fully equipped
to operate in commercial service and does and will comply in all material
respects with all governmental requirements governing such service;
(w) there are no broker's or underwriter's fees payable in
connection with the transactions contemplated in the Operative Agreements
other than those of the Underwriters and First Chicago Leasing Corporation;
and
(x) the representations and warranties of the Lessee set forth in
the Original Agreements to which it is a party were correct on and as of
the Delivery Date (except to the extent such representations expressly
related solely to a specified earlier date, in which case such warranties
and representations were correct on and as of such earlier date).
Section 6.02. Offering by Lessee. The Lessee represents and
warrants that it has authorized no one to act on its behalf in connection with
the offer or sale of any interest in the Lessor's Estate or the Trust
Agreement other than First Chicago Leasing Corporation. Neither the Lessee
nor, based on representations of First Chicago Leasing Corporation, anyone
acting on its behalf has directly or indirectly offered any interest in the
Lessor's Estate or the Trust Agreement, or similar interests, for sale to, or
solicited any offer to acquire any of the same from, anyone other than the
Owner Participant and no more than 53 other institutional investors.
Section 6.03. Certain Covenants of Lessee. The Lessee covenants and
agrees with the Owner Participant, the Owner Trustee (in its individual
capacity and as Owner Trustee), the Pass Through Trustee (in its individual
capacity and as Pass Through Trustee) and the Indenture Trustee (in its
individual capacity and as Indenture Trustee) as follows:
(a) The Lessee will cause to be done, executed, acknowledged and
delivered all such further acts, conveyances and assurances as the Owner
Trustee, the Indenture Trustee, the Pass Through Trustee or the Owner
Participant shall reasonably require for accomplishing the purposes of this
Agreement, the Trust Agreement, the Indenture, the Tax Indemnity Agreement,
the Lease and the other Operative Agreements to which it is a party.
Without limiting the generality of this Section 6.03(a), the Lessee will
take, or cause to be taken, at the Lessee's cost and expense, such action
with respect to the recording, filing, re-recording and re-filing of the
Indenture, each Indenture and Security Agreement Supplement, the Lease,
each Lease Supplement and any financing statements or other instruments as
may be necessary, or as requested by the Indenture Trustee and appropriate,
to maintain the perfection of the first security interest and the Lien
created by the Indenture, and the Owner Trustee's title to and interest in
the Aircraft and the Lessor's Estate as against the Lessee and any third
parties, or if the Lessee cannot take, or cause to be taken, such action,
will furnish to the Indenture Trustee and the Owner Trustee timely notice
of the necessity of such action, together with such instruments, in
execution form, and such other information as may be required to enable
either of them to take such action at the Lessee's cost and expense in a
timely manner.
(b) The Lessee shall maintain the certificates referred to in
Section 7.01 of the Lease and shall cause the Aircraft to remain duly
registered, in the name of the Owner Trustee, under the Act; provided,
however, that the Owner Participant, the Owner Trustee and the Indenture
Trustee agree that, so long as no Default or Event of Default shall have
occurred and be continuing, if at any time after December 31, 2002 the
Lessee has requested their consent to the registration of the Aircraft in
the name of the Owner Trustee (or, if appropriate, in the name of the
Lessee or a sublessee as a "lessee" or a "sublessee"), at the Lessee's
expense, in a country in which a sublessee could be located under the
provisions of Section 7.02(a)(i) of the Lease with which the United States
then maintains normal and full diplomatic relations, upon receipt by the
Owner Participant, the Owner Trustee and the Indenture Trustee of the
assurances and opinion described below, none of them shall unreasonably
withhold their consent to such change in registration (it being agreed,
without limitation, that the inability of the Lessee to deliver such
assurances or such opinion shall constitute reasonable grounds to withhold
such consent).
As a condition to any change in the registration of the Aircraft, the
Owner Participant, the Owner Trustee in its individual and trust capacities,
and the Indenture Trustee shall have received:
(i) assurances satisfactory to them:
(A) to the effect that the insurance provisions of the Lease
have been and will be complied with and are and shall be in full
force and effect upon such change of registry;
(B) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft;
(C) that the Owner Trustee's right, title and interest in and
to the Aircraft is recognized and fully enforceable in the new
jurisdiction of registry, that the rights of the Owner Trustee in and
to the Aircraft will not be impaired in such new jurisdiction of
registry and that the new jurisdiction of registry will give effect
to the title and registry of the Aircraft therein substantially to
the same extent as does the Government;
(D) that such new country of registry (x) would provide
substantially equivalent protection for the rights of owner
participants, lessors or lenders in similar transactions as provided
under United States law (except that, in the absence of restrictions
under the laws of such country on rights and remedies of lessors and
secured parties similar to those imposed by Sections 362 and 363 of
the Bankruptcy Code, rights and remedies similar to those available
under Section 1110 of the Bankruptcy Code shall not be required), and
(y)(i) if such change in registration is made other than in
connection with a sublease, imposes maintenance standards at least
comparable to those of the FAA, and (ii) if such change in
registration is made in connection with a sublease permitted under
Section 7.02(a)(i) of the Lease, imposes maintenance standards in
conformity with those set forth in Section 7.02(a)(i) of the Lease;
(E) that import and export certificates and any exchange
permits necessary to allow all Rent and other payments provided for
under the Lease, if required, shall have been procured at the
Lessee's own cost and expense by the Lessee;
(F) that the Lessee shall have effected or caused to be
effected at the Lessee's own cost and expense all recordings and
filings that are required to perfect the Lien of the Indenture;
(G) to the effect that the original indemnities (and any
additional indemnities for which the Lessee is then willing to enter
into a binding agreement to indemnify) in favor of the Owner
Participant, the Owner Trustee (in its individual capacity and as
trustee under the Trust Agreement), the Indenture Trustee (in its
individual capacity and as trustee under the Indenture), the Pass
Through Trustee (in its individual capacity and as trustee under the
Pass Through Agreement) and the other Indemnitees under this
Agreement, the Indenture, the Pass Through Agreement and (in the case
of the Owner Participant only) the Tax Indemnity Agreement, afford
each such party substantially the same protection as provided prior
to such change of registry;
(H) that such change will not result in the imposition of, or
increase in the amount of, any Tax for which the Lessee has not
agreed to indemnify the Owner Participant, the Indenture Trustee, the
Owner Trustee (or any successor, assign or Affiliate thereof) and the
Trust Estate;
(I) that any value added tax, customs duty, tariff or similar
governmental charge relating to the change in jurisdiction of
registration of the Aircraft shall have been paid in full or
adequately provided for by the Lessee to the satisfaction of the
Owner Trustee, the Indenture Trustee and the Owner Participant;
(J) of the payment by the Lessee of any reasonable fees and
expenses of the Owner Participant, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee in connection with
such change of registry, including any reasonable attorneys' fees
and expenses; and
(K) that duties and tariffs, if applicable, shall have been
paid for by the Lessee;
(ii) a favorable opinion of counsel (reasonably satisfactory to the
Owner Trustee, the Indenture Trustee and the Owner Participant) in the new
jurisdiction of registry, addressed and reasonably satisfactory to such
parties in scope, form and substance, to the effect:
(A) that the terms (including, without limitation, the
governing law, service-of-process and jurisdictional-submission
provisions thereof) of the Lease and the Indenture are legal,
valid, binding and enforceable in such jurisdiction against the
Lessee, any sublessee, the Owner Trustee and the Indenture
Trustee, respectively;
(B) that it is not necessary for the Owner Participant, the
Owner Trustee, the Indenture Trustee or the Pass Through Trustee to
register or qualify to do business or meet other requirements not
already met in such jurisdiction in connection with the registration
in the new jurisdiction (and the filing and/or recordation therein of
the Indenture or Lease) and the exercise of any rights or remedies
with respect to the Aircraft pursuant to the Lease or the Indenture
or in order to maintain such registration and the Lien of the
Indenture;
(C) that the courts of such jurisdiction would provide
substantially equivalent protection to the Lessor, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee as
provided under United States law (with the exception described in
paragraph (b)(i)(D)(x) of this Section 6.03) in respect of the
transactions contemplated hereby, including, without limitation, the
remedies provided in the Indenture and the Lease;
(D) that there is no tort liability of the beneficial owner,
record owner, lessor or mortgagee of an aircraft not in possession
thereof under the laws of such jurisdiction, other than tort
liability which might have been imposed on such owner, lessor or
mortgagee under the laws of the United States or any state thereof
(it being understood that, in the event such latter opinion cannot be
given in a form satisfactory to the Owner Participant and the
Indenture Trustee, such opinion shall be waived, if insurance
reasonably satisfactory to the Owner Participant, the Indenture
Trustee and the Owner Trustee, in its individual capacity, is
provided, at Lessee's expense, to cover such risk and the Lessee
undertakes to keep such insurance in full force and effect);
(E) that the laws of such jurisdiction will not impair the
rights of the Lessor in and to the Aircraft and (unless the Lessee
shall have agreed to provide insurance reasonably satisfactory to the
Indenture Trustee and the Owner Participant covering the risk of
requisition of use of the Aircraft by the government of registry of
the Aircraft) require fair compensation by the government of such
jurisdiction payable in currency freely convertible into United
States Dollars for the loss of use of the Aircraft in the event of
such requisition;
(F) that the Owner Trustee's title to the Aircraft is
recognized and fully enforceable in such jurisdiction, that such
jurisdiction will give effect to the title of the Aircraft therein
substantially to the same extent as does the Government, and that the
Lien of the Indenture shall continue as a first priority, duly
perfected lien on the Aircraft; and
(G) to such further effect with respect to such other matters
as the Owner Participant, the Owner Trustee, or the Indenture Trustee
may reasonably request.
If following any reregistration of the Aircraft, the Aircraft is
located outside the United States, the Lessee shall have thirty (30) days to
relocate the Aircraft within the United States and, if unable to do so, shall
pay the reasonable incremental out-of-pocket costs of the Lessor, the Owner
Participant or their authorized representatives incurred in connection with
any inspection or appraisal required or permitted under the Operative
Agreements. Such obligation shall apply only with respect to one inspection
or appraisal in any calendar year unless an Event of Default shall have
occurred and be continuing.
(c) The Lessee shall promptly file any reports, or furnish to the
Owner Trustee and the Owner Participant such information as may be required
to enable the Owner Trustee and the Owner Participant timely to file any
reports required to be filed by the Owner Trustee as the Lessor and the
Owner Participant under the Lease with any governmental authority.
(d) The Lessee will cause the Special Aviation Counsel to file, and
where appropriate record, on the Refunding Date, the Lease, the Trust
Agreement and the Indenture. The following documents shall be filed and,
where appropriate, recorded on the Refunding Date with the Aeronautics
Authority in the following order of priority: first, the Trust Agreement,
second, the Indenture and third, the Lease with the Indenture attached
thereto.
(e) The Lessee will furnish to the Owner Participant, the Owner
Trustee and the Indenture Trustee annually after the execution of this
Agreement, by March 15 of each year, commencing with the year 1996, an
opinion, reasonably satisfactory to the Owner Participant and the Indenture
Trustee, of Special Aviation Counsel, or other counsel specified from time
to time by the Lessee acceptable to the Lessor and the Indenture Trustee:
(i) stating either (1) that in the opinion of such counsel such action has
been taken with respect to the recording, filing, re-recording and
re-filing of the Lease, the Indenture, the Trust Agreement, and any
supplements to any of them and any financing statements, continuation
statements or other instruments, and all other action has been taken, as is
necessary to maintain the Owner Trustee's title to and interest in the
Aircraft and the Lessor's Estate as against the Lessee and any third
parties and to maintain the perfection of the security interests created by
said documents and reciting the details of such action, or (2) that in the
opinion of such counsel no such action is necessary to maintain such title
or the perfection of such security interests; (ii) specifying all other
action which needs to be taken during the succeeding 14 months in order to
maintain such title and the perfection of such security interests (which
the Lessee agrees timely to take); and (iii) stating that the Owner Trustee
is the owner of legal title to the Aircraft, and the Aircraft is free and
clear of all Liens, except the security interest created by the Indenture
and such as are permitted by the Lease and the Indenture.
(f) The Lessee shall at all times maintain its corporate existence
except as permitted by Section 6.03(g) hereof and all of its rights,
privileges and franchises necessary in the normal conduct of its business,
except for any corporate right, privilege or franchise (i) that it
determines, in its reasonable, good faith business judgment, is no longer
necessary or desirable in the conduct of its business and (ii) the loss of
which will not materially adversely affect or diminish the rights of the
Holders.
(g) The Lessee shall not enter into any merger or consolidation, or
convey, transfer or lease all or substantially all of its assets as an
entirety to any Person, unless the surviving corporation or Person which
acquires by conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (i) is a domestic corporation organized
and existing under the laws of the United States or a political subdivision
thereof, (ii) is a Citizen of the United States, (iii) is a U.S. Air
Carrier holding an "air carrier operating certificate" issued under Chapter
447 of the Act for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, (iv) expressly assumes by an
instrument in writing in form and substance satisfactory to the Indenture
Trustee, the Owner Participant and the Owner Trustee all of the Lessee's
obligations hereunder and under the other Operative Agreements, and each
other document contemplated hereby or thereby and the Lessee delivers such
instrument to the Indenture Trustee, the Owner Participant and the Owner
Trustee, (v) provides an opinion from counsel to the Lessee which counsel
shall be reasonably satisfactory to the Owner Participant and the Indenture
Trustee and which opinion shall be reasonably satisfactory to the Owner
Participant and the Indenture Trustee, and an officer's certificate, each
stating that such merger, consolidation, conveyance, transfer or lease and
the instrument noted in clause (iv) above comply with this Section 6.03(g),
that such instrument is a legal, valid and binding obligation of, and is
enforceable against, such survivor or Person, and that all conditions
precedent herein provided for relating to such transaction have been
complied with, and (vi) immediately after such merger, consolidation or
conveyance, transfer or lease, as the case may be, the surviving company is
in compliance with all of the terms and conditions of this Agreement and
the Lease and each other Operative Agreement and each other document
contemplated hereby or thereby; provided that no such merger, consolidation
or conveyance, transfer or lease shall be permitted if the same gives rise
to an Event of Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the Lessee
is merged or the Person to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Lessee under this Agreement and the Lease and each other
Operative Agreement and any other document contemplated hereby and thereby
to which the Lessee is a party with the same effect as if such successor
corporation had been named as the Lessee herein and therein. No such
conveyance, transfer or lease of all or substantially all of the assets of
the Lessee as an entirety shall have the effect of releasing the Lessee or
any successor corporation which shall theretofore have become such in the
manner prescribed in this Section 6.03(g) from its liability hereunder or
under the other Operative Agreements. Nothing contained herein shall
permit any lease, sublease, or other arrangement for the use, operation or
possession of the Aircraft except in compliance with the applicable
provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant and the Indenture Trustee of any change in the address of its
chief executive office (as such term is used in Section 9-103(3) of the
Tennessee Uniform Commercial Code) or of any change in its corporate name.
(i) The Lessee agrees to furnish to the Owner Participant, the
Lessor and the Indenture Trustee:
(A) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Lessee, a
consolidated balance sheet as of the end of such fiscal year, and the
related consolidated statements of income, common stockholders'
equity, retained earnings and cash flows of the Lessee for the fiscal
year then ended as prepared and certified by the Lessee's independent
certified public accountants, including their opinion;
(B) within sixty (60) days after the end of the first, second
and third quarterly accounting periods in each fiscal year of the
Lessee, a consolidated balance sheet of the Lessee prepared by it as
of the close of the accounting period then ended, together with the
related consolidated statements of income, retained earnings and cash
flows for such accounting period certified by the chief accounting
officer or a financial vice president of the Lessee;
(C) promptly upon their general transmission, copies of all
regular and periodic reports furnished by the Lessee to its
stockholders;
(D) promptly after filing with the SEC, copies of the Lessee's
Annual Reports on Form 10-K (including all corresponding annual
reports to shareholders), Quarterly Reports on Form 10-Q and, if
requested, any registration statement or prospectus filed by the
Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business
Days after) any Responsible Officer of the Lessee obtaining actual
knowledge of any condition or event which constitutes a Default or
any officer of the Lessee obtaining knowledge of any condition or
event which constitutes an Event of Default, an officer's certificate
specifying the nature and period of existence thereof and what action
the Lessee has taken or is taking or proposes to take with respect
thereto; and
(F) from time to time, such other financial information as the
Lessor, the Owner Participant or the Indenture Trustee may reasonably
request.
Concurrently with the delivery of the financial statements referred
to in clause (A) above, the Lessee shall deliver to the Lessor, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee a certificate
of the Lessee, signed by any one of the President, the Chief Financial
Officer, the General Counsel, the Treasurer or the principal accounting
officer of the Lessee, stating that the signer, or an employee reporting to
same, is familiar with the relevant terms of this Agreement and the Lease and
the signer has reviewed, or has caused to be made under such Person's
supervision a review of, the activities of the Lessee and that, to the best of
his or her knowledge, there does not exist any Default or any Event of Default
or if a Default or an Event of Default exists or did exist, specifying the
nature thereof, the period of existence thereof and what action the Lessee has
taken or proposes to take with respect thereto.
Section 6.04. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Sections 6.01 and
6.02 hereof and in any other Operative Agreement shall survive the Closings
hereunder and the expiration or other termination of this Agreement and the
other Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate. (a) [Intentionally Left Blank.]
(b) Owner Participant. The Owner Participant represents and
warrants that its interest in the Lessor's Estate and the Trust Agreement was
acquired by it for its own account and not with a view to resale or
distribution thereof; provided, however, that the disposition by the Owner
Participant of its interest in the Lessor's Estate and the Trust Agreement
shall, subject to the terms and provisions of Article 5 of the Trust
Agreement, at all times be within its control and the foregoing representation
shall not limit the Owner Participant's right to transfer or sell such
interests pursuant to the terms of this Agreement. Neither the Owner
Participant nor anyone authorized to act on its behalf has directly or
indirectly offered any interest in the Lessor's Estate or the Trust Agreement,
or in any similar security, for sale to, or solicited any offer to acquire any
of the same from, anyone. The Owner Participant further represents and
warrants that neither it nor anyone authorized to act on its behalf has made
or will make any offer, solicitation or sale of any interest in the Lessor's
Estate or the Trust Agreement in violation of the provisions of Section 5 of
the Securities Act of 1933, as amended. No representation in this Section
7.01(b) shall include any action or inaction of the Lessee, the Agent, First
Chicago Leasing Corporation or the Underwriters whether or not purportedly on
behalf of the Owner Trustee, the Owner Participant or any of their Affiliates.
(c) Owner Trustee. The Owner Trustee represents and warrants, both
in its individual capacity and as trustee, that neither it nor anyone acting
on its behalf (i) has directly or indirectly offered or will directly or
indirectly offer any interest in the Lessor's Estate, or in any similar
security, for sale to, or solicited any offer to acquire any of the same from
anyone (other than the Owner Participant) and (ii) except as contemplated in
Section 8.02(a) of the Indenture, shall own Certificates.
Section 7.02. Citizenship. (a) Generally. Each of the Owner
Trustee, in its individual capacity and as Trustee, and the Owner Participant
severally represents and warrants that it is a Citizen of the United States on
the Refunding Date. If the Owner Participant or the Owner Trustee in its
individual capacity does not comply with the requirements of this Section
7.02, the Owner Trustee, the Indenture Trustee and the Owner Participant
hereby agree that a Default or an Event of Default shall not be deemed to have
occurred and be continuing under the Lease due to non-compliance by the Lessee
with the registration requirements in the Lease occasioned by the
noncompliance of the Owner Participant or the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time it shall have actual knowledge that it has
ceased to be a Citizen of the United States, it will resign immediately as the
Owner Trustee if such citizenship is necessary under the Act as in effect at
such time or, if it is not necessary under the Act as in effect at such time,
if it is informed in writing by the Lessee or the Owner Participant that such
lack of United States citizenship would have any adverse effect on the Lessee
or the Owner Participant. The Owner Trustee, in its individual capacity,
further covenants that if at any time it appears reasonably probable that it
will cease to be a Citizen of the United States based on information that is
(i) known to a Responsible Officer or (ii) generally known to the public, it
will promptly so notify, to the extent permitted by law, all parties to this
Agreement.
(c) Owner Participant. The Owner Participant agrees, solely for the
benefit of the Lessee, the Indenture Trustee and the Pass Through Trustee,
that if at any time when the Aircraft is registered or the Lessee proposes
to register the Aircraft in the United States (i) it shall cease to be, or
believes itself likely to cease to be, a Citizen of the United States and
(ii) the Aircraft shall or would therefore become ineligible for
registration in the name of the Owner Trustee under the Act and regulations
then applicable thereunder, then the Owner Participant shall give notice
thereof to the Lessee and the Indenture Trustee and shall (at its own
expense and without any reimbursement or indemnification from the Lessee)
immediately (and in any event within a period of 15 days) (x) effect a
voting trust or other similar arrangement, (y) transfer in accordance with
the terms of this Agreement and the Trust Agreement all its rights, title
and interest in and to such Trust Agreement, the Lessor's Estate and this
Agreement, or (z) take any other alternative action that would prevent any
deregistration, or maintain the United States registration, of the
Aircraft. It is agreed that the Owner Participant shall be liable to pay
promptly on request (A) to each of the other parties hereto any damages
actually suffered by any such other party as the result of the
representation and warranty of the Owner Participant in the first sentence
of Section 7.02(a) hereof proving to be untrue as of the Refunding Date;
and (B) to the Lessee, the Indenture Trustee and the Pass Through Trustee
for any damages actually incurred by the Lessee, the Indenture Trustee and
the Pass Through Trustee as a result of the Owner Participant's failure to
comply with its obligations pursuant to the first sentence of this Section
7.02(c). Each party hereto agrees, upon the request and at the sole
expense of the Owner Participant, to cooperate with the Owner Participant
in complying with its obligations under the provisions of the first
sentence of this Section 7.02(c).
Section 7.03. Representations, Warranties and Covenants of the Owner
Participant. (a) Representations, Warranties and Covenants. In addition to
and without limiting its other representations and warranties provided for in
this Article 7, the Owner Participant represents and warrants that:
(i) it is a corporation duly incorporated and validly existing in
good standing under the laws of its jurisdiction of incorporation and it
has full corporate power, authority and legal right to carry on its present
business and operations, to own or lease its Properties and to enter into
and to carry out the transactions contemplated by the Original Agreements
to which it is a party, this Agreement, the Tax Indemnity Agreement, and
the Trust Agreement;
(ii) the execution, delivery and performance by it of the Original
Agreements to which it is a party, this Agreement, the Tax Indemnity
Agreement, and the Trust Agreement have been duly authorized by all
necessary corporate action on its part and, assuming the accuracy of the
Lessee's representations in Section 6.01(o) hereof, do not require any
governmental approvals that would be required to be obtained by the Owner
Participant;
(iii) based on the representations, warranties and covenants
contained in Sections 6.01(m)(viii), 6.01(o), 6.02, 7.01(c) and 7.09 hereof
and compliance with Section 10.06 of the Indenture, neither the execution,
delivery or performance by the Owner Participant of the Original Agreements
to which it is a party, this Agreement, the Tax Indemnity Agreement, and
the Trust Agreement nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent or approval under any law, governmental rule or
regulation applicable to the Owner Participant or the charter documents, as
amended, or bylaws, as amended, of the Owner Participant or any order,
writ, injunction or decree of any court or governmental authority against
the Owner Participant or by which it or any of its Properties is bound or
any indenture, mortgage or contract or other agreement or instrument to
which the Owner Participant is a party or by which it or any of its
Properties is bound, or constitutes or will constitute a default thereunder
or results or will result in the imposition of any Lien upon any of its
Properties;
(iv) the Original Agreements to which it is a party, this Agreement,
the Tax Indemnity Agreement and the Trust Agreement have been or on the
Refunding Date will be duly executed and delivered by the Owner Participant
and constitute or on the Refunding Date will constitute the legal, valid
and binding obligation of the Owner Participant enforceable against it in
accordance with their respective terms except as such enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws or equitable principles of general application to or affecting
the enforcement of creditors' rights generally (regardless of whether
enforceability is considered in a proceeding in equity or at law);
(v) to the best of its knowledge, it is not in default under any
mortgage, deed of trust, indenture, lease or other instrument or agreement
to which the Owner Participant is a party or by which it or any of its
Properties may be bound, or in violation of any applicable law, which
default or violation would have a material adverse effect on the financial
condition, business or operations of the Owner Participant or an adverse
effect on the ability of the Owner Participant to perform its obligations
under the Original Agreements to which it is a party, this Agreement and
the other Operative Agreements to which it is or is to be a party;
(vi) there are no pending or, to the knowledge of the Owner
Participant, threatened actions, suits, investigations or proceedings
against the Owner Participant before any court, administrative agency or
tribunal which are expected to materially adversely affect the ability of
the Owner Participant to perform its obligations under any of the Original
Agreements or the Operative Agreements to which it is a party, and the
Owner Participant knows of no pending or threatened actions or proceedings
before any court, administrative agency or tribunal involving it in
connection with the transactions contemplated by this Agreement, the
Original Agreements or the Operative Agreements;
(vii) neither the execution and delivery by it of the Original
Agreements to which it is a party, this Agreement, the Tax Indemnity
Agreement or the Trust Agreement nor the performance of its obligations
hereunder or thereunder requires the consent or approval of or the giving
of notice to, the registration with, or the taking of any other action in
respect of, any governmental authority or agency that would be required to
be obtained or taken by the Owner Participant except for filings
contemplated by this Agreement;
(viii)no part of the funds to be used by it to acquire the interests
to be acquired by it under this Agreement constitutes assets (within the
meaning of ERISA and any applicable rules and regulations) of any employee
benefit plan subject to Title I of ERISA or of any plan or individual
retirement account subject to Section 4975 of the Code; and
(ix) the representations and warranties of the Owner Participant set
forth in the Original Agreements to which it is a party were correct on
and as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date).
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or
to the nature or use of the equipment owned by the Owner Trustee, other than
such laws, rules or regulations relating to the citizenship requirements of
the Owner Participant under applicable aviation law.
(b) Lessor's Liens. The Owner Participant further represents,
warrants and covenants that there are no Lessor's Liens attributable to it (or
an Affiliate thereof) against, on or with respect to the Aircraft or the
Lessor's Estate or the Trust Indenture Estate, and that there will not be any
Lessor's Lien attributable to it (or an Affiliate thereof) against, on or with
respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate
attributable to it (or an Affiliate thereof) on the Refunding Date. The Owner
Participant agrees with and for the benefit of the Lessee, the Indenture
Trustee and the Pass Through Trustee that the Owner Participant will, at its
own cost and expense, take such action as may be necessary (by bonding or
otherwise, so long as neither the Lessee's operation and use of the Aircraft
nor the validity and priority of the Lien of the Indenture is impaired) to
duly discharge and satisfy in full, promptly after the same first becomes
known to the Owner Participant, any Lessor's Lien against, on or with respect
to the Aircraft or the Lessor's Estate or the Trust Indenture Estate
attributable to the Owner Participant (or an Affiliate thereof), provided,
however, that the Owner Participant shall not be required to discharge or
satisfy such Lessor's Lien which is being contested by the Owner Participant
in good faith and by appropriate proceedings so long as such proceedings do
not involve any material danger of the sale, forfeiture or loss of the
Aircraft or the Lessor's Estate or the Trust Indenture Estate or any interest
in any thereof or otherwise materially adversely affect the validity or
priority of the Lien of the Indenture.
(c) Indemnity for Lessor's Liens. The Owner Participant agrees to
indemnify and hold harmless the Lessee, the Indenture Trustee and the Pass
Through Trustee from and against any loss, cost, expense or damage which may
be suffered by the Lessee, the Indenture Trustee or the Pass Through Trustee
as the result of the failure of the Owner Participant to discharge and satisfy
any Lessor's Liens attributable to the Owner Participant (or an Affiliate
thereof) and required to be discharged as described in Section 7.03(b) hereof.
(d) Assignment of Interests of Owner Participant. The Owner
Participant agrees that it will not assign, convey or otherwise transfer any
of its right, title or interest in and to the Operative Agreements or the
Lessor's Estate except in accordance with the provisions of Article 5 of the
Trust Agreement, as in effect on the date hereof or as amended in accordance
with the terms of the Operative Agreements.
(e) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
Section 7.04. Representations, Covenants and Warranties of FSBU and
the Owner Trustee. (a) In addition to and without limiting its other
representations and warranties provided for in this Article 7, FSBU represents
and warrants, in its individual capacity with respect to items (i), (ii),
(iii)(A), (iv), (v), (vi) and (vii) below, and as the Owner Trustee with
respect to items (iii)(B) and (iv) that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States with its
principal place of business and chief executive office (as such terms are
used in Article 9 of the Uniform Commercial Code) at 79 South Main Street,
Salt Lake City, Utah, 84111, Attention: Corporate Trust Department and,
assuming the Trust Agreement has been duly authorized, executed and
delivered by the Owner Participant, has full corporate power and authority,
in its individual capacity or as the Owner Trustee, as the case may be, to
execute, deliver and perform this Agreement, the Original Agreements and
the Operative Agreements to which it is or is to be party;
(ii) the execution, delivery and performance by FSBU, either in its
individual capacity or as the Owner Trustee, as the case may be, of this
Agreement, the Original Agreements and the Operative Agreements to which it
is or is to be party have been duly authorized by all necessary corporate
action on its part, and do not contravene its certificate of incorporation
or bylaws; each of this Agreement, the Original Agreements and the
Operative Agreements to which it is or is to be a party has been duly
authorized, executed and delivered by FSBU, either in its individual
capacity or as the Owner Trustee, as the case may be, and neither the
execution and delivery thereof nor FSBU's performance of or compliance with
any of the terms and provisions hereof or thereof will violate any Federal
or Utah law or regulation governing FSBU's banking or trust powers;
(iii) (A) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or is
to be party when duly executed and delivered will, and each of the Original
Agreements to which it is a party does, to the extent each such document is
entered into by FSBU in its individual capacity, constitute the legal,
valid and binding obligation of FSBU in its individual capacity enforceable
against it in such capacity in accordance with its respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by FSBU in its individual capacity
of any of its obligations thereunder does not contravene any lease,
regulation or contractual restriction binding on FSBU in its individual
capacity;
(B) assuming due authorization, execution and delivery by each other
party thereto, each of the Operative Agreements to which it is or is to be
party when duly executed and delivered will, and each of the Original
Agreements to which it is a party does, to the extent each such document is
entered into by the Owner Trustee in its trust capacity, constitute the
legal, valid and binding obligation of the Owner Trustee enforceable
against it in such capacity in accordance with its respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by the Owner Trustee of any of its
obligations thereunder does not contravene any lease, regulation or
contractual restriction binding on the Owner Trustee;
(iv) there are no pending or, to its knowledge, threatened actions
or proceedings against FSBU before any court or administrative agency
which would materially and adversely affect the ability of FSBU, either
in its individual capacity or as the Owner Trustee, as the case may be,
to perform its obligations under this Agreement, the Original Agreements
and the Operative Agreements to which it is or is to be party;
(v) it shall give the Lessee, the Indenture Trustee and the Owner
Participant at least thirty (30) days' prior written notice in the event of
any change in its chief executive office or name;
(vi) neither the execution and delivery by it, either in its
individual capacity or as the Owner Trustee, as the case may be, of any of
the Original Agreements and the Operative Agreements to which it is or is
to be a party, requires on the part of FSBU in its individual capacity or
any of its Affiliates the consent or approval of or the giving of notice
to, the registration with, or the taking of any other action in respect of,
any Federal or Utah governmental authority or agency governing its banking
or trust powers;
(vii) on the Delivery Date the Owner Trustee shall have received
whatever title to the Aircraft as was conveyed to it by AVSA, on the
Refunding Date the Aircraft will be free of Lessor's Liens attributable to
FSBU in its individual capacity and FSBU in its individual capacity is a
Citizen of the United States; and
(viii) the representations and warranties of the Owner Trustee set
forth in the Original Agreements to which it is a party were correct on
and as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date).
(b) Lessor's Liens. FSBU, in its individual capacity, further
represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity against, on or with respect
to the Aircraft or the Lessor's Estate or the Trust Indenture Estate, and
that there will not be any such Lessor's Liens against, on or with respect
to the Aircraft or the Lessor's Estate or the Trust Indenture Estate on the
Refunding Date. The Owner Trustee, in its trust capacity, and at the cost
and expense of the Lessee, covenants that it will in its trust capacity
promptly, and in any event within 30 days after the same shall first become
known to it, take such action as may be necessary to discharge duly any
Lessor's Liens attributable to it in its trust capacity. FSBU, in its
individual capacity, covenants and agrees that it will at its own expense
take such action as may be necessary to duly discharge and satisfy in full,
promptly, and in any event within 30 days after the same shall first become
known to it, any Lessor's Liens against, on or with respect to the Aircraft
or the Lessor's Estate or the Trust Indenture Estate attributable to it in
its individual capacity or the consolidated group of taxpayers of which it
(in such capacity) is a part which may arise at any time after the date of
this Agreement.
(c) Indemnity for Lessor's Liens. FSBU, in its individual capacity,
agrees to indemnify and hold harmless the Lessee, the Indenture Trustee, the
Owner Participant, the Pass Through Trustee, and the Owner Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Pass Through Trustee, the Owner Participant, or the
Owner Trustee as a result of the failure of FSBU to discharge and satisfy any
Lessor's Liens attributable to it in its individual capacity, as described in
Section 7.04(b) hereof.
(d) Securities Act. None of FSBU, the Owner Trustee or any Person
authorized by either of them to act on its behalf has directly or indirectly
offered or sold any interest in the Lessor's Estate, or in any similar
security relating to the Lessor's Estate, or in any security the offering of
which for purposes of the Securities Act of 1933, as amended, would be deemed
to be part of the same offering as the offering of the aforementioned
securities to, or solicited any offer to acquire any of the same from, any
Person.
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee. (a) The Indenture Trustee in its individual capacity
represents as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has the corporate power and authority to enter into and perform its
obligations under the Indenture and this Agreement and to authenticate the
Certificates to be delivered on the Refunding Date;
(ii) the Indenture and this Agreement, and the authentication of the
Certificates to be delivered on the Refunding Date have been duly
authorized by all necessary corporate action on its part, and neither the
execution and delivery thereof nor its performance of any of the terms and
provisions thereof will violate any federal law or regulation relating to
its banking or trust powers or contravene or result in any breach of, or
constitute any default under, its articles of association or by-laws;
(iii) each of the Indenture, this Agreement and the other Operative
Agreements to which it is a party has been duly executed and delivered by
it and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is the legal, valid and binding
obligation of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its respective terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws or equitable principles of general application to or
affecting the enforcement of creditors' rights;
(iv) neither the execution and delivery by it of this Agreement and
the other Operative Agreements to which it is or is to be a party, nor the
performance by it of any of the transactions contemplated hereby or
thereby, requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any
Federal or state governmental authority or agency governing its banking and
trust powers;
(v) the representations and warranties of the Indenture Trustee set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date); and
(vi) the Indenture Trustee holds the original counterparts of the
Original Lease and the Lease Supplement.
(b) Indenture Trustee's Liens. The Indenture Trustee, in its
individual capacity, further represents, warrants and covenants that there are
no Indenture Trustee's Liens attributable to it in its individual capacity
against, on or with respect to the Aircraft or the Lessor's Estate or the
Trust Indenture Estate, and that there will not be any Indenture Trustee's
Liens against, on or with respect to the Aircraft or the Lessor's Estate or
the Trust Indenture Estate on the Refunding Date. The Indenture Trustee, in
its individual capacity, covenants and agrees that it will at its own expense
take such action as may be necessary to duly discharge and satisfy in full,
promptly, and in any event within 30 days after the same shall first become
known to it, any Indenture Trustee's Liens against, on or with respect to the
Aircraft or the Lessor's Estate or the Trust Indenture Estate.
(c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee,
in its individual capacity, agrees to indemnify and hold harmless the Lessee,
the Owner Participant, the Owner Trustee and the Pass Through Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Owner Trustee or the Pass
Through Trustee as a result of the failure of the Indenture Trustee to
discharge and satisfy any Indenture Trustee's Liens attributable to it in its
individual capacity, as described in Section 7.05(b) hereof.
Section 7.06. Indenture Trustee's Notice of Default. The Indenture
Trustee agrees to give the Owner Participant notice of any Default promptly
upon a Responsible Officer of the Indenture Trustee having actual knowledge
thereof.
Section 7.07. Releases from Indenture. The Indenture Trustee
covenants and agrees, for the benefit of the Lessee and the Owner Participant,
to execute and deliver the instruments of release from the Lien of the
Indenture which it is required to execute and deliver in accordance with the
provisions of Article XIV of the Indenture, and the Owner Participant agrees,
for the benefit of the Lessee, to cause the Owner Trustee to request the
Indenture Trustee to execute and deliver such instruments of release.
Section 7.08. Covenant of Quiet Enjoyment. The Owner Participant,
the Indenture Trustee, the Pass Through Trustee and the Owner Trustee
covenants and agrees as to itself only that, so long as no Event of Default
under the Lease has occurred and is continuing, neither such Owner Participant
(or the Owner Trustee, the Indenture Trustee or the Pass Through Trustee, as
the case may be) nor any Person lawfully claiming through such Owner
Participant (or the Owner Trustee, the Indenture Trustee or the Pass Through
Trustee, as the case may be) shall interfere with the Lessee's right quietly
to enjoy the Aircraft during the Term without hindrance or disturbance by such
Owner Participant (or the Owner Trustee, the Indenture Trustee or the Pass
Through Trustee as the case may be), provided, however, that the Lessor shall
not be liable for any act or omission of the Indenture Trustee or any other
Person claiming through the Indenture Trustee.
Section 7.09. Original Loan Participants' and Pass Through Trustee's
Representations and Warranties. (a) Each Original Loan Participant
represents and warrants that the representations and warranties made by it in
Sections 7.01(a) and 7.06 of the Original Participation Agreement were correct
on and as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
representations and warranties were correct on and as of such earlier date).
(b) The Pass Through Trustee, in its individual capacity (except
with respect to clause (iii) below), represents and warrants as of the date
hereof (except as otherwise provided), as of the Pass Through Closing Date and
as of the Refunding Date that:
(i) it is a validly existing national banking association duly
organized under the laws of the United States of America, holding a valid
certificate to do business as a national banking association with banking
and trust powers and has the corporate power and authority to enter into
and perform its obligations under the Pass Through Agreement, the Series
Supplements and this Agreement and to execute and authenticate the Pass
Through Certificates to be delivered on the Pass Through Closing Date;
(ii) the execution, delivery and performance of this Agreement, the
Pass Through Agreement and the Series Supplements and the performance of
its obligations hereunder and thereunder (including the execution and
authentication of the Pass Through Certificates to be delivered on the
Pass Through Closing Date) have been fully authorized by all necessary
corporate action on its part, and, subject to (A) the registration of
the issuance and sale of the Pass Through Certificates under the
Securities Act, (B) compliance with any applicable state securities laws
and (C) the qualification of the Pass Through Agreement under the Trust
Indenture Act, neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
Federal or South Carolina law or regulation relating to its banking or
trust powers or contravene or result in any breach of, or constitute any
default under its articles of association, or bylaws or the provisions
of any indenture, mortgage, contract or other agreement to which it is a
party or by which it or its properties may be bound or affected; and
(iii) each of this Agreement and the Pass Through Agreement has been,
and as of the Pass Through Closing Date the Series Supplements will be,
duly executed and delivered by it (in its individual and trust
capacities) and, assuming that each such agreement is the legal, valid
and binding obligation of each other party thereto, is or will be, as
the case may be, the legal, valid and binding obligation of the Pass
Through Trustee (in its individual and trust capacities), enforceable in
accordance with its respective terms except as limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or
equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
Section 7.10. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Owner Participant, the
Owner Trustee (in its individual or trust capacity), the Pass Through Trustee
(in its individual or trust capacity) and the Indenture Trustee (in its
individual or trust capacity) provided for in this Article 7, and their
respective obligations under any and all of them, shall survive the Closings
and the expiration or other termination of this Agreement, and the other
Operative Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a) Subject
to compliance by the Lessee with all of its obligations under the Operative
Agreements, each of the Owner Participant, the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee covenants and agrees that if
the Lessee elects to terminate the Lease and to purchase the Aircraft pursuant
to Section 4.02(a)(A), (D), (E) or (F) of the Lease, and so long as no Event
of Default shall have occurred and be continuing then, upon compliance with
the applicable provisions of said Section 4.02(a) of the Lease, the Owner
Trustee will transfer to the Lessee, without recourse or warranty (except as
to the absence of Lessor's Liens) but subject to the Lien of the Indenture,
all of the Owner Trustee's right, title and interest in and to the Aircraft,
and if the Lessee, in connection with such purchase, elects pursuant to
Section 4.02(a)(A), (D), (E) or (F) of the Lease to assume the obligations of
the Owner Trustee to the Indenture Trustee and the Holders under the
Indenture, the Certificates and hereunder, each of the parties shall execute
and deliver appropriate documentation permitting the Lessee to assume such
obligations on the basis of full recourse to the Lessee, maintaining for the
benefit of the Holders the security interest in the Aircraft created by the
Indenture, and upon compliance with the provisions of this Section 7.11
releasing the Owner Participant and the Owner Trustee from all obligations in
respect of the Certificates, the Indenture and all other Operative Agreements
except any obligations which shall have arisen (or with respect to events
which shall have occurred) prior to such assumption and take all such other
actions as are reasonably necessary to permit such assumption by the Lessee.
(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument satisfactory
in form and substance to the Indenture Trustee (A) pursuant to which the
Lessee irrevocably and unconditionally assumes and undertakes, with full
recourse to the Lessee, to pay, satisfy and discharge when and as due (at
the stated maturity thereof, by acceleration or otherwise) the principal
of, Make-Whole Premium, if any, interest and all other sums owing on all
Outstanding Certificates (or on the Lessee's substituted obligations) in
accordance with their terms and to punctually perform and observe all of
the covenants and obligations hereunder and under the Indenture and the
Certificates (as the same may be amended in connection with such
assumption) to be performed or observed by the Owner Trustee and (B) which
contains amendments to the Indenture, in form and substance satisfactory to
the Indenture Trustee and the Holders, that incorporate therein such
provisions from the Lease and this Agreement as may be appropriate,
including, without limitation, events of default substantially identical in
scope and effect to those set forth in the Lease and covenants
substantially identical to the covenants of the Lessee hereunder and under
the Lease;
(ii) the instrument referred to in paragraph (i) of this Section
7.11(b), any Uniform Commercial Code financing statements relating thereto,
and any other documents which shall be necessary (or reasonably requested
by the Indenture Trustee) to establish the Lessee's title to and interest
in the Aircraft or to reflect the substitution of the Lessee for the Owner
Trustee under the Operative Agreements or to continue the perfection of the
security interests in the Aircraft and the other rights, Property and
interests included in the Trust Indenture Estate for the benefit of the
Holders (or the Lessee's substituted obligations) shall be filed in such
form, manner and places as are necessary or, in the reasonable opinion of
the Indenture Trustee, advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance report
dated the effective date of such assumption of an independent insurance
broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Article 13 of the Lease
(as it relates to the Indenture Trustee) relating to the insurance with
respect to the Aircraft;
(iv) the Indenture Trustee shall have received evidence that as of
the effectiveness of the assignment on the date of such assumption the
Aircraft is free and clear of all Liens other than the Lien of the
Indenture and other Permitted Liens;
(v) the Indenture Trustee shall have received a certificate from
the Lessee that no Event of Default shall have occurred and be continuing
as of the effective date of such assumption; and
(vi) the Indenture Trustee shall have received (A) from counsel for
the Lessee (who may be the Lessee's General Counsel) a legal opinion, in
form and substance satisfactory to the Indenture Trustee (w) with
respect to the compliance of the assumption contemplated hereby with the
terms, provisions and conditions hereof, (x) with respect to the due
authorization, execution, delivery, validity and enforceability of the
instrument referred to in paragraph (i) of this Section 7.11(b), (y)
with respect to the continued perfection of the first and prior Lien and
security interest in the Aircraft for the benefit of the Holders of the
Certificates (or the Lessee's substituted obligations) referred to in
paragraph (ii) of this Section 7.11(b) and (z) with respect to the
continued availability of the benefits of Section 1110 of the Bankruptcy
Code to the Indenture Trustee for the benefit of the Holders with
respect to the Aircraft after giving effect to such assumption, (B) from
counsel to the Indenture Trustee and Special Aviation Counsel, a legal
opinion comparable to the respective opinions delivered on the Delivery
Date with such changes therein as may be appropriate in light of such
assumption, and (C) in the case of each opinion described in clause (A)
or (B) above, covering such additional matters as the Indenture Trustee
shall reasonably request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Owner Participant, the Owner
Trustee and the Indenture Trustee in connection with such assumption.
Section 7.12. Indebtedness of Owner Trustee. So long as the
Indenture is in effect, the Owner Trustee, not in its individual capacity,
but solely as trustee under the Trust Agreement, shall not incur any
indebtedness for borrowed money except as expressly contemplated herein or
in any other Operative Agreement (excluding the Tax Indemnity Agreement)
and shall not engage in any business or other activity other than the
transactions contemplated herein or in any other Operative Agreement
(excluding the Tax Indemnity Agreement) and all necessary or appropriate
activity related thereto.
Section 7.13. Compliance with Trust Agreement, Etc. Each of the
Owner Participant, FSBU and the Owner Trustee agrees with the Lessee, the
Indenture Trustee and the Pass Through Trustee that so long as the Lien of the
Indenture shall be in effect it will (i) comply with all of the terms of the
Trust Agreement applicable to it in its respective capacity, the noncompliance
with which would materially adversely affect any such party and (ii) not take
any action, or cause any action to be taken, to amend, modify or supplement
any provision of the Trust Agreement in a manner that would adversely affect
any such party without the prior written consent of such party. The Owner
Trustee confirms for the benefit of the Lessee, the Indenture Trustee and the
Pass Through Trustee that it will comply with the provisions of Article 2 of
the Trust Agreement. Notwithstanding anything else to the contrary in the
Trust Agreement, so long as the Lease remains in effect, the Owner Participant
agrees not to terminate or revoke the trust created by the Trust Agreement
without the consent of the Lessee and (so long as the Indenture shall not have
been discharged) the Indenture Trustee.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. The
Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross
receipts, sales, rental, use, value added, property (tangible and intangible),
ad valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
charges, assessments or withholdings of any nature whatsoever, together with
any assessments, penalties, fines, additions to tax or interest thereon
(individually, a "Tax," and collectively called "Taxes"), however imposed
(whether imposed upon any Indemnitee, the Lessee, all or any part of the
Aircraft, Airframe, any Engine or any Part, the Lessor's Estate, the Trust
Indenture Estate, Rent or otherwise), by any Federal, state or local
government or taxing authority in the United States, or by any government or
taxing authority of a foreign country or of any political subdivision or
taxing authority thereof or by a territory or possession of the United States
or an international taxing authority, upon or with respect to, based upon or
measured by:
(i) the Aircraft, the Airframe, any Engine or any Part;
(ii) the location, replacement, conditioning, refinancing, control,
purchase, registration, reregistration, repossession, improvement,
maintenance, redelivery, manufacture, acquisition, purchase, financing,
mortgaging, ownership, acceptance, rejection, delivery, non-delivery,
leasing, subleasing, transport, insuring, inspection, registration,
assembly, abandonment, preparation, installment, possession, use,
operation, return, presence, storage, repair, transfer of title,
modification, rebuilding, import, export, alteration, addition,
replacement, assignment, overhaul, transfer of registration or
registration, imposition of any lien, sale or other disposition of the
Aircraft, Airframe, any Engine or any Part thereof or interest therein;
(iii) the rentals (including Basic Rent and Supplemental Rent),
receipts or earnings arising from the Operative Agreements or from the
purchase, financing, ownership, delivery, leasing, possession, use,
operation, return, storage, transfer of title, sale or other disposition of
the Aircraft, the Airframe or any part thereof or interest therein;
(iv) any or all of the Original Agreements or the Operative
Agreements;
(v) the Property, or the income or other proceeds received with
respect to the Property, held by the Owner Trustee under the Trust
Agreement or after an Event of Default under the Lease, by the Indenture
Trustee under the Indenture;
(vi) otherwise with respect to or by reason of the transactions
described in or contemplated by the Original Agreements or the Operative
Agreements;
(vii) the payment of the principal or interest or other amounts
payable with respect to the Original Loan Certificates or the Certificates;
(viii)the Original Loan Certificates, the Certificates or the Pass
Through Certificates or the issuance, acquisition, or refinancing thereof
or the beneficial interests in the Lessor's Estate or the creation thereof
under the Trust Agreement; or
(ix) any assumption by the Lessee pursuant to Section 7.11 of this
Agreement and Section 2.12 of the Indenture.
(b) Exceptions. The indemnity provided for in Section 8.01(a) shall
not extend to any of the following:
(i) With respect to an Indemnitee other than an Original Loan
Participant, Taxes based upon, measured by or with respect to the net or
gross income, items of tax preference or minimum tax or excess profits,
receipts, value added (but only to the extent such value added tax is in
the nature of an income tax), capital, franchise, net worth or conduct of
business or other similarly-based Taxes of such Indemnitee (other than any
Taxes in the nature of sales, use, transfer, excise, rental, license, ad
valorem, property or other similarly based Taxes) (the "Income Taxes");
provided, however that the provisions of this paragraph (b)(i) shall not
exclude from the indemnity described in Section 8.01(a) hereof, any Income
Taxes to the extent such Income Taxes are imposed by any jurisdiction in
which the Indemnitee would not be subject to such Income Taxes but for, or
would be subject to such Income Taxes solely as a result of, (x) the
operation, registration, location, presence, or use of the Aircraft,
Airframe, any Engine or any Part thereof, in such jurisdiction or (y) the
place of incorporation or principal office or the activities of the Lessee
or any sublessee in such jurisdiction (it being understood that any such
indemnity would be payable only to the extent of the net harm incurred by
the Indemnitee from such Income Taxes, taking into account any incremental
current Tax benefit in another tax jurisdiction resulting from payment of
such Income Taxes); provided, further, that the provisions of this
paragraph (b)(i) relating to Income Taxes shall not exclude from the
indemnity described in Section 8.01(a) any Income Taxes for which the
Lessee would be required to indemnify an Indemnitee (x) so that any payment
under the Operative Agreements, otherwise required to be made on an
After-Tax Basis, is made on an After-Tax Basis or (y) pursuant to the last
sentence of Section 8.02, 8.05, 9.02 or 9.05 of this Agreement;
(ii) With respect to an Original Loan Participant, Income Taxes
(other than in the case of a Non-U.S. Person, U.S. federal withholding
taxes on amounts payable with respect to such Holder's Loan Certificate)
except to the extent such Income Tax is imposed (including by way of
increase) by any jurisdiction in which the Indemnitee is subject to tax
(A) as a result of the operation, registration, location, presence,
basing or use of the Aircraft, Airframe any Engine or any Part thereof,
in such jurisdiction (it being understood that (I) the incremental
Income Taxes described in this clause (A) shall not include any U.S.
Federal income taxes and (II) that to the extent such incremental Income
Taxes give rise to any incremental current Tax benefit in another tax
jurisdiction, that such incremental benefit shall offset and decrease
the incremental Income Taxes determined under this clause (A)) or (B)
solely as a result of the place of incorporation, principal office,
corporate domicile or the activities of the Lessor, Owner Participant,
the Owner Trustee, the Indenture Trustee, the Lessee or any sublessee in
such jurisdiction (it being understood that to the extent that any
Income Taxes described under this clause (B) give rise to any
incremental current Tax benefit in another tax jurisdiction or another
tax period, that such incremental Tax benefit shall offset and decrease
the Income Taxes determined under this clause (B)); provided, however,
that the provisions of this paragraph (b)(ii) relating to Income Taxes
shall not exclude from the indemnity described in Section 8.01(a) any
Income Taxes for which the Lessee would be required to indemnify an
Indemnitee (x) so that any payment under the Operative Agreements,
otherwise required to be made on an After-Tax Basis, is made on an
After-Tax Basis or (y) pursuant to the last sentence of Section 8.02 of
this Agreement;
(iii) Taxes arising out of or measured by acts, omissions, events
or periods of time (or any combination of the foregoing) which occur
after (and are not attributable to acts, omissions or events occurring
contemporaneously with or prior to) (A) the payment in full of all
amounts payable by the Lessee pursuant to and in accordance with the
Operative Agreements, or the earlier discharge in full of the Lessee's
payment obligations under and in accordance with the Lease and the
Operative Agreements (and the Certificates in the case of the Indenture
Trustee or the Trust Indenture Estate if the Lessee shall have assumed
the Certificates pursuant to Section 7.11 of this Agreement), and (B)
the earliest of (x) the expiration of the Term of the Lease and return
of the Aircraft in accordance with Article 12 of the Lease, (y) the
termination of the Lease in accordance with the applicable provisions of
the Lease and return of the Aircraft in accordance with the Lease, or
(z) the termination of the Lease in accordance with the applicable
provisions of the Lease and the transfer of all right, title and
interest in the Aircraft to the Lessee pursuant to its exercise of any
of its purchase options set forth in Section 4.02(a) of the Lease,
except that, notwithstanding anything in this Section 8.01(b) to the
contrary, Taxes incurred in connection with the exercise of any remedies
pursuant to Article 17 of the Lease following the occurrence of an Event
of Default shall not be excluded from the indemnity described in Section
8.01(a);
(iv) As to the Owner Trustee, Taxes imposed against the Owner
Trustee upon or with respect to any fees for services rendered in its
capacity as trustee under the Trust Agreement or, as to the Indenture
Trustee, Taxes imposed against the Indenture Trustee upon or with respect
to any fees received by it for services rendered in its capacity as trustee
under the Indenture;
(v) Taxes imposed on an Indemnitee that would not have been imposed
but for the willful misconduct or gross negligence of such Indemnitee
(other than gross negligence or willful misconduct not actually committed
by but instead imputed to such Indemnitee by reason of such Indemnitee's
participation in the transactions contemplated by the Operative Agreements)
or the breach by such Indemnitee of any representation, warranty or
covenant contained in the Operative Agreements or any document delivered in
connection therewith (unless attributable to a breach of representation,
warranty or covenant of the Lessee);
(vi) Taxes imposed on the Owner Trustee or the Owner Participant or
any successor, assign or Affiliate thereof which became payable by reason
of any voluntary or involuntary transfer or disposition by such Indemnitee
subsequent to the Delivery Date, including revocation of the Trust, of any
interest in some or all of the Aircraft, Airframe, Engines or Parts thereof
or its interest in the Lessor's Estate, other than (A) Taxes that result
from transfers or dispositions which occur while an Event of Default under
the Lease has occurred and is continuing at the time of such transfer or
disposition or (B) Taxes that result from any transfer or disposition
pursuant to the terms of the Lease;
(vii) Taxes imposed on the Owner Participant for which the Lessee is
obligated to indemnify the Owner Participant pursuant to the Tax Indemnity
Agreement;
(viii) Notwithstanding anything herein to the contrary, Taxes
imposed on a successor, assign or other transferee (including, without
limitation, a transferee which is a new lending office of an original
Indemnitee) of any entity or Person which on the Refunding Date is an
Indemnitee (for purposes of this clause (vii), an "original Indemnitee") or
such original Indemnitee to the extent that such Taxes exceed the amount of
Taxes that would have been imposed (in the case of an Original Loan
Participant, immediately after giving effect to such succession, assignment
or other transfer) and would have been indemnifiable pursuant to Section
8.01(a) had there not been a succession, assignment or other transfer by
such original Indemnitee of any such interest of such Indemnitee in the
Aircraft or any part thereof, any interest in or under any Operative
Agreement, or any proceeds thereunder (it being understood that for
purposes of determining the amount of indemnification that would have been
due to such original Indemnitee with respect to a net income Tax, it shall
be assumed that such original Indemnitee would be subject to taxation on
its income at the highest marginal statutory rate applicable to it);
provided, however, that the exclusion provided by this clause (vii) shall
not apply in the case of a succession, assignment or other transfer (1)
while an Event of Default under the Lease or the Indenture has occurred and
is continuing; (2) required by any provision of the Operative Agreements
(other than pursuant to Section 7.02 hereof) or (3) in the case of the
Owner Participant, to any Tax other than an Income Tax;
(ix) As to any Original Loan Certificate Holder or Certificate
Holder, any U.S. federal withholding taxes imposed on the payment or
receipt of any amounts payable with respect to the Original Loan
Certificates of an Original Loan Certificate Holder or a Certificate of a
Certificate Holder, as the case may be, which is a Non-U.S. Person, unless
in the case of an Original Loan Certificate Holder, such Indemnitee (I)
either (A) delivers to the Indenture Trustee and the Lessor two Treasury
Department Forms 4224 with respect to any and all payments under the Loan
Certificates, (B) delivers to the Indenture Trustee and the Lessor a
Treasury Department Form 1001 entitling such Holder to a complete exemption
from U.S. federal withholding tax on interest, or (C) delivers to Indenture
Trustee and the Lessor a Treasury Department Form W-8, in each case,
evidencing such Indemnitee's partial or complete exemption from United
States withholding taxes, and (II) executes and delivers to the Indenture
Trustee and the Lessor additional Treasury Department Forms 4224, 1001, or
W-8 (or any successor forms), as applicable in such manner and at such
times as may be necessary to evidence such exemption (unless and to the
extent that, in the case of any Original Loan Participant, such Indemnitee
is not legally entitled to do so as a result of a change in law or
regulation enacted, adopted or promulgated after the acquisition by it of
its Loan Certificates) (in the event that the Lessee assumes the debt, an
Original Loan Participant shall be deemed to have become such when it first
acquired its Original Loan Certificate); provided, however, that the
provisions of this paragraph (b)(viii) shall not apply to any withholding
taxes for which the Lessee would be required to indemnify an Original Loan
Certificate Holder so that any payment under the Operative Agreements,
otherwise required to be made on an After-Tax Basis, is made on an
After-Tax Basis;
(x) any Taxes which have been included in the Purchase Price;
(xi) any Taxes which would not have been imposed but for a Lessor's
Lien with respect to the Owner Participant or an Indenture Trustee's Lien
with respect to the Indenture Trustee;
(xii) any Taxes imposed on the Owner Participant or any person who
is a "disqualified person", within the meaning of Section 4975(e)(2) of the
Code, or a "party in interest", within the meaning of Section 3(14) of
ERISA, by virtue of such person's relationship to the Owner Participant as
the result of any prohibited transaction, within the meaning of Section 406
of ERISA or Section 4975(c)(1) of the Code, occurring with respect to the
purchase or holding of any Pass Through Certificate (or any funded
participation therein) (i) over which purchase or holding the Owner
Participant or any Affiliate thereof has discretion or control (other than
in the capacity of a directed trustee or custodian), or (ii) by an employee
benefit plan, within the meaning of Section 3(3) of ERISA, or individual
retirement account or plan subject to Section 4975 of the Code with respect
to which the Owner Participant (or any Affiliate thereof) has the power,
directly or indirectly, to appoint or terminate, or to negotiate the terms
of the management agreement with, the person or persons having discretion
or control (other than in the capacity of a directed trustee or custodian),
over such purchase or holding; and
(xiii) Taxes imposed by any jurisdiction to the extent they would
have been imposed on the Lessor or the Owner Participant for activities in
such jurisdiction unrelated to the transactions contemplated by the
Operative Agreements.
(c) Withholding. The Pass Through Trustee shall withhold any Taxes
required to be withheld on payments to any holder of a Pass Through
Certificate who is a Non-U.S. Person except to the extent that such a holder
of a Pass Through Certificate has furnished evidence to the Pass Through
Trustee sufficient under applicable law to entitle such holder of a Pass
Through Certificate to any exemption from or reduction in the rate of
withholding on interest claimed by such holder of a Pass Through Certificate.
The Indenture Trustee shall withhold any Taxes required to be withheld on any
payment to a Holder pursuant to Section 5.09 of the Indenture. If the
Indenture Trustee or Pass Through Trustee fails to withhold a Tax required to
be withheld with respect to any Holder of a Certificate or any holder of a
Pass Through Certificate or any claim is otherwise asserted by a taxing
authority against the Owner Trustee or Owner Participant for any withholding
tax, the Lessee will indemnify the Owner Trustee and the Owner Participant
(without regard to the exclusions set forth in Section 8.01(b) hereof) on an
After-Tax Basis against any such Taxes required to be withheld and any
interest and penalties with respect thereto, along with any other costs
(including reasonable attorney's fees) incurred in connection with any such
claim. The Indenture Trustee or the Pass Through Trustee, as the case may be,
in its individual capacity (and without recourse to the Trust Indenture
Estate), shall indemnify the Lessee (without regard to the exclusions set
forth in Section 8.01(b) hereof) on an After-Tax Basis for any payment the
Lessee shall have made pursuant to the preceding sentence.
Section 8.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Tax indemnified against under Section 8.01
shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Tax not
been incurred. If any Indemnitee actually realizes a permanent tax benefit by
reason of the payment of any Tax paid or indemnified against by the Lessee,
such Indemnitee shall promptly pay to the Lessee to the extent such tax
benefit was not previously taken into account in computing such payment, but
not before the Lessee shall have made all payments then due to such Indemnitee
under this Agreement, the Tax Indemnity Agreement, the Original Agreements and
any other Operative Agreement, an amount equal to the lesser of (x) the sum of
such permanent tax benefit plus any other permanent tax benefit actually
realized by such Indemnitee that would not have been realized but for any
payment made by such Indemnitee pursuant to this sentence and not already paid
to the Lessee, and (y) the amount of the payment made under Sections 8.01 and
8.02 by the Lessee to such Indemnitee plus the amount of any other payments by
the Lessee to such Indemnitee theretofore required to be made under Sections
8.01 and 8.02 (and the excess, if any, of the amount described in clause (x)
above over the amount described in clause (y) above shall be carried forward
and applied to reduce pro tanto any subsequent obligations of the Lessee to
make payments pursuant to Section 8.01); provided, however, that
notwithstanding the foregoing portions of this sentence, such Indemnitee shall
not be obligated to make any payment to the Lessee pursuant to this sentence
as long as an Event of Default shall have occurred and be continuing under the
Lease. The Lessee shall reimburse on an After-Tax Basis such Indemnitee for
any payment of a tax benefit pursuant to the preceding sentence (or a tax
benefit otherwise taken into account in calculating the Lessee's indemnity
obligation hereunder) to the extent that such tax benefit is disallowed or
reduced in a taxable year subsequent to the year of such payment (including
the expiration of any tax credit carryovers or carrybacks of such Indemnitee
that would not otherwise have expired).
Section 8.03. Time of Payment. Any amount payable to an Indemnitee
pursuant to this Article 8 shall be paid within 30 days after receipt of a
written demand therefor from such Indemnitee accompanied by a written
statement describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable, provided that in the case of amounts
which are being contested by the Lessee in good faith or by the Indemnitee in
either case pursuant to Section 8.04, such amount shall be payable 30 days
after the time such contest is finally resolved.
Section 8.04. Contests. If a written claim is made against any
Indemnitee for Taxes with respect to which the Lessee is liable for a payment
or indemnity hereunder, such Indemnitee shall promptly give the Lessee notice
in writing of such claim and shall furnish the Lessee with copies of any
requests for information from any taxing authority relating to such Taxes with
respect to which the Lessee may be required to indemnify hereunder; provided,
however, that the failure of an Indemnitee to give such notice or furnish such
copy shall not terminate any of the rights of such Indemnitee under this
Article 8, except to the extent that the Lessee's contest rights have been
materially and adversely impaired by the failure to provide such notice. The
Indemnitee shall in good faith, with due diligence and at the Lessee's
expense, if timely requested in writing by the Lessee, contest (or, at the
Indemnitee's option, require the Lessee to contest in the name of the Lessee,
if permitted by law) the validity, applicability or amount of such Taxes by:
(i) resisting payment thereof if lawful and practicable or not
paying the same except under protest if protest is necessary and proper in
each case so long as non-payment will not result in a material risk of the
sale, forfeiture or loss of, or the creation of a Lien other than a
Lessor's Lien on the Aircraft, Airframe or any Engine or any risk of
criminal liability; or
(ii) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings.
If the Indemnitee, after reasonable discussion with the Lessee and
consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such
Indemnitee shall determine the manner in which to contest such Taxes, and
shall periodically or upon the Lessee's request advise the Lessee of the
progress of such contest; provided, however, that if the Indemnitee
determines in its sole discretion that such participation will not
adversely affect such Indemnitee's contest of any Taxes not indemnified
hereunder, the Lessee shall have the right to participate in such contest,
including, among other rights, the right to attend governmental or judicial
conferences (to the extent unrelated issues are not discussed) concerning
such claim and the right to review and approve all submissions to any
governmental or other authority insofar as they relate to the Tax for which
indemnification is sought. Notwithstanding the preceding sentences of this
Section 8.04, such Indemnitee shall not be required to take or continue any
action unless the Lessee shall have (i) agreed in writing to pay and shall
pay the Indemnitee on demand and on an After-Tax Basis for any liability or
reasonable expense which such Indemnitee may incur as a result of
contesting such Taxes including without limitation (y) reasonable
attorneys' and accountants' fees and (z) the amount of any interest,
penalty or additions to tax which may ultimately be payable as the result
of contesting such Taxes, (ii) delivered to the Indemnitee a written
acknowledgment of the Lessee's obligation to such Indemnitee pursuant to
this Agreement to the extent that the contest is not successful and of the
inapplicability of any exclusion or defenses thereto, provided, however,
that such acknowledgement shall not preclude the Lessee from raising
defenses to liability under this Agreement if a decision in such contest is
rendered which clearly articulates the cause of such Tax and the cause, as
so articulated, is not one for which the Lessee is responsible to pay an
indemnity hereunder, (iii) made all payments and indemnities (other than
contested payments and indemnities) then due to the Indemnitee hereunder or
with respect to any of the transactions contemplated by or under the
Operative Agreements. In no event shall such Indemnitee be required or the
Lessee permitted to contest pursuant to this Section 8.04 the imposition of
any Tax for which the Lessee is obligated to indemnify any Indemnitee
hereunder unless (i) such Indemnitee shall have received an opinion of
independent tax counsel, at the Lessee's expense, selected by such
Indemnitee and reasonably satisfactory to the Lessee ("Tax Counsel") to the
effect that a reasonable basis exists for contesting such claim, (ii) such
Indemnitee shall have determined that such contest will not result in any
material risk of loss, sale or forfeiture of, or the creation of a Lien
(other than Lessor's Liens) on, the Aircraft or any part thereof or
interest thereon or in a risk of criminal liability, or adversely affect
the Trust Indenture Estate, (iii) if an Event of Default shall have
occurred and be continuing, the Lessee shall have provided security for its
obligations hereunder reasonably satisfactory to the Indemnitee, (iv) if
such contest shall be conducted in a manner requiring payment of the claim
in advance, the Lessee shall have advanced sufficient funds, on an interest
free basis, to make the payment required, and agreed to indemnify the
Indemnitee against any additional net adverse tax consequences on an After-
Tax Basis to such Indemnitee of such advance and (v) the issue shall not be
the same as an issue previously contested hereunder and decided adversely,
unless the Indemnitee shall have received, at the Lessee's sole expense, a
written opinion, in form and substance reasonably satisfactory to such
Indemnitee, of Tax Counsel, to the effect that the applicable circumstances
or law has changed and, in light thereof, there is substantial authority
within the meaning of Section 6662(d) of the Code, as interpreted by the
Treasury regulations thereunder, or under similar principles of state or
foreign law (as the case may be) for contesting such claim and (vi) the
amount of the indemnity payments the Lessee would be required to make with
respect to such adjustment, when aggregated with similar adjustments that
could be raised in other taxable years of such Indemnitee is at least
$50,000.
The Indemnitee shall not appeal any judicial decision unless it
receives an opinion of independent tax counsel, at the Lessee's sole expense,
selected by such Indemnitee and reasonably satisfactory to the Lessee to the
effect that a reasonable basis continues to exist for the Indemnitee's
position.
Nothing contained in this Section 8.04 shall require any Indemnitee
to contest or continue to contest, or permit Lessee to contest, a claim
which such Indemnitee would otherwise be required to contest pursuant to
this Section 8.04, if such Indemnitee shall waive payment by Lessee of any
amount that might otherwise be payable by Lessee under this Article 8 in
connection with such claim.
Section 8.05. Refunds. Upon receipt by an Indemnitee of a refund of
all or any part of any Taxes which the Lessee shall have paid for such
Indemnitee or for which the Lessee shall have reimbursed or indemnified such
Indemnitee, and provided there shall not have occurred and be continuing any
Event of Default by the Lessee hereunder or under the Lease (in which case
payment shall not be made to the Lessee until such Event of Default shall have
been cured), such Indemnitee shall pay to the Lessee an amount equal to the
amount of such refund less (x) reasonable expenses not previously reimbursed,
(y) all payments then due to such Indemnitee under this Article 8 and (z)
Taxes imposed with respect to the accrual or receipt thereof, including
interest received attributable thereto, plus any tax benefit actually realized
by such Indemnitee as a result of any payment by such Indemnitee made pursuant
to this sentence; provided, however, that such amount shall not be payable (a)
before such time as the Lessee shall have made all payments or indemnities
then due and payable to such Indemnitee under this Article 8 and (b) to the
extent that the amount of such payment would exceed (i) the amount of all
prior payments by the Lessee to such Indemnitee pursuant to this Article 8
less (ii) the amount of all prior payments by such Indemnitee to the Lessee
pursuant to this Article 8.
Any subsequent loss of such refund or tax benefit shall be treated as
a Tax subject to indemnification under the provisions of this Article 8 (in
the case of any such tax benefit, without regard to Section 8.01(b) hereof).
Section 8.06. Lessee's Reports. In case any report or return is
required to be made with respect to any obligation of the Lessee under this
Article 8, the Lessee shall make such report or return, except for any such
report or return that the Indemnitee has notified the Lessee that it intends
to file, in such manner as will show the ownership of the Aircraft in the
Owner Trustee and shall send a copy of the applicable portions of such report
or return to the Indemnitee and the Owner Trustee or will notify the
Indemnitee of such requirement and make such report or return in such manner
as shall be satisfactory to such Indemnitee and the Owner Trustee. The Lessee
will provide such information reasonably available to the Lessee as the
Indemnitee may reasonably require from the Lessee to enable the Indemnitee to
fulfill its tax filing requirements with respect to the transactions
contemplated by the Operative Agreements (without duplication of the
requirements of Section 3 of Tax Indemnity Agreement) and any audit
information request arising from any such filing. The Indemnitee will provide
such information reasonably available to it as the Lessee may reasonably
require from such Indemnitee to enable the Lessee to fulfill its tax filing
requirements with respect to the transactions contemplated by the Operative
Agreements and any audit information request arising from such filing;
provided that in no event shall any Indemnitee be required to provide copies
of any of its tax returns. The Lessee shall hold the Indemnitee harmless from
and against any liabilities, including penalties, additions to tax, fines and
interest, imposed upon or incurred by such Indemnitee to the extent directly
attributable to any insufficiency or inaccuracy in any return, statement, or
report prepared by the Lessee or information supplied by the Lessee, or
directly attributable to the Lessee's failure to supply reasonably available
information to such Indemnitee as required by this Section 8.06.
Section 8.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 8 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of the Operative Agreements.
Section 8.08. Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft,
Airframe, any Engine or Parts, to the extent permitted by the applicable
federal, state, local or foreign law, the Lessee shall pay such tax directly
to the relevant Taxing authority and file any returns or reports required with
respect thereto; provided, however, that the Lessee shall not make any
statements or take any action which would indicate that the Lessee or any
Person other than the Owner Trustee or Owner Participant is the owner of the
Aircraft, the Airframe, any Engine or any Part or which would otherwise be
inconsistent with the terms of the Lease and the position thereunder of the
Owner Trustee and the Owner Participant. Copies of such returns or reports,
together with evidence of payment of any tax due, shall be sent by the Lessee
to the Owner Participant within thirty (30) days after the date of each
payment by the Lessee of any Tax.
Section 8.09. Reimbursements by Indemnitees Generally. If, for any
reason, Lessee is required to make any payment with respect to any Taxes
imposed on any Indemnitee in respect of the transactions contemplated by the
Operative Agreements or on the Aircraft, the Airframe, the Engines, the Parts
of any part thereof, which Taxes are not the responsibility of Lessee with
respect to such Indemnitee, then such Indemnitee shall pay to Lessee within 30
days of Lessee's demand therefor an amount which equals the amount actually
paid by Lessee with respect to such Taxes.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify each
Indemnitee against and agrees to protect, defend, save and keep harmless each
Indemnitee from any and all liabilities, obligations, losses, damages
(including if, as a result of an Indenture Event of Default described in
Section 7.01(a)(i) of the Indenture, the Indenture Trustee shall have sold all
or any portion of the Indenture Estate and the proceeds thereof were less than
an amount equal to accrued and unpaid Basic Rent on the date of sale plus the
Stipulated Loss Value as of such date, damages equal to such shortfall
together with interest thereon to the extent permitted by law at the Debt Rate
until such shortfall is paid in full), penalties, claims, actions, suits,
costs, disbursements and expenses (including reasonable legal fees and
expenses (including, without limitation, the allocated reasonable costs and
expenses of in-house counsel to any Original Loan Participant) and all costs
and expenses relating to amendments, supplements, adjustments, consents,
refinancings and waivers under the Operative Agreements and the Original
Agreements except as otherwise provided in Section 10.01(d)(i) or Section 15
hereof) of every kind and nature (whether or not any of the transactions
contemplated by this Agreement are consummated) (individually, an "Expense,"
collectively, "Expenses"), which may be imposed on, incurred or suffered by or
asserted against any Indemnitee, in any way relating to, based on or arising
out of:
(i) the Original Agreements, this Agreement, the Lease, the
Indenture, the Trust Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty
Bill of Sale or any other Operative Agreement or any other document entered
into in connection herewith or any sublease or transfer or any transactions
contemplated hereby or thereby;
(ii) the operation, possession, use, non-use, maintenance, storage,
overhaul, delivery, non-delivery, control, repair or testing of the
Aircraft, Airframe, or any Engine or any engine used in connection with the
Airframe, or any part thereof by the Lessee, any sublessee or any other
Person whatsoever, whether or not such operation, possession, use, non-use,
maintenance, storage, overhaul, delivery, non-delivery, control, repair or
testing is in compliance with the terms of the Lease, including without
limitation, claims for death, personal injury or property damage or other
loss or harm to any Person whatsoever, including, without limitation, any
passengers, shippers or other Persons wherever located, and claims relating
to any laws, rules or regulations, including, without limitation,
environmental control, noise and pollution laws, rules or regulation;
(iii) the manufacture, design, sale, return, purchase, acceptance,
rejection, delivery, non-delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, registration, reregistration, import,
export, performance, non-performance, lease, sublease, transfer,
merchantability, fitness for use, alteration, substitution or replacement
of any Airframe, Engine, or Part under the Lease, the Purchase Agreement,
the Purchase Agreement Assignment, the GTA or the Engine Warranty
Assignment or other transfer of use or possession, or other disposition of
the Aircraft, the Airframe, any Engine or any Part including, without
limitation, latent and other defects, whether or not discoverable, strict
tort liability, and any claims for patent, trademark or copyright
infringement;
(iv) any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Lessee under any of the Operative Agreements or
the Original Agreements, or the falsity or inaccuracy of any representation
or warranty of the Lessee in any of the Operative Agreements or the
Original Agreements (other than representations and warranties in the Tax
Indemnity Agreement);
(v) the enforcement of the terms of the Operative Agreements or the
Original Agreements and the administration of the Trust Indenture Estate;
and
(vi) the offer, issuance, sale or delivery of any Certificate or any
Pass Through Certificate or any Original Loan Certificate, or any
refunding or refinancing thereof, or interest in the Lessor's Estate or
the Trust Agreement or the Original Trust Agreement or any similar
interest or in any way relating to or arising out of the Trust Agreement
or the Original Trust Agreement and the Lessor's Estate, the Indenture
or Original Indenture or the Trust Indenture Estate (including, without
limitation, any claim arising out of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, or any other
Federal or state statute, law or regulation, or at common law or
otherwise relating to securities), or the action or inaction of the
Owner Trustee or Indenture Trustee as trustees, in the manner
contemplated by this Agreement, the Original Participation Agreement,
the Indenture, the Original Indenture, the Indenture and Security
Agreement Supplement, the Trust Agreement or the Original Trust
Agreement and in the case of the Owner Participant, its obligations
arising under Section 6.01 of the Trust Agreement or the Original Trust
Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a
result of their respective ownership or leasing of any interest in the
Aircraft, Airframe, any Engine or Part during the Term, whether or not in the
Lessee's possession or control, insofar as such Expense relates to any
activity or event whatsoever involving such item while it is under lease to
the Lessee (or after termination of the Lease in connection with the exercise
of remedies thereunder to the extent that such Expense is attributable to the
transactions contemplated hereby and by the other Operative Agreements and
Original Agreements), and such Expense does not fall within any of the
exceptions listed in Section 9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a) shall
not extend to any Expense of any Indemnitee:
(i) which would not have occurred but for the willful misconduct or
gross negligence of such Indemnitee;
(ii) in respect of the Aircraft to the extent attributable to acts
or events which occur after the Aircraft is no longer part of the Lessor's
Estate or leased under the Lease or, if the Aircraft remains a part of the
Lessor's Estate, after the expiration of the Term and any holdover period
under Section 12.05 of the Lease (other than pursuant to Article 17 of the
Lease, in which case the indemnity provided in Section 9.01(a) hereof shall
survive for so long as Lessor shall be entitled to exercise remedies under
such Article 17), or to acts or events which occur after return of
possession of the Aircraft by the Lessee in accordance with the provisions
of the Lease but in any such case only to the extent not fairly
attributable to acts or omissions of the Lessee prior to expiration of the
Term and any holdover period under Section 12.05 of the Lease, including
without limitation the Lessee's failure to fully discharge all of its
obligations under the Lease, the other Operative Agreements or the Original
Agreements;
(iii) which is a Tax, whether or not the Lessee is required to
indemnify therefor pursuant to Article 8 hereof or pursuant to the Tax
Indemnity Agreement;
(iv) which is a cost or expense required to be paid by the Owner
Participant or its permitted transferees (and not by the Lessee) pursuant
to this Agreement or any other Operative Agreement (other than the Owner
Participant's obligations under Section 6.01 of the Trust Agreement) and
for which the Lessee is not otherwise obligated to reimburse the Owner
Participant, directly or indirectly;
(v) which would not have been incurred by such Indemnitee if such
Indemnitee had not been in breach of its representations or warranties, or
had not defaulted in the observance and performance of the terms and
provisions required to be observed and performed by it, in this Agreement,
the Purchase Agreement Assignment, the Lease, the Indenture, the Trust
Agreement, the Original Agreements or any other Operative Agreement to
which it is a party unless such breach or default shall be a result of the
breach or default of any of the foregoing by the Lessee or another
Indemnitee;
(vi) which is a payment required to be made by the Owner Participant
pursuant to Section 2.01(b) hereof, but nothing contained in this Section
9.01(b)(vi) shall be deemed or construed to limit the obligations of the
Lessee to the Indenture Trustee and Holders of the Certificates pursuant to
Section 3.05 of the Lease;
(vii) in the case of the Owner Participant, Lessor's Liens to the
extent attributable to the Owner Participant; in the case of the Owner
Trustee, Lessor's Liens to the extent attributable to the Owner Trustee;
and in the case of the Indenture Trustee, Indenture Trustee's Liens;
(viii) in the case of the Owner Participant or the Owner Trustee, to
the extent attributable to the offer or sale by such Indemnitee after the
Delivery Date of any interest in the Aircraft, the Lessor's Estate or the
Trust Agreement or any similar interest, (including an offer or sale
resulting from bankruptcy or other proceedings for the relief of debtors in
which such Indemnitee is the debtor), unless in each case such offer or
sale shall occur (w) in connection with a Refinancing, (x) as a result of
exercise of remedies under Section 17 of the Lease, (y) during a period
when an Event of Loss has occurred or (z) in connection with the
termination of the Lease or action or direction of the Lessee pursuant to
the Lease; or
(ix) which is incurred by the Owner Participant or any person who is
a "disqualified person", within the meaning of Section 4975(e)(2) of the
Code, or a "party in interest", within the meaning of Section 3(14) of
ERISA, by virtue of such person's relationship to the Owner Participant, as
the result of any prohibited transaction, within the meaning of Section 406
of ERISA or Section 4975(c)(1) of the Code, occurring with respect to the
purchase or holding of any Pass Through Certificate (i) over which purchase
or holding the Owner Participant or any Affiliate thereof has discretion or
control (other than in the capacity of a directed trustee or custodian), or
(ii) by an employee benefit plan, within the meaning of Section 3(3) of
ERISA, or individual retirement account or plan subject to Section 4975 of
the Code with respect to which the Owner Participant (or any Affiliate
thereof) has the power, directly or indirectly, to appoint or terminate, or
to negotiate the terms of the management agreement with, the person or
persons having discretion or control (other than in the capacity of a
directed trustee or custodian), over such purchase or holding.
Section 9.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Expense indemnified against under Section
9.01 shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Expense not
been incurred. If any Indemnitee actually realizes a permanent Tax benefit by
reason of the payment of such Expense paid or indemnified against by the
Lessee which was not considered in the computation thereof, such Indemnitee
shall promptly pay to the Lessee, but not before the Lessee shall have made
all payments theretofore due such Indemnitee under this Agreement, the
Original Agreements, the Tax Indemnity Agreement and any other Operative
Agreement, an amount equal to the lesser of (x) the sum of such Tax benefit
plus any other permanent Tax benefit actually realized by such Indemnitee as
the result of any payment made by such Indemnitee pursuant to this sentence
and (y) the amount of such payment pursuant to this Section 9.02 by the Lessee
to such Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore made pursuant to this Section 9.02 less the amount of
any payments by such Indemnitee to the Lessee theretofore made pursuant to
this Section 9.02 (and the excess, if any, of the amount described in clause
(x) above over the amount described in clause (y) above shall be carried
forward and applied to reduce pro tanto any subsequent obligations of the
Lessee to make payments pursuant to this Section 9.02), it being intended that
no Indemnitee should realize a net Tax benefit pursuant to this Section 9.02
unless the Lessee shall first have been made whole for any payments by it to
such Indemnitee pursuant to this Section 9.02; provided, however, that
notwithstanding the foregoing portions of this sentence, such Indemnitee shall
not be obligated to make any payment to the Lessee pursuant to this sentence
so long as an Event of Default shall have occurred and be continuing. Any
taxes that are imposed on any Indemnitee as a result of the disallowance or
reduction of such Tax benefit referred to in the next preceding sentence in a
taxable year subsequent to the year of allowance and utilization by such
Indemnitee (including the expiration of any tax credit carryovers or
carrybacks of such Indemnitee that would not otherwise have expired) shall be
indemnifiable pursuant to the provisions of Section 8.01 hereof without regard
to Section 8.01(b) hereof.
Section 9.03. Subrogation. Upon the payment in full of any
indemnity pursuant to this Article 9 by the Lessee (but not earlier), the
Lessee shall be subrogated to any right of the Indemnitee, other than with
respect to any of such Indemnitee's insurance policies or in connection
with any indemnity claim the Person indemnified may have against any other
Indemnitee in respect of the matter against which such indemnity has been
made.
Section 9.04. Notice and Payment. Each Indemnitee and the Lessee
shall give prompt written notice one to the other of any liability of which
such party has knowledge for which the Lessee is, or may be, liable under this
Article 9; provided, however, that failure to give such notice shall not
terminate any of the rights of Indemnitees under this Article 9, except (with
respect to such Indemnitee) to the extent that the Lessee has been materially
prejudiced by the failure to provide such notice. Unless otherwise provided
in the Operative Agreements, any amount payable to an Indemnitee pursuant to
this Article 9 shall be paid within 30 days after receipt of a written demand
therefor from such Indemnitee accompanied by a written statement describing in
reasonable detail the basis for such indemnity and the computation of the
amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a recovery of
all or any part of any amount which the Lessee shall have paid to such
Indemnitee or for which the Lessee shall have reimbursed such Indemnitee under
this Article 9, and provided there shall not have occurred a Payment Default
or an Event of Default (in which case payment shall not be made to the Lessee
until such Payment Default or Event of Default shall have been cured) such
Indemnitee shall pay to the Lessee the amount of any such recovery, including
interest received with respect to the recovery, net of any Taxes paid or
payable as a result of the receipt of the recovery and interest, plus any net
additional permanent income tax benefits actually realized by Indemnitee as
the result of any payment made pursuant to this sentence less any reasonable
costs and expense of any Indemnitee not reimbursed by the Lessee; provided,
however, that such amount shall not be payable (a) before such time as the
Lessee shall have made all payments or indemnities then due and payable to
such Indemnitee under this Article 9 or (b) to the extent that the amount of
such payment would exceed the amount of all prior payments by the Lessee to
such Indemnitee pursuant to this Article 9, less the amount of all prior
payments by such Indemnitee to the Lessee pursuant to this Article 9. Any
subsequent loss of such recovery or tax benefit shall be subject to
indemnification under Article 8 or this Article 9, as the case may be.
Section 9.06. Defense of Claims. The Lessee or its insurers shall
have the right (in each such case at the Lessee's sole expense) to investigate
or, provided that (i) the Lessee or its insurers shall not reserve the right
to dispute liability with respect to any insurance policies pursuant to which
coverage is sought, (ii) in the case of the Lessee, no Event of Default shall
have occurred and be continuing and (iii) the Lessee shall have first
acknowledged in writing to such Indemnitee the Lessee's obligation to
indemnify such Indemnitee hereunder in respect of such claim, defend any claim
covered by insurance for which indemnification is sought pursuant to this
Article 9 and each Indemnitee shall cooperate with the Lessee or its insurers
with respect thereto, and provided, further, the Lessee shall not be entitled
to assume and control the defense of any such claim if and to the extent such
Indemnitee reasonably objects to such control on the ground that an actual or
potential material conflict of interest exists where it is advisable for such
Indemnitee to be represented by separate counsel. Subject to the immediately
foregoing sentence, where the Lessee or the insurers under a policy of
insurance maintained by the Lessee undertake the defense of an Indemnitee with
respect to such a claim, no additional legal fees or expenses of such
Indemnitee in connection with the defense of such claim shall be indemnified
hereunder unless the fees or expenses were incurred at the written request of
the Lessee or such insurers. Subject to the requirement of any policy of
insurance applicable to a claim, an Indemnitee may participate at its own
expense at any judicial proceeding controlled by the Lessee or its insurers
pursuant to the preceding provisions, provided that such party's participation
does not, in the opinion of the independent counsel appointed by the Lessee or
its insurers to conduct such proceedings, interfere with such control; and
such participation shall not constitute a waiver of the indemnification
provided in this Section 9.06. No Indemnitee shall enter into any settlement
or other compromise with respect to any claim described in this Section 9.06
without the prior written consent of the Lessee, which consent shall not
unreasonably be withheld or delayed, unless such Indemnitee waives its right
to be indemnified under this Article 9 with respect to such claim.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Purchase Agreement
Assignment, the Engine Warranty Assignment, the Lease and the other Operative
Agreements but, as to such indemnities, only with respect to losses,
liabilities, obligations, damages, penalties, claims, actions, suits, costs,
Expenses and disbursements caused by events occurring or existing (or fairly
attributable to the Lessee's acts or omissions) prior to or incurred in the
process of (i) the return or disposition of the Aircraft under Article 12 or
Article 17 of the Lease, or (ii) the termination of the Lease or the Indenture
or, if later, the return of the Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's obligations
under the indemnities provided for in this Agreement shall be those of a
primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
the Lease, the Indenture, the Trust Agreement, or any other document or
instrument, and the Person seeking indemnification from the Lessee pursuant to
any provision of this Agreement may proceed directly against the Lessee
without first seeking to enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee on
demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a) Transaction
Costs. The Owner Participant shall pay (or reimburse the Lessee if the Lessee
shall have previously made such payment), in addition to those items set forth
in Section 10.01(a) of the Original Participation Agreement (other than clause
(vi) thereof) all fees and expenses of the following persons relating to the
public offering of the Pass Through Certificates contemplated by the
Underwriting Agreement and related to the transactions contemplated hereby:
(i) the fees and expenses of counsel for the Owner Participant; (ii) the fees
and expenses of counsel for the Lessee, Owner Trustee, the Indenture Trustee,
the Pass Through Trustee, the Original Loan Participants and the Underwriters
(other than those fees, expenses and disbursements payable by the Underwriters
pursuant to the Underwriting Agreement); (iii) the fees and expenses of
Daugherty, Fowler & Peregrin; (iv) any initial fees and expenses of the Pass
Through Trustee and the fees and expenses of the Owner Trustee and the
Indenture Trustee; (v) any compensation, commissions and discounts payable to
the Underwriters pursuant to the Underwriting Agreement; (vi) the fees, if
any, incurred in printing the Pass Through Certificates; (vii) the fees and
expenses incurred in connection with printing any amendment to the
Registration Statement on Form S-3 bearing Registration No. 33-56569, printing
any Preliminary Prospectus or Prospectus (as such terms are defined in the
Underwriting Agreement) for the offering of the Pass Through Certificates;
(viii) the fees and expenses of Arthur Andersen & Co.; (ix) the fees and
expenses of Moody's and S&P; and (x) the fees and expenses of First Chicago
Leasing Corporation. The fees and expenses described in clauses (ii) through
(x) of this paragraph shall be allocable to the Owner Participant under this
Agreement (1) to the extent incurred specifically with respect to the Owner
Participant or the refunding of the Original Loan Certificates, and (2) to the
extent such fees and expenses are incurred but are not specifically
attributable to the Owner Participant or the refunding of the Original Loan
Certificates, in the proportion that the principal amount of the Certificates
bears to the total amount of the Pass Through Certificates.
The Owner Participant, the Owner Trustee and the Lessee acknowledge
that the percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth in the Lease have been prepared assuming the aggregate amount
payable by the Owner Participant pursuant to the preceding paragraph and
Section 10.01 of the Original Participation Agreement is 1.80% of the Purchase
Price (the "Estimated Expense Amount"); provided, however, that in no event
shall the sum of (i) the Owner Participant's Commitment (as such term is
defined in the Original Participation Agreement), (ii) the Transaction Costs
to be paid by the Owner Participant pursuant to Section 2.03 of the Original
Participation Agreement, (iii) the Transaction Costs to be paid by the Owner
Participant pursuant to Section 10.01 hereof, and (iv) the Owner Participant
Amount (as defined in the Original Participation Agreement) exceed, in the
aggregate, $25,350,000, unless otherwise agreed by the Owner Participant. To
the extent that the payment by the Owner Participant of Transaction Costs
would cause the sum described in the immediately preceding sentence to exceed
$25,350,000, the Lessee shall be obligated to pay the Transaction Costs
constituting the First Chicago Leasing Corporation fee and the Davis Polk &
Wardwell fee to the extent of such excess and the Owner Participant shall have
no obligation to pay such excess.
(b) Continuing Expenses. The continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the entity
acting as Owner Trustee, as lessor under the Lease and as trustee under the
Trust Agreement with respect to the administration of the Lease and the
Lessor's Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses and initial fees relating to the
establishment of any replacement trustee) of the Indenture Trustee, as trustee
under the Indenture with respect to the administration of the Trust Indenture
Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and initial fees relating to the establishment of a
replacement trustee) of the Pass Through Trustee shall be paid as Supplemental
Rent by the Lessee, including without limitation any amounts payable to the
Indenture Trustee or on account of requests by the Indenture Trustee for
indemnification under Article XI of the Indenture.
(c) Amendments, Supplements and Appraisal. Without limitation of
the foregoing, the Lessee agrees:
(i) to pay as Supplemental Rent to the Owner Trustee, the Owner
Participant, the Owner Participant Guarantor, the Indenture Trustee and the
Pass Through Trustee all costs and expenses (including reasonable legal
fees and expenses) incurred by any of them in connection with (a) any
Default or Event of Default and any enforcement or collection proceedings
resulting therefrom, or (b) the enforcement of the obligations of the
Lessee hereunder or under the other Operative Agreements and the
enforcement of this Section 10.01, including, without limitation, the
entering into or giving or withholding of any amendments or supplements or
waivers or consents, including without limitation, any amendment,
supplement, waiver or consent resulting from any work-out, restructuring or
similar proceeding relating to the performance or nonperformance by the
Lessee of its obligations under the Operative Agreements; with respect to
the Original Agreements, this Agreement, the Lease, the Indenture, the
Certificates, the Tax Indemnity Agreement, the Purchase Agreement
Assignment or any other Operative Agreement or document or instrument
delivered pursuant to any of them, which amendment, supplement, waiver or
consent is required by any provision of any Operative Agreement or is
requested by the Lessee or necessitated by the action or inaction of the
Lessee; provided, however, that the Lessee shall not be responsible for
fees and expenses incurred in connection with the offer, sale or other
transfer (whether pursuant to Article 5 of the Trust Agreement or
otherwise) by the Owner Participant or the Owner Trustee after the
Refunding Date of any interest in the Aircraft, the Lessor's Estate or the
Trust Agreement or any similar interest (and the Owner Participant shall be
responsible for all such fees and expenses), unless such offer, sale or
transfer shall occur (A) during a period when an Event of Default has
occurred and is continuing under the Lease, (B) during a period following
an Event of Loss or (C) in connection with the termination of the Lease or
action or direction of the Lessee pursuant to Section 4.02 or Article 10 of
the Lease; and
(ii) to pay the fees, costs and expenses of all appraisers involved
in an independent appraisal of the Aircraft to the extent required under
Section 4.03 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a)
Resignation and Removal. The Owner Trustee or any successor Owner Trustee may
resign or may be removed by the Owner Participant, and a successor Owner
Trustee may be appointed and a Person may become Owner Trustee under the Trust
Agreement only in accordance with the provisions of Section 3.11 of the Trust
Agreement and the provisions of paragraphs (b) and (c) of this Section 11.01.
(b) Conditions to Appointment. The appointment in any manner of a
successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall
be subject to the following conditions:
(i) Such successor Owner Trustee shall be a Citizen of the United
States;
(ii) Such successor Owner Trustee shall be a bank or a trust company
having combined capital, surplus and undivided profits of at least
$100,000,000 or a bank or trust company fully guaranteed by a direct or
indirect parent thereof having a combined capital, surplus and undivided
profits of at least $100,000,000;
(iii) Such appointment shall not violate any provisions of the Act or
any applicable rule or regulation of the applicable regulatory agency or
body of any other jurisdiction in which the Aircraft may then be registered
or create a relationship which would be in violation of the Act or any
applicable rule or regulation of the applicable regulatory agency or body
of any other jurisdiction in which the Aircraft may then be registered;
(iv) Such successor Owner Trustee shall enter into an agreement or
agreements, in form and substance satisfactory to the Lessee, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee whereby
such successor Owner Trustee confirms that it shall be deemed a party to
this Agreement, the Trust Agreement, the Lease, the Lease Supplement,
the Purchase Agreement Assignment, the Engine Warranty Assignment, the
Indenture, the Indenture Supplement and any other Operative Agreement to
which the Owner Trustee is a party and agrees to be bound by all the
terms of such documents applicable to the Owner Trustee and makes the
representations and warranties contained in Section 7.04 hereof (except
that it may be duly incorporated, validly existing and in good standing
under the laws of the United States of America or any State thereof);
and
(v) All filings of Uniform Commercial Code financing and
continuation statements, filings in accordance with the Act and
amendments thereto shall be made and all further actions taken in
connection with such appointment as may be necessary in connection with
maintaining the validity, perfection and priority of the Lien of the
Indenture and the valid and continued registration of the Aircraft in
accordance with the Act.
(c) Appointment. For so long as the Aircraft remains registered
under the Act, the Owner Participant agrees to appoint promptly a successor
Owner Trustee meeting the requirements of Section 11.01(b) hereof in the event
the Owner Participant has knowledge that the Owner Trustee at any time shall
not be a Citizen of the United States.
(d) Revocation. The Owner Participant agrees not to revoke and
terminate the Trust Agreement except in accordance with Section 4.01(a) of the
Trust Agreement, as in effect on the date hereof or as amended in accordance
with the terms of the Operative Agreements.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. The Owner
Participant shall have no obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Trust
Agreement, the Tax Indemnity Agreement or any other Operative Agreement to
which the Owner Participant is a party, and the Owner Participant shall not be
liable for the performance by any party hereto of such other party's
obligations or duties hereunder. Under no circumstances shall the Owner
Participant as such be liable to the Lessee, nor shall the Owner Participant
be liable to any Holder, for any action or inaction on the part of the Owner
Trustee or the Indenture Trustee in connection with this Agreement, the
Indenture, the Lease, the Trust Agreement, the Purchase Agreement Assignment,
the Engine Warranty Assignment, any other Operative Agreement, any Original
Agreement, the ownership of the Aircraft, the administration of the Lessor's
Estate or the Trust Indenture Estate or otherwise, whether or not such action
or inaction is caused by the willful misconduct or gross negligence of the
Owner Trustee or the Indenture Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of a
Certificate shall have no further interest in, or other right with respect to,
the Trust Indenture Estate when and if the principal and interest on all
Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall
have been paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Trust
Agreement and the Indenture and to all of the terms of said documents, and the
Lessee acknowledges receipt of an executed counterpart of each of the Trust
Agreement and the Indenture; it being agreed that such consent shall not be
construed to require the Lessee's consent to any future supplement to, or
amendment, waiver or modification of, the terms of the Trust Agreement, the
Indenture or the Certificates, except that prior to the occurrence and
continuance of an Event of Default, no section of the Indenture or the Trust
Agreement shall be amended or modified in any manner materially adverse to the
Lessee without its consent.
Section 13.02. Further Assurances. The Lessee hereby confirms to
the Owner Participant its covenants set forth in and obligations under the
Lease. The Lessee agrees that, except as otherwise provided in the
Indenture, the Owner Trustee may not enter into any amendment, modification
or supplement of, or give any waiver or consent with respect to, or approve
any matter or document as being satisfactory under the Lease without the
prior consent of the Indenture Trustee and the Owner Participant and that,
except as otherwise provided in the Indenture, upon an Indenture Event of
Default, the Indenture Trustee may act as the Lessor under the Lease to the
exclusion of the Owner Trustee. The Lessee further agrees to deliver to
the Indenture Trustee and the Owner Participant a copy of each notice,
statement, request, report or other communication given or required to be
given to the Owner Trustee under the Lease.
Section 13.03. No Retroactive Application. This Agreement, the
Lease, the Indenture and the Trust Agreement each amend and restate, and the
Tax Indemnity Agreement amends, the respective original agreements with no
intention of retroactive application. The applicable original agreements have
been restated for the convenience of the parties and such amendments and
restatements, and such amendment in the case of the Tax Indemnity Agreement,
are not intended to waive or modify the obligations of any party which accrued
or were to have been performed on or prior to the Refunding Date under such
unamended agreements (or, in the case of this Agreement, the effective date
hereof) or to deprive any party of its rights and remedies in respect thereof.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and
other communications required by this Agreement shall be in writing and
shall be deemed received (a) if given by telecopier, when transmitted and
the appropriate telephonic confirmation received if transmitted on a
Business Day and during normal business hours of the recipient, and
otherwise on the next Business Day following transmission, (b) if given by
certified mail, return receipt requested, postage prepaid five Business
Days after being deposited in the United States mails and (c) if given by
Federal Express service (or, if a Default or Event of Default shall have
occurred and be continuing, by other comparable courier service), when
received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2007 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a
copy to Senior Vice President and General Counsel at 1980 Nonconnah Drive,
Memphis, Tennessee 38132, telephone (901) 395-3388, facsimile (901)
395-4758, or at such other address as the Lessee shall from time to time
designate in writing to the Lessor, the Indenture Trustee and the Owner
Participant;
(b) If to the Lessor or the Owner Trustee, to its office at 79 South
Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department; telephone (801) 246-5630, facsimile (801) 246-5053, or to such
other address as Lessor shall from time to time designate in writing to the
Lessee and the Indenture Trustee, with a copy to Owner Participant at the
Owner Participant's address as provided in subsection (c) below;
(c) If to the Owner Participant, to its office at 1900 Fifth Avenue
North, Eighth Floor, Birmingham, Alabama 35202, Attention: President;
telephone (205) 326-5780, facsimile (205) 307-4124, or to such other
address as the Owner Participant may from time to time designate in writing
to the Lessee and the Indenture Trustee;
(d) If to the Indenture Trustee, to its office at 600 Peachtree
Street, N.E., Suite 900, Atlanta, Georgia 30308, Attention: Corporate
Trust Lease Administration; telephone (404) 607-4681, facsimile (404)
607-6362, or to such other address as the Indenture Trustee shall from time
to time designate in writing to the Lessor, the Lessee and the
Participants; and
(e) If to the Pass Through Trustee, to its office at 1301 Gervis
Street, 4th Floor, Columbia, South Carolina 29201; Attention Corporate
Trust Administration; telephone (803) 929-5905, facsimile (803) 929-5922
(with a copy to the Indenture Trustee at the address provided in paragraph
(d) above), or to such other address as the Pass Through Trustee shall from
time to time designate in writing to the Lessor, the Lessee and the Owner
Participant.
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing. (a) Subject to the terms and
conditions of this Section 15.01, the Lessee may request the Owner Participant
to participate in up to three refinancings (including that contemplated by
this Agreement on the Refunding Date), in whole but not in part, of the
Certificates prior to the end of the Basic Term (a "Refinancing"), provided,
that, except in connection with the Refinancing contemplated by this Agreement
on the Refunding Date, such Refinancing may not occur prior to the fifth
anniversary of the Refunding Date. Such Refinancings may be placed in either
the private or public markets and shall be denominated in United States
dollars (or in any other foreign currency so long as there is no foreign
currency risk to the Owner Participant), and shall be on terms that do not
materially adversely affect the Owner Participant. The Owner Participant
agrees to negotiate promptly in good faith to conclude an agreement with the
Lessee as to the terms of any such Refinancing transaction (including the
terms of any debt to be issued in connection with such refinancing and the
documentation to be executed in connection therewith). Without the consent of
the Owner Participant, the prospectus and other offering materials relating to
any Refinancing in the form of a public offering shall not identify the Owner
Participant and shall not include any financial statements of the Owner
Participant or any Affiliate thereof. In connection with any such Refinancing
in the form of a public offering, the Lessee shall indemnify the Owner
Participant for any liabilities under federal, state or foreign securities
laws resulting from such offering. The aggregate principal amount of the new
Certificates issued in connection with each Refinancing shall be the same as
the aggregate principal amount outstanding on the Certificates being
refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant shall have received at least 10
Business Days' prior written notice of the closing date of such Refinancing,
the Owner Participant shall have been provided such longer period required for
a reasonable opportunity to review the relevant documentation and the Owner
Participant shall have determined in good faith that neither it nor the Owner
Trustee shall suffer any loss or expense or bear any increased risk as a
result of such Refinancing (including, without limitation, any risk with
respect to taxes or other adverse consequences to the Owner Participant
including the application of Revenue Procedures 75-21 and 75-28 and Section
467 of the Code) for which it has not been or will not have been indemnified
by the Lessee in a manner reasonably satisfactory to the Owner Participant.
Prior to the consummation of any Refinancing pursuant to this Section
15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent, Stipulated Loss Values, and
Termination Values payable pursuant to the Lease as a result of the
Refinancing in accordance with Section 3.04 of the Lease, and thereafter the
amounts set forth in such schedule shall become the amounts payable under the
Lease. Upon the consummation of the Refinancing, the evidence of indebtedness
issued pursuant to the Refinancing shall be considered "Certificates" for
purposes of this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall have
no obligation to proceed with any Refinancing transaction as contemplated by
this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the
Owner Participant by agreement in form and substance satisfactory to each of
them, for any liability, obligation (other than the obligation to pay
principal and interest in respect of the refinanced indebtedness), cost or
expense (including, without limitation, reasonable attorneys' fees and
Make-Whole Premium and any other premiums or amounts due under the Indenture),
including any adverse tax consequences or impact, related to or arising out of
any such Refinancing transaction, except to the extent of amounts included in
Transaction Costs and payable by the Owner Participant as provided herein.
(d) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the
Certificates then outstanding; provided, however, that such Refinancing shall
be subject to the satisfaction of each of the following conditions:
(i) Payment of principal, accrued interest, Make-Whole Premium and
Breakage Costs, if any, and all other sums due and owing on the
Certificates payable under the Indenture;
(ii) Payment in full of all other amounts then due and owing by the
Lessee under this Agreement, the Indenture, the Lease, the Trust Agreement,
and the Certificates then outstanding shall have been made by the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to such Owner Participant, unless the Lessee shall have agreed
to provide an indemnity in respect thereof reasonably satisfactory in form
and substance to the Owner Participant), certificates and other documents
as it may reasonably request, each in form and substance reasonably
satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) The Lessee shall have provided or agreed to provide to the
Owner Participant, as Supplemental Rent under the Lease, sufficient
funds to pay any Breakage Costs, Make-Whole Premium and any other
amounts due under the Indenture;
(vi) The satisfaction or waiver by each other party to this
Agreement of the conditions set forth in this Section 15.01 to such party's
obligations under this Section 15.01;
(vii) No Event of Default shall have occurred and be continuing or
would occur immediately after giving effect to such Refinancing; and
(viii) The documentation relating to such Refinancing shall permit
the Lessee to place the Refinancing loan certificates with an ERISA Plan.
The Lessee shall not indemnify the Owner Participant, or any of the Owner
Participant's Affiliates, assigns, officers, directors, employees, agents
and servants, for any Taxes, within the meaning of Section 8 hereof, or
Expenses, within the meaning of Section 9 hereof, arising under or in
connection with any "prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975 of the Code, if the sole underwriter or the
manager or co-manager of the underwriting syndicate or the selling or
placement agent of the Refinancing loan certificates has an exemption from
the prohibited transaction rules under Section 406 of ERISA and Section 4975
of the Code with respect to pass through certificates, such as Prohibited
Transaction Exemption 90-24 or any other comparable exemption, unless such
exemption is not available or is not valid with respect to such Refinancing
loan certificates. If such exemption is not available or is not valid,
then the Lessee shall indemnify the Owner Participant pursuant to, and to
the extent provided for, under Section 8 and 9 hereof for Taxes and
Expenses arising under or in connection with any "prohibited transaction",
within the meaning of Section 406 of ERISA or Section 4975 of the Code,
resulting from such placement.
Section 15.02. Reoptimization. (a) If a Change in Tax Rate occurs
prior to the end of the Basic Term, then, subject to the terms and conditions
of this Section 15.02 and Section 3.04 of the Lease, the Owner Participant
may, upon 30 days' prior notice to the Lessee, the Indenture Trustee, the
Owner Trustee and the Holders, elect to modify the schedule of payments of
principal of the certificates issued ("Refinancing Certificates") in
connection with any Refinancing effected after the Refunding Date using
private debt (not including debt issued pursuant to an exemption from
registration under the Securities Act relying on Rule 144A promulgated
thereunder but otherwise marketed in a manner substantially similar to
securities registered under the Securities Act, and not including debt issued
in connection with any offering of securities registered under the Securities
Act) due on each remaining Rent Payment Date on or commencing on the Rent
Payment Date next succeeding the date mutually agreed to by the Owner
Participant, the Lessee and the Indenture Trustee on which the Owner
Participant shall make such modification (the "Reoptimization Date"). Promptly
after making such modification, the Owner Participant shall furnish each party
hereto written notice of the amounts so recalculated.
(b) Adjustments to Refinancing Certificates. On the Reoptimization
Date, subject to the satisfaction on or before the Reoptimization Date of the
conditions set forth in Section 15.02(c), the Owner Trustee will issue and
deliver and the Indenture Trustee will authenticate, and each holder of a
Refinancing Certificate will accept delivery of, a new Refinancing Certificate
or Refinancing Certificates (in replacement of each Refinancing Certificate
then held by such holder, which Refinancing Certificates shall be surrendered
to the Indenture Trustee for cancellation) containing such changed principal
installments (expressed as a percentage of the original principal amount of
such Refinancing Certificate) as shall have been recalculated by the Owner
Participant, but in the same principal amount as, and containing terms
identical to, except as otherwise contemplated by Section 15.02(d) hereof, the
Refinancing Certificates originally issued in connection with the Operative
Agreements.
(c) Conditions to the Obligations of the Holders of the Refinancing
Certificates on the Reoptimization Date. The obligation of each holder of a
Refinancing Certificate to accept delivery of a new Refinancing Certificate on
the Reoptimization Date, and to surrender on such Reoptimization Date any
Refinancing Certificate then held by it, is subject to the following
conditions precedent having been satisfied on or before the Reoptimization
Date:
(i) the requirements of Section 15.02(d) hereof shall have been
satisfied;
(ii) the following documents, in form and substance satisfactory to
such Holder, shall have been duly authorized, executed and delivered by the
party or parties thereto and shall be in full force and effect: (A) if the
payments of Basic Rent, Stipulated Loss Values and Termination Values with
respect to the Term have been changed, an amendment to the Lease, dated the
Reoptimization Date, (B) an amendment to the Indenture setting forth any
changed repayment schedule to the Refinancing Certificates, dated the
Reoptimization Date and (C) replacement Refinancing Certificates; and
(iii) in connection with any Reoptimization the Owner Participant
shall pay or agree to pay all reasonable costs and expenses incurred by the
Lessee, the Owner Trustee, the Indenture Trustee and each Holder of a
Refinancing Certificate (including, without limitation, reasonable legal
fees and expenses) in connection with any such reoptimization.
(d) Payment Schedules. Except as otherwise provided in this
Section 15.02 as long as the Refinancing Certificates remain outstanding,
the payment schedules for the Refinancing Certificates shall not be
modified.
ARTICLE 16
[INTENTIONALLY LEFT BLANK]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes. It is hereby agreed
between the Owner Participant and the Lessee (but the Lessee makes no
representation to such effect) that for Federal income tax purposes the Owner
Participant will be the owner of the Aircraft and the Lessee will be the
lessee of the Aircraft.
Section 17.02. [Intentionally Left Blank]
Section 17.03. Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
Section 17.04. No Oral Modifications. Neither this Agreement nor
any of its terms may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to the Owner Trustee and the Indenture Trustee. A copy of each such
termination, amendment, supplement, waiver or modification shall also be
delivered to each other party to this Agreement other than the Original Loan
Participants.
The consent of the Pass Through Trustee, in its capacity as a party
to this Agreement and not as a Holder, shall not be required to modify, amend
or supplement this Agreement or to give any consent, waiver, authorization or
approval with respect to this Agreement under the circumstances in which the
consent of the Indenture Trustee would not be required for such modification,
amendment, supplement, consent, waiver or approval in accordance with Section
8.01(b) of the Indenture, provided that the Pass Through Trustee shall be
entitled to receive any Officer's Certificate (as defined in the Pass Through
Agreement) or Opinion of Counsel (as defined in the Pass Through Agreement)
necessary, in its sole discretion, to establish that the Indenture Trustee's
consent would not be required under such circumstances.
Section 17.05. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Owner Participant and its successors and
permitted assigns, the Owner Trustee and its successors as Owner Trustee (and
any additional owner trustee appointed), the Indenture Trustee and its
successors as Indenture Trustee (and any additional indenture trustee
appointed) under the Indenture and the Pass Through Trustee and its successors
as Pass Through Trustee (and any additional pass through trustee appointed).
Section 17.07. Concerning the Owner Trustee, Pass Through Trustee
and Indenture Trustee. Each of First Security Bank of Utah, National
Association, Nationsbank, National Association (Carolinas) and NationsBank
of Georgia, National Association is entering into this Agreement solely in
their respective capacities (except to the extent otherwise expressly
indicated), in the case of First Security Bank of Utah, National
Association, not in its individual capacity but solely as trustee under the
Trust Agreement, in the case of Nationsbank, National Association
(Carolinas), not in its individual capacity but solely as pass through
trustee under the Pass Through Agreement and in the case of NationsBank of
Georgia, National Association, as indenture trustee under the Indenture,
and except as otherwise expressly provided in this Agreement or in the
Lease, the Indenture, the Pass Through Agreement or the Trust Agreement,
neither First Security Bank of Utah, National Association, Nationsbank,
National Association (Carolinas), nor NationsBank of Georgia, National
Association, shall be personally liable for or on account of its
statements, representations, warranties, covenants or obligations under
this Agreement; provided, however, that each of First Security Bank of
Utah, National Association, Nationsbank, National Association (Carolinas),
and NationsBank of Georgia, National Association accepts the benefits
running to it under this Agreement, and each agrees that (except as
otherwise expressly provided in this Agreement or any other Operative
Agreement to which it is a party) it shall be liable in its individual
capacity for (a) its own gross negligence or willful misconduct (whether in
its capacity as trustee or in its individual capacity), (b) any breach of
representations and warranties or any breach of covenants made in its
individual capacity pursuant to or in connection with this Agreement or the
other Operative Agreements to which it is a party, (c) any breach, in the
case of the Owner Trustee, of its covenants made in its individual capacity
in Sections 3.05 and 3.08 of the Indenture, (d) the failure to use ordinary
care in receiving, handling and disbursing funds, (e) in the case of the
Owner Trustee, Lessor's Liens attributable to it in its individual
capacity, (f) in the case of the Indenture Trustee, Indenture Trustee's
Liens and (g) taxes, fees or other charges on, or based on, or measured by,
any fees, commissions or compensation received by it in connection with the
transactions contemplated by the Operative Agreements.
Section 17.08. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17.09. Public Release of Information. Subject to applicable
legal requirements (including, without limitation, securities laws
requirements, other regulatory requirements and other legally compelled
disclosures), so long as there shall not have occurred an Event of Default or
Indenture Event of Default, each party shall in each instance obtain the prior
written approval of each other party concerning the exact text and timing of
news releases, articles and other information releases to the public media
concerning any Operative Agreements.
Section 17.10. Certain Limitations on Reorganization. The Indenture
Trustee agrees that, if (i) the Lessor's Estate or the trust created by the
Trust Agreement becomes a debtor subject to the reorganization provisions of
the Bankruptcy Code or any other applicable bankruptcy or insolvency statutes,
(ii) pursuant to such reorganization provision, the Owner Participant is held
to have recourse liability to the debtor or the trustee of the debtor directly
or indirectly on account of any amount payable as principal, interest or
premium on the Certificates, and (iii) the Indenture Trustee actually receives
any Recourse Amount which reflects any payment by the Owner Participant on
account of (ii) above, then the Indenture Trustee shall promptly refund to the
Owner Participant such Recourse Amount. For purposes of this Section 17.10,
"Recourse Amount" means the amount by which the portion of such payment by the
Owner Participant on account of clause (ii) above received by the Indenture
Trustee exceeds the amount which would have been received by the Indenture
Trustee if the Owner Participant had not become subject to the recourse
liability referred to in (ii) above. Nothing contained in this Section shall
prevent the Indenture Trustee from enforcing any individual obligation (and
retaining the proceeds thereof) of the Owner Participant under this Agreement
or any other Operative Agreement to the extent herein or therein provided, for
which the Owner Participant has expressly agreed by the terms of this
Agreement to accept individual responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS AND IS BEING DELIVERED IN NEW
YORK.
Section 17.12. Section 1110 Compliance. The Owner Participant, the
Indenture Trustee and the Lessee agree that the transactions contemplated by
the Operative Agreements are expressly intended to be, shall be and should be
construed so as to be entitled to the benefits and protection of Section 1110
of the Bankruptcy Code.
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality. Each party hereto agrees (on behalf
of itself and each of its Affiliates, agents, directors, officers, employees
and representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature, any non-public information supplied to it pursuant to this
Agreement which is identified by the Person supplying the same as being
confidential at the time the same is delivered to such party, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for any of the parties hereto, (iii) to bank examiners, auditors,
insurance regulators, accountants or similar regulatory authorities, (iv) in
connection with any litigation to which any one or more of the parties hereto
is a party relating to the transactions contemplated hereby or by any of the
Operative Agreements, (v) to a subsidiary or Affiliate of the parties hereto,
(vi) to any assignee or participant (or prospective assignee or participant)
so long as such assignee or participant (or prospective assignee or
participant) first executes and delivers to the respective party making such
assignment an agreement in writing to be bound by the provisions of this
Section 18.01 or (vii) in the case of the Owner Participant or the Owner
Trustee (in its individual or trust capacity) to the Owner Trustee (in its
individual or trust capacity) or to the Owner Participant, as the case may be.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers and
this Participation Agreement shall be effective this ___ day of August,
1995.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name:Robert D. Henning
Title:Assistant Treasurer and Managing
Director - Structured Finance
OWNER PARTICIPANT:
AMSOUTH LEASING CORPORATION
By:__________________________________________
Name:Charles F. Kiser
Title:President
OWNER TRUSTEE:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual
capacity except as otherwise
expressly provided herein,
but solely as Owner Trustee
By:__________________________________________
Name:
Title:
INDENTURE TRUSTEE:
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION,
not in its individual
capacity except as otherwise
expressly provided herein,
but solely as Indenture Trustee
By:__________________________________________
Name:
Title:
PASS THROUGH TRUSTEE:
NATIONSBANK, NATIONAL ASSOCIATION
(CAROLINAS)
not in its individual
capacity except as otherwise
expressly provided herein,
but solely as Pass Through Trustee
By:__________________________________________
Name:
Title:
ORIGINAL LOAN PARTICIPANTS:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as a Loan Participant and as Agent
By:__________________________________________
Name:
Title:
BANK OF AMERICA NT & SA
By:__________________________________________
Name:
Title:
CIBC INC.
By:__________________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:__________________________________________
Name:
Title:
SCHEDULE I
CERTIFICATE INFORMATION
1. Federal Express Corporation Pass Through Trust, 1995-A1
Federal Express Corporation Trust No. N658FE
Interest Rate: 7.63%
Maturity: January 5, 2013
Principal Amount: $48,360,000
2. Federal Express Corporation Pass Through Trust, 1995-A2
Federal Express Corporation Trust No. N658FE
Interest Rate: 8.06%
Maturity: January 5, 2016
Principal Amount: $13,166,000
SCHEDULE II
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Act; Federal Aviation Act. Title 49 of the United States Code
(which, among other things, recodified the Federal Aviation Act of 1958, as
amended to the time of such recodification), as amended and in effect on the
date of the Lease or as subsequently amended, or any successor or substituted
legislation at the time in effect and applicable, and the regulations
promulgated pursuant thereto.
Additional Insureds. As defined in Article 13 of the Lease.
Aeronautics Authority or FAA. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment received or deemed to
have been received by a Person (the "Original Payment") shall be supplemented
by a further payment to such Person so that the sum of the two payments shall
be equal to the Original Payment, after taking into account (x) all Taxes that
would result from the receipt or accrual of such payments and (y) any
reduction in Taxes that would result from such increased Taxes. In the case
of amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is
at all times subject to Federal income tax at the maximum marginal rate
generally applicable to corporations from time to time and actual state, local
and foreign income taxes.
Agent. The Chase Manhattan Bank (National Association) and its
successors and permitted assigns as Agent for the Original Loan Participants
pursuant to Article 16 of the Original Participation Agreement.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by
the Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Act) as to which there is in force a permit granted under
Section 41302 of the Act.
Aircraft. The Airframe (or any permitted substitute airframe)
together with the two Engines (or any Replacement Engine) whether or not any
of such initial or Replacement Engines may from time to time be installed on
such Airframe or may be installed on any other airframe or on any other
aircraft, including any aircraft substituted pursuant to Section 11.03 of the
Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) leased by the Lessor to the
Lessee pursuant to the Lease and the initial Lease Supplement and having
the United States FAA Registration Number and manufacturer's serial number
specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any replacement airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement, dated as of August 1, 1995.
Ancillary Agreement. Any written agreement of the Lessee to which
the Lessor is a party or to which the Lessor has consented in writing
entered into on the Delivery Date or the Refunding Date in connection with
the transactions contemplated by the Operative Agreements, as such
agreement may be amended and supplemented from time to time and delivered
to the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and
the Owner Participant as amended from time to time.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with a copy of such report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
May 1, 1995, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended,
and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or with the giving of notice or lapse of
time or both would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft throughout
the Basic Term pursuant to Section 3.02 of the Lease, adjusted pursuant to
Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on July 5, 2019 or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized
or required to close in New York, New York and Memphis, Tennessee, and so
long as the Lien of the Indenture is in effect, in Atlanta, Georgia,
Columbia, South Carolina and, thereafter, in Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N658FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Act, or any analogous part of any
successor or substituted legislation or regulation at the time in effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, references to the Code shall
mean the Internal Revenue Code of 1986, as amended from time to time.
Commencement Date. July 5, 1995.
Consent and Agreement. The Consent and Agreement dated as of May 1,
1995 executed by the Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Department. The principal office of the Owner
Trustee located at 79 South Main Street, Salt Lake City, Utah 84111 or such
other office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified to the Lessee,
the Indenture Trustee and the Owner Participant.
Corporate Trust Office. The principal office of the Indenture
Trustee located at 600 Peachtree Street, N.E., Suite 900, Atlanta, Georgia
30308, Attention: Corporate Trust Lease Administration or such other office at
which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to the
Lessee, the Owner Participant and the Owner Trustee.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition, which with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. May 4, 1995.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by its manufacturer's serial number in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease,
together with all Parts related thereto. Except as otherwise provided, at
such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of May 1, 1995, executed
by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N658FE), dated as of May 1, 1995 between the
Lessor and the Lessee, as the same may be amended, modified or supplemented
from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. Has the meaning set forth in Section 7.06 of the
Participation Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use
(A) for a period in excess of 30 days due to theft or disappearance or such
longer period not to exceed 60 days from the end of such initial 30-day period
if and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such loss constitutes an Event of Loss under clause (ii)
of this definition) or (B) for a period in excess of 60 days due to the
destruction, damage beyond economic repair or rendition of such property
permanently unfit for normal use by Lessee for any reason whatsoever; (ii) any
damage to such property which results in an insurance settlement with respect
to such property on the basis of a total loss, or constructive or compromised
total loss; (iii) (1) condemnation, confiscation or seizure of, or requisition
of title to such property by the Government, any foreign government or
purported government or any agency or instrumentality thereof, or (2)
condemnation, confiscation, or seizure of, or requisition or taking of, use of
such property (A) by a foreign government or instrumentality or agency of any
such foreign government, for a period in excess of 180 days (or such shorter
period ending on the earlier of the expiration of the Term or on the date on
which an insurance settlement with respect to such property on the basis of a
total loss or constructive or compromised total loss shall occur) or (B) by
the Government for a period extending beyond the Term, provided that no Event
of Loss shall be deemed to have occurred, and the Term shall be extended
automatically for a period of six months (or the date of return of the
Aircraft, if shorter, so long as the Lessor receives at least six months
notice of such date of return) beyond the end of the Term in the event that
the Aircraft, the Airframe or any Engine is requisitioned by the Government
pursuant to an activation as part of the Civil Reserve Air Fleet Program
described in Section 7.02(a)(iv) of the Lease; and (iv) as a result of any
law, rule, regulation, order or other action by the Aeronautics Authority or
other governmental body having jurisdiction, the use of the Aircraft or
Airframe in the normal course of air transportation of cargo shall have been
prohibited by virtue of a condition affecting all Airbus A300F-600 series
aircraft equipped with engines of the same make and model as the Engines for a
period of six (6) consecutive months, unless the Lessee, prior to the
expiration of such six (6) month period, shall be diligently carrying forward
all steps which are necessary or desirable to permit the normal use of the
Aircraft or Airframe or, in any event, if such use of the Aircraft or the
Airframe shall have been prohibited for a period of twelve (12) consecutive
months, unless the Lessee, prior to the expiration of such twelve (12) month
period shall have conformed at least one Airbus A300F-600 series aircraft (but
not necessarily the Aircraft or the Airframe) to the requirements of any such
law, rule, regulation, order, or other action and shall have commenced regular
commercial use and shall be diligently carrying forward, on a
non-discriminatory basis, all steps necessary or desirable to permit the
normal use of the Aircraft by the Lessee. The date of such Event of Loss
shall be (s) the 31st day or the 91st day, as the case may be, following loss
of such property or its use due to theft or disappearance (or the end of the
Term, if earlier); (t) the 61st day following the date of any destruction,
damage beyond economic repair or rendition of such property permanently unfit
for normal use; (u) the date of any insurance settlement on the basis of a
total loss or constructive or compromised total loss; (v) the date of any
condemnation, confiscation, seizure or requisition of title of such property;
(w) the 181st day following condemnation, confiscation, seizure or requisition
for use of such property by a foreign government referred to in clause
(iii)(2)(A) above (or the end of the Term or the date of any insurance
settlement described therein, if earlier than such 181st day); (x) the last
day of the Term in the case of requisition for use of such property by the
Government; (y) the last day of the 6 month or 12 month period, referred to in
clause (iv) above. An Event of Loss with respect to the Aircraft shall be
deemed to have occurred if any Event of Loss occurs with respect to the
Airframe. If an Event of Loss described in any of clauses (i) (A), (iii),
(iv) or (v) above shall occur, Lessor may elect, within 30 days following the
date upon which such Event of Loss is deemed to have occurred, to waive such
Event of Loss and the consequences thereof.
Excepted Payments. Collectively, (i) indemnity or other payments
(and interest thereon to the extent provided in the Operative Agreements)
paid or payable by the Lessee in respect of the Owner Participant, the
Owner Trustee in its individual capacity or any of their respective
successors, permitted assigns, directors, officers, employees, servants and
agents or Affiliates, pursuant to the Participation Agreement or any
indemnity hereafter granted to the Owner Participant or the Owner Trustee
in its individual capacity pursuant to the Lease or the Participation
Agreement, (ii) proceeds of public liability insurance (or government
indemnities in lieu thereof) in respect of the Aircraft payable as a result
of insurance claims paid for the benefit of, or losses suffered by, the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or by the Owner Participant, or their respective successors,
permitted assigns or Affiliates, (iii) proceeds of insurance maintained
with respect to the Aircraft by the Owner Participant (whether directly or
through the Owner Trustee) maintained in accordance with the provisions of
but not required under Section 13 of the Lease, (iv) payments of
Supplemental Rent by the Lessee in respect of any amounts payable under the
Tax Indemnity Agreement, (v) any amounts payable by the Lessee to the Owner
Participant or the Owner Trustee in its individual capacity, after the
release thereof from the Lien of the Indenture, (vi) (x) in the case of
any Basic Rent received by the Indenture Trustee on or in respect of any
Rent Payment Date, subject to receipt by the Indenture Trustee of Basic
Rent due on such Rent Payment Date satisfying Section 3.05 of the Lease,
payments of Basic Rent payable on such Rent Payment Date constituting
increases in Basic Rent attributable to payments arising pursuant to
Section 5 of the Tax Indemnity Agreement and (y) in the case of any Basic
Rent otherwise received by the Indenture Trustee, so long as no Payment
Default or Indenture Event of Default shall have occurred and be
continuing, payments of Basic Rent constituting increases in Basic Rent
attributable to payments arising pursuant to Section 5 of the Tax Indemnity
Agreement, (vii) the payment of incremental out-of-pocket expenses of the
Owner Trustee, the Owner Participant or their respective authorized
representatives payable by the Lessee under Section 6.03(b) of the
Participation Agreement or Section 14.01 of the Lease following any
reregistration of the Aircraft and (viii) any right to demand, collect or
otherwise receive and enforce the payment of any amount described in
clauses (i) through (vii) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
Fair Market Renewal Term. A term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the second
paragraph of Section 4.01(a) thereof and with respect to which the
conditions set forth in such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease. Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal
in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion
to buy and an informed and willing seller unaffiliated with such purchaser
and under no compulsion to sell, assuming that the Aircraft (or other
property) is unencumbered by the Lease. Unless otherwise provided in the
applicable provisions of any Operative Agreement, in such determination it
shall be assumed that the Aircraft is in the condition required under the
Lease in the case of return of the Aircraft pursuant to Article 12 of the
Lease; provided that in connection with any determination pursuant to or
for the purposes of Article 17 of the Lease, the Aircraft shall be
appraised on an "as is, where is" basis. Fair Market Value shall be
determined in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FSBU. First Security Bank of Utah, National Association, a national
banking association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between
the Engine Manufacturer and the Lessee related to the purchase by the
Lessee of the Engines as originally executed or as modified, amended or
supplemented in accordance with the terms thereof, but only insofar as the
General Terms Agreement relates to the Engines, to the extent assigned to
the Owner Trustee pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSBU, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, the Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N658FE), dated as of May 1, 1995, as amended and
restated as of August 1, 1995, between the Lessor and the Indenture Trustee,
as supplemented by the Indenture and Security Agreement Supplement, or amended
including any amendment or supplement thereto entered into from time to time.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N658FE) dated May 4, 1995, as such Indenture and Security Agreement Supplement
shall be amended or supplemented from time to time and any other supplement to
the Indenture, substantially in the form of Exhibit A to the Indenture.
Indenture Default. Any event or condition, which with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. NationsBank of Georgia, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes or Expenses
imposed against the Indenture Trustee which are not required to be indemnified
against by the Lessee pursuant to the Participation Agreement by reason of
Section 8.01(b) or 9.01(b) thereof.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N658FE) dated as of May 1, 1995, as amended and restated as of August 1, 1995,
entered into by the Lessor and the Lessee concurrently with the execution and
delivery of the Indenture, as said Lease may from time to time be supplemented
or amended, or its terms waived or modified, to the extent permitted by, and
in accordance with, the terms of the Indenture, including, without limitation,
supplementation by one or more Lease Supplements entered into pursuant to the
applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N658FE) dated May 4, 1995, as such Lease Supplement
shall be amended or supplemented from time to time and any other supplement
to the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessor. First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), the GTA, the Engine Warranty Assignment, the Engine Consent, any
warranty with respect to the Airframe and the Engines, all amounts of Basic
Rent and Supplemental Rent, including without limitation, insurance proceeds
(other than insurance proceeds payable to or for the benefit of the Owner
Trustee in its individual capacity, the Owner Participant or the Indenture
Trustee) and requisition, indemnity or other payments of any kind for or with
respect to the Aircraft (except amounts owing to the Owner Participant, to the
Indenture Trustee, to the Owner Trustee in its individual capacity, or to any
of their respective directors, officers, employees and agents pursuant to
Articles 8 and 9 of the Participation Agreement). Notwithstanding the
foregoing, "Lessor's Estate" shall (i) not include any Excepted Payment and
(ii) include all property purported to be covered by the Granting Clause of
the Indenture.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, or the Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, (ii)
acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof or which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Articles 7, 8, 9, 10
or 11 of the Lease and other than a transfer pursuant to the exercise of the
remedies set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to an excess of (i) the
present values of all remaining scheduled payments of such principal amount or
portion thereof and interest thereon (excluding interest accrued from the
immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate per semi-annual period equal to the Debt Rate.
Non-U.S. Person. Any Person other than (i) a citizen or resident of
the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which the Lessee in good faith determines to
be obsolete or no longer suitable or appropriate for use on the Airframe or
any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, any Owner Trustee Guaranty,
any Ancillary Agreement entered into by or with the written consent of the
Indenture Trustee, which by its terms is an Operative Agreement, the
Certificates outstanding at the time of reference, the Indenture, the
Indenture and Security Agreement Supplement, the Consent and Agreement, the
AVSA Consent and Agreement, the Consent and Guaranty (to the extent assigned
by the Purchase Agreement Assignment), the Engine Consent and the Tax
Indemnity Agreement, each as amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N658FE) dated as of May 1,
1995 between the Owner Trustee and the Indenture Trustee, which together with
the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N658FE) dated May 4, 1995 attached thereto was recorded
as one instrument by the FAA on May 5, 1995 and assigned Conveyance Number
NN008445.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N658FE) dated as of May 1, 1995 between the Owner Trustee as lessor,
and the Lessee, which together with Lease Supplement No. 1 (Federal Express
Corporation Trust No. N658FE) dated May 4, 1995 attached thereto was recorded
as one instrument by the FAA on May 5, 1995 and assigned Conveyance Number
NN008446.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the first Refinancing after the Delivery
Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N658FE) among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of May 1, 1995.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N658FE) between the Lessee and the
Owner Participant as it was originally executed as of May 1, 1995.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N658FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of May 1, 1995 and filed with the FAA
on May 4, 1995.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Amount. The amount described in Section 2.03 of
the Participation Agreement and set forth on Schedule II to the Lease.
Owner Participant Guarantor. AmSouth Bank of Alabama, its successors
and permitted assigns and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty dated the
Delivery Date, as amended and restated on the Refunding Date substantially in
the form of Exhibit E to the Participation Agreement, as the same may be
amended, modified or supplemented from time to time.
Owner Trustee. FSBU, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash flow during the Interim Term
and the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages and the EBO Price, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N658FE), dated as of May 1, 1995, as amended
and restated as of August 1, 1995, among the Lessee, the Original Loan
Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as trustee, the Owner
Participant, the Pass Through Trustee, not in its individual capacity
except as otherwise expressly provided therein, but solely as pass through
trustee and the Indenture Trustee, not in its individual capacity except as
otherwise expressly stated therein, but solely as indenture trustee, as
amended, modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever
nature (other than complete Engines or engines) which may from time to time
be incorporated or installed in or attached to the Airframe or any Engine
or, prior to replacement thereof in accordance with the Lease, which may be
removed therefrom.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
August 1, 1995 between the Lessee and the Pass Through Trustee, as such
Pass Through Agreement may be modified, supplemented or amended from time
to time in accordance with the provisions thereof.
Pass Through Certificates. Any of the 1995 Pass Through
Certificates, Series A1 or 1995 Pass Through Certificates, Series A2, in
each case as issued by the related Pass Through Trust; and "Pass Through
Certificates" means all of the Pass Through Certificates issued by each of
the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1995-A1
or Federal Express Pass Through Trust, 1995-A2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. NationsBank, National Association (Carolinas),
a national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 5 and July 5 commencing July 5, 1995.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Premium Termination Date. With respect to the Certificates having a
Maturity in 2013, February 22, 2007, and with respect to the Certificates
having a Maturity in 2016, May 4, 2015.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of
the Indenture.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase
Agreement, dated as of July 3, 1991 between AVSA and the Lessee, including
all exhibits, appendices and letter agreements attached thereto as
originally executed or as modified, amended or supplemented in accordance
with the terms thereof, but only to the extent that the foregoing relates
to the Aircraft and to the extent assigned pursuant to the Purchase
Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N658FE), dated as of May 1, 1995
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 21 for January 5
Payment Dates and June 20 for July 5 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least ten Business Days prior
to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of
the products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the
payment due on the Maturity of such Certificate, by (ii) the number of
years (calculated to the nearest one-twelfth) which will elapse between
such determination date, and the date on which such payment is scheduled to
be made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 5 and July 5 commencing July 5,
1995.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of the same or of equal or greater
value, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Department or Corporate
Trust Office (in the Corporate Trust Lease Administration Department), as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, with respect to the Owner Participant, the president or
any vice president with direct responsibility for the transactions
contemplated by the Operative Agreements, and with respect to any other party,
any corporate officer or (except in the case of the Owner Participant) other
employee of a party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Corporation.
Securities Act. The Securities Act of 1933, as amended.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
Series Supplement. The Series Supplement 1995-A1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1995-A2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both of such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value shall
be, under any circumstances and in any event, an amount, together with so much
of the arrears portion of Basic Rent due and owing through the date of payment
of Stipulated Loss Value as does not constitute an Excepted Payment, at least
sufficient to pay in full as of such date of payment the aggregate unpaid
principal amount of and accrued interest on the Certificates outstanding on
such date of payment. Subject to the immediately preceding sentence, it is
understood and agreed that the amounts set forth on Schedule III of the Lease,
for dates other than Rent Payment Dates on which arrears Basic Rent is due,
fully reflect appropriate Basic Rent accruals and credits of unearned Basic
Rent and, accordingly, no further accrual or credit shall be required whenever
Stipulated Loss Value is to be calculated with reference to any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant or
others, including, without limitation, payments of Stipulated Loss Value, EBO
Price and amounts calculated by reference to Termination Value and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after July 5, 2002 in the case of Article 10 of the Lease, and in the
case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling on
January 5, 2011 or January 5, 2014, as the case may be, (ii) Section
4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the
eighth anniversary of the Commencement Date and (iii) Section 4.02(a)(F) of
the Lease, January 5, 2016.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to
be calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N658FE), dated as of May 1, 1995 as amended and restated as of
August 1, 1995, between the Owner Participant and the Owner Trustee in its
individual capacity, as from time to time modified, amended or supplemented
pursuant to its applicable provisions and in accordance with the Operative
Agreements.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. The several Underwriters named in the Underwriting
Agreement.
Underwriting Agreement. The Underwriting Agreement dated August 16,
1995 among the Lessee, Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Chase Securities, Inc.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Federal Aviation Act, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Federal Aviation
Act and Part 121 of the regulations under such Act, for aircraft capable of
carrying ten (10) or more individuals or 6,000 pounds or more of cargo, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provision thereof or in absence thereof.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Malaysia
Austria Mexico
Belgium Netherlands
Canada New Zealand
Denmark Norway
Finland Philippines
France Singapore
Germany Spain
Iceland Sweden
Ireland Switzerland
Japan United Kingdom
Luxembourg
EXHIBIT A(1)(a)
[Letterhead of Federal Express]
[Refunding Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N658FE
Ladies and Gentlemen:
I am the Vice President - Law of Federal Express Corporation, a
Delaware corporation ("Federal"), and am familiar with the transactions
contemplated by the Participation Agreement (Federal Express Corporation
Trust No. N658FE), dated as of May 1, 1995, as amended and restated as of
August 1, 1995 (the "Participation Agreement"), among Federal, as Lessee,
AmSouth Leasing Corporation, as Owner Participant, The Chase Manhattan Bank
(National Association), Bank of America NT & SA, CIBC Inc. and The First
National Bank of Chicago, as Original Loan Participants, First Security
Bank of Utah, National Association, a national banking association, not in
its individual capacity, except as otherwise stated, but solely as Owner
Trustee under the Trust Agreement, NationsBank of Georgia, National
Association, a national banking association, not in its individual
capacity, except as otherwise stated, but solely as Indenture Trustee under
the Indenture and NationsBank, National Association (Carolinas), as Pass
Through Trustee, relating to the Aircraft. This opinion is being delivered
pursuant to Section 4.01(l)(i) of the Participation Agreement. Capitalized
terms not otherwise defined herein have the meaning assigned thereto in the
Participation Agreement.
The Participation Agreement provides, among other things, for
the refinancing in full of the Original Loan Certificates evidencing the
Original Loan Participants' participation in the payment of the Purchase
Price of one Airbus A300F4-605R aircraft (the "Aircraft"), using the
proceeds from the public offering of the Pass Through Certificates. Two
Series of Pass Through Certificates will be issued by two Pass Through
Trusts formed to acquire, among other securities, the Certificates bearing
a particular interest rate and having a particular Maturity that will be
issued under the Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N658FE) dated as of May 1, 1995, as amended and
restated as of August 1, 1995, as supplemented by the related Indenture and
Security Agreement Supplement ("Indenture"), between the Owner Trustee and
the Indenture Trustee.
In connection with the opinions expressed below, I have
examined or caused to be examined by attorneys under my supervision, the
Operative Agreements. We have relied upon originals or copies, certified
or otherwise identified to our satisfaction, of such corporate records,
documents and other instruments as in our judgment are relevant to
rendering the opinions expressed below. As to any facts material to the
opinions expressed below (other than any thereof relating to Federal), we
have relied upon the representations and warranties made in the Operative
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of
all documents submitted to us as originals and the conformity with the
originals of all documents submitted to us as copies. We have also assumed
that each of the parties to each of the Operative Agreements, other than
Federal, has full power, authority and legal right to enter into such
Operative Agreements and that each such Operative Agreement has been duly
authorized, executed and delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, is a
"citizen of the United States" within the meaning of Section 40102(a)(15)
of Title 49 of the United States Code (formerly Section 101(16) of the
Federal Aviation Act of 1958, as amended to the date of recodification (the
"Act")), and has or had, on the date of execution thereof, the corporate
power and authority to carry on its business as currently conducted and to
enter into and perform its obligations under the Original Agreements and
the Operative Agreements to which it is a party. Federal is duly qualified
to do business and is in good standing in the State of Tennessee and each
other state of the United States in which its operations or the nature of
its business requires Federal to so qualify, except where the failure to so
qualify would not have a material adverse impact on Federal or its
business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material
to the operation of the routes flown by it and the conduct of its business
and operations as currently conducted, and each such certificate,
franchise, license, permit, right and concession and consent is in full
force and effect.
3. Each of the Original Agreements and the Operative
Agreements to which Federal is a party has or had, on the date of execution
thereof, been duly authorized, executed and delivered by Federal and
together constitute the legal, valid and binding obligations of Federal
enforceable against Federal in accordance with its and their terms.
4. Neither the execution and delivery by Federal of the
Original Agreements and the Operative Agreements to which Federal is a
party, nor the consummation of any of the transactions by Federal
contemplated thereby, nor the performance of the obligations thereunder by
Federal, did at the time of execution and delivery, or does presently (a)
require any stockholder approval or violate the certificate of
incorporation or by-laws of Federal or (b) conflict with or contravene the
provisions of, or constitutes a default under, or result in the creation of
any Lien (other than Liens permitted under Section 6.01(a) of the Lease)
upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ,
injunction or decree of any court or governmental authority against Federal
or by which any of its properties may be bound or any indenture, mortgage,
contract or other agreement known to me to which Federal is a party or by
which it may be bound or, to my knowledge, any judgement or order of the
State of Tennessee or the United States of America applicable to or binding
on Federal or require the approval or consent of any trustee or the holders
of any indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the
Original Agreements and the Operative Agreements to which it is a party,
nor the consummation of any of the transactions by Federal contemplated
thereby, nor the performance of the obligations thereunder by Federal, did
or does, as the case may be, require the consent or approval of, the giving
of notice to, or (except as described or contemplated in the Participation
Agreement and the Lease, all of which are required to be performed on or
prior to the Refunding Date and which shall have been accomplished on or
prior to the Refunding Date), the registration with, or the taking of any
other action in respect of, the FAA, the Securities and Exchange Commission
or any other authority or agency of the federal government or of the State
of Tennessee other than (a) the registration of the issuance and sale of
the Pass Through Certificates under the Securities Act, (b) compliance with
the securities laws of each applicable state, and (c) the filing of the
Indenture, the Lease and the Trust Agreement with the FAA.
6. There are no pending, or to my knowledge, threatened
actions, suits, investigations or proceedings before or by any court or
administrative agency which individually (or in the aggregate in the case
of any group of related lawsuits) which (A) involve the Aircraft, (B)
except for the matters described under "Legal Proceedings" in Federal's
Annual Report on Form 10-K for the fiscal year ended May 31, 1995, as to
which I can express no opinion at this time concerning Federal's liability
(if any) or the effect of any adverse determination upon the consolidated
financial condition, business or operations of Federal, if adversely
determined, would materially and adversely affect the consolidated
financial condition, business or operations of the Lessee, or (C) if
adversely determined would adversely affect the ability of the Lessee to
perform its obligations under the Original Agreements or the Operative
Agreements.
7. Except for the filing and, where appropriate, recording
pursuant to the Act of the Indenture, the Lease, the Trust Agreement, the
filing of the financing statements referred to in Section 4.01(f) of the
Participation Agreement and the taking of possession by the Indenture
Trustee of the original counterpart of the Lease and maintaining possession
of the original counterpart of the Lease Supplement delivered on the
Delivery Date, no further action, including any filing or recording of any
document is necessary or advisable in order to establish and perfect the
Owner Trustee's title to and interest in the Aircraft as against Federal
and any third parties, or to perfect the first security interests in and
mortgage Lien on the Trust Indenture Estate in favor of the Indenture
Trustee in each case with respect to such portion of the Aircraft as is
covered by the recording system established by the Act.
8. Federal is a duly certificated "air carrier" within the
meaning of the Act, and a holder of a certificate under Sections 41102(a)
and 41103 of the Act, and an "air carrier operating certificate" issued
under Chapter 447 of the Act for aircraft capable of carrying ten (10) or
more individuals or 6,000 pounds or more of cargo, and each such
certificate is in full force and effect.
9. Good and marketable title to the Aircraft was, immediately
before delivery of AVSA's FAA Bill of Sale and AVSA's Warranty Bill of Sale
and therefor to the Owner Trustee, vested in Federal free and clear of all
Liens and good and marketable title to the Aircraft was, on the Delivery
Date, duly conveyed by Federal to the Owner Trustee free and clear of all
Liens. Pursuant to the Original Participation Agreement the Aircraft was
duly delivered to the Owner Trustee. Federal, as Lessee, duly accepted the
Aircraft under the Original Lease and the Lease Supplement and the Term
commenced.
10. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in
the State of Tennessee) are located at 2005 Corporate Avenue, Memphis,
Shelby County, Tennessee.
11. Federal is not, and is not directly or indirectly
controlled by or acting on behalf of any Person which is, an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
The opinions expressed in Paragraph 3 above as to the
enforceability of the Original Agreements and the Operative Agreements to
which Federal is a party are based upon the assumption for purposes of such
opinions and without independent analysis that, notwithstanding the
respective choice of laws clauses in the Original Agreements and the
Operative Agreements, the governing law with respect to each of the
Original Agreements and the Operative Agreements is identical in all
relevant respects to the law of the State of Tennessee. Insofar as the
foregoing opinion relates to the enforceability of any instrument, such
enforceability is subject to applicable bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors' rights generally
(whether such enforceability is considered in a proceeding in equity or at
law). The enforceability of the remedies provided under the Lease may also
be limited by applicable laws which may affect the remedies provided
therein but which do not in my opinion affect the validity of the Lease or
make such remedies inadequate for the practical realization of the benefits
intended to be provided thereby.
I do not express any opinion as to matters governed by any law
other than the Federal laws of the United States of America, the
corporation law of the State of Delaware and the laws of the State of
Tennessee.
As to the matters referred to in paragraphs 7 and 9 above, I
have relied on the opinion of Daugherty, Fowler & Peregrin of even date
herewith, to the extent such matters are addressed in such counsel's
opinion and subject to the assumptions and qualifications expressed
therein.
This opinion is delivered to you solely for your use in
connection with the transactions described herein, and may not be used for
any other purpose, and may not be relied upon by any other person, without
my prior written consent.
I rendered an opinion dated May 4, 1995 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. I hereby consent
and agree that the addressees hereto who were not addressees to the
Delivery Date Opinion may rely on the Delivery Date Opinion as fully and
with the same force and effect as if such addressees were originally named
therein on the date of the Delivery Date Opinion.
Very truly yours,
George W. Hearn
SCHEDULE A
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
NationsBank of Georgia, National Association
Corporate Trust Lease Administration
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Pass Through Trustee
NationsBank, National Association
1301 Gervis Street
4th Floor
Columbia, South Carolina 29201
Owner Participant
AmSouth Leasing Corporation
1900 Fifth Avenue North
7th Floor
Birmingham, Alabama 35203
Underwriters
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Chase Securities, Inc.
c/o Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower
New York, New York 10281
Original Loan Participants
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
The First National Bank of Chicago
Transportation Division
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
EXHIBIT A(1)(b)
[Letterhead of Davis Polk & Wardwell]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N658FE
Ladies and Gentlemen:
We have acted as special counsel for Federal Express
Corporation, a Delaware corporation ("Federal Express"), in connection with
the transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N658FE), dated as of May 1, 1995, as amended and
restated as of August 1, 1995 (the "Participation Agreement"), among Federal
Express, as Lessee, AmSouth Leasing Corporation, as Owner Participant, The
Chase Manhattan Bank (National Association), Bank of America NT & SA, CIBC
Inc. and The First National Bank of Chicago, as the Original Loan
Participants, First Security Bank of Utah, National Association, a national
banking association, not in its individual capacity but solely as Owner
Trustee under the Trust Agreement, NationsBank of Georgia, National
Association, a national banking association, not in its individual capacity,
except as otherwise stated, but solely as Indenture Trustee under the
Indenture, and NationsBank, National Association (Carolinas), as Pass Through
Trustee, relating to the Aircraft. This opinion is being delivered pursuant
to Section 4.01(l)(viii) of the Participation Agreement. Capitalized terms
not otherwise defined herein have the meanings assigned thereto in the
Participation Agreement.
Pursuant to the Original Participation Agreement, the Owner
Participant and the Original Loan Participants participated in the payment of
the Purchase Price of one Airbus A300F4-605R Aircraft which was purchased by
the Owner Trustee pursuant to AVSA's FAA Bill of Sale and AVSA's Warranty Bill
of Sale, subjected to the Lien of the Original Indenture and leased to Federal
Express under the Original Lease. The Participation Agreement provides, among
other things, for the refinancing of the Original Loan Certificates using the
proceeds from the public offering of the Pass Through Certificates. Two
Series of Pass Through Certificates will be issued by separate Pass Through
Trusts, each formed to acquire, among other securities, the Certificates
bearing a particular interest rate and having a particular Maturity that will
be issued under the Indenture.
In connection with the opinions expressed below, we have
examined the Original Participation Agreement, the Original Trust Agreement,
the Original Lease, the Lease Supplement, the Original Indenture, the
Indenture and Security Agreement Supplement, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement, the AVSA Consent and
Agreement, the Engine Consent, the Airbus Guaranty, the Original Loan
Certificates, the Certificates, the Pass Through Certificates, the Pass
Through Agreement, each Series Supplement, the Participation Agreement, the
Indenture, the Lease and the Trust Agreement. We have also examined
originals, or copies certified to our satisfaction, of such other agreements,
documents, certificates and statements of governmental officials and corporate
officers as we have deemed necessary or advisable as a basis for such
opinions. In such examination, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals
and the conformity with the originals of all documents submitted to us as
copies.
As to any facts material to our opinions expressed below, we
have, with your consent, relied on the representations and warranties made in
or pursuant to the Participation Agreement, the Original Participation
Agreement and the other documents referred to therein, the accuracy of which
we have not independently verified. In addition, we have, when relevant facts
were not independently established by us, relied, to the extent we deemed such
reliance proper, upon certificates of public officials and certificates,
telegrams and other written or telephoned statements of officers of the
parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and
the other property included in the Lessor's Estate as may not be covered by
the recording system established by the FAA pursuant to Section 44107 of the
Act, no filing or recording of any document or other action was or is
necessary in order to establish the Owner Trustee's title thereto and interest
therein as against Federal Express and any third parties.
2. The Lease creates a valid leasehold interest in the
Aircraft, the entitlement thereof to the benefits of recordation under the Act
being subject to the due and timely filing and, where appropriate, recording
of (A) the Lease, with the Indenture attached as an exhibit, (B) the Indenture
and (C) the Trust Agreement.
3. The execution, delivery and performance of the Original
Participation Agreement, the Participation Agreement, the Original Trust
Agreement, the Trust Agreement, the Original Indenture, the Indenture, the
Indenture and Security Agreement Supplement, the Original Lease, the Lease and
the Lease Supplement by the Owner Trustee in its individual or trust capacity,
as the case may be, and the issuance, execution, delivery and performance of
the Certificates by the Owner Trustee in its trust capacity do not violate,
and fully comply with, any laws and governmental rules and regulations of the
State of New York that may be applicable to the Owner Trustee in its
individual or trust capacity, as the case may be. The opinion set forth in
this paragraph 3 is rendered without regard to the effect, if any, on such
issuance (in the case of the Certificates), execution, delivery or performance
or the taking of any other action, the conduct of any other business or the
exercise of any other powers by First Security Bank of Utah, National
Association in its individual or in a trust capacity in the State of New York
not related to the transactions contemplated by the Original Agreements or the
Operative Agreements.
4. The execution, delivery and performance of the
Participation Agreement, the Pass Through Agreement and each Series Supplement
by the Pass Through Trustee in its individual or trust capacity, as the case
may be, and the issuance, execution, delivery and performance of the Pass
Through Certificates by the Pass Through Trustee in its trust capacity do not
contravene any laws and governmental rules and regulations of the State of New
York that may be applicable to the Pass Through Trustee in its individual or
trust capacity, as the case may be. The opinion set forth in this paragraph 4
is rendered without regard to the effect, if any, on such issuance (in the
case of the Pass Through Certificates), execution, delivery or performance of
the taking of any other action, the conduct of any other business or the
exercise of any other powers by NationsBank, National Association (Carolinas),
in its individual or in a trust capacity in the State of New York not related
to the transactions contemplated by the Original Agreements, the Operative
Agreements, the Pass Through Agreement and each Series Supplement.
5. (a) Each of the Original Agreements and the Operative
Agreements to which Federal Express is a party has been duly authorized,
executed and delivered by Federal Express.
(b) The execution, delivery and performance by Federal Express
of each of the Original Agreements and each of the Operative Agreements to
which Federal Express is a party do not violate, and fully comply with, any
laws and governmental rules and regulations of the State of New York that may
be applicable to Federal Express. The opinion set forth in this paragraph
5(b) is rendered without regard to the taking of any action or the conduct of
any other business by Federal Express in the State of New York other than the
transactions contemplated by the Original Agreements or the Operative
Agreements.
6. Assuming (i) the due authorization, execution and
delivery of the Original Participation Agreement, the Participation Agreement,
the Original Lease, the Lease, the Lease Supplement, the Original Indenture,
the Indenture, the Indenture and Security Agreement Supplement, the Original
Trust Agreement, the Trust Agreement, the Original Tax Indemnity Agreement,
Amendment No. 1 to the Original Tax Indemnity Agreement, AVSA's FAA Bill of
Sale, AVSA's Warranty Bill of Sale, the Purchase Agreement Assignment, the
Consent and Agreement, the AVSA Consent and Agreement, the Engine Consent, the
Airbus Guaranty, the Engine Consent and Agreement, the Pass Through Agreement,
each Series Supplement and each other Original Agreement and Operative
Agreement by each of the parties to each such document (other than Federal
Express), (ii) the due authorization, execution, issue and delivery by the
Owner Trustee, and the due authentication by the Indenture Trustee, of the
Certificates to be issued under the Indenture in accordance with the terms of
the Indenture, (iii) that the Original Loan Certificates are delivered by the
Original Loan Participants to the Indenture Trustee for cancellation and are
cancelled, (iv) the due authorization, execution, issuance, delivery and
authentication by the Pass Through Trustee of the Pass Through Certificates to
be issued under the Pass Through Agreement and the Series Supplement relating
to such Pass Through Certificates, in each case in accordance with the terms
of the Pass Through Agreement and such Series Supplement, and (v) that the
form of each such document is in compliance with all applicable laws and
governmental rules and regulations (other than Federal laws and the laws of
the State of New York), then: (A) each such document constitutes a legal,
valid and binding agreement of each party thereto enforceable against each
such party in accordance with its terms; (B) the Original Indenture created,
and the Indenture creates, for the benefit of the Holders, the security
interest in the Trust Indenture Estate that they purport to create; (C) the
Certificates, when issued to and acquired by the Pass Through Trustee, will be
legal, valid and binding obligations of the Owner Trustee enforceable against
the Owner Trustee in accordance with their terms and the terms of the
Indenture and will be entitled to the benefits of the Indenture, including the
benefit of the security interest created thereby; (D) the Pass Through
Certificates, when issued to and acquired by the Underwriters in accordance
with the Underwriting Agreement, will be legal, valid and binding obligations
of the Pass Through Trustee enforceable against the Pass Through Trustee in
accordance with their terms and will be entitled to the benefits of the Pass
Through Agreement and the Series Supplement relating thereto; and (E) the
beneficial interest of the Owner Participant under the Trust Agreement in and
to the properties which are part of the Trust Indenture Estate is subject, to
the extent provided in the Indenture, to the Lien of the Indenture in favor of
the Holders. The opinions set forth in this paragraph 6 are subject to the
due filing and recording, where appropriate, with the FAA of the Indenture,
the Lease and the Trust Agreement.
7. All the properties which are part of the Trust Indenture
Estate (including all right, title and interest of the Owner Trustee
pledged and mortgaged by it pursuant to the Indenture in and to the
Aircraft and the Lease) have been pledged and mortgaged with the Indenture
Trustee as part of the Trust Indenture Estate (subject to the due filing
and, where appropriate, recording of those documents referred to in
paragraph 2 above and the financing statements referred to in Section
4.01(f) of the Participation Agreement), and the beneficial interests of
the Owner Participant under the Trust Agreement in and to such properties
are subject, to the extent provided in the Indenture, to the Lien of the
Indenture in favor of the Holders of the Certificates issued and to be
issued under the Indenture.
8. The Indenture creates, as security for the Certificates
duly issued and to be issued under the Indenture, the first priority security
interest in the Aircraft it purports to create, the perfection and rank
thereof being subject to the registration with the FAA of the Aircraft in the
name of the Owner Trustee and the due and timely filing and, where
appropriate, recording in accordance with the Act of the documents referred to
in paragraph 2 above. We express no opinion with respect to the status of any
security interest in any portion of the Aircraft which does not constitute an
"aircraft" or "aircraft engine", as defined in paragraphs (6) and (7) of
Section 40102(a) of the Act.
9. Federal Express's participation in the transactions
contemplated by the Operative Agreements does not and will not constitute a
violation of Section 7 of the Securities Exchange Act of 1934.
10. It is not necessary, in connection with the creation of
the beneficial interests of the Owner Participant in the Trust Indenture
Estate under the circumstances contemplated by the Participation Agreement to
register such beneficial interest under the Securities Act of 1933, as
amended, or to qualify the Trust Agreement under the Trust Indenture Act of
1939, as amended.
11. The provisions of Section 1110 of the United States
Bankruptcy Code will apply to the Aircraft for the benefit of the Indenture
Trustee.
The foregoing opinions are subject to the following
qualifications:
(a) To the extent that this opinion relates to matters
involving Federal aviation law, we have relied, with your consent,
without independent investigation and verification and subject to the
assumptions and qualifications contained therein, upon the opinion of
Daugherty, Fowler & Peregrin to be delivered to you and dated the
date hereof. We have also relied on the opinion dated the date
hereof of George W. Hearn, Vice President - Law of the Lessee, for
purposes of the matters stated in paragraphs 5(a) (except to the
extent that New York law is applicable) and as to all matters of
Tennessee law.
(b) We are qualified to practice law in the State of New York,
and we do not purport to be experts on, or to express any opinion
herein concerning, any laws other than the laws of the State of New
York, the laws of the United States and the General Corporation Law
of the State of Delaware.
(c) The opinion contained in paragraph 6 above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and (ii) general principles of equity
which may affect the remedies provided in the agreements referred to
in said opinions, which laws and principles, however, do not in our
opinion make the remedies provided in said agreements inadequate for
the practical realization of the benefits of the security intended to
be provided thereby.
(d) This opinion is rendered solely to you at Federal
Express's request in connection with the above matter. This opinion
may not be relied upon by you for any other purpose or relied upon by
any other Person without our prior written consent.
(e) We rendered an opinion dated May 4, 1995 (the "Delivery
Date Opinion"), a copy of which is attached hereto, in connection
with the financing and acquisition of the Aircraft on such date. We
hereby consent and agree that the addressees hereto who were not
addressees to the Delivery Date Opinion may rely on the Delivery Date
Opinion as fully and with the same force and effect as if such
addressees were originally named therein on the date of the Delivery
Date Opinion.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Pass Through Trustee
NationsBank, National Association
1301 Gervis Street
4th Floor
Columbia, South Carolina 29201
Indenture Trustee
NationsBank of Georgia, National Association
Corporate Trust Lease Administration
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Owner Participant
AmSouth Leasing Corporation
1900 Fifth Avenue North
7th Floor
Birmingham, Alabama 35203
Underwriters
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Chase Securities, Inc.
c/o Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower
New York, New York 10281
Original Loan Participants
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
The First National Bank of Chicago
Transportation Division
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
EXHIBIT A(2)(a)
[Letterhead of Winston & Strawn]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N658FE
Ladies and Gentlemen:
We have acted as special counsel for AmSouth Leasing
Corporation, an Alabama corporation (the "Owner Participant"), and AmSouth
Bank of Alabama, a national banking association (the "Owner Participant
Guarantor"), in connection with the transactions contemplated by (i) the
Participation Agreement, dated as of May 1, 1995, as amended and restated
as of August 1, 1995 (the "Participation Agreement"), among Federal Express
Corporation, as Lessee (the "Lessee"), the Owner Participant, The Chase
Manhattan Bank (National Association), Bank of America NT & SA, CIBC Inc.
and The First National Bank of Chicago, as the Original Loan Participants
(the "Original Loan Participants"), First Security Bank of Utah, National
Association, a national banking association, not in its individual capacity
but solely as Owner Trustee under the Trust Agreement (the "Owner
Trustee"), NationsBank of Georgia, National Association, a national banking
association, not in its individual capacity, except as otherwise stated,
but solely as Indenture Trustee under the Indenture (the "Indenture
Trustee"), and NationsBank, National Association (Carolinas), as Pass
Through Trustee, (ii) the Trust Agreement, dated as of May 1, 1995, as
amended and restated August 1, 1995 (the "Trust Agreement"), by and between
the Owner Participant and the Owner Trustee and (iii) the Tax Indemnity
Agreement, dated as of May 1, 1995, as amended by Amendment No. 1 thereto
dated as of August 1, 1995 (the "Tax Indemnity Agreement"), by and between
the Owner Participant and the Lessee. This opinion is delivered pursuant
to Section 4.01(l)(ii) of the Participation Agreement. Unless otherwise
defined herein, all capitalized terms used herein shall have the respective
defined meanings set forth in the Participation Agreement.
In connection with our opinions herein, we have examined
executed counterparts of (i) the Original Participation Agreement, the
Original Trust Agreement and the Original Tax Indemnity Agreement
(collectively, the "Original Owner Participant Documents") and (ii) the
Participation Agreement, the Trust Agreement and the Tax Indemnity
Agreement (collectively, the "Owner Participant Documents"). We have
further examined and relied upon the accuracy of original, certified,
conformed, photographic or telecopied copies of such records, agreements,
certificates and other documents as we have deemed necessary or appropriate
to enable us to render the opinions expressed herein. In all such
examinations, we have assumed the genuineness of signatures on original
documents and the conformity to such original documents of all copies
submitted to us as certified, conformed, photographic or telecopied copies,
and as to certificates and telegraphic and telephonic confirmations given
by public officials, we have assumed the same to have been properly given
and to be accurate. As to various questions of fact material to our
opinions, we have relied solely upon the accuracy of the statements,
representations and warranties made in the Original Agreements and the
Operative Agreements and we have made no independent investigation or
inquiry with respect to such factual matters.
With your consent, and for purposes of this opinion, we have
assumed the accuracy of the following matters, but we have not made any
independent investigation or inquiry with respect thereto and we render no
opinion on such matters:
(a) The Original Owner Participant Documents and the Owner
Participant Documents, at the time of execution and delivery by the
Owner Participant, were or will have been, as the case may be, duly
and validly executed and delivered by all parties thereto (other than
the Owner Participant) and constituted or will constitute, as the
case may be, the legal, valid and binding obligations of such
parties, enforceable against such parties in accordance with their
terms.
(b) The parties to the Original Owner Participant Documents
and the Owner Participant Documents, (other than the Owner
Participant) at the time of execution and delivery by the Owner
Participant, obtained or have obtained, as the case may be, and there
were or are, as the case may be, in full force and effect at such
time, any and all required consents, permits and approvals required
by or from any and all federal, state, local or foreign governmental
agencies and authorities in connection with the transactions
contemplated thereby, to the extent necessary for the legality,
validity, binding effect or enforceability of the Original Owner
Participant Documents and the Owner Participant Documents.
We have been retained as special counsel to the Owner
Participant and the Owner Participant Guarantor in connection with the
transactions contemplated by the Participation Agreement, and have not
generally represented the Owner Participant or the Owner Participant Guarantor
in their other business activities and are not familiar with the nature and
extent of such other activities. Accordingly, we also have assumed without
investigation that such other activities are not of such a nature as to cause
the transactions contemplated by the Owner Participant Documents to be
governed by laws or regulations of the State of New York or the United States
of America applicable only because of such other activities (such as laws
relating specifically to the banking, securities, insurance, communications or
utility industries) and not applicable to business corporations generally.
Based upon the foregoing, we are of the opinion that:
(1) Each of the Original Participation Agreement and the Original
Tax Indemnity Agreement on the date of execution thereof constituted,
and each of the Participation Agreement and the Tax Indemnity
Agreement constitutes a legal, valid and binding obligation of the
Owner Participant, enforceable against the Owner Participant in
accordance with their respective terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally, and except as enforcement thereof is
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
(2) Neither the execution and delivery of the Original Owner
Participant Documents and the Owner Participant Documents by the
Owner Participant nor the consummation by the Owner Participant of
the transactions contemplated thereby, (A) required or requires the
consent or approval of, the giving of notice to, the registration
with, or the taking of any other action with respect to, any
governmental authority or agency of the State of New York or the
federal government of the United States of America or (B)
contravened or contravenes any law, governmental rule or
regulation of the State of New York or the federal government of
the United States of America.
(3) Neither the execution and delivery of the Guaranty by the Owner
Participant Guarantor nor the consummation by the Owner Participant
Guarantor of any of the transactions therein contemplated, or the
fulfillment of, or compliance with, the terms and provisions thereof,
(A) required or requires the consent or approval of, the giving of
notice to, the registration with, or the taking of any other action
with respect to, any governmental authority or agency of the State
of New York or the federal government of the United States of America
or (B) contravened or contravenes any law, governmental rule or
regulation of the State of New York or the federal government of the
United States of America.
In rendering the foregoing opinions, we have relied, with your
consent, on the opinion of even date herewith of Berkowitz, Lefkovits, Isom &
Kushner, counsel to the Owner Participant and the Owner Participant Guarantor,
as to the matters set forth therein that are governed by the laws of the State
of Alabama, and our opinions are subject to the same limitations and
exceptions as set forth therein.
The foregoing opinions are subject, however, to the
qualification that we express no opinion as to matters relating to the title
to or sufficiency of description of any property or collateral described in
the Original Owner Participant Documents or the Owner Participant Documents or
the Guaranty or the perfection or relative priority of any lien or security
interest created with respect to such property or collateral thereunder. In
addition, we express no opinion as to matters governed by (i) any tax laws,
(ii) the Federal Aviation Act of 1958, as amended and recodified, or by any
other laws, statutes, rules or regulations of the United States particularly
relating to the acquisition, ownership, registration, leasing, use or sale of
the Aircraft, the Airframe or the Engines other than such laws relating to
personal property generally, (iii) any securities laws, (iv) laws pertaining
to the Owner Participant solely because of the business activities of the
Owner Participant other than the transactions contemplated by the Original
Owner Participant Documents or the Owner Participant Documents and which are
not applicable to business corporations generally and (v) laws pertaining to
the Owner Participant Guarantor solely because of the business activities of
the Owner Participant Guarantor other than the transactions contemplated by
the Owner Participant Guarantor and which are not applicable to business
corporations generally.
We are licensed to practice law in the State of New York and we
express no opinions herein as to the laws of any state or jurisdiction other
than the laws of the State of New York and the laws of the United States of
America.
This opinion is furnished by us at your request and at the
Owner Participant's and the Owner Participant Guarantor's request for your
sole benefit, and we agree that you and your successors and permitted assigns
may rely on the opinions expressed herein. No other Person or entity shall be
entitled to rely on the opinions expressed herein without our express written
consent.
We rendered an opinion dated May 4, 1995 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
NationsBank of Georgia, National Association
Corporate Trust Lease Administration
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Pass Through Trustee
NationsBank, National Association
1301 Gervis Street
4th Floor
Columbia, South Carolina 29201
Owner Participant
AmSouth Leasing Corporation
1900 Fifth Avenue North
7th Floor
Birmingham, Alabama 35203
Underwriters
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Chase Securities, Inc.
c/o Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower
New York, New York 10281
Original Loan Participants
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
The First National Bank of Chicago
Transportation Division
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
EXHIBIT A(2)(b)
[Letterhead of Berkowitz, Lefkovits, Isom & Kushner]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N658FE
Ladies and Gentlemen:
We have acted as counsel to AmSouth Leasing Corporation, an
Alabama corporation (the "Owner Participant"), and AmSouth Bank of Alabama, an
Alabama banking corporation (the "Owner Participant Guarantor"), in connection
with the transactions contemplated by (i) the Participation Agreement, dated
as of May 1, 1995, as amended and restated as of August 1, 1995 (the
"Participation Agreement"), among Federal Express Corporation, as Lessee (the
"Lessee"), the Owner Participant, The Chase Manhattan Bank (National
Association), Bank of America NT & SA, CIBC Inc. and The First National Bank
of Chicago, as the Original Loan Participants (the "Original Loan
Participants"), First Security Bank of Utah, National Association, a national
banking association, not in its individual capacity but solely as Owner
Trustee under the Trust Agreement (the "Owner Trustee"), NationsBank of
Georgia, National Association, a national banking association, not in its
individual capacity, except as otherwise stated, but solely as Indenture
Trustee under the Indenture (the "Indenture Trustee"), and NationsBank,
National Association (Carolinas), as Pass Through Trustee (the "Pass Through
Trustee), (ii) the Trust Agreement, dated as of May 1, 1995, as amended and
restated August 1, 1995 (the "Trust Agreement"), by and between the Owner
Participant and the Owner Trustee, (iii) the Tax Indemnity Agreement, dated as
of May 1, 1995, as amended by Amendment No. 1 thereto (the "Tax Indemnity
Agreement"), by and between the Owner Participant and the Lessee, and (iv) the
Guaranty Agreement, dated as of May 1, 1995, as amended and restated August 1,
1995 (the "Guaranty"), by the Owner Participant Guarantor to the Lessee, the
Owner Trustee, the Original Loan Participants, the Indenture Trustee, the Pass
Through Trustee and each Holder. This opinion is delivered pursuant to
Section 4.01(l)(ii) of the Participation Agreement. Unless otherwise defined
herein, all capitalized terms used herein shall have the respective defined
meanings set forth in the Participation Agreement.
In connection with the opinions herein, I have examined
executed counterparts of the Original Participation Agreement, the Original
Trust Agreement, the Original Tax Indemnity Agreement, the Participation
Agreement, the Trust Agreement and the Tax Indemnity Agreement (collectively,
the "Owner Participant Documents") and the Guaranty. I have further examined
and relied upon the accuracy of original, certified, conformed, photographic
or telecopied copies of such records, agreements, certificates and other
documents as we have deemed necessary or appropriate to enable us to render
the opinions expressed herein. In all such examinations, I have assumed the
genuineness of signatures on original documents and the conformity to such
original documents of all copies submitted to me as certified, conformed,
photographic or telecopied copies, and as to certificates and telegraphic and
telephonic confirmations given by public officials, I have assumed the same to
have been properly given and to be accurate. As to various questions of fact
material to my opinions, I have relied solely upon the accuracy of the
statements, representations and warranties made in the Owner Participant
Documents and the Guaranty. I have assumed, except with regard to the Owner
Participant and the Owner Participant Guarantor, that the Owner Participant
Documents and the Guaranty have been duly authorized, executed and delivered
by the respective parties thereto and that they constitute the legal, valid
and binding obligations of each other party thereto enforceable against each
such party in accordance with their respective terms.
Based upon the foregoing, I advise you that, in my opinion:
1. The Owner Participant is a corporation duly incorporated
and validly existing in good standing under the laws of the State of
Alabama, and has the full corporate power, authority and legal right
to carry on its present business and operations, to own or lease its
Properties and enter into and to carry out the transactions
contemplated by the Owner Participant Documents. The Owner
Participant Guarantor is duly organized, validly existing and in good
standing under the laws of the United States as a national banking
association and has the power and authority to execute, deliver and
perform the terms of the Guaranty;
2. The Owner Participant is a "citizen of the United States"
as defined in Section 40102(a)(15) of Title 49 of the United States
Code (formerly Section 101(16) of the Federal Aviation Act of 1958,
as amended to the date of recodification);
3. The Owner Participant has duly authorized, executed and
delivered the Owner Participant Documents and each of the Owner
Participant Documents constitutes the legal, valid and binding
obligation of the Owner Participant, enforceable against the Owner
Participant in accordance with its respective terms, except as may
be limited by bankruptcy, insolvency, moratorium and other similar
laws affecting the rights of creditors generally and by the exercise
of judicial discretion in the granting of equitable remedies. The
Owner Participant Guarantor has duly authorized, executed and
delivered the Guaranty and the Guaranty constitutes the legal, valid
and binding obligation of the Owner Participant Guarantor,
enforceable against the Owner Participant Guarantor in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
moratorium and other similar laws affecting the rights of creditors
generally and by the exercise of judicial discretion in the granting
of equitable remedies;
4. None of the execution, delivery or performance by the Owner
Participant of the Owner Participant Documents, nor the compliance
with the terms and provisions thereof by the Owner Participant (a)
requires the consent or approval of, the giving of notice to, the
registration with, the recording or filing of any document with, or
the taking or any other action with respect to any governmental
authority or agency of the State of New York or of the federal
government of the United States; or (b) violates any law,
governmental rule or regulation of the State of New York or of the
federal government of the United States or any governmental authority
or agency thereof; or (c) results in the breach of any of the terms,
conditions or provisions of the Certificate of Incorporation or
By-Laws of the Owner Participant; or (d) to the best of my knowledge
is in violation of any judgment or order applicable to or binding
upon the Owner Participant or its properties, or would violate or
(except as contemplated by the Owner Participant Documents) would
subject the Trust Estate to any lien under any indenture, mortgage,
bank credit agreement, note or bond purchase agreement, long-term
lease, license or contract or any other agreement or instrument to
which the Owner Participant is a party or by which the Owner
Participant is bound, and do not require approval of the shareholders
of the Owner Participant or the approval or consent of any trustee
or holder of indebtedness of the Owner Participant. Neither the
execution, delivery or performance by the Owner Participant Guarantor
of the Guaranty nor the compliance with the terms and provisions
thereof by the Owner Participant Guarantor (a) requires the
consent or approval of, the giving of notice to, the registration
with, the recording or filing of any document with, or the taking
or any other action with respect to any governmental authority or
agency of the State of Alabama or of the federal government of the
United States; or (b) violates any law, governmental rule or
regulation of the State of Alabama or of the federal government of
the United States or any governmental authority or agency thereof;
or (c) results in the breach of any of the terms, conditions or
provisions of the Articles of Association or By-Laws of the Owner
Participant Guarantor; or (d) to the best of my knowledge is in
violation of any judgment or order applicable to or binding upon
the Owner Participant Guarantor or its properties, or would
violate the provisions of, or constitute a default under, any
indenture, mortgage, contract or other agreement to which the
Owner Participant Guarantor is a party or by which the Owner
Participant Guarantor or any of its property may be bound, and do
not require approval of the shareholders of the Owner Participant
Guarantor or the approval or consent of any trustee or holder of
indebtedness of the Owner Participant Guarantor; and
5. There are no actions, suits, investigations or proceedings
pending or, to the best of my knowledge without independent
investigation, threatened against or affecting the Owner Participant
or the Owner Participant Guarantor in any court or before any
administrative agency or arbitrator, which, if adversely determined,
would materially adversely affect the ability of the Owner
Participant to perform its obligations under the Owner Participant
Documents or the Guaranty, as the case may be, and we are not aware
of any pending or threatened actions or proceedings before any court,
administrative agency or tribunal involving the Owner Participant or
the Owner Participant Guarantor in connection with the transactions
contemplated by any of the Owner Participant Documents or the
Guaranty, as the case may be.
I am authorized to practice law in the State of Alabama and do
not hold myself out as an expert on the law of any state other than the State
of Alabama. Consequently, the foregoing opinions are limited to the federal
laws of the United States of America and the laws of the State of Alabama, and
I express no opinion as to the laws of any other state or jurisdiction.
Further, I have made no investigation and express no opinion, as to any
aviation law or other laws, statutes, rules or regulations applicable due to
the particular nature of the equipment subject to the Lease, and I express no
opinion as to securities laws. With respect to the opinion concerning the
Owner Participant's citizenship expressed in paragraph 2 hereof, I have relied
as to matters of fact on the Affidavit of United States Citizenship dated May
1, 1995, executed on behalf of the Owner Participant.
This opinion is furnished by me at your request for your sole
benefit, and I agree that you and your successors and permitted assigns may
rely on the opinions expressed herein. This opinion may not be relied upon by
you for any other purpose, or relied upon by any other person, firm or
corporation for any purpose without my prior written consent.
We rendered an opinion dated May 4, 1995 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
NationsBank of Georgia, National Association
Corporate Trust Lease Administration
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Pass Through Trustee
NationsBank, National Association
1301 Gervis Street
4th Floor
Columbia, South Carolina 29201
Owner Participant
AmSouth Leasing Corporation
1900 Fifth Avenue North
7th Floor
Birmingham, Alabama 35203
Underwriters
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Chase Securities, Inc.
c/o Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower
New York, New York 10281
Original Loan Participants
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
The First National Bank of Chicago
Transportation Division
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
EXHIBIT A(3)
[Letterhead of Powell, Goldstein, Frazer & Murphy]
[Refunding Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N658FE
Ladies and Gentlemen:
We are counsel for NationsBank of Georgia, National
Association, a national banking association (the "Indenture Trustee"). In
such capacity, we have advised the Indenture Trustee with respect to
authorization, execution and delivery by the Indenture Trustee of the Trust
Indenture, Mortgage and Security Agreement (Federal Express Corporation Trust
No. N658FE) dated as of May 1, 1995 (the "Original Indenture") between First
Security Bank of Utah, National Association (the "Owner Trustee") and the
Indenture Trustee, the Participation Agreement (Federal Express Corporation
Trust No. N658FE) dated as of May 1, 1995 (the "Original Participation
Agreement") among Federal Express Corporation ("Federal Express"), AmSouth
Leasing Corporation, as Owner Participant (the "Owner Participant"), The Chase
Manhattan Bank (National Association), Bank of America NT & SA, CIBC Inc. and
The First National Bank of Chicago, as Original Loan Participants (the
"Original Loan Participants"), the Owner Trustee and the Indenture Trustee,
the Trust Indenture and Security Agreement (Federal Express Corporation Trust
No. N658FE) dated as of May 1, 1995, as amended and restated as of August 1,
1995 (as amended and restated, the "Indenture") between the Owner Trustee and
the Indenture Trustee, and the Participation Agreement (Federal Express
Corporation Trust No. N658FE) dated as of May 1, 1995, as amended and restated
as of August 1, 1995 (as amended and restated, the "Participation Agreement")
among Federal Express, the Owner Participant, the Original Loan Participants,
the Owner Trustee, the Indenture Trustee, and NationsBank, National
Association (Carolinas), as Pass Through Trustee. Further, we have advised
the Indenture Trustee with respect to the authentication of one or more
equipment trust certificates (the "Certificates") referred to in the Indenture
issued on the date hereof.
This opinion is being delivered pursuant to Section
4.01(l)(iii) of the Participation Agreement. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings set forth or referred to
in the Participation Agreement. Additionally, CIBC Inc. is sometimes referred
to herein as the "Georgia Loan Participant")
In rendering this opinion, we have reviewed the Operative
Agreements, the Original Agreements to which the Indenture Trustee is a party
(which we previously reviewed) and such other documents as we have deemed to
be appropriate and relevant as a basis for the opinions hereinafter set forth,
including, without limitation, certified copies of the Articles of Association
and By-laws of the Indenture Trustee, a certificate of an officer of the
Indenture Trustee as to certain matters, including the incumbency of the
officer of the Indenture Trustee who executed the Indenture and the
Participation Agreement and who authenticated the Certificates and
certificates of the Comptroller of the Currency, Washington, D.C. dated
[______________], as to the Indenture Trustee's existence and authority to do
business as a national banking association and to act in a fiduciary capacity.
In all such examinations we have assumed the authenticity and
completeness of all documents submitted to us as original documents and the
conformity to original documents and completeness of all documents submitted
to us as photostatic, notarial or certified copies. Based on the foregoing,
it is our opinion that:
1. The Indenture Trustee is a national banking association
validly existing and in good standing under the laws of
the United States of America holding a valid certificate
to do business as a national banking association, with
banking and trust powers, is a Citizen of the United
States as that term is defined in Section 40102(a)(15) of
the Act, and has the corporate power and authority to
execute, deliver and perform its obligations under the
Indenture and the Participation Agreement and to
authenticate the Certificates to be delivered on the date
hereof and had on the date of execution thereof the
corporate power and authority to execute, deliver and
perform its obligations under the Original Indenture and
the Original Participation Agreement.
2. The Indenture Trustee, in its individual and trust
capacities, has duly authorized, executed and delivered
the Indenture, the Participation Agreement and each of
the other Operative Agreements to which it is a party and
as of the date of execution thereof had duly authorized,
executed and delivered the Original Indenture, the
Original Participation Agreement and each of the other
Original Agreements to which it was a party. Assuming
the other parties thereto are legally bound, each of the
Indenture and the Participation Agreement constitutes,
and on the date of execution thereof the Original
Indenture and the Original Participation Agreement
constituted, a legal, valid and binding obligation of the
Indenture Trustee in its trust capacity (and, to the
extent provided in each such document, in its individual
capacity) enforceable against the Indenture Trustee in
its trust capacity (and, to the extent provided in each
such document, in its individual capacity) in accordance
with its terms, except as the provisions thereof may be
limited by bankruptcy, reorganization, insolvency,
fraudulent conveyance, moratorium or other similar laws
generally affecting creditors' rights from time to time
in effect. The opinions expressed above as to the
enforceability of the documents referred to above further
are subject in each case to applicable laws and equitable
principles that may render certain remedial provisions in
the documents referred to above invalid or unenforceable,
which laws and principles, however, in our opinion do not
make the remedies provided in such documents inadequate
for the practical realization of the benefits, taken as a
whole, of the security intended to be provided thereby.
3. The Certificates delivered on the date hereof have been
duly authenticated and delivered by the Indenture Trustee
in accordance with the terms of the Indenture.
4. The execution, delivery and performance by the Indenture
Trustee of the Indenture, the Participation Agreement and
each of the other Operative Agreements to which it is a
party are not in violation of the Articles of Association
or By-laws of the Indenture Trustee or any law,
governmental rule or regulation of the United States or
the State of Georgia governing the banking or trust
powers of the Indenture Trustee or, to our knowledge, any
judgment, order, indenture, mortgage, bank credit
agreement, note or bond purchase agreement, long-term
lease, license or other agreement or instrument to which
it is a party or by which it or its properties may be
bound. The execution, delivery and performance by the
Indenture Trustee of the Original Indenture, the Original
Participation Agreement and each of the other Operative
Agreements to which it is a party were not on the date of
execution thereof in violation of the Articles of
Association or By-laws of the Indenture Trustee or any
law, governmental rule or regulation of the United States
or the State of Georgia governing the banking or trust
powers of the Indenture Trustee or, to our knowledge, any
judgment, order, indenture, mortgage, bank credit
agreement, note or bond purchase agreement, long-term
lease, license or other agreement or instrument to which
it is a party or by which it or its properties may be
bound.
5. Neither the execution and delivery by the Indenture
Trustee, in its individual or trust capacity, as the case
may be, of the Original Indenture, the Indenture, the
Original Participation Agreement, the Participation
Agreement or any of the other Operative Agreements to
which it is a party, nor the consummation by the
Indenture Trustee, in its individual or trust capacity,
as the case may be, of any of the transactions
contemplated in any of those documents requires
consent or approval of, giving of notice to, or
registration with, or taking of any other action with
respect to, any federal or state governmental
authority or agency having jurisdiction over the
Indenture Trustee.
6. (a) Subject to the assumptions and qualifications set
forth herein and in subparagraph 6(b) below, (i) there
are no fees, taxes or other charges payable by the Owner
Trustee, the Indenture Trustee (except taxes imposed on
fees payable to the Indenture Trustee) to the State of
Georgia or any political subdivision thereof in
connection with the execution, delivery or performance of
any of the Operative Agreements or in connection with the
issuance and acquisition of the Certificates issued to
the Certificate Holders or the beneficial interests of
the Certificate Holders in the Trust Indenture Estate;
(ii) neither the Indenture Trustee nor the trust created
under the Indenture will be subject to any fee, tax or
other governmental charge under the laws of the State of
Georgia or any political subdivision thereof in existence
on the date hereof, on, based on or measured by, directly
or indirectly, the gross receipts, net income or value of
the Trust Indenture Estate; and (iii) there is no fee,
tax or other governmental charge (other than as such as
may be imposed upon the Georgia Loan Participant) under
the laws of the State of Georgia or any political
subdivision thereof in existence on the date hereof, on,
based on or measured by any payments under the
Certificates issued to the Certificate Holders by reason
of the creation of the trust under the Indenture pursuant
to the laws of the State of New York or the Indenture
Trustee's performance of its duties under the Trust
Indenture within the State of Georgia. We express no
opinion, however, as to whether or not any fees, taxes or
other charges are now or hereafter may be payable by the
Original Loan Participants, the Owner Participant or the
Georgia Loan Participant to the State of Georgia or any
political subdivision thereof in connection with (x) the
execution, delivery or performance by any of the
Indenture, the Participation Agreement or any of the
other Operative Agreements, (y) the making by the Owner
Participant of its investment in the Aircraft or (z) with
respect to the Georgia Loan Participant, the issuance and
ownership of the Original Loan Certificates issued to the
Georgia Loan Participant.
(b) The opinions set forth in the immediately preceding
subparagraph 6(a) are subject in relevant part to and
qualified by the following assumptions, which we have
made with your knowledge:
(i) for purposes of taxes which might be imposed
upon the Owner Trustee or the Lessor's Estate under
Chapter 5, Ad Valorem Taxation of Property, or
Chapter 6, Taxation of Intangibles, Title 48,
Revenue and Taxation, Official Code of Georgia
Annotated ("O.C.G.A."), we have assumed that (x)
the Lessee will make, in a timely manner, an annual
property tax return of the Aircraft, in accordance
with Chapter 5, Article 12, Ad Valorem Taxation of
Airline Companies, Title 48, Revenue and Taxation,
O.C.G.A., and (y) the Lessee will pay, in a timely
manner, the tangible property tax, if any, due with
respect to the Aircraft;
(ii) for purposes of taxes which might be imposed
upon the Lessor's Estate or the Owner Trustee under
Chapter 6, Taxation of Intangibles, Title 48,
Revenue and Taxation, O.C.G.A., we have assumed
that as of January 1 of each year there will be no
undistributed funds held in either the Lessor's
Estate or the Trust Indenture Estate, except such
funds as shall be invested in those types of
obligations or evidences of debt as are described
in Section 48-6-22(1), O.C.G.A.;
(iii) for purposes of taxes which might be imposed
upon the Lessor's Estate or the Owner Trustee under
Chapter 7, Income Taxes, Title 48, Revenue and
Taxation, O.C.G.A., we have assumed that (x) the
Lessor's Estate is a "Grantor Trust" for Federal
income tax purposes (i.e., the Owner Participant
will be treated as the owner of the Lessor's Estate
under Subpart E of Part I of Subchapter J of the
Internal Revenue Code) and (y) the Owner Trustee
and the Owner Participant will report on that basis
for Federal income tax purposes; and
(iv) for purposes of taxes which might be imposed
upon the Certificate Holders under Chapter 6,
Taxation of Intangibles or Chapter 7, Income Taxes,
Title 48, Revenue and Taxation, O.C.G.A., neither
the Certificates held by such Certificate Holders
nor the interest income thereon nor any interest of
such Certificate Holders in and to the Trust
Indenture Estate has been derived from or has been
or will be acquired in the conduct of or used
incident to business carried on by such Holders or
property of such Certificate Holders located in the
State of Georgia.
We express no opinion as to the correctness of the foregoing
assumptions, but nothing has come to our attention to cause us to believe that
any such assumption is incorrect; however, we have conducted no independent
investigation in this regard.
We are members of the Bar of the State of Georgia and the
opinions set forth herein are limited to the laws of the State of Georgia and,
subject to the limitations set forth herein, the federal laws of the United
States of America. With respect to the opinions set forth above in paragraph
2 as to the validity, binding effect and enforceability of the Indenture, the
Participation Agreement and the other Operative Agreements, the governing law
of which is expressly stated to be that of the State of New York, we have
assumed with your permission that the Indenture, the Participation Agreement
and the other Operative Agreements constitute legal, valid, binding and
enforceable documents or instruments under the laws of the State of New York
(as to which assumption we express no opinion). Further, without limiting the
generality of the foregoing, we express no opinion with respect to (i) except
as set forth in paragraph 1 of this opinion, with respect to the citizenship
of the Indenture Trustee, the Act and the regulations promulgated thereunder,
the impact of the Act upon matters set forth in this opinion or any other
aviation or other laws, rules or regulations applicable to the particular
nature of the equipment to be acquired by the Owner Trustee; (ii) federal
securities laws, including, without limitation, the Securities Act of 1933, as
amended, and the Trust Indenture Act of 1939, as amended, or state securities
or blue sky laws; (iii) title to any property, real or personal, or the
priority or perfection of any liens or security interests; (iv) the authority
or power of the Indenture Trustee under the laws of any jurisdiction other
than Georgia or federal laws of the United States of America to exercise any
rights or remedies set forth in the Operative Agreements or to perform any
duties or obligations on its part to be performed other than those that can be
performed in the State of Georgia; or (v) ERISA.
This opinion is being furnished only to the parties to whom
this opinion is addressed and is solely for their benefit, and no other person
or entity shall be entitled to rely on this opinion without our express prior
written consent. This opinion may not be used, circulated, quoted, published
or otherwise referred to for any purpose without our express prior written
consent. This opinion is limited to the matters stated herein, and no opinion
is implied or may be inferred beyond the opinions expressly stated herein.
We rendered an opinion dated May 4, 1995 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
NationsBank of Georgia, National Association
Corporate Trust Lease Administration
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Pass Through Trustee
NationsBank, National Association
1301 Gervis Street
4th Floor
Columbia, South Carolina 29201
Owner Participant
AmSouth Leasing Corporation
1900 Fifth Avenue North
7th Floor
Birmingham, Alabama 35203
Underwriters
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Chase Securities, Inc.
c/o Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower
New York, New York 10281
Original Loan Participants
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
The First National Bank of Chicago
Transportation Division
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
EXHIBIT A(4)
[Letterhead of Daugherty, Fowler & Peregrin]
[Refunding Date]
To the Parties Named on Schedule A attached hereto
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section
4.01(l)(iv) of the Participation Agreement (Federal Express Corporation Trust
No. N658FE), dated as of May 1, 1995, as amended and restated as of August 1,
1995 (the "Participation Agreement") among Federal Express Corporation, as
Lessee (the "Lessee"), AmSouth Leasing Corporation, as Owner Participant (the
"Owner Participant"), The Chase Manhattan Bank (National Association), Bank of
America NT & SA, CIBC Inc. and The First National Bank of Chicago, as the
Original Loan Participants (the "Original Loan Participants"), First Security
Bank of Utah, National Association, not in its individual capacity but solely
as Owner Trustee (the "Owner Trustee"), NationsBank of Georgia, National
Association, as Indenture Trustee (the "Indenture Trustee") and NationsBank,
National Association (Carolinas), as Pass Through Trustee, with respect to
that portion of Subtitle VII of Title 49 of the United States Code relative
to the recordation of instruments and the registration of aircraft thereunder.
The capitalized terms herein shall, unless otherwise defined,
have the same meanings given them in the Participation Agreement or in Annex I
attached hereto.
We have examined and filed on this date with the Federal
Aviation Administration (the "FAA") the following described instruments at the
respective times listed below:
(a) Trust Agreement (Federal Express Corporation Trust No.
N658FE) dated as of May 1, 1995, as amended and restated
August 1, 1995 and executed on August __, 1995 (the
"Trust Agreement") between the Owner Participant and
the Owner Trustee, which Trust Agreement amends and
restates the Original Trust Agreement, which Trust
Agreement was filed at ____ _.m., C.D.T.;
(b) Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N658FE) dated as of May 1, 1995, as
amended and restated August 1, 1995 and executed on
August __, 1995 (the "Indenture") between the Owner
Trustee and the Indenture Trustee, which Indenture amends
and restates the Original Indenture, which Indenture was
filed at ____ _.m., C.D.T.; and,
(c) Lease Agreement (Federal Express Corporation Trust No.
N658FE) dated as of May 1, 1995, as amended and restated
August 1, 1995 and executed on August __, 1995 (the
"Lease") between the Owner Trustee, as lessor, and the
Lessee, as lessee, which Lease amends and restates the
Original Lease, with the Indenture attached thereto,
which Lease with the Indenture attached thereto was filed
at ____ _.m., C.D.T.
The Confidential Omissions were intentionally omitted from the FAA
filing counterparts of the Lease and the Indenture, as containing confidential
financial information.
Based upon our examination of the above described instruments
and of such records of the FAA as we deemed necessary to render this opinion,
it is our opinion that:
1. AC Form 8050-2 Aircraft Bill of Sale dated May 4, 1995 (the
"FAA Bill of Sale") from AVSA S.A.R.L. as seller, conveying
title to the Airframe to the Owner Trustee, has been duly
recorded by the FAA on May 4, 1995 and assigned Conveyance No.
2A266662;
2. the Indenture and the Lease with the Indenture attached are in
due form for recordation by and have been duly filed for
recordation with the FAA pursuant to and in accordance with the
provisions of 49 U.S.C. Section 44107;
3. the Trust Agreement is in due form for filing and has been duly
filed with the FAA pursuant to and in accordance with the
provisions of 49 U.S.C. Section 44103(a);
4. the Original Trust Agreement was duly filed with the FAA on May
4, 1995 pursuant to and in accordance with the provisions of 49
U.S.C. Section 44103(a);
5. the Original Indenture with the Indenture and Security
Agreement Supplement attached has been duly filed with and duly
recorded by the FAA pursuant to and in accordance with the
provisions of 49 U.S.C. Section 44107;
6. the Original Lease with the Lease Supplement, the Original
Indenture and the Indenture and Security Agreement Supplement
attached was duly filed with and duly recorded by the FAA
pursuant to and in accordance with the provisions of 49 U.S.C.
Section 44107;
7. the Airframe is duly registered in the name of the Owner
Trustee pursuant to and in accordance with the provisions of 49
U.S.C. Section 44103(a);
8. the Owner Trustee has valid legal title to the Airframe and the
Aircraft is free and clear of all Liens, except (i) the
security interest created by the Original Indenture, as amended
and restated by the Indenture, as supplemented by the Indenture
and Security Agreement Supplement, and (ii) the rights of the
parties under the Original Lease, as amended and restated by
the Lease, as supplemented by the Lease Supplement;
9. the Original Indenture, as amended and restated by the
Indenture, as supplemented by the Indenture and Security
Agreement Supplement, constitutes a duly perfected first
priority security interest in the Aircraft and a duly perfected
first assignment of all the right, title and interest of the
Owner Trustee in, to and under the Original Lease, as amended
and restated by the Lease, as supplemented by the Lease
Supplement (insofar as such assignment affects an interest
covered by the recording system established by the FAA pursuant
to 49 U.S.C. Section 44107), and no other registration of the
Airframe or filings other than filings with the FAA (which have
been duly effected) are necessary in order to perfect in any
applicable jurisdiction in the United States (A) the Owner
Trustee's title to the Airframe or (B) such security interest
and assignment (insofar as such assignment affects an interest
covered by the recording system established by the FAA pursuant
to 49 U.S.C. Section 44107), it being understood that no
opinion is expressed as to the validity, priority or
enforceability of such security interest and assignment under
local law or as to the recognition of the perfection of such
security interest and assignment as against third parties in
any legal proceeding outside the United States;
10. no authorization, approval, consent, license or order of, or
registration with, or the giving of notice to, the FAA is
required for the valid authorization, delivery and performance
of the Original Lease, as amended and restated by the Lease, as
supplemented by the Lease Supplement, the Original Indenture,
as amended and restated by the Indenture, as supplemented by
the Indenture and Security Agreement Supplement, or the
Original Trust Agreement, as amended and restated by the
Trust Agreement, except for such filings as are referred to
in our opinion dated May 4, 1995 (which have been duly
effected) and the filings referred to in clauses (a), (b)
and (c) above; and,
11. neither the authorization, issuance and delivery of the
Certificates, the execution and delivery by the parties thereto
of the Original Trust Agreement, the Trust Agreement, the
Original Indenture, the Indenture, the Indenture and Security
Agreement Supplement, the Original Participation Agreement, the
Participation Agreement, the FAA Bill of Sale, the Original
Lease, the Lease and the Lease Supplement or the performance by
the parties thereto of: (i) the Original Trust Agreement, as
amended and restated by the Trust Agreement; (ii) the Original
Indenture, as amended and restated by the Indenture, as
supplemented by the Indenture and Security Agreement
Supplement; (iii) the Original Participation Agreement, as
amended and restated by the Participation Agreement; and (iv)
the Original Lease, as amended and restated by the Lease, as
supplemented by the Lease Supplement, in accordance with the
provisions thereof, nor the consummation by the parties thereto
of any of the transactions contemplated thereby, requires the
consent or approval of, or the giving of notice to, or the
registration with, or the taking of any other action in respect
of, the FAA except for the filings, the recordations and the
filings for recordation specified elsewhere in this opinion.
No opinion is expressed as to the Airframe during any period or
periods of time during which it has not been subject to United States
registration.
No opinion is expressed as to laws other than Federal laws of
the United States. In rendering this opinion, we were subject to the accuracy
of the FAA, its employees and agents, in the filing, indexing and recording
of instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Further, in rendering this
opinion we are assuming the validity and enforceability of the above described
instruments under local law. Since our examination was limited to records
maintained by the FAA, our opinion does not cover liens which are perfected
without the filing of notice thereof with the FAA, such as federal tax liens,
liens arising under 29 U.S.C. Section 1368(a), possessory artisan's liens, or
matters of which the parties have actual notice. In rendering this opinion we
are assuming that there are no documents with respect to the Aircraft which
have been filed for recording under the recording system of the FAA but have
not yet been listed in the available records of such system as having been so
filed.
In rendering this opinion we have relied upon the opinion of the
Assistant Chief Counsel for the Aeronautical Center dated [date] and have
continued to rely upon the opinion of the Assistant Chief Counsel for the
Aeronautical Center dated May 3, 1995, copies of which are attached hereto.
Annex I
Certain Definitions
Airframe, Engines and Aircraft
One (1) Airbus Industrie A300F4-605R aircraft bearing
manufacturer's serial number 752 and U.S. Registration No. N658FE (the
"Airframe") and two (2) General Electric CF6-80C2-A5F aircraft engines bearing
manufacturer's serial numbers 705-224 and 705-225 (the "Engines") (the
Airframe and the Engines are referred to collectively as the "Aircraft").
Original Trust Agreement
Trust Agreement (Federal Express Corporation Trust No. N658FE)
dated as of May 1, 1995 between the Owner Participant and the Owner Trustee,
which was filed with the FAA on May 4, 1995.
Original Indenture
Trust Indenture, Mortgage and Security Agreement (Federal
Express Corporation Trust No. N658FE) dated as of May 1, 1995 between the
Owner Trustee and the Indenture Trustee, which together with the Indenture and
Security Agreement Supplement (as hereinafter defined) attached thereto was
recorded as one instrument by the FAA on May 5, 1995 and assigned Conveyance
No. NN008445.
Indenture and Security Agreement Supplement
Indenture and Security Agreement Supplement No. 1 (Federal
Express Corporation Trust No. N658FE) dated May 4, 1995 between the Owner
Trustee and the Indenture Trustee, with respect to the Aircraft, which was
attached to and recorded by the FAA as one instrument with the Original
Indenture.
Original Lease
Lease Agreement (Federal Express Corporation Trust No. N658FE)
dated as of May 1, 1995 between the Owner Trustee, as lessor, and the
Lessee, which together with the Lease Supplement (as hereinafter defined),
the Original Indenture and the Indenture and Security Agreement Supplement
attached thereto was recorded as one instrument by the FAA on May 5, 1995
and assigned Conveyance No. NN008446.
Lease Supplement
Lease Supplement No. 1 (Federal Express Corporation Trust No.
N658FE) dated May 4, 1995 between the Owner Trustee, as lessor, and the
Lessee, with respect to the Aircraft, which was attached to and recorded by
the FAA as one instrument with the Original Lease.
Confidential Omissions
The Lease was filed with the FAA, with (i) the Excess Amount
and Basic Rent (Schedule II), (ii) the Stipulated Loss Values (Schedule III),
(iii) the Termination Values (Schedule IV), (iv) the Purchase Option Schedule
(Schedule V) omitted from the FAA filing counterpart thereof as containing
confidential financial information; and (v) the purchase price under Section
4.02(a)(F) set forth in Ancillary Agreement I, which was not attached to the
FAA filing counterpart of the Lease or otherwise filed with the FAA for
recordation as containing confidential financial information.
The Indenture was filed with the FAA, with the Schedule of
Principal Payments (Schedule I) omitted from the FAA filing counterpart
thereof as containing confidential financial information.
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
NationsBank of Georgia, National Association
Corporate Trust Lease Administration
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Pass Through Trustee
NationsBank, National Association
1301 Gervis Street
4th Floor
Columbia, South Carolina 29201
Owner Participant
AmSouth Leasing Corporation
1900 Fifth Avenue North
7th Floor
Birmingham, Alabama 35203
Underwriters
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Chase Securities, Inc.
c/o Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower
New York, New York 10281
Original Loan Participants
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
The First National Bank of Chicago
Transportation Division
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
EXHIBIT A(5)
[Letterhead of Ray, Quinney & Nebeker]
[Refunding Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N658FE
Ladies and Gentlemen:
We have acted as special counsel to First Security Bank of
Utah, National Association, a national banking association ("First
Security"), in connection with the Trust Agreement (Federal Express
Corporation Trust No. N658FE), dated as of May 1, 1995, as amended and
restated as of August 1, 1995 (the "Trust Agreement"), between First
Security and AmSouth Leasing Corporation, an Alabama corporation (the
"Owner Participant"). Pursuant to the Participation Agreement (Federal
Express Corporation Trust No. N658FE), dated as of May 1, 1995, as amended
and restated August 1, 1995 (the "Participation Agreement"), among Federal
Express Corporation, as Lessee, the Owner Participant, The Chase Manhattan
Bank (National Association), Bank of America NT & SA, CIBC Inc. and The
First National Bank of Chicago, as the Original Loan Participants, First
Security, not in its individual capacity except as specifically set forth
therein but solely as Owner Trustee (the "Owner Trustee") under the Trust
Agreement, NationsBank of Georgia, National Association, as Indenture
Trustee and NationsBank, National Association (Carolinas), as Pass Through
Trustee, one Airbus A300F4-605R aircraft bearing U.S. Registration No.
N658FE (the "Aircraft") is being refinanced. This opinion is furnished
pursuant to Section 4.01(l)(vii) of the Participation Agreement.
Capitalized terms used herein and not otherwise defined are used as defined
in the Participation Agreement, except that references herein to any
instrument shall mean such instrument as in effect on the date hereof.
We have examined executed counterparts or copies otherwise
identified to our satisfaction of the following documents:
(a) The Participation Agreement;
(b) The Trust Agreement;
(c) The Indenture;
(d) The Indenture and Security Agreement Supplement No. 1
dated May 4, 1995;
(e) The Lease;
(f) The Lease Supplement dated May 4, 1995 (each of the
documents identified in paragraphs (a) through (f) above
being collectively referred to as the "Owner Trustee
Documents"); and
(g) The Certificates being issued today (the "Certificates").
We have also examined originals or copies of such other
documents, such corporate records, certificates and other statements of
governmental officials and corporate officers and other representatives of the
corporations or entities referred to herein and such other instruments as we
have deemed necessary or appropriate for the purposes of this opinion.
Moreover, as to certain facts material to the opinions expressed herein, we
have relied upon representations and warranties contained in the Owner Trustee
Documents.
Based upon the foregoing and upon an examination of such
questions of law as we have considered necessary or appropriate, and subject
to the assumptions, exceptions and qualifications set forth below, we advise
you that, in our opinion:
1. First Security is a national banking association duly
organized and validly existing under the laws of the United States of
America with its principal place of business and chief executive
office (as such terms are used in Article 9 of the Uniform Commercial
Code) at 79 South Main Street, Salt Lake City, Utah, 84111,
Attention: Corporate Trust Department holding a valid certificate to
do business as a national banking association, with banking and trust
powers, is a Citizen of the United States within the meaning of
Section 40102(a)(15) of Title 49 of the United States Code (formerly
Section 101(16) of the Federal Aviation Act of 1958, as amended to
the date of recodification) (the "Act"), and each of First Security
and the Owner Trustee, as the case may be, has or had, on the date of
execution thereof, full corporate power, authority and legal right to
execute, deliver and perform each of the Owner Trustee Documents to
which it is or is to be a party and to issue, execute, deliver and
perform the Certificates.
2. Each of First Security and the Owner Trustee, as the case
may be, has duly authorized, executed and delivered each Owner
Trustee Document to which it is a party; each such document
constitutes a legal, valid and binding obligation of the Owner
Trustee (and, to the extent set forth in the respective Owner Trustee
Document, of First Security) enforceable against the Owner Trustee
(and, to the extent set forth in the respective Owner Trustee
Document, against First Security) in accordance with its terms; and
the Trust Agreement constitutes a legal, valid and binding obligation
of the Owner Participant enforceable against the Owner Participant in
accordance with its terms. The Certificates have been duly issued,
executed and delivered by the Owner Trustee, pursuant to
authorization contained in the Trust Agreement, and constitute the
legal, valid and binding obligations of the Owner Trustee enforceable
against the Owner Trustee in accordance with their terms and the
terms of the Indenture; and the Certificates are entitled to the
benefits and security afforded by the Indenture in accordance with
their terms and the terms of the Indenture.
3. On the Delivery Date, the Owner Trustee received from AVSA
such title to the Aircraft as AVSA conveyed to the Owner Trustee,
subject to the rights of the Owner Trustee and the Lessee under the
Original Lease and the security interest created pursuant to the
Original Indenture and the Indenture Supplement; and to our
knowledge, there exist no Liens affecting the title of the Owner
Trustee to the Lessor's Estate resulting from claims against First
Security not related to the ownership of the Lessor's Estate or the
administration of the Lessor's Estate or any other transaction
pursuant to the Indenture or any document included in the Trust
Indenture Estate.
4. All the properties which are part of the Trust Indenture
Estate have been pledged and mortgaged with the Indenture Trustee as
part of the Trust Indenture Estate and the beneficial interest of the
Owner Participant under the Trust Agreement in and to such properties
is subject, to the extent provided in the Indenture, to the Lien of
the Indenture in favor of the Holders of the Certificates.
5. To the extent that the Uniform Commercial Code of the State
of Utah (the "UCC") is applicable, except for the Indenture
Trustee's taking possession of all monies and securities
(including instruments) constituting part of the Trust Indenture
Estate, no action, including the filing or recording of any
document, is necessary (i) to create under the UCC the security
interest in the Trust Indenture Estate (including the grant and
assignment unto the Indenture Trustee of the security interest in
all estate, right, title and interest of the Owner Trustee in, to
and under the Lease) which the Indenture by its terms purports to
create in favor of the Indenture Trustee, and (ii) to perfect in
the State of Utah such security interest, except for the filing of
a UCC financing statement complying with the formal requisites of
Section 9-402 of the UCC in the office of the Division of
Corporations and Commercial Code of the State of Utah with respect
to the security interest, which filing has been duly effected, and
the filing of continuation statements with respect thereto
required to be filed at periodic intervals under the UCC.
6. The Trust Agreement duly creates a legal and valid trust
under Utah law, the trust created by the Trust Agreement has been
duly created and exists for the benefit of the Owner Participant, and
the Trust Agreement and the Indenture Supplement create for the
benefit of the Owner Participant the interest in the properties
referred to in Section 1.02 of the Trust Agreement which the Trust
Agreement by its terms purports to create, which interest is subject
and subordinate to the security interests created by the Indenture to
the extent provided in the Indenture.
7. Neither the authorization, execution and delivery by the
Owner Trustee or First Security, as the case may be, of the Owner
Trustee Documents, nor the issuance, execution and delivery by the
Owner Trustee of the Certificates nor the fulfillment or compliance
by the Owner Trustee or First Security with the respective terms and
provisions thereof nor the consummation of any of the transactions by
the Owner Trustee or First Security, as the case may be, contemplated
thereby requires the consent or approval of, the giving of notice to,
the registration with, or the taking of any other action in respect
of, any court or administrative or governmental authority or agency
of the State of Utah or the United States of America governing the
banking or trust powers of First Security.
8. Assuming that (i) the Aircraft is not used in Utah and is
not physically located in Utah at the commencement or termination of
the Term or during such Term, (ii) in connection with any sale of the
Aircraft, such Aircraft will not be physically delivered in Utah to a
buyer nor be shipped from a point within Utah to a buyer, and (iii)
the trust created by the Trust Agreement is treated as a grantor
trust for federal income tax purposes within the contemplation of
Sections 671 through 678 of the Internal Revenue Code of 1986, there
are no fees, taxes, or other charges (except taxes imposed on fees
payable to the Owner Trustee) payable to the State of Utah or any
political subdivision thereof in connection with the execution,
delivery or performance by the Owner Trustee, the Indenture Trustee,
the Lessee or the Owner Participant, as the case may be, of the Owner
Trustee Documents or in connection with the making by the Owner
Participant of its investment in the Aircraft or its acquisition of
the beneficial interest in the Lessor's Estate or in connection with
the issuance and acquisition of the Certificates, and neither the
Owner Trustee, the Lessor's Estate nor the trust created by the Trust
Agreement will be subject to any fee, tax or other governmental
charge (except taxes on fees payable to the Owner Trustee) under the
laws of the State of Utah or any political subdivision thereof on,
based on or measured by, directly or indirectly, the gross receipts,
net income or value of the Lessor's Estate solely by reason of the
creation or continued existence of the trust under the terms of
the Trust Agreement pursuant to the laws of the State of Utah or
the Owner Trustee's performance of its duties under the Trust
Agreement.
9. The execution, delivery and performance by the Owner
Trustee or First Security, as the case may be, of each of the Owner
Trustee Documents and the issuance, execution, delivery and
performance of the Certificates by the Owner Trustee are not or were
not, on the date of execution thereof, in violation of the charter or
by-laws of First Security or of any law, governmental rule, or
regulation of the State of Utah or the United States of America
governing the banking or trust powers of First Security or, to our
knowledge, of any indenture, mortgage, bank credit agreement, note or
bond purchase agreement, long-term lease, license or other agreement
or instrument to which it is a party or by which it is bound or, to
our knowledge, of any judgment or order of the State of Utah or the
United States of America relating to the banking or trust powers of
First Security.
10. There is no fee, tax or other governmental charge under
the laws of the State of Utah or any political subdivision thereof in
existence on the date hereof on, based on or measured by any payments
under the Certificates or the beneficial interests in the Lessor's
Estate, by reason of the creation of the trust under the Trust
Agreement, pursuant to the laws of the State of Utah or the Owner
Trustee's performance of its duties under the Trust Agreement, within
the State of Utah, which would not have been imposed if First
Security did not have its principal place of business and did not
perform its obligations under the Owner Trustee Documents in the
State of Utah.
11. Under the Utah Uniform Fraudulent Transfer Act or any
other similar law of the State of Utah relating to fraudulent
conveyances, no filing, recording or publication is necessary or
appropriate to protect the interests of (i) the Owner Trustee as
Lessor or owner with respect to the Aircraft and (ii) the Indenture
Trustee as secured party under the Indenture against claims of
creditors of the Owner Trustee resulting from the sale and lease of
the Aircraft pursuant to the Bills of Sale and the Lease.
12. Neither a Utah Court nor a Federal Court applying Utah
law, if properly presented with the issue and after having properly
considered such issue, would permit the Owner Participant to
terminate the Trust Agreement, except in accordance with its terms or
with the consent of the Indenture Trustee, so long as the Lien of the
Indenture on the Trust Indenture Estate has not been released or
payment of the principal of, and premium, if any, and interest on,
the Certificates has not been made in full. Under the laws of the
State of Utah, so long as the Trust Agreement has not been terminated
in accordance with its terms or with the consent of the Indenture
Trustee, creditors of any person that is an Owner Participant,
holders of a lien against the assets of any such person and
representatives of creditors of any such person, such as trustees,
receivers or liquidators (whether or not an insolvency proceeding has
been commenced) (collectively, the "Creditors") may acquire valid
claims and liens, as to the Lessor's Estate, only against the rights
of such Owner Participant under the Trust Agreement or in the
Lessor's Estate, and do not have, and may not through the enforcement
of such Creditors' rights acquire, any greater rights than such Owner
Participant with respect to the Trust Agreement or the Lessor's
Estate.
The foregoing opinions are subject to the following
assumptions, exceptions and qualifications:
A. The foregoing opinions are limited to the laws of the State
of Utah and the federal laws of the United States of America governing the
banking and trust powers of First Security. In addition, we express no
opinion with respect to (i) federal securities laws, including the Securities
Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and
the Trust Indenture Act of 1939, as amended, (ii) the Federal Aviation Act of
1958, as amended (except with respect to the opinion set forth in paragraph 1
above concerning the citizenship of First Security), (iii) the Federal
Communications Act of 1934, as amended, or (iv) state securities or blue sky
laws. Insofar as the foregoing opinions relate to the validity and
enforceability in Utah of the Certificates and the other Owner Trustee
Documents expressed to be governed by the laws of the State of New York, we
have assumed that the Certificates and such Owner Trustee Documents constitute
legal, valid, binding and enforceable documents or instruments under such laws
(as to which we express no opinion).
B. The foregoing opinions regarding enforceability of any
document or instrument are subject to (i) applicable bankruptcy, insolvency,
moratorium, reorganization, receivership and similar laws affecting the rights
and remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
C. We have assumed the due authorization, execution and
delivery by each of the parties thereto, other than First Security and the
Owner Trustee, of the Owner Trustee Documents to which each is a party and
that each of such parties has the full power, authority and legal right to
execute and deliver each such document.
D. The opinion set forth in paragraph 1 above concerning the
citizenship of First Security is based upon the facts contained in an
affidavit of First Security, made by its Assistant Vice President, the facts
set forth in which we have not independently verified.
E. We have assumed the due authentication of the Certificates
by the Indenture Trustee.
F. We have assumed that all signatures (other than those of
the Owner Trustee or First Security) on documents and instruments examined
by us are genuine, that all documents and instruments submitted to us as
originals are authentic, and that all documents and instruments submitted
to us as copies conform with the originals, which facts we have not
independently verified.
G. We do not purport to be experts in respect of, or express
any opinion concerning, aviation law or other laws, rules or regulations
applicable to the particular nature of the equipment to be acquired by the
Owner Trustee.
H. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the Lessor's Estate or the
priority of any mortgage or security interest.
I. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section
406 of the Employee Retirement Income Security Act of 1974.
This opinion is rendered solely for your benefit and may not be
relied upon by any other person or entity for any purpose without our prior
written consent, except that the law firm of Davis Polk & Wardwell may rely on
this opinion in connection with the rendering of its opinion dated the date
hereof in connection with the financing described herein.
We rendered an opinion dated May 4, 1995 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
NationsBank of Georgia, National Association
Corporate Trust Lease Administration
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Pass Through Trustee
NationsBank, National Association
1301 Gervis Street
4th Floor
Columbia, South Carolina 29201
Owner Participant
AmSouth Leasing Corporation
1900 Fifth Avenue North
7th Floor
Birmingham, Alabama 35203
Underwriters
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Chase Securities, Inc.
c/o Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower
New York, New York 10281
Original Loan Participants
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
The First National Bank of Chicago
Transportation Division
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
EXHIBIT B
[FORM OF LEASE AGREEMENT]
[See Exhibit 4.g]
EXHIBIT C
[FORM OF INDENTURE]
[See Exhibit 4.c.1]
EXHIBIT D
[FORM OF TRUST AGREEMENT]
[See Exhibit 4.f]
EXHIBIT E
AMENDED AND RESTATED
GUARANTY AGREEMENT
GUARANTY AGREEMENT (Federal Express Corporation Trust No. N658FE), dated
May 4, 1995 as amended and restated on August __, 1995 (this "Guaranty"), from
AMSOUTH BANK OF ALABAMA, an Alabama banking corporation (the "Guarantor"), to
FEDERAL EXPRESS CORPORATION (the "Lessee"), FIRST SECURITY BANK OF UTAH, N.A.,
in its individual capacity and as Owner Trustee (the "Owner Trustee"), THE
ENTITIES LISTED AS LOAN PARTICIPANTS ON SCHEDULE I TO THE ORIGINAL
PARTICIPATION AGREEMENT (as defined below) (the "Original Loan Participants"),
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, as Indenture Trustee (the
"Indenture Trustee"), and NATIONSBANK, NATIONAL ASSOCIATION (CAROLINAS), as
Pass Through Trustee (the Lessee, the Owner Trustee, the Original Loan
Participants, the Indenture Trustee and the Pass Through Trustee, together
with their respective permitted successors, transferees and assigns, each
being a "Beneficiary" and collectively the "Beneficiaries").
RECITALS
WHEREAS, AMSOUTH LEASING CORPORATION (the "Owner Participant") is a
wholly owned subsidiary of the Guarantor and has entered into (i) the
Participation Agreement (Federal Express Corporation Trust No. N658FE) dated
as of May 1, 1995 and amended and restated as of August 1, 1995, among the
Owner Participant, the Lessee, the Original Loan Participants, the Owner
Trustee, the Indenture Trustee and the Pass Through Trustee (as such may be
amended, modified and supplemented in accordance with the terms thereof, the
"Participation Agreement", as originally executed, the "Original Participation
Agreement"), (ii) the Trust Agreement (Federal Express Corporation Trust No.
N658FE) dated as of May 1, 1995 and amended and restated as of August 1, 1995,
between the Owner Participant and First Security Bank of Utah, N.A. (as such
may be amended, modified or supplemented in accordance with the terms thereof,
the "Trust Agreement"), and (iii) the Tax Indemnity Agreement (Federal Express
Corporation Trust No. N658FE) dated as of May 1, 1995 [and amended as of
August 1, 1995], between the Owner Participant and the Lessee (as such may be
amended, modified and supplemented in accordance with the terms thereof, the
"Tax Indemnity Agreement") (collectively, the "Owner Participant Agreements");
and
WHEREAS, in order to induce the Beneficiaries to enter into the Owner
Participant Agreements, the Guarantor desires to enter into this Guaranty to
guarantee the Owner Participant's performance and compliance with the
covenants, agreements, obligations, terms and conditions of or applicable to
the Owner Participant under and pursuant to the Owner Participant Agreements.
NOW, THEREFORE, in consideration of the premises set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Guarantor hereby covenants and agrees as follows:
SECTION 1. Definitions. Capitalized terms used in this Guaranty
without other definition have the respective meanings specified in the
Participation Agreement.
SECTION 2. The Guaranty. (a) The Guarantor hereby irrevocably and
unconditionally guarantees to each of the Beneficiaries (i) the due, punctual
and full payment of all obligations of the Owner Participant which are payable
by the Owner Participant under or pursuant to any of the Owner Participant
Agreements and in accordance with the terms thereof, by acceleration or
otherwise, without offset or deduction; and (ii) the due and punctual
performance by the Owner Participant of, and compliance by the Owner
Participant with, all of its other obligations, covenants, and undertakings
contained in or arising under or pursuant to each of the Owner Participant
Agreements (the obligations referred to in clauses (i) and (ii) being
collectively hereinafter referred to as the "Guaranteed Obligations");
provided, however, the Guaranteed Obligations shall not include any
obligations of the Owner Participant which are non-recourse to the Owner
Participant pursuant to the terms of the Owner Participant Agreements.
Without limitation of the foregoing, in case the Owner Participant shall for
any reason whatsoever fail to pay duly and punctually any payment required to
be made by the Owner Participant under any of the Owner Participant Agreements
when and as the same shall be due and payable in accordance with the terms of
such Owner Participant Agreement, by acceleration or otherwise, the Guarantor
will immediately pay the same to the Person entitled thereto and, in addition,
such further amount, if any, as shall be sufficient to cover the costs and
expenses of collection and in case the Owner Participant shall fail to perform
or comply with any of its other obligations, covenants or undertakings
contained in or arising under or pursuant to any of the Owner Participant
Agreements for any reason whatsoever, the Guarantor will forthwith perform or
comply with such obligation, covenant or undertaking or cause the same
forthwith to be performed or complied with.
(b) Without limitation of the Guarantor's obligations hereunder,
all amounts payable by the Guarantor hereunder shall in any event be paid
immediately upon demand by the respective Beneficiary entitled thereto, in
immediately available funds, as such party may direct and at the place
specified by such Beneficiary.
SECTION 3. Unconditional Nature of Obligations; Waiver.
(a) Unconditional Nature of Obligations. The obligations of
the Guarantor contained in Section 2 above are direct, independent and
primary obligations of the Guarantor and are absolute, present,
unconditional and continuing obligations and are not conditioned in any way
upon the institution of suit or the taking of any other action or any
attempt to enforce performance of or compliance with the obligations,
covenants or undertakings (including, without limitation, any payment
obligations) of the Owner Participant and, without limitation, shall
constitute a guaranty of payment and performance and not of collection,
binding upon the Guarantor and its successors and assigns and irrevocable
without regard to the genuineness, validity, legality or enforceability of
any of the Owner Participant Agreements or the lack of power or authority
of the Owner Participant to enter into any of the Owner Participant
Agreements or any substitution, release or exchange of any other guaranty
or any other security for any of the Guaranteed Obligations or any other
circumstance whatsoever (other than payment or performance) that might
otherwise constitute a legal or equitable discharge of a surety or
guarantor and shall not be subject to any right of set-off, recoupment or
counterclaim and are in no way conditioned or contingent upon any attempt
to collect from the Owner Participant or any other entity or to perfect or
enforce any security or upon any other condition or contingency or upon any
other action, occurrence, or circumstance whatsoever. Without limiting the
generality of the foregoing, the Guarantor shall have no right to terminate
this Guaranty, or to be released, relieved or discharged from its
obligations hereunder, and such obligations shall be neither affected or
diminished for any reason whatsoever, including, without limitation, (i)
any amendment or supplement to or modification of any Owner Participant
Agreement, any extension or renewal of the Owner Participant's obligations
under any Owner Participant Agreement, or any subletting, assignment or
transfer of the Owner Participant's or any Beneficiary's interest in the
Owner Participant Agreements, (ii) any bankruptcy, insolvency,
readjustment, composition, liquidation or similar proceeding with respect
to the Owner Participant or any other Person, (iii) any furnishing or
acceptance of additional security or any exchange, surrender, substitution
or release of any security, (iv) any waiver, consent or other action or
inaction or any exercise or nonexercise of any right, remedy or power with
respect to the Guaranteed Obligations or any of the Owner Participant
Agreements, (v) any merger or consolidation of the Owner Participant or the
Guarantor into or with any other Person, or any change in the structure of
the Owner Participant or in the ownership of the Owner Participant by the
Guarantor, (vi) any default, misrepresentation, negligence, misconduct or
other action or inaction of any kind by any Beneficiary under or in
connection with any Operative Document or any other agreement relating to
this Guaranty, except to the extent that any such default,
misrepresentation, negligence, misconduct or other action or inaction would
limit the Guaranteed Obligations, (vii) any defect in the title, condition,
design, operation or fitness of, or any interference with the operation,
use or possession of, the Aircraft, (viii) any failure to establish,
perfect or preserve title to or any security interest in or to the Aircraft
or any other collateral security for the Guaranteed Obligations, or (ix)
any other circumstance whatsoever (except the complete payment and
performance of the Guaranteed Obligations).
(b) Waiver. The Guarantor unconditionally waives, to the
fullest extent permitted by law, any right it may have to (i) the notice of
any waiver or extension granted to the Owner Participant, (ii) all notices
which may be required by statute, rule of law or otherwise to preserve any
of the rights of any of the Beneficiaries against the Owner Participant,
the Guarantor or any other Person, (iii) require any of the Beneficiaries
to proceed against the Owner Participant or any other Person or pursue any
collateral or remedy within such Beneficiary's power, (iv) require
acceptance of this Guaranty, diligence, presentment, demand for payment,
protest and all other notices, including notice of the creation, renewal,
extension or accrual of any of the Guaranteed Obligations, (v) require any
election of remedies, (vi) require the marshalling of assets or the resort
to any other security or, (vii) except as otherwise expressly provided
herein, claim any other defense, contingency, circumstance or matter which
might constitute a legal or equitable discharge of a surety or guarantor.
SECTION 4. Term of the Obligations of the Guarantor. The obligations
of the Guarantor under this Guaranty shall be discharged and released upon the
earlier of (a) the payment, performance and satisfaction in full of the
Guaranteed Obligations after the termination of all of the Owner Participant
Agreements, and (b) the transfer by the Owner Participant of its rights and
obligations under the Operative Documents, or any other assignment or other
transfer of the Owner Participant's rights and obligations pursuant to the
Operative Agreements to any Person who is not an Affiliate of the Guarantor,
in either case in accordance with, and as permitted by, the Participation
Agreement; provided, however, that any such transfer shall not relieve the
Guarantor of any of its obligations hereunder arising out of events occurring
prior to such transfer.
SECTION 5. Representations, Warranties and Covenants of the Guarantor.
(a) Corporate Existence and Power. The Guarantor is a
corporation duly organized, validly existing and in good standing as a banking
corporation under the laws of the State of Alabama. The Guarantor has the
corporate power and authority (i) to own or lease its properties and to carry
on its present business and operations, and (ii) to enter into and perform its
obligations under this Guaranty. The Owner Participant is a wholly-owned
subsidiary of the Guarantor.
(b) Due Authorization, Etc.. The execution and delivery by the
Guarantor of this Guaranty and compliance by the Guarantor with all of the
provisions hereof do not and will not contravene any law, governmental rule or
regulation or any order, writ, injunction or decree of any court or
governmental authority or agency applicable to or binding on the Guarantor or
contravene the provisions of, or constitute a default under, its charter or
by-laws or any indenture, mortgage, contract or any agreement or instrument to
which the Guarantor is a party or by which it or any of its property may be
bound or affected.
(c) Validity; Enforceability. This Guaranty has been duly
authorized, executed and delivered by the Guarantor, constitutes a legal,
valid and binding obligation of the Guarantor and is enforceable against the
Guarantor in accordance with its terms.
(d) Governmental Consents. No authorization or approval or
other action by, and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution, delivery or performance
by the Guarantor of this Guaranty or in connection herewith.
(e) Financial Information. The Guarantor has a combined
capital, surplus and undivided profits equal to at least $75,000,000. The
Guarantor will promptly upon receiving a written request therefor from any of
the Lessee, the Owner Trustee, the Indenture Trustee or the Pass Through
Trustee, provide copies of the originally-signed cover page and the
consolidated balance sheet (Schedule RC) of the Guarantor's most
recently-filed "call report" (that is, the quarterly consolidated reports of
condition and income for a bank with domestic and foreign offices -- FFIEC),
or any successor or other form applicable to the Guarantor. Since the date of
the consolidated balance sheet (Schedule RC) of the Guarantor dated December
31, 1994, there has been no material adverse change in the financial condition
of the Guarantor.
(f) Litigation. There are no pending or, to the knowledge of
the Guarantor, threatened actions or proceedings before any court or
administrative agency which would adversely affect the ability of the
Guarantor to perform its obligations hereunder.
The representations and warranties set forth in this Section 5
shall survive the execution and delivery of this Guaranty, provided that each
such representation and warranty is made only on and as of the date hereof.
SECTION 6. Survival of Guaranty. Notwithstanding anything to the
contrary herein, this Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any of the amounts paid to any
of the Beneficiaries, in whole or in part, is required to be repaid upon the
insolvency, bankruptcy, dissolution, liquidation, or reorganization of the
Guarantor or the Owner Participant or any other Person, or as a result of the
appointment of a custodian, receiver, trustee, or other officer with similar
powers with respect to the Guarantor or the Owner Participant or any other
Person or any substantial part of the property of the Guarantor or the Owner
Participant or such other Person, all as if such payments had not been made.
SECTION 7. Remedies; Subrogation. (a) In the event the Guarantor shall
fail to pay immediately any amounts due under this Guaranty, or to comply with
any other term of this Guaranty within three Business Days of the date of
demand therefor, each Beneficiary shall be entitled to all rights and remedies
to which it may be entitled hereunder or at law, in equity or by statute.
(b) Subrogation. The Guarantor will not exercise any rights
that it may acquire by way of subrogation under this Guaranty, by any payment
made hereunder or otherwise, until all the Guaranteed Obligations shall have
been paid in full. If any amount shall be paid to the Guarantor on account of
such subrogation rights at any time when all the Guaranteed Obligations shall
not have been paid in full, such amount shall be held in trust for the benefit
of the Beneficiary to whom such Guaranteed Obligation is payable and shall
forthwith be paid to such Beneficiary to be credited and applied to such
Guaranteed Obligation, whether matured or unmatured, in accordance with the
terms of the Owner Participant Agreement under which such Guaranteed
Obligation arose. If (i) the Guarantor shall make payment to any Beneficiary
of all or any part of the Guaranteed Obligations and (ii) all the Guaranteed
Obligations shall be paid in full, such Beneficiary will, at the Guarantor's
request and expense, execute and deliver to the Guarantor appropriate
documents, without recourse and with representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of an interest in the
Guaranteed Obligations resulting from such payment by the Guarantor.
(c) The provisions of this paragraph shall survive the term of
this Guaranty and the payment in full of the Guaranteed Obligations and the
termination of the Operative Documents.
SECTION 8. Limitations. Nothing in this Guaranty shall expressly or by
implication increase or expand the rights or obligations of any Beneficiary or
the Owner Participant under the Operative Documents.
SECTION 9. No Waiver; Amendments. No failure on the part of any
party hereto to exercise, no delay in exercising and no course of dealing
with respect to, any right or remedy hereunder will operate as a waiver
thereof; nor will any single or partial exercise of any right or remedy
hereunder preclude any other further exercise of any other right or remedy.
All remedies of the Beneficiaries against the Owner Participant are
cumulative without duplication. This Guaranty may not be waived, amended,
supplemented or modified except by an instrument in writing executed by the
Beneficiaries.
SECTION 10. Assignment and Assumption. This Guaranty may not be
assigned by the Guarantor to, or assumed by, any successor to or assign of
the Guarantor without the prior written consent of the Beneficiaries except
in connection with a sale of all or substantially all of the Guarantor's
assets and pursuant to an assignment and assumption agreement, in form and
substance satisfactory to the Beneficiaries, of the Guarantor's obligations
hereunder, or as otherwise provided in Section 4 hereof, by a Person
complying with the requirements of the Operative Agreements for a
transferee of the Owner Participant.
SECTION 11. Notices. All notices, demands or other communications
required or otherwise provided under this Agreement shall be in writing and
shall be delivered to the Beneficiaries at the address set forth in Section
14.01 of the Participation Agreement and, if to the Guarantor:
at: AmSouth Bank of Alabama
1901 Sixth Avenue North
Birmingham, Alabama 35203
Attn: Law Department
with a copy to: AmSouth Bank of Alabama
c/o AmSouth Leasing Corporation
1900 Fifth Avenue North
Birmingham, Alabama 35203
Attn: President
or to such other address as the Guarantor or any Beneficiary may specify by
written notice. All notices shall be deemed duly given if given in any manner
provided for in Section 14.01 of the Participation Agreement.
SECTION 12. Successors and Assigns. This Agreement shall bind the
Guarantor and its successors and permitted assigns and inure to the benefit of
the Beneficiaries and their successors and permitted assigns.
SECTION 13. Severability. The invalidity or unenforceability of
any one or more provisions of this Agreement shall not affect the validity or
enforceability of the remaining portions of this Agreement.
SECTION 14. Governing Law. THIS GUARANTY SHALL FOR ALL PURPOSES
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
ALABAMA.
* * * * * * *
IN WITNESS WHEREOF, the party hereto has caused this Amended and
Restated Guaranty Agreement to be duly executed on the day and year first
above written.
AMSOUTH BANK OF ALABAMA
By:
_______________________
Title:
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N659FE)
Dated as of June 1, 1995
Amended and Restated as of August 1, 1995
among
FEDERAL EXPRESS CORPORATION,
Lessee
SHAWMUT BANK, NATIONAL ASSOCIATION,
Owner Participant
THE ENTITIES LISTED ON SCHEDULE I TO THE
ORIGINAL PARTICIPATION AGREEMENT,
Original Loan Participants
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
Not in Its Individual Capacity Except as Otherwise Expressly
Set Forth Herein, but Solely as Owner Trustee,
Owner Trustee
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION,
Indenture Trustee
and
NATIONSBANK, NATIONAL ASSOCIATION (CAROLINAS),
Pass Through Trustee
______________________________
LEVERAGED LEASE OF ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 757, REGISTRATION NO. N659FE
TABLE OF CONTENTS
Page
Initial Recitals........................................................... 1
ARTICLE 1
DEFINITIONS............................................................. 3
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
REFUNDING THE ORIGINAL LOAN CERTIFICATES
Section 2.01. Transfer of Funds........................................ 3
Section 2.02. Certificates............................................. 6
Section 2.03. Owner Participant Payment................................ 6
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANTS
Section 3.01. Extent of Interest of Original Loan Participants......... 7
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent..................................... 7
Section 4.02. Opinion of Special Aviation Counsel...................... 16
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............. 16
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties.................. 16
Section 6.02. Offering by Lessee....................................... 22
Section 6.03. Certain Covenants of Lessee.............................. 22
Section 6.04. Survival of Representations and Warranties............... 30
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate................................................. 30
Section 7.02. Citizenship.............................................. 31
Section 7.03. Representations, Warranties and Covenants of the Owner
Participant............................................ 32
Section 7.04. Representations, Covenants and Warranties of FSBU and the
Owner Trustee.......................................... 37
Section 7.05. Representations, Warranties and Covenants of the Indenture
Trustee................................................ 39
Section 7.06. Indenture Trustee's Notice of Default.................... 41
Section 7.07. Releases from Indenture.................................. 41
Section 7.08. Covenant of Quiet Enjoyment.............................. 41
Section 7.09. Original Loan Participants' and Pass Through Trustee's
Representations and Warranties......................... 41
Section 7.10. Survival of Representations, Warranties and Covenants.... 42
Section 7.11. Lessee's Assumption of the Certificates.................. 43
Section 7.12. Indebtedness of Owner Trustee............................ 45
Section 7.13. Compliance with Trust Agreement, Etc..................... 45
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes......................... 46
Section 8.02. After-Tax Basis.......................................... 51
Section 8.03. Time of Payment.......................................... 52
Section 8.04. Contests................................................. 52
Section 8.05. Refunds.................................................. 54
Section 8.06. Lessee's Reports......................................... 54
Section 8.07. Survival of Obligations.................................. 55
Section 8.08. Payment of Taxes......................................... 55
Section 8.09. Reimbursements by Indemnitees Generally.................. 55
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally................................................ 56
Section 9.02. After-Tax Basis.......................................... 59
Section 9.03. Subrogation.............................................. 60
Section 9.04. Notice and Payment....................................... 60
Section 9.05. Refunds.................................................. 60
Section 9.06. Defense of Claims........................................ 61
Section 9.07. Survival of Obligations.................................. 62
Section 9.08. Effect of Other Indemnities.............................. 62
Section 9.09. Interest................................................. 62
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs....................... 62
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee.................. 64
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant.................... 66
Section 12.02. Interest of Holders of Certificates..................... 66
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents.................... 66
Section 13.02. Further Assurances...................................... 67
Section 13.03. No Retroactive Application.............................. 67
ARTICLE 14
NOTICES
Section 14.01. Notices................................................. 67
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing............................................. 68
Section 15.02. Reoptimization.......................................... 71
ARTICLE 16
[INTENTIONALLY LEFT BLANK]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes.......................... 73
Section 17.02. [Intentionally Left Blank.]............................. 73
Section 17.03. Counterparts............................................ 73
Section 17.04. No Oral Modifications................................... 73
Section 17.05. Captions................................................ 74
Section 17.06. Successors and Assigns.................................. 74
Section 17.07. Concerning the Owner Trustee, Pass Through Trustee and
Indenture Trustee..................................... 74
Section 17.08. Severability............................................ 75
Section 17.09. Public Release of Information........................... 75
Section 17.10. Certain Limitations on Reorganization................... 75
Section 17.11. GOVERNING LAW........................................... 76
Section 17.12. Section 1110 Compliance................................. 76
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality......................................... 76
SCHEDULE I Certificate Information
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
EXHIBIT A(1)(a) Opinion of Lessee's Counsel
EXHIBIT A(1)(b) Opinion of Lessee's Special Counsel
EXHIBIT A(2)(a) Opinion of Owner Participant's Special Counsel
EXHIBIT A(2)(b) Opinion of Owner Participant's Counsel
EXHIBIT A(3) Opinion of Indenture Trustee's Special Counsel
EXHIBIT A(4) Opinion of Special Aviation Counsel
EXHIBIT A(5) Opinion of Owner Trustee's Counsel
EXHIBIT A(6) Opinion of Pass Through Trustee's Special Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N659FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N659FE) dated as of June 1, 1995, as amended and restated as of August 1, 1995
(this "Agreement") among FEDERAL EXPRESS CORPORATION, a Delaware corporation
(herein, together with its successors and permitted assigns, "Lessee"),
SHAWMUT BANK, NATIONAL ASSOCIATION, a national banking association (herein,
together with its successors and permitted assigns, "Owner Participant"), the
entities listed on Schedule I to the Original Participation Agreement as Loan
Participants (individually, together with its successors and permitted
assigns, "Original Loan Participant" and collectively "Original Loan
Participants"), FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national
banking association, not in its individual capacity, except as otherwise
expressly stated herein, but solely as Owner Trustee under the Trust Agreement
referred to below (in such capacity as trustee, together with its successors
and permitted assigns, the "Owner Trustee"), NATIONSBANK OF GEORGIA, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity,
except as otherwise expressly stated herein, but solely as trustee under the
Indenture referred to below (in such capacity as trustee, together with its
successors and permitted assigns, the "Indenture Trustee"), and NATIONSBANK,
NATIONAL ASSOCIATION (CAROLINAS), a national banking association, not in its
individual capacity, except as otherwise expressly stated herein, but solely
as trustee, as Pass Through Trustee (in such capacity as trustee, together
with its successors and permitted assigns, the "Pass Through Trustee").
W I T N E S S E T H :
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee entered into the Original
Participation Agreement (such term, and all other terms not heretofore
defined, shall have the meanings assigned thereto as provided in Article 1
below), providing for the sale and lease of the Aircraft that was delivered on
the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant entered into the
Original Trust Agreement relating to the Aircraft with First Security Bank of
Utah, National Association in its individual capacity, pursuant to which First
Security Bank of Utah, National Association agreed, among other things, to
hold the Lessor's Estate in trust for the benefit of the Owner Participant;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Indenture Trustee
entered into the Original Indenture, for the benefit of the Original Loan
Participants, pursuant to which the Owner Trustee issued to the Original Loan
Participants the Original Loan Certificates as evidence of the loans made by
the Original Loan Participants to the Owner Trustee, the proceeds of which
were used by the Owner Trustee to pay a portion of the Purchase Price for the
Aircraft;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Lessee entered
into the Original Lease relating to the Aircraft, whereby, subject to the
terms and conditions set forth in said Lease, the Owner Trustee agreed to
lease the Aircraft to the Lessee, and the Lessee agreed to lease the Aircraft
from the Owner Trustee, such lease of the Aircraft being evidenced by the
execution and delivery of the Lease Supplement;
WHEREAS, Article 15 of the Original Participation Agreement
permits a Refinancing of the Original Loan Certificates subject to the
satisfaction of the conditions specified in Section 15.01 thereof, and Section
3.04 of the Original Lease contemplates the adjustment of the percentages for
Basic Rent, Stipulated Loss Value and Termination Value in the event of such a
Refinancing, and the Lessee has requested that the Owner Trustee effect such a
Refinancing and adjustment;
WHEREAS, in order to facilitate such Refinancing, the Lessee is
concurrently entering into an Underwriting Agreement, which relates to two
series of Pass Through Certificates that will be issued by the Pass Through
Trusts formed to acquire, among other securities, the Certificates bearing a
particular interest rate and having a particular Maturity that will be issued
under the Indenture;
WHEREAS, on the Pass Through Closing Date, a closing will occur
with respect to the public offering of the Pass Through Certificates issued by
each Pass Through Trust, an allocable amount of the proceeds of which offering
will be used by the Pass Through Trustee to purchase for each such Pass
Through Trust the Certificates of the interest rate and Maturity applicable
thereto, the proceeds of which purchase in turn will be applied to the
Refinancing in full of the outstanding principal amount of the Original Loan
Certificates;
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee have agreed, subject to
the terms and conditions hereinafter provided, to amend and restate, and to
add the Pass Through Trustee as a party to, the Original Participation
Agreement; and
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participants and the Indenture Trustee have agreed, to the
extent they are parties thereto and, subject to the terms and conditions
hereinafter provided, to amend and restate the Original Indenture, to amend
and restate the Original Lease, to amend the Original Tax Indemnity Agreement
and to amend and restate the Original Trust Agreement, each such amendment and
restatement to be executed and delivered simultaneously with the purchase of
the Certificates by the Pass Through Trustee for the Pass Through Trusts and
the Refinancing in full of the Original Loan Certificates.
NOW, THEREFORE, in consideration of the mutual covenants contained
in this Agreement and other good and valuable consideration, receipt of which
is hereby acknowledged, the parties hereto agree, subject to the terms and
conditions hereinafter provided, that the Original Participation Agreement be
and the same is hereby amended and restated in its entirety as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the definitions set
forth in Schedule II hereto are incorporated herein for all purposes of this
Agreement and shall be equally applicable to both the singular and the plural
forms of the terms so defined.
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
REFUNDING THE ORIGINAL LOAN CERTIFICATES
Section 2.01. Transfer of Funds.
(a) On or before the Pass Through Closing Date, the Pass Through
Trustee and the Lessee, in accordance with the Pass Through Agreement, shall
enter into the Series Supplements, and, subject to the terms and conditions
set forth therein, on the Pass Through Closing Date (i) the Lessee shall
direct the Underwriters to execute a wire transfer or intra-bank transfer to
the Pass Through Trustee in the amount of the total proceeds payable pursuant
to the Underwriting Agreement with respect to the Pass Through Certificates
and (ii) the Pass Through Trustee shall deliver the Pass Through Certificates
to the Underwriters upon receipt by the Pass Through Trustee of such proceeds.
(b) Subject to the satisfaction or waiver of the conditions set
forth herein, on the Refunding Date the following events shall occur in the
order set forth below:
(i) the Owner Participant shall on behalf of the Owner Trustee
execute a wire transfer or intra-bank transfer in favor of the Agent in the
amount of all accrued and unpaid interest on the Original Loan Certificates
to but excluding the Refunding Date (less an amount equal to the excess of
the proceeds of sale of the related Pass Through Certificates referred to
in paragraph (iii) below over the outstanding principal amount of the
Original Loan Certificates), which transfer shall constitute the payment of
all such accrued and unpaid interest;
(ii)the Lessee shall on behalf of the Owner Trustee execute a wire
transfer or intra-bank transfer in favor of the Agent as Supplemental Rent
in the amount of any Breakage Costs required to be paid pursuant to the
Original Indenture which transfer shall constitute the payment of all such
Breakage Costs;
(iii)for each Pass Through Trust, from an allocable amount of the
proceeds of the sale of the related Pass Through Certificates, the Pass
Through Trustee shall pay on behalf of the Owner Trustee in the manner
specified in paragraph (iv) below, an amount equal to the principal amount
of Certificates of the Maturity and having the interest rate that relates
to such Pass Through Trust, which amounts in the aggregate shall equal the
aggregate principal amount of the Certificates as specified in Section 2.04
of the Indenture;
(iv)the aggregate amount payable by the Pass Through Trustee pursuant
to paragraph (iii) above shall be payable by wire transfer or intra-bank
transfer in favor of the Agent on behalf of the Owner Trustee in the amount
of the outstanding principal amount of the Original Loan Certificates plus
an amount equal to the excess amount referred to in the parenthetical
phrase in paragraph (i) above;
(v) the Agent shall apply the amounts received by it under paragraphs
(i), (ii) and (iv) of this subsection (b) to prepay the Original Loan
Certificates in full in accordance with Sections 2.06 and 2.10 of the
Original Indenture; and
(vi)the Owner Trustee shall cause the Certificates to be delivered to
the applicable Pass Through Trustee in accordance with Section 2.02 hereof.
On the Refunding Date concurrently with the events specified in
clauses (iii) through (v) of this Section 2.01(b), the parties hereto shall
execute and deliver, to the extent they are parties thereto, and consent to
the execution and delivery of (if they are not a party thereto), the
Indenture, the Lease and the Trust Agreement, and the Owner Trustee shall
execute and deliver to the Indenture Trustee for authentication, and the
Indenture Trustee shall authenticate and deliver to the applicable Pass
Through Trustee, upon the request of the Owner Trustee, the Certificates as
provided in Section 2.02 hereof. The Owner Participant hereby requests and
directs the Owner Trustee to execute and deliver this Participation
Agreement and, subject to the terms hereof, to take the actions specified
herein. The Original Loan Participants by their execution and delivery
hereof, request and direct the Indenture Trustee to execute and deliver
this Agreement and concurrently with the events specified in clauses (iii)
through (v) of this Section 2.01(b) and subject to the terms and conditions
hereof to take the actions contemplated herein. The parties hereto,
including, without limitation, the Original Loan Participants, confirm
that, as provided in Section 2.06 of the Original Indenture, upon payment
in full of the principal amount, Breakage Costs, if any, and interest on
the Original Loan Certificates and all other sums then payable to the
Original Loan Participants under the Original Agreements to the extent
specified in subsection (c) below, the Original Loan Participants shall
have no further interest in, or other right or obligation with respect to,
the Trust Indenture Estate, the Original Agreements or the Operative
Agreements (it being understood that the foregoing shall not limit or
detract from any claim that any Original Loan Participant may have under
Article 8 or 9 or Section 10.01(a)(ii) hereof or of the Original
Participation Agreement) and, accordingly, have no obligation to, and will
not attempt to direct any future actions of the Indenture Trustee with
respect to the Trust Indenture Estate, provided that the rights and
obligations of the Original Loan Participants shall, until the payment in
full of such amounts to the Agent on behalf of the Original Loan
Participants on the Refunding Date, be governed by the Original
Participation Agreement and the other Operative Agreements contemplated
thereby or in effect immediately prior to the effectiveness of this
Agreement and shall, upon such payment and thereafter, be governed by this
Agreement. The Lessee hereby consents to the foregoing.
(c) Not less than three (3) Business Days prior to the Refunding
Date, the Agent on behalf of the Original Loan Participants shall give notice
in writing to the parties hereto of the principal amount, Breakage Costs, if
any, and interest on and all other amounts due on the Refunding Date under the
Original Loan Certificates and all other sums payable on the Refunding Date to
the Original Loan Participants under the Original Agreements, such notice to
be deemed final and binding on the Original Loan Participants as to the
respective amounts of principal, Breakage Costs, if any, and interest when
given; provided that the expected Refunding Date, at the time such notice is
given, is the same as the Refunding Date.
(d) On the Refunding Date, subject to (i) the giving of at least ten
(10) Business Days' prior written notice to the Indenture Trustee and the
Original Loan Participants, (ii) the receipt by the Original Loan Participants
of the funds referred to in Section 2.01(b)(v) above and (iii) compliance with
the provisions of Section 15 of the Original Participation Agreement and
Section 2.10(c) of the Original Indenture (including the Refinancing in full
of the Original Loan Certificates), the Original Loan Participants shall
deliver the Original Loan Certificates to the Indenture Trustee for
cancellation and delivery to the Owner Trustee.
(e) The closing with respect to the acquisition of the Pass Through
Certificates by the Underwriters and the closing with respect to the
Refinancing of the Original Loan Certificates (together, the "Closings") shall
take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017.
(f) All payments pursuant to this Section 2.01 shall be made in
immediately available funds.
(g) In the event that the Refunding Date and the actions
contemplated to occur on such date pursuant to subsection (d) of this Section
2.01 do not occur on or before August 31, 1995, then the rights and
obligations of the parties to the Original Participation Agreement, including,
without limitation, the Original Loan Participants, shall be governed by the
Original Participation Agreement and the other Operative Agreements
contemplated thereby or in effect immediately prior to the effectiveness of
this Agreement and this Agreement shall be of no further force and effect,
except that the Lessee shall be obligated hereby to pay all fees and expenses
of the Original Loan Participants, the Indenture Trustee, the Owner
Participant, the Owner Trustee, the Pass Through Trustee and their respective
counsel relating to the transactions contemplated hereby. Each of the parties
hereto agrees to execute and deliver to the other parties such documents and
instruments as may be necessary to give effect to the foregoing provisions of
this subsection (g).
Section 2.02. Certificates. Subject to the satisfaction or waiver
of the conditions set forth herein, on the Refunding Date, the Owner Trustee
shall execute and deliver to the Indenture Trustee, and the Indenture Trustee
shall authenticate and deliver, upon the request of the Owner Trustee, to the
Pass Through Trustee for each Pass Through Trust, the Certificate specified
for such Pass Through Trust on Schedule I attached hereto, which (i) shall be
issued in the principal amount and in the Maturity set forth for such
Certificate in Schedule I hereto, (ii) shall bear interest at the interest
rate set forth for such Certificate in Schedule I hereto, (iii) shall be
issued in such form and on such terms as are specified in the Indenture, (iv)
shall be dated and authenticated on the Refunding Date and shall bear interest
from the Refunding Date and (v) shall be registered in the name of the Pass
Through Trustee on behalf of such Pass Through Trust.
Section 2.03. Owner Participant Payment. The Owner Participant
agrees with the Lessee and only with the Lessee on behalf of the Owner
Trustee to make available to the Owner Trustee funds sufficient to pay to
the Indenture Trustee on the Commencement Date an amount equal to the
difference between the amounts of principal (if any) and interest scheduled
to be paid on the Certificates on such date, and the amount of Basic Rent,
if any, scheduled to be paid by the Lessee on such date (the "Owner
Participant Amount"), and the Owner Trustee shall upon receipt thereof make
such funds available to the Indenture Trustee to pay amounts due and owing
under the Certificates on the Commencement Date, provided that the Owner
Participant shall not be obligated to make such funds available if an Event
of Default under the Lease shall have occurred and be continuing on the
date on which such funds are to be made available. If the Owner
Participant does not make such funds available when otherwise required to
do so, the Lessee shall be obligated to make an advance pursuant to Section
3.05 of the Lease in an amount sufficient to pay in full the amounts of
principal and interest due on the Certificates on such date. Such
obligations shall not, nor shall they be construed to, make the Owner
Participant directly liable on the Certificates or in any way convert the
Certificates to recourse loans against the Owner Participant.
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANTS
Section 3.01. Extent of Interest of Original Loan Participants.
Delivery of the Original Loan Certificates by the Original Loan Participants
to the Indenture Trustee for cancellation on the Refunding Date shall be
conclusive evidence of receipt by the Original Loan Participants of all
amounts then due and payable to the Original Loan Participants in respect of
principal of, Breakage Costs, if any, and interest on the Original Loan
Certificates under the Original Agreements (it being understood that the
foregoing shall not limit or detract from any claim any Original Loan
Participant may have under Article 8 or 9 or Section 10.01(a)(ii) hereof or of
the Original Participation Agreement).
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent. The obligations of the Owner
Trustee, the Owner Participant, the Lessee, the Indenture Trustee and the Pass
Through Trustee on behalf of each Pass Through Trust to participate in the
transactions contemplated hereby on the Refunding Date are subject to the
fulfillment to the satisfaction of such party (or waiver by such party), prior
to or on the Refunding Date, of the following conditions precedent (it being
understood that receipt by the Lessee of any of the following documents shall
not be a condition precedent to the obligations of any party):
(a) Certificates. On the Refunding Date, there shall have been duly
issued and delivered by the Owner Trustee to the Pass Through Trustee for
each Pass Through Trust, against payment therefor, a Certificate,
substantially in the form set forth in Exhibit B to the Indenture, duly
authenticated, dated the Refunding Date and registered in the name of the
Pass Through Trustee on behalf of such Pass Through Trust, in the principal
amounts, Maturity, bearing the interest rate and the other economic
terms specified in the Series Supplements and otherwise as provided in
Section 2.04 of the Indenture. The Pass Through Certificates shall be
registered under the Securities Act, any applicable state securities
laws shall have been complied with, and the Pass Through Agreement shall
have been qualified under the Trust Indenture Act.
(b) Legal Investment. On the Refunding Date, no fact or condition
shall exist under applicable laws or regulations, or interpretations of any
such laws or regulations by applicable regulatory authorities, which, in
the opinion of the Owner Participant or its special counsel, the Pass
Through Trustee or the Indenture Trustee, would make it illegal for the
Owner Participant, the Lessee, the Owner Trustee, the Pass Through Trustee
or the Indenture Trustee, and no change in circumstances shall have
occurred which would otherwise make it illegal or otherwise in
contravention of guidance issued by regulatory authorities for the Owner
Participant, the Lessee, the Owner Trustee, the Pass Through Trustee or the
Indenture Trustee, to participate in the transaction to be consummated on
the Refunding Date; and no action or proceeding shall have been instituted
nor shall governmental action before any court, governmental authority or
agency be threatened which in the opinion of counsel for the Owner
Participant, the Pass Through Trustee or the Indenture Trustee is not
frivolous, nor shall any order have been issued or proposed to be issued by
any court, or governmental authority or agency, as of the Refunding Date,
to set aside, restrain, enjoin or prevent the consummation of any of the
transactions contemplated by this Agreement or by any of the other
Operative Agreements.
(c) Underwriters. The Underwriters shall have transferred the funds
specified in Section 2.01(a) hereof and all conditions thereunder shall
have been satisfied or waived.
(d) Refunding Documents. This Agreement and the following documents
shall have been duly authorized, executed and delivered by the respective
party or parties thereto, shall, to the extent that the forms thereof are
not attached hereto, each be satisfactory in form and substance to the
Lessee, the Indenture Trustee, the Pass Through Trustee, the Owner Trustee
and the Owner Participant (each acting directly or by authorization to its
special counsel) and shall each be in full force and effect; there shall
not have occurred any default thereunder, or any event which with the lapse
of time or the giving of notice or both would be a default thereunder, and
copies executed or certified as requested by the Lessee, the Owner Trustee,
the Owner Participant, the Indenture Trustee or the Pass Through Trustee,
as the case may be, of such documents shall have been delivered to the
Lessee, the Owner Participant, the Indenture Trustee, the Pass Through
Trustee and the Owner Trustee (provided that the sole chattel-paper
original of the Lease shall be delivered to the Indenture Trustee):
(i) the Lease;
(ii)the Indenture;
(iii) the Trust Agreement; and
(iv) in the case of the Owner Participant only, Amendment No. 1 to
the Original Tax Indemnity Agreement.
(e) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee and the Owner Participant shall have received such evidence as it
deems appropriate, including, without limitation, an independent insurance
broker's report, together with certificates of insurance from such broker,
in form and substance satisfactory to the Indenture Trustee and the Pass
Through Trustee (to the extent of their interests thereunder) or the Owner
Participant, as the case may be, to establish that the insurance required
by Article 13 of the Lease is in effect.
(f) Financing Statements. (i) Uniform Commercial Code ("UCC")
financing statements covering all the security interests (and other
interests) created by or pursuant to the Granting Clause of the Original
Indenture shall have been executed and delivered by the Owner Trustee, as
debtor, and by the Indenture Trustee, as secured party, for and on behalf
of the Original Loan Participants, and such financing statements shall have
been duly filed in the State of Utah; (ii) a form UCC-3 financing statement
to amend and restate each financing statement referred to in the
immediately preceding sentence shall have been executed and delivered by
the Owner Trustee, as debtor, and by the Indenture Trustee as secured
party, and a form UCC-1 financing statement covering all the security
interests (and other interests) created by or pursuant to the Granting
Clause of the Indenture shall have been executed and delivered by the Owner
Trustee, as debtor, and by the Indenture Trustee, as secured party, for and
on behalf of the Holders, and concurrently with the Refinancing of the
Original Loan Certificates such UCC-3 financing statement and UCC-1
financing statement shall have been duly filed or duly submitted for filing
in the State of Utah, and all other actions shall have been taken which, in
the opinion of special counsel for the Pass Through Trustee or for the
Underwriters, are necessary or desirable to maintain the perfection of the
security interest created by or pursuant to the Granting Clause of the
Indenture; (iii) a UCC notice filing describing the Original Lease as a
lease shall have been executed and delivered by the Owner Trustee, as
lessor, and the Lessee, as lessee (which filing shall name the Indenture
Trustee as assignee of the Owner Trustee), and shall have been duly filed
in the State of Tennessee; and (iv) a form UCC-3 financing statement to
amend and restate the UCC notice filing referred to in the immediately
preceding clause (iii) shall have been executed and delivered by the Owner
Trustee, as lessor, and by the Lessee, as lessee (which filing shall name
the Indenture Trustee as assignee of the Owner Trustee), and such notice
filing shall concurrently with the Refinancing of the Original Loan
Certificates have been duly filed in the State of Tennessee, and all other
actions shall have been taken which, in the opinion of the Owner
Participant, Pass Through Trustee and the Underwriters, are necessary to
perfect and protect such security interests and other interests created by
or pursuant to the Granting Clause of the Indenture.
(g) Corporate Documents. Except when such Person is the delivering
party, the Owner Participant, the Owner Trustee, the Lessee, the Original
Loan Participants, the Pass Through Trustee and the Indenture Trustee
(acting directly or by authorization to its counsel) shall have received
the following, in each case in form and substance satisfactory to it:
(i) copies, certified by the Secretary or an Assistant Secretary
of the Lessee as of the Refunding Date, of the certificate of
incorporation and bylaws of the Lessee and of the resolutions of the
Board of Directors of the Lessee duly authorizing the lease by the
Lessee of the Aircraft under the Lease and the execution, delivery
and performance by the Lessee of the Original Agreements to which it
is a party, this Agreement, the Lease, the Tax Indemnity Agreement,
the Pass Through Agreement, the Series Supplements, the other
Operative Agreements to which the Lessee is or is to be a party and
each other document to be executed and delivered by the Lessee in
connection with the transactions contemplated hereby;
(ii) a copy of the articles of association and bylaws of the
Owner Participant certified by the Secretary or Assistant
Secretary of the Owner Participant;
(iii)a copy of the charter and bylaws and other instruments of
First Security Bank of Utah, National Association, certified as of
the Refunding Date by the Secretary or Assistant Secretary of First
Security Bank of Utah, National Association as of the Refunding Date
(or other like instruments satisfactory to the Lessee and the Owner
Participant), and a copy of the resolutions of the board of directors
of First Security Bank of Utah, National Association, certified as
such by such Secretary or Assistant Secretary as of the Refunding
Date, authorizing the execution and delivery by First Security Bank
of Utah, National Association or the Owner Trustee, as the case may
be, of the Original Agreements to which it is a party, the Trust
Agreement and each of the other Operative Agreements to which it is
or is to be a party, whether in its individual capacity or as Owner
Trustee;
(iv) a copy of the charter and bylaws and other instruments of
NationsBank of Georgia, National Association ("NationsBank"),
certified as of the Refunding Date by the Secretary or Assistant
Secretary of NationsBank (or other like instruments satisfactory to
the Lessee and the Owner Participant) which bylaws include a
provision authorizing the execution and delivery by NationsBank or
the Indenture Trustee, as the case may be, of each of the Original
Agreements to which it is a party and each of the other Operative
Agreements to which it is or is to be a party;
(v) a copy of the charter and bylaws and other instruments of
Nationsbank, National Association (Carolinas), certified as of the
Refunding Date by the Secretary or an Assistant Secretary of
Nationsbank, National Association (Carolinas) (or other like
instruments satisfactory to the Lessee and the Owner Participant)
which bylaws include a provision authorizing the execution and
delivery by Nationsbank, National Association (Carolinas) or the Pass
Through Trustee, as the case may be, of this Participation Agreement,
the Pass Through Agreement, the Series Supplements and any other
document executed or authenticated by or on behalf of the Pass
Through Trustee in connection with the transactions contemplated
hereby; and
(vi) such other documents, evidences, materials, and information
with respect to the Lessee, the Owner Trustee, the Indenture Trustee,
the Pass Through Trustee and the Owner Participant as the Indenture
Trustee, the Pass Through Trustee or the Owner Participant may
reasonably request in order to establish the consummation of the
transactions contemplated by this Agreement.
(h) Title, Airworthiness and Registration. On the Refunding Date,
the following statements shall be true, and the Owner Participant, the
Owner Trustee, the Pass Through Trustee and the Indenture Trustee shall
have received evidence from the Lessee reasonably satisfactory to each such
Person to the effect that:
(i) the Owner Trustee has good and marketable title to the
Aircraft, free and clear of Liens, except the rights of the Owner
Trustee and the Lessee under the Lease and the Lease Supplement
covering the Aircraft, the rights of the Indenture Trustee under the
Indenture and the beneficial interest of the Owner Participant
created by the Trust Agreement and the interest of the Holders
created by the Indenture and the Indenture and Security Supplement
covering the Aircraft;
(ii) the Aircraft has been duly certified by the Aeronautics
Authority as to type and airworthiness in accordance with the terms
of the Operative Agreements;
(iii)the Lease, the Indenture and the Trust Agreement
concurrently with the Refinancing of the Original Loan
Certificates have been duly filed for recordation (or shall be in
the process of being so duly filed for recordation) with the
Aeronautics Authority pursuant to the Act; and
(iv) the Aircraft is registered in the name of the Owner Trustee.
(i) Officer's Certificate of Lessee. On the Refunding Date, the
following statements shall be true, and the Owner Participant, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee shall have
received a certificate signed by the Vice President and Treasurer or any
other duly authorized officer of the Lessee, dated the Refunding Date,
stating that:
(i) the representations and warranties of the Lessee contained
in the Operative Agreements to which it is a party (excluding the Tax
Indemnity Agreement) and in any certificate delivered pursuant hereto
or thereto are true and correct on and as of the Refunding Date as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date, in
which case such certificate shall state that such representations and
warranties were true and correct on and as of such earlier date);
(ii) except for the matters described under "Legal Proceedings"
in the Lessee's Annual Report on Form 10-K for the fiscal year ended
May 31, 1995, as to which such officer will make no certification
concerning the liability of the Lessee (if any), or the effect of any
adverse determination of any such matters upon the consolidated
financial condition, business or operations of the Lessee, no
material adverse change has occurred in the financial condition,
business or operations of the Lessee from that shown in the audited
financial statements of the Lessee as of May 31, 1995, and nothing
has occurred which will, in the judgment of such officer, materially
adversely affect the ability of the Lessee to carry on its business
or to perform its obligations under this Agreement and each other
Operative Agreement to which it is a party; and
(iii)no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(j) Officer's Certificate of Owner Participant. On the Refunding
Date, the following statements shall be true, and the Lessee, the Pass
Through Trustee, the Owner Trustee and the Indenture Trustee shall have
received a certificate from the Owner Participant, signed by a duly
authorized officer of the Owner Participant dated the Refunding Date,
stating that:
(i) the representations and warranties of the Owner Participant
contained in this Agreement, the Trust Agreement and any other
Operative Agreement to which it is a party and in any certificate
delivered pursuant hereto or thereto, are true and correct on and as
of the Refunding Date as though made on and as of such date (except
to the extent that such representations and warranties relate solely
to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as
of such earlier date);
(ii) no Lessor's Liens attributable to the Owner Participant
exist; and
(iii)no event has occurred and is continuing which constitutes,
due to any action or inaction on the part of the Owner Participant,
an Indenture Default or an Indenture Event of Default.
(k) Other Officer's Certificates. On the Refunding Date, the
following statements shall be true, and the Owner Participant, the Lessee,
the Pass Through Trustee, the Owner Trustee and the Indenture Trustee shall
have received a certificate from each of First Security Bank of Utah,
National Association and the Owner Trustee (in the case of the Lessee, the
Owner Participant, the Pass Through Trustee and the Indenture Trustee),
NationsBank of Georgia, National Association (in the case of the Lessee,
the Owner Participant, the Pass Through Trustee and the Owner Trustee) and
NationsBank, National Association (Carolinas) (in the case of the Owner
Participant, the Lessee, the Owner Trustee and the Indenture Trustee)
signed by a duly authorized officer of First Security Bank of Utah,
National Association, NationsBank of Georgia, National Association and
NationsBank, National Association (Carolina), respectively, dated the
Refunding Date, stating with respect to First Security Bank of Utah,
National Association and the Owner Trustee, NationsBank of Georgia,
National Association and the Indenture Trustee and NationsBank, National
Association (Carolina) and the Pass Through Trustee, as the case may be,
that:
(i) the representations and warranties of the Owner Trustee in
its individual capacity and as trustee, of the Indenture Trustee in
its individual capacity and as trustee, and of the Pass Through
Trustee in its individual capacity and as trustee contained in this
Agreement, the Lease, the Trust Agreement and the Indenture and in
any certificate delivered pursuant hereto or thereto are true and
correct on and as of the Refunding Date as though made on and as of
such date (except to the extent that such representations and
warranties relate solely to an earlier date, in which case such
certificate shall state that such representations and warranties were
true and correct on and as of such earlier date);
(ii) to the best of its knowledge, no event has occurred and is
continuing, which constitutes or which, but for the lapse of time or
the giving of notice, or both, would constitute, due to any action or
omission on the part of the Owner Trustee in its individual capacity
or as trustee, and of the Indenture Trustee in its individual
capacity or as trustee, an Event of Default or an Indenture Event of
Default; and
(iii)there are no Lessor's Liens attributable to the Owner
Trustee or First Security Bank of Utah, National Association and no
Indenture Trustee's Liens affecting the Trust Indenture Estate or the
Lessor's Estate or any part thereof.
(l) Legal Opinions. The Owner Participant, the Original Loan
Participants, the Lessee, the Owner Trustee, the Indenture Trustee and the
Pass Through Trustee (acting directly or by authorization to its special
counsel) shall have received from the following counsel their respective
legal opinions in each case satisfactory to the Owner Participant, the
Original Loan Participants, the Lessee, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee, as the case may be, as to scope and
substance (and covering such other matters as the recipient may reasonably
request) and dated the Refunding Date:
(i) George W. Hearn, Esq., Vice President, Law - Corporate and
Business Transactions of the Lessee in the form of Exhibit A(1)(a)
hereto and addressed to the Owner Participant, the Owner Trustee, the
Pass Through Trustee, the Indenture Trustee, the Underwriters and the
Original Loan Participants;
(ii) Morgan, Lewis & Bockius, special counsel for the Owner
Participant, in the form of Exhibit A(2)(a) hereto and Richard A.
Toomey, Jr., Esq., Senior Vice President and General Counsel of the
Owner Participant, in the form of Exhibit A(2)(b) hereto, each
addressed to the Owner Participant, the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee, the Lessee, the Underwriters and
the Original Loan Participants;
(iii)Powell, Goldstein, Frazer & Murphy, special counsel for the
Indenture Trustee, in the form of Exhibit A(3) hereto and addressed
to the Owner Participant, the Indenture Trustee, the Owner Trustee,
the Pass Through Trustee, the Lessee, the Underwriters and the
Original Loan Participants;
(iv) Daugherty, Fowler & Peregrin, special aviation counsel, in
the form of Exhibit A(4) hereto and addressed to the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, the Lessee, the Underwriters and the Original Loan
Participants;
(v) [intentionally left blank];
(vi) [intentionally left blank];
(vii)Ray, Quinney & Nebeker, special counsel for the Owner
Trustee, in the form of Exhibit A(5) hereto and addressed to the
Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, the Lessee, the Underwriters and the Original Loan
Participants;
(viii)Davis Polk & Wardwell, special counsel for the Lessee, in
the form of Exhibit A(1)(b) hereto addressed to the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, the Lessee, the Underwriters and the Original Loan
Participants; and
(ix) Powell, Goldstein, Frazer & Murphy, special counsel for the
Pass Through Trustee in the form of Exhibit A(6) hereto and addressed
to the Owner Participant, the Indenture Trustee, the Owner Trustee,
the Pass Through Trustee, the Lessee, the Underwriters and the
Original Loan Participants.
(m) No Indenture Default. No Indenture Event of Default or
Indenture Default attributable to either First Security Bank of Utah,
National Association or the Owner Trustee has occurred and is
continuing.
(n) No Defaults. No Default or Event of Default under the Lease and
no Event of Loss or event, which with the passage of time or if continued
unremedied or unaltered would constitute an Event of Loss, shall have
occurred or be in existence.
(o) Cancellation. Following the Refinancing of the Original Loan
Certificates, the Original Loan Certificates shall have been duly delivered
by the Original Loan Participants to the Indenture Trustee for cancellation
and delivery to the Owner Trustee.
(p) Other Agreements. The Lessee and the Pass Through Trustee shall
have entered into the Pass Through Agreement and the Series Supplements,
all conditions to the effectiveness of each thereof shall have been
satisfied or waived, and the Pass Through Certificates shall have been
issued pursuant to the Series Supplements. The Lessee and the
Underwriters shall have entered into the Underwriting Agreement, all
conditions to the effectiveness thereof shall have been satisfied or
waived, and the Pass Through Certificates shall have been delivered
pursuant to the Underwriting Agreement.
Section 4.02. Opinion of Special Aviation Counsel. Promptly upon
the filing and, where appropriate, recording of the documents specified in
4.01(h)(iii) hereof, pursuant to the Act, the Lessee shall cause Special
Aviation Counsel to deliver to the Owner Participant, the Owner Trustee, the
Pass Through Trustee and the Indenture Trustee an opinion as to (i) the due
recording of such documents and the documents identified in Section 4.01(i) of
the Original Participation Agreement and (ii), subject to customary
qualifications, the lack of any intervening documents with respect to the
Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby is
subject to the conditions that, prior to or on the Refunding Date, the Lessee
shall have received the certificates and other documents which are referred to
in, or the opinions to be addressed to it under, as the case may be,
paragraphs (d), (g)(ii)-(v), (h)(ii)-(iv), (j), (k) and (l) (ii), (iii), (iv),
(vii), (viii) and (ix) of Section 4.01 hereof and the Underwriters and the
Owner Participant shall have made available the amounts required to be paid by
them pursuant to Section 2.01 hereof.
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties. The Lessee
represents and warrants to the Owner Participant, the Owner Trustee (in its
individual capacity and as Owner Trustee), the Pass Through Trustee (in its
individual capacity and as Pass Through Trustee) and the Indenture Trustee (in
its individual capacity and as Indenture Trustee) that, on the date hereof and
as of the Refunding Date:
(a) the Lessee is a corporation duly organized and validly existing
and is in good standing under the laws of the State of Delaware with its
principal place of business and chief executive office (as such terms are
used in Article 9 of the Uniform Commercial Code) in Memphis, Tennessee,
and is duly qualified to do business as a foreign corporation and is in
good standing in all jurisdictions in which it has intrastate routes, or
offices or major overhaul facilities or in which other activities of the
Lessee require such qualification;
(b) the Lessee has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its Properties and to enter into and perform its obligations under
this Agreement, the Original Agreements to which it is a party, the other
Operative Agreements to which it is a party, the Pass Through Agreement and
the Series Supplements (the "Lessee Documents");
(c) the Lessee is an "air carrier" within the meaning of the Act and
a holder of a certificate under Sections 41102(a) and 41103 of the Act and
a "citizen of the United States" within the meaning of Section 40102(a)(15)
of the Act holding an "air carrier operating certificate" issued under
Chapter 447 of the Act for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, and each such certificate is
in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively
"permits") which are material to the operation of the routes flown by it
and the conduct of its business and operations as currently conducted and
each such permit is in full force and effect;
(e) the execution, delivery and performance of the Lessee Documents
by the Lessee have been duly authorized by all necessary corporate action
on the part of the Lessee and do not require any stockholder approval, or
approval or consent of any trustee or holder of any indebtedness or
obligations of the Lessee, and each such document has been duly executed
and delivered by the Lessee and constitutes the legal, valid and binding
obligations of the Lessee enforceable against it in accordance with the
terms thereof except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether enforceability is
considered in a proceeding in equity or at law);
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by the Lessee of the Lessee Documents or for the
use and maintenance of the Aircraft except for such registrations,
applications and recordings referred to in the opinions of Special Aviation
Counsel delivered or to be delivered pursuant to Sections 4.01(l)(iv) and
4.02 hereof and except for the filings referred to in Section 4.01(f)
hereof, all of which shall have been duly obtained or made and shall be in
full force and effect on and as of the Refunding Date or as contemplated by
said Sections;
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent or approval under, any law, governmental rule or
regulation or the charter documents, as amended, or bylaws, as amended, of
the Lessee or any order, writ, injunction or decree of any court or
governmental authority against the Lessee or by which it or any of its
Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Lessee is a party or by which it or
any of its Properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any Lien upon any
of its Properties;
(h) there are no pending or, to the knowledge of the Lessee,
threatened actions, suits, investigations or proceedings (whether or not
purportedly on behalf of the Lessee) against or affecting the Lessee or any
of its Property before or by any court or administrative agency which (A)
involve the Aircraft, (B) except for the matters described under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the fiscal year
ended May 31, 1995, as to which no representation is made concerning the
Lessee's liability (if any) or the effect of any adverse determination upon
the consolidated financial condition, business or operations of the Lessee,
if adversely determined, would materially and adversely affect the
consolidated financial condition, business or operations of the Lessee, or
(C) if adversely determined would adversely affect the ability of the
Lessee to perform its obligations under the Lessee Documents;
(i) the Lessee and its subsidiaries have filed or caused to be filed
all tax returns which are required to be filed and has paid or caused to be
paid all taxes shown to be due and payable pursuant to such returns or
pursuant to any assessment received by the Lessee (other than assessments
the payment of which is being contested in good faith by the Lessee), and
the Lessee has no knowledge of any related actual or proposed deficiency or
additional assessment which either in any case or in the aggregate would
materially adversely affect the Lessee's consolidated financial condition
(other than, in any such case, assessments, the payment of which is being
contested in good faith by the Lessee and other than the federal
transportation excise tax assessments, the protests against which are
described in the Lessee's Annual Report on Form 10-K for the fiscal year
ended May 31, 1995, as to which no representation is made concerning the
Lessee's liability (if any) or the effect of any adverse determination upon
the Lessee's consolidated financial condition, which assessments are being
contested in good faith by the Lessee);
(j) except for (A) the filing and, where appropriate, recordation
pursuant to the Act of the Indenture, the Trust Agreement and the Lease,
(B) the filing of the financing statements referred to in Section 4.01(f)
hereof and (C) the taking of possession by the Indenture Trustee of the
original counterpart of the Lease and maintaining possession of the
original counterpart of the Lease Supplement delivered on the Delivery
Date, no further action, including any filing or recording of any document,
is necessary or advisable in order (i) to establish the Owner Trustee's
title to and interest in the Aircraft and the Lessor's Estate as against
the Lessee and any third parties, or (ii) to perfect the first security
interests in and mortgage Lien on the Trust Indenture Estate in favor of
the Indenture Trustee;
(k) on the Delivery Date, the Owner Trustee received good and
marketable title to the Aircraft, free and clear of all Liens, except the
rights of the Owner Trustee and the Lessee under the Original Lease, the
rights of the Indenture Trustee under the Original Indenture and the
beneficial interest of the Owner Participant created by the Original Trust
Agreement and the interest of the Original Loan Participants created by the
Original Indenture and the Indenture and Security Supplement covering the
Aircraft;
(l) the Lessee has heretofore delivered to the Owner Participant
true and correct copies of the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1995, and of the audited consolidated balance
sheet of the Lessee for the fiscal year ended May 31, 1995, and the related
consolidated statements of income, changes in common stockholders'
investment and cash flows for such fiscal year, accompanied by a report
thereon containing opinions without qualification, except as therein noted,
by Arthur Andersen & Co., independent public accountants; said financial
statements have been prepared in accordance with generally accepted
accounting principles consistently applied and present fairly the financial
position of the Lessee as of such date and the results of its operations
and cash flows for such periods and such Annual Report and financial
statements did not, as of their respective dates of filing with the SEC,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein not misleading;
(m) with respect to ERISA, except as otherwise disclosed:
(i) none of the Pension Plans (as defined at the end of this
Section 6.01(m)) nor their related trusts have been terminated in a
distress termination pursuant to Section 4041(c) of ERISA or by the
Pension Benefit Guaranty Corporation or any successor agency or
instrumentality thereto (the "PBGC") pursuant to Section 4042 of
ERISA, nor have any actions been taken to so terminate any Pension
Plan or related trust and neither the Lessee nor any ERISA Affiliate
has incurred or could reasonably be expected to incur any material
liability with respect to a Pension Plan under Section 4062, 4063,
4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such term is
defined in Section 4043(b) of ERISA) with respect to any Pension Plan
which have resulted or could reasonably be expected to result in any
material liability of the Lessee;
(iii)no "accumulated funding deficiency" (as such term is defined
in Section 302 of ERISA or Section 412 of the Code) exists with
respect to any Pension Plan, whether or not waived, nor has any
request for a waiver under Section 412(d) of the Code been, or is
reasonably likely to be, filed with respect to any of the Pension
Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed to
make any contribution or payment to any Pension Plan which has
resulted or could reasonably be expected to result in the
imposition of a Lien under Section 302(f) of ERISA or Section
412(n) of the Code;
(v) all Pension Plans are in compliance in all material respects
with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred or
is reasonably likely to incur any material withdrawal liability
pursuant to Section 4201 or 4204 of ERISA or any material
liability under Section 515 of ERISA;
(vii)to the best of the Lessee's knowledge, neither the Lessee
nor any ERISA Affiliate has engaged in a "prohibited transaction"
(within the meaning of Section 4975 of the Code or Section 406 of
ERISA) which could reasonably be expected to subject the Lessee to
the tax or penalties on prohibited transactions imposed by Section
4975 of the Code or Section 502 of ERISA; and
(viii)assuming the truth of the representations contained in
Sections 7.03(a)(viii) and 7.09 hereof and compliance with Section
10.06 of the Indenture, the execution and delivery of this Agreement
and the other Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not involve any
transaction which is prohibited by Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section 4975
of the Code. No part of the funds to be used by the Lessee in
satisfaction of its obligations under this Agreement or any other of
the Operative Agreements to which the Lessee is a party or to which
the Lessee is bound are the assets of any employee benefit plan
subject to Title I of ERISA, or any individual retirement account or
an employee benefit plan subject to Section 4975 of the Code.
As used in this Section 6.01(m), the term "Pension Plan" means an employee
pension benefit plan as defined in Section 3(2) of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and which is maintained, or contributed to,
by the Lessee or any ERISA Affiliate, and the term "ERISA Affiliate" means
any entity which together with the Lessee would be treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Section 4.01(f) hereof, no
governmental approval of any kind is required of the Owner Participant or
for the Owner Participant's execution of or performance under this
Agreement or any agreement contemplated hereby by reason of any fact or
circumstance of the Lessee, the nature of the Aircraft or the Lessee's
proposed operations or use of the Aircraft;
(p) on the Refunding Date, all premiums with respect to the
insurance required to be provided by the Lessee on or prior to the
Refunding Date under Article 13 of the Lease have been paid by the
Lessee;
(q) on the Refunding Date, all sales or use taxes relating to the
sale of the Aircraft by AVSA to the Owner Trustee which are then or were
theretofore due shall have been paid;
(r) the Lessee is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Lessee is a
party or by which it or any of its Properties or assets may be bound, or in
violation of any applicable law, which default or violation would have a
material adverse effect on the financial condition, business or operations
of the Lessee or its ability to perform any of its obligations under the
Lessee Documents;
(s) no Default or Event of Default or Event of Loss or event, which
with the passage of time or if continued unremedied or unaltered would
constitute an Event of Loss, has occurred or exists;
(t) the Aircraft has been duly certified by the FAA as to type and
airworthiness; there is in effect with respect to the Aircraft a current
and valid airworthiness certificate issued by the FAA pursuant to the Act;
and there is no fact known to the Lessee which materially adversely affects
the value, utility or condition of the Aircraft;
(u) on the Refunding Date, the Lessee shall not be in default in the
performance of any term or condition of the Purchase Agreement, the
Purchase Agreement Assignment, the Engine Warranty Assignment and the
GTA;
(v) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(w) the Aircraft is fully equipped to operate in commercial service
and will comply with all governmental requirements governing such service;
(x) neither the Lessee nor any of its Affiliates is engaged
principally in the business of extending credit for the purpose of buying
or carrying margin stock (within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System) and no part of the proceeds
from the sale of the Certificates and/or sale of the Aircraft by the Lessee
to the Owner Trustee will be used to purchase or carry any such margin
stock, or to refinance any borrowing, the proceeds of which were used to
purchase or carry any such margin stock;
(y) there are no broker's or underwriter's fees payable in
connection with the transactions contemplated in the Operative Agreements
other than those of the Underwriters and First Chicago Leasing Corporation;
and
(z) the representations and warranties of the Lessee set forth in the
Original Agreements to which it is a party were correct on and as of the
Delivery Date (except to the extent such representations expressly related
solely to a specified earlier date, in which case such warranties and
representations were correct on and as of such earlier date).
Section 6.02. Offering by Lessee. The Lessee represents and
warrants that it has authorized no one to act on its behalf in connection with
the offer or sale of any interest in the Lessor's Estate or the Trust
Agreement other than First Chicago Leasing Corporation. Neither the Lessee
nor, based on representations of First Chicago Leasing Corporation, anyone
acting on its behalf has directly or indirectly offered any interest in the
Lessor's Estate or the Trust Agreement, or similar interests, for sale to, or
solicited any offer to acquire any of the same from, anyone other than the
Owner Participant and no more than 53 other institutional investors (as such
term is defined in Regulation D promulgated under the Securities Act of 1933,
as amended).
Section 6.03. Certain Covenants of Lessee. The Lessee covenants and
agrees with the Owner Participant, the Owner Trustee (in its individual
capacity and as Owner Trustee), the Pass Through Trustee (in its individual
capacity and as Pass Through Trustee) and the Indenture Trustee (in its
individual capacity and as Indenture Trustee) as follows:
(a) The Lessee will cause to be done, executed, acknowledged and
delivered all such further acts, conveyances and assurances as the Owner
Trustee, the Indenture Trustee, the Pass Through Trustee or the Owner
Participant shall reasonably require for accomplishing the purposes of this
Agreement, the Trust Agreement, the Indenture, the Tax Indemnity Agreement,
the Lease and the other Operative Agreements to which it is a party.
Without limiting the generality of this Section 6.03(a), the Lessee will
promptly take, or cause to be taken, at the Lessee's cost and expense, such
action with respect to the recording, filing, re-recording and re-filing of
the Indenture, each Indenture and Security Agreement Supplement, the Lease,
each Lease Supplement and any financing statements or other instruments as
may be necessary, or as requested by the Indenture Trustee and appropriate,
to maintain the perfection of the first security interest and the Lien
created by the Indenture, and the Owner Trustee's title to and interest in
the Aircraft and the Lessor's Estate as against the Lessee and any third
parties, or if the Lessee cannot take, or cause to be taken, such action,
will furnish to the Indenture Trustee and the Owner Trustee timely notice
of the necessity of such action, together with such instruments, in
execution form, and such other information as may be required to enable
either of them to take such action at the Lessee's cost and expense in a
timely manner.
(b) The Lessee shall maintain the certificates referred to in
Section 7.01 of the Lease and shall cause the Aircraft to remain duly
registered, in the name of the Owner Trustee, under the Act; provided,
however, that the Owner Participant, the Owner Trustee and the Indenture
Trustee agree that if at any time after December 31, 2002 the Lessee has
requested their consent to the registration of the Aircraft in the name of
the Owner Trustee (or, if appropriate, in the name of the Lessee or a
sublessee as a "lessee" or a "sublessee"), at the Lessee's expense, in a
country listed in Schedule III hereto with which the United States then
maintains normal and full diplomatic relations and the Owner Participant,
upon receipt by the Owner Participant, the Owner Trustee and the Indenture
Trustee of the assurances and opinion described below, none of them shall
unreasonably withhold their consent to such change in registration (it
being agreed, without limitation, that the inability of the Lessee to
deliver such assurances or such opinion shall constitute reasonable grounds
to withhold such consent).
As a condition to any change in the registration of the Aircraft, the
Owner Participant, the Owner Trustee in its individual and trust capacities,
and the Indenture Trustee shall have received:
(i) assurances satisfactory to them:
(A) to the effect that the insurance provisions of the Lease
have been and will be complied with and are and shall be in full
force and effect upon such change of registry;
(B) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft;
(C) that the Owner Trustee's right, title and interest in and to
the Aircraft is recognized and fully enforceable in the new
jurisdiction of registry, that the rights of the Owner Trustee in and
to the Aircraft will not be impaired in such new jurisdiction of
registry and that the new jurisdiction of registry will give effect
to the title and registry of the Aircraft therein substantially to
the same extent as does the Government;
(D) that such new country of registry (x) would provide
substantially equivalent protection for the rights of owner
participants, lessors or lenders in similar transactions as provided
under United States law (except that, in the absence of restrictions
under the laws of such country on rights and remedies of lessors and
secured parties similar to those imposed by Sections 362 and 363 of
the Bankruptcy Code, rights and remedies similar to those available
under Section 1110 of the Bankruptcy Code shall not be required),
(y)(i) if such change in registration is made other than in
connection with a sublease permitted under Section 7.02(a)(i) of the
Lease, imposes maintenance standards at least comparable to those of
the FAA, and (ii) if such change in registration is made in
connection with a sublease permitted under Section 7.02(a)(i) of the
Lease, imposes maintenance standards in conformity with those set
forth in Section 7.02(a)(i) of the Lease and (z) would not impose
requirements which materially increase the administrative or other
burdens or obligations of the Owner Participant under the Operative
Agreements unless indemnified by the Lessee;
(E) that import and export certificates and any exchange permits
necessary to allow all Rent and other payments provided for under the
Lease, if required, shall have been procured at the Lessee's own cost
and expense by the Lessee;
(F) that the Lessee shall have effected or caused to be effected
at the Lessee's own cost and expense all recordings and filings that
are required to perfect the Lien of the Indenture;
(G) to the effect that the original indemnities (and any
additional indemnities for which the Lessee is then willing to enter
into a binding agreement to indemnify) in favor of the Owner
Participant, the Owner Trustee (in its individual capacity and as
trustee under the Trust Agreement), the Indenture Trustee (in its
individual capacity and as trustee under the Indenture), the Pass
Through Trustee (in its individual capacity and as trustee under the
Pass Through Agreement) and the other Indemnitees under this
Agreement, the Indenture, the Pass Through Agreement and (in the case
of the Owner Participant only) the Tax Indemnity Agreement, afford
each such party substantially the same protection as provided prior
to such change of registry;
(H) that such change will not result in the imposition of, or
increase in the amount of, any Tax (which, for this purpose, includes
the loss of any tax benefits assumed by the Owner Participant to be
available to it based upon the assumptions set forth in Section 2 of
the Original Tax Indemnity Agreement) for which the Lessee has not
agreed to indemnify the Owner Participant, the Indenture Trustee, the
Owner Trustee (or any successor, assign or Affiliate thereof) and the
Trust Estate;
(I) that any value added tax, customs duty, tariff or similar
governmental charge relating to the change in jurisdiction of
registration of the Aircraft shall have been paid in full or
adequately provided for by the Lessee to the satisfaction of the
Owner Trustee, the Indenture Trustee and the Owner Participant;
(J) of the payment by the Lessee of any reasonable fees and
expenses of the Owner Participant, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee in connection with such change
of registry, including any reasonable attorneys' fees and expenses;
and
(K) that duties and tariffs, if applicable, shall have been paid
for by the Lessee;
(ii) a favorable opinion of counsel (reasonably satisfactory to the
Owner Trustee, the Indenture Trustee and the Owner Participant) in the new
jurisdiction of registry, addressed and reasonably satisfactory to such
parties in scope, form and substance, to the effect:
(A) that the terms (including, without limitation, the governing
law, service-of-process and jurisdictional-submission provisions
thereof) of the Lease and the Indenture are legal, valid, binding and
enforceable in such jurisdiction against the Lessee, any sublessee,
the Owner Trustee and the Indenture Trustee, respectively;
(B) that it is not necessary for the Owner Participant, the
Owner Trustee, the Indenture Trustee or the Pass Through Trustee
to register or qualify to do business or meet other requirements
not already met in such jurisdiction in connection with the
registration in the new jurisdiction (and the filing and/or
recordation therein of the Indenture or Lease) and the exercise of
any rights or remedies with respect to the Aircraft pursuant to
the Lease or the Indenture or in order to maintain such
registration and the Lien of the Indenture;
(C) that the courts of such jurisdiction would provide
substantially equivalent protection to the Lessor, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee as
provided under United States law (with the exception described in
paragraph (b)(i)(D)(x) of this Section 6.03) in respect of the
transactions contemplated hereby, including, without limitation, the
remedies provided in the Indenture and the Lease;
(D) that there is no tort liability of the beneficial owner,
record owner, lessor or mortgagee of an aircraft not in possession
thereof under the laws of such jurisdiction, other than tort
liability which might have been imposed on such owner, lessor or
mortgagee under the laws of the United States or any state thereof
(it being understood that, in the event such latter opinion cannot be
given in a form satisfactory to the Owner Participant and the
Indenture Trustee, such opinion shall be waived, if insurance
reasonably satisfactory to the Owner Participant, the Indenture
Trustee and the Owner Trustee, in its individual capacity, is
provided, at Lessee's expense, to cover such risk and the Lessee
undertakes to keep such insurance in full force and effect);
(E) that the laws of such jurisdiction will not impair the
rights of the Lessor in and to the Aircraft or under the Lease and
(unless the Lessee shall have agreed to provide insurance reasonably
satisfactory to the Indenture Trustee and the Owner Participant
covering the risk of requisition of use of the Aircraft by the
government of registry of the Aircraft) require fair compensation by
the government of such jurisdiction payable in currency freely
convertible into United States Dollars for the loss of use of the
Aircraft in the event of such requisition;
(F) that the Owner Trustee's title to the Aircraft is recognized
and fully enforceable in such jurisdiction, that such jurisdiction
will give effect to the title of the Aircraft therein substantially
to the same extent as does the Government, and that the Lien of the
Indenture shall continue as a first priority, duly perfected lien on
the Aircraft; and
(G) to such further effect with respect to such other matters as
the Owner Participant, the Owner Trustee, or the Indenture Trustee
may reasonably request.
(c) The Lessee shall promptly file any reports, or furnish to the
Owner Trustee and the Owner Participant such information as may be required
to enable the Owner Trustee and the Owner Participant timely to file any
reports required to be filed by the Owner Trustee as the Lessor and the
Owner Participant under the Lease with any governmental authority.
(d) The Lessee will cause the Special Aviation Counsel to file, and
where appropriate record, on the Refunding Date, the Lease, the Trust
Agreement and the Indenture. The following documents shall be filed and,
where appropriate, recorded on the Refunding Date with the Aeronautics
Authority in the following order of priority: first, the Trust Agreement,
second, the Indenture and third, the Lease with the Indenture attached
thereto.
(e) The Lessee will furnish to the Owner Participant, the Owner
Trustee and the Indenture Trustee annually after the execution of this
Agreement, by March 15 of each year, commencing with the year 1996, an
opinion, reasonably satisfactory to the Owner Participant and the Indenture
Trustee, of Special Aviation Counsel, or other counsel specified from time
to time by the Lessee acceptable to the Lessor and the Indenture Trustee:
(i) stating either (1) that in the opinion of such counsel such action has
been taken with respect to the recording, filing, re-recording and
re-filing of the Lease, the Indenture, the Trust Agreement, and any
supplements to any of them and any financing statements, continuation
statements or other instruments, and all other action has been taken, as is
necessary to maintain the Owner Trustee's title to and interest in the
Aircraft and the Lessor's Estate as against the Lessee and any third
parties and to maintain the perfection of the security interests created by
said documents and reciting the details of such action, or (2) that in the
opinion of such counsel no such action is necessary to maintain such title
or the perfection of such security interests; (ii) specifying all other
action which needs to be taken during the succeeding 14 months in order to
maintain such title and the perfection of such security interests (which
the Lessee agrees timely to take); and (iii) stating that the Owner Trustee
is the owner of legal title to the Aircraft, and the Aircraft is free and
clear of all Liens, except the security interest created by the Indenture
and such as are permitted by the Lease and the Indenture.
(f) The Lessee shall at all times maintain its corporate existence
except as permitted by Section 6.03(g) hereof and all of its rights,
privileges and franchises necessary in the normal conduct of its business,
except for any corporate right, privilege or franchise (i) that it
determines, in its reasonable, good faith business judgment, is no longer
necessary or desirable in the conduct of its business and (ii) the loss of
which will not materially adversely affect or diminish the rights of the
Holders or the Owner Participant.
(g) The Lessee shall not enter into any merger or consolidation, or
convey, transfer or lease all or substantially all of its assets as an
entirety to any Person, unless the surviving corporation or Person which
acquires by conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (i) is a domestic corporation organized
and existing under the laws of the United States or a political subdivision
thereof, (ii) is a Citizen of the United States, (iii) is a U.S. Air
Carrier holding an "air carrier operating certificate" issued under Chapter
447 of the Act for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, (iv) expressly assumes by an
instrument in writing in form and substance satisfactory to the Indenture
Trustee, the Owner Participant and the Owner Trustee all of the Lessee's
obligations hereunder and under the other Operative Agreements, and each
other document contemplated hereby or thereby and the Lessee delivers such
instrument to the Indenture Trustee, the Owner Participant and the Owner
Trustee, (v) provides an opinion from counsel to the Lessee which counsel
shall be reasonably satisfactory to the Owner Participant and the Indenture
Trustee and which opinion shall be reasonably satisfactory to the Owner
Participant and the Indenture Trustee, and an officer's certificate, each
stating that such merger, consolidation, conveyance, transfer or lease and
the instrument noted in clause (iv) above comply with this Section 6.03(g),
that such instrument is a legal, valid and binding obligation of, and is
enforceable against, such survivor or Person, and that all conditions
precedent herein provided for relating to such transaction have been
complied with, and (vi) immediately after such merger, consolidation or
conveyance, transfer or lease, as the case may be, the surviving company is
in compliance with all of the terms and conditions of this Agreement and
the Lease and each other Operative Agreement and each other document
contemplated hereby or thereby; provided that no such merger, consolidation
or conveyance, transfer or lease shall be permitted if the same gives rise
to a Default not capable of cure within the applicable grace period
therefor or an Event of Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the Lessee
is merged or the Person to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Lessee under this Agreement and the Lease and each other
Operative Agreement and any other document contemplated hereby and thereby
to which the Lessee is a party with the same effect as if such successor
corporation had been named as the Lessee herein and therein. No such
conveyance, transfer or lease of all or substantially all of the assets of
the Lessee as an entirety shall have the effect of releasing the Lessee or
any successor corporation which shall theretofore have become such in the
manner prescribed in this Section 6.03(g) from its liability hereunder or
under the other Operative Agreements. Nothing contained herein shall
permit any lease, sublease, or other arrangement for the use, operation or
possession of the Aircraft except in compliance with the applicable
provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant and the Indenture Trustee of any change in the address of its
chief executive office (as such term is used in Section 9-103(3) of the
Tennessee Uniform Commercial Code) or of any change in its corporate name.
(i) The Lessee agrees to furnish to the Owner Participant, the
Lessor and the Indenture Trustee:
(A) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Lessee, a
consolidated balance sheet as of the end of such fiscal year, and the
related consolidated statements of income, common stockholders'
equity, retained earnings and cash flows of the Lessee for the fiscal
year then ended as prepared and certified by the Lessee's independent
certified public accountants, including their opinion;
(B) within sixty (60) days after the end of the first, second
and third quarterly accounting periods in each fiscal year of the
Lessee, a consolidated balance sheet of the Lessee prepared by it as
of the close of the accounting period then ended, together with the
related consolidated statements of income, retained earnings and cash
flows for such accounting period certified by the chief accounting
officer or a financial vice president of the Lessee;
(C) promptly upon their general transmission, copies of all
reports and statements furnished by the Lessee to all of its
stockholders;
(D) promptly after filing with the SEC, copies of the Lessee's
Annual Reports on Form 10-K (including all corresponding annual
reports to shareholders), Quarterly Reports on Form 10-Q and, if
requested, any registration statement or prospectus filed by the
Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business
Days after) any Responsible Officer of the Lessee obtaining actual
knowledge of any condition or event which constitutes a Default or
any officer of the Lessee obtaining knowledge of any condition or
event which constitutes an Event of Default, an officer's certificate
specifying the nature and period of existence thereof and what action
the Lessee has taken or is taking or proposes to take with respect
thereto; and
(F) from time to time, such other financial information as the
Lessor, the Owner Participant or the Indenture Trustee may reasonably
request.
Concurrently with the delivery of the financial statements referred
to in clause (A) above, the Lessee shall deliver to the Lessor, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee a certificate
of the Lessee, signed by any one of the President, the Chief Financial
Officer, the General Counsel, the Treasurer or the principal accounting
officer of the Lessee, stating that the signer, or an employee reporting to
same, is familiar with the relevant terms of this Agreement and the Lease and
the signer has reviewed, or has caused to be made under such Person's
supervision a review of, the activities of the Lessee and that, to the best of
his or her knowledge, there does not exist any Default or any Event of Default
or if a Default or an Event of Default exists or did exist, specifying the
nature thereof, the period of existence thereof and what action the Lessee has
taken or proposes to take with respect thereto.
Section 6.04. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Sections 6.01 and
6.02 hereof and in any other Operative Agreement shall survive the Closings
hereunder and the expiration or other termination of this Agreement and the
other Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate. (a) [Intentionally Left Blank.]
(b) Owner Participant. The Owner Participant represents and
warrants that its interest in the Lessor's Estate and the Trust Agreement was
acquired by it for its own account and not with a view to resale or
distribution thereof; provided, however, that the disposition by the Owner
Participant of its interest in the Lessor's Estate and the Trust Agreement
shall, subject to the terms and provisions of Article 5 of the Trust
Agreement, at all times be within its control and the foregoing representation
shall not limit the Owner Participant's right to transfer or sell such
interests pursuant to the terms of this Agreement. Neither the Owner
Participant nor anyone authorized to act on its behalf has directly or
indirectly offered any interest in the Lessor's Estate or the Trust Agreement,
or in any similar security, for sale to, or solicited any offer to acquire any
of the same from, anyone. The Owner Participant further represents and
warrants that neither it nor anyone authorized to act on its behalf has made
or will make any offer, solicitation or sale of any interest in the Lessor's
Estate or the Trust Agreement in violation of the provisions of Section 5 of
the Securities Act of 1933, as amended. No representation in this Section
7.01(b) shall include any action or inaction of the Lessee, the Agent, First
Chicago Leasing Corporation or the Underwriters whether or not purportedly on
behalf of the Owner Trustee, the Owner Participant or any of their Affiliates.
Section 7.02. Citizenship. (a) Generally. Each of the Owner
Trustee, in its individual capacity and as Trustee, and the Owner Participant
severally represents and warrants that it is a Citizen of the United States on
the Refunding Date. If the Owner Participant or the Owner Trustee in its
individual capacity does not comply with the requirements of this Section
7.02, the Owner Trustee, the Indenture Trustee and the Owner Participant
hereby agree that a Default or an Event of Default shall not be deemed to have
occurred and be continuing under the Lease due to non-compliance by the Lessee
with the registration requirements in the Lease occasioned by the
noncompliance of the Owner Participant or the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time it shall have actual knowledge that it has
ceased to be a Citizen of the United States, it will resign immediately as the
Owner Trustee if such citizenship is necessary under the Act as in effect at
such time or, if it is not necessary under the Act as in effect at such time,
if it is informed in writing by the Lessee or the Owner Participant that such
lack of United States citizenship would have any adverse effect on the Lessee
or the Owner Participant. The Owner Trustee, in its individual capacity,
further covenants that if at any time it appears reasonably probable that it
will cease to be a Citizen of the United States based on information that is
(i) known to a Responsible Officer or (ii) generally known to the public, it
will promptly so notify, to the extent permitted by law, all parties to this
Agreement.
(c) Owner Participant. The Owner Participant agrees, solely for the
benefit of the Lessee, the Pass Through Trustee and the Indenture Trustee,
that if at any time when the Aircraft is registered or the Lessee proposes to
register the Aircraft in the United States (i) it shall cease to be, or
determines that it is likely to cease to be, a Citizen of the United States
and (ii) the Aircraft shall or would therefore become ineligible for
registration in the name of the Owner Trustee under the Act and regulations
then applicable thereunder, then the Owner Participant shall give notice
thereof to the Lessee and the Indenture Trustee and shall (at its own expense
and without any reimbursement or indemnification from the Lessee) immediately
(and in any event within a period of 15 Business Days following such
determination or, if earlier, within 15 days following actual loss of
citizenship) (x) effect a voting trust or other similar arrangement, (y)
transfer in accordance with the terms of this Agreement and the Trust
Agreement all its rights, title and interest in and to such Trust Agreement,
the Lessor's Estate and this Agreement, or (z) take any other alternative
action that would prevent any deregistration, or maintain the United States
registration, of the Aircraft. It is agreed that the Owner Participant shall
be liable to pay promptly on request (A) to each of the other parties hereto
any actual damages (but not consequential damages) suffered by any such other
party to the extent the same shall result from the representation and warranty
of the Owner Participant in the first sentence of Section 7.02(a) hereof
proving to be untrue as of the Refunding Date; and (B) to the Lessee, the
Indenture Trustee and the Pass Through Trustee for any damages actually
incurred by the Lessee, the Indenture Trustee and the Pass Through Trustee as
a result of the Owner Participant's failure to comply with its obligations
pursuant to the first sentence of this Section 7.02(c); provided, that, the
foregoing shall not restrict the Pass Through Trustee or the Indenture Trustee
from asserting against the Owner Participant any damages actually incurred by
the holders of any Pass Through Certificates. Each party hereto agrees, upon
the request and at the sole expense of the Owner Participant, to cooperate
with the Owner Participant in complying with its obligations under the
provisions of the first sentence of this Section 7.02(c).
Section 7.03. Representations, Warranties and Covenants of the Owner
Participant. (a) Representations, Warranties and Covenants. In addition to
and without limiting its other representations and warranties provided for in
this Article 7, the Owner Participant represents and warrants that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States and it has
full corporate power, authority and legal right to carry on its present
business and operations, to own or lease its Properties and to enter into
and to carry out the transactions contemplated by the Original Agreements
to which it is a party, this Agreement, the Tax Indemnity Agreement, and
the Trust Agreement;
(ii)the execution, delivery and performance by it of the Original
Agreements to which it is a party, this Agreement, the Tax Indemnity
Agreement, and the Trust Agreement have been duly authorized by all
necessary corporate action on its part and, assuming the accuracy of the
Lessee's representations in Section 6.01(o) hereof, do not require any
governmental approvals that would be required to be obtained by the Owner
Participant;
(iii)based on the representations, warranties and covenants contained
in Sections 6.01(m)(viii), 6.02, 7.01(c) and 7.09 hereof and compliance
with Section 10.06 of the Indenture, neither the execution, delivery or
performance by the Owner Participant of the Original Agreements to which it
is a party, this Agreement, the Tax Indemnity Agreement, and the Trust
Agreement nor compliance with the terms and provisions hereof or thereof,
conflicts or will conflict with or results or will result in a breach or
violation of any of the terms, conditions or provisions of, or will require
any consent or approval under any law, governmental rule or regulation
applicable to the Owner Participant or the charter documents, as amended,
or bylaws, as amended, of the Owner Participant or any order, writ,
injunction or decree of any court or governmental authority against the
Owner Participant or by which it or any of its Properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its Properties is
bound, or constitutes or will constitute a default thereunder or results or
will result in the imposition of any Lien upon any of its Properties;
(iv)the Original Agreements to which it is a party, this Agreement,
the Tax Indemnity Agreement and the Trust Agreement have been or on the
Refunding Date will be duly executed and delivered by the Owner Participant
and constitute or on the Refunding Date will constitute the legal, valid
and binding obligation of the Owner Participant enforceable against it in
accordance with their respective terms except as such enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws or equitable principles of general application to or affecting
the enforcement of creditors' rights;
(v) to the best of its knowledge, it is not in default under any
mortgage, deed of trust, indenture, lease or other instrument or agreement
to which the Owner Participant is a party or by which it or any of its
Properties may be bound, or in violation of any applicable law, which
default or violation would have a material adverse effect on the financial
condition, business or operations of the Owner Participant or an adverse
effect on the ability of the Owner Participant to perform its obligations
under the Original Agreements to which it is a party, this Agreement and
the other Operative Agreements to which it is or is to be a party;
(vi)there are no pending or, to the knowledge of the Owner
Participant, threatened actions, suits, investigations or proceedings
against the Owner Participant before any court, administrative agency or
tribunal which are expected to materially adversely affect the ability of
the Owner Participant to perform its obligations under any of the Original
Agreements or the Operative Agreements to which it is or is to be a party,
and the Owner Participant knows of no pending or threatened actions or
proceedings before any court, administrative agency or tribunal involving
it in connection with the transactions contemplated by this Agreement, the
Original Agreements or the Operative Agreements;
(vii)neither the execution and delivery by it of the Original
Agreements to which it is a party, this Agreement, the Tax Indemnity
Agreement or the Trust Agreement nor the performance of its obligations
hereunder or thereunder requires the consent or approval of or the giving
of notice to, the registration with, or the taking of any other action in
respect of, any governmental authority or agency that would be required to
be obtained or taken by the Owner Participant except for filings
contemplated by this Agreement;
(viii) no part of the funds to be used by it to acquire the interests
to be acquired by it under this Agreement constitutes assets (within the
meaning of ERISA and any applicable rules and regulations) of any employee
benefit plan subject to Title I of ERISA or of any plan or individual
retirement account subject to Section 4975 of the Code;
(ix)it has a consolidated tangible net worth of not less than
$75,000,000; and
(x) the representations and warranties of the Owner Participant set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date).
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or
to the nature or use of the equipment owned by the Owner Trustee, including,
without limitation, the airworthiness, value, condition, workmanship, design,
patent or trademark infringement, operation, merchantability or fitness for
use of the Aircraft, other than such laws, rules or regulations relating to
the citizenship requirements of the Owner Participant under applicable
aviation law.
(b) Lessor's Liens. The Owner Participant further represents,
warrants and covenants that there are no Lessor's Liens attributable to it (or
an Affiliate thereof) against, on or with respect to the Aircraft or the
Lessor's Estate or the Trust Indenture Estate, and that there will not be any
Lessor's Lien attributable to it (or an Affiliate thereof) against, on or with
respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate
attributable to it (or an Affiliate thereof) on the Refunding Date. The Owner
Participant agrees with and for the benefit of the Lessee, the Indenture
Trustee and the Pass Through Trustee that the Owner Participant will, at its
own cost and expense, take such action as may be necessary (by bonding or
otherwise, so long as neither the Lessee's operation and use of the Aircraft
nor the validity and priority of the Lien of the Indenture is impaired) to
duly discharge and satisfy in full, promptly after the same first becomes
known to the Owner Participant, any Lessor's Lien against, on or with respect
to the Aircraft or the Lessor's Estate or the Trust Indenture Estate
attributable to the Owner Participant (or an Affiliate thereof), provided,
however, that the Owner Participant shall not be required to discharge or
satisfy such Lessor's Lien which is being contested by the Owner Participant
in good faith and by appropriate proceedings so long as such proceedings do
not involve any material danger of the sale, forfeiture or loss of the
Aircraft or the Lessor's Estate or the Trust Indenture Estate or any interest
in any thereof or otherwise materially adversely affect the validity or
priority of the Lien of the Indenture.
(c) Indemnity for Lessor's Liens. The Owner Participant agrees to
indemnify and hold harmless the Lessee, the Indenture Trustee and the Pass
Through Trustee from and against any loss, cost, expense or damage which may
be suffered by the Lessee, the Indenture Trustee or the Pass Through Trustee
as the result of the failure of the Owner Participant to discharge and satisfy
any Lessor's Liens attributable to the Owner Participant (or an Affiliate
thereof) and required to be discharged as described in Section 7.03(b) hereof.
(d) Assignment of Interests of Owner Participant. At any time after
all obligations of the Owner Participant under Section 2.01(d) hereof have
been satisfied in full, the Owner Participant may assign, convey or otherwise
transfer to a single institutional investor or an Affiliate of an
institutional investor all (but not less than all) of the Beneficial Interest,
provided that it gives the Lessee and the Indenture Trustee at least 10
Business Days' notice of such assignment, conveyance or other transfer and
provided further that the Owner Participant shall remain liable for all
obligations of the Owner Participant under the Trust Agreement and the
Operative Agreements to which the Owner Participant is a party to the extent
(but only to the extent) incurred on or before the date of such transfer and
provided that the transferee agrees by a written instrument in form and
substance reasonably satisfactory to the Indenture Trustee, the Owner Trustee
and the Lessee to assume primary liability for all obligations as a Owner
Participant under the Trust Agreement and the other Operative Agreements to
which such Owner Participant is a party incurred after the date of transfer
and the Owner Participant shall remain secondarily liable for all such
obligations assumed by its successor as Owner Participant; provided, that the
Owner Participant need not so agree to remain and shall not be so secondarily
liable if (a) such transferee is (i) a bank, savings institution, finance
company, leasing company or trust company, national banking association acting
for its own account or in a fiduciary capacity as trustee or agent under any
pension, retirement, profit sharing or similar trust or fund, insurance
company, fraternal benefit society or corporation acting for its own account
having a combined capital and surplus (or, if applicable, consolidated
tangible net worth or its equivalent) of not less than $75,000,000, (ii) a
subsidiary of any Person described in clause (i) where such Person provides
(A) support for the obligations assumed by such transferee subsidiary
reasonably satisfactory to the Lessee, the Owner Trustee and the Indenture
Trustee or (B) an unconditional guaranty reasonably satisfactory to the
Lessee, the Owner Trustee and the Indenture Trustee of such transferee
subsidiary's obligations, or (iii) an Affiliate of the transferring Owner
Participant, so long as such Affiliate has a combined capital and surplus (or,
if applicable, consolidated tangible net worth or its equivalent) of not less
than $75,000,000, (b) such transferee is legally capable of binding itself to
the obligations of the Owner Participant and expressly agrees to assume all
obligations of the Owner Participant under the Trust Agreement and this
Agreement and (c) such transferee shall provide representations
substantially similar to those contained in Section 7.03(a) hereof. In the
event of any such assignment, conveyance or transfer, the transferee shall
become a party to the Trust Agreement and shall agree to be bound by all
the terms of and will undertake all of the obligations of the Owner
Participant contained in the Trust Agreement and the other Operative
Agreements in such manner as is reasonably satisfactory to the Owner
Trustee, the Indenture Trustee and the Lessee. A transferee hereunder
shall be (i) a "U.S. Person" as defined in Section 7701(a)(30) of the Code
(or any successor provision thereto) or if the transferee shall not be such
"U.S. Person" then (A) each Certificate Holder shall be provided an
indemnity in form and substance satisfactory to each such Certificate
Holder, for any Taxes that may be imposed on such Certificate Holder
(currently or in the future) due to such transferee's failure to be such a
"U.S. Person" and (B) such transferee shall be personally liable for any
debt service to the extent that its receipt of rentals is reduced by reason
of any withholding Taxes that result from such transferee's failure to be
such a "U.S. Person" and (ii) a Citizen of the United States or has
established a voting trust, voting powers or other arrangement reasonably
satisfactory to the Indenture Trustee and the Lessee to permit the Owner
Trustee to be the registered owner of the Aircraft under the Federal
Aviation Act. A transferee hereunder shall not be, and in acquiring the
Beneficial Interest shall not use the assets of, an employee benefit plan
subject to Title I of ERISA or an individual retirement account or a plan
subject to Section 4975 of the Code. Assuming the truth of the
representations made in Sections 6.01(m) and 7.06 hereof and compliance
with Section 10.06 of the Indenture, no such assignment, conveyance or
transfer shall violate any provision of law or regulation or create a
relationship which would be in violation thereof. The Owner Trustee shall
not be on notice of or otherwise bound by any such assignment, conveyance
or transfer unless and until it shall have received an executed counterpart
of the instrument of such assignment, conveyance or transfer. Upon any
such disposition by the Owner Participant to a transferee as above
provided, the transferee shall be deemed the "Owner Participant" or
"Trustor" for all purposes of the Operative Agreements, and shall be deemed
to have made all the payments previously made by its transferor and to have
acquired the same interest in the Lessor's Estate as theretofore held by
its transferor; and each reference therein to the "Owner Participant" or
"Trustor" shall thereafter be deemed a reference to such transferee.
Notwithstanding anything to the contrary contained in this Section 7.03(d),
in no event shall the Owner Participant transfer its interest in the
Beneficial Interest to any entity whose business is that of a nationwide or
worldwide overnight or expedited delivery small package air courier, cargo
or freight deliverer and which competes with the Lessee in one of its
principal lines of business.
(e) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
Section 7.04. Representations, Covenants and Warranties of FSBU and
the Owner Trustee. (a) In addition to and without limiting its other
representations and warranties provided for in this Article 7, FSBU represents
and warrants, in its individual capacity with respect to items (i), (ii),
(iii)(A), (iv), (v), (vi) and (vii) below, and as the Owner Trustee with
respect to items (iii)(B) and (iv) that:
(i)it is a national banking association duly organized and validly
existing in good standing under the laws of the United States with its
principal place of business and chief executive office (as such terms are
used in Article 9 of the Uniform Commercial Code) at 79 South Main Street,
Salt Lake City, Utah, 84111, Attention: Corporate Trust Department and,
assuming the Trust Agreement has been duly authorized, executed and
delivered by the Owner Participant, has full corporate power and authority,
in its individual capacity or as the Owner Trustee, as the case may be, to
carry on its business as now conducted, and to execute, deliver and perform
this Agreement, the Original Agreements and the Operative Agreements to
which it is or is to be a party;
(ii) the execution, delivery and performance by FSBU, either in its
individual capacity or as the Owner Trustee, as the case may be, of this
Agreement, the Original Agreements and the Operative Agreements to which it
is or is to be party have been duly authorized by all necessary corporate
action on its part, and do not contravene its certificate of incorporation
or by-laws; each of this Agreement, the Original Agreements and the
Operative Agreements to which it is or is to be a party has been duly
authorized, executed and delivered by FSBU, either in its individual
capacity or as the Owner Trustee, as the case may be, and neither the
execution and delivery thereof nor FSBU's performance of or compliance with
any of the terms and provisions hereof or thereof will violate any federal
or state or local law or regulation governing FSBU's banking or trust
powers;
(iii) (A) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or is
to be party when duly executed and delivered will, and each of the Original
Agreements to which it is a party does, to the extent each such document is
entered into by FSBU in its individual capacity, constitute the legal,
valid and binding obligation of FSBU in its individual capacity enforceable
against it in such capacity in accordance with its respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by FSBU in its individual capacity
of any of its obligations thereunder does not contravene any lease,
regulation or contractual restriction binding on FSBU in its individual
capacity;
(B) assuming due authorization, execution and delivery by each other
party thereto, each of the Operative Agreements to which it is or is to be
party when duly executed and delivered will, and each of the Original
Agreements to which it is a party does, to the extent each such document is
entered into by the Owner Trustee in its trust capacity, constitute the
legal, valid and binding obligation of the Owner Trustee enforceable
against it in such capacity in accordance with its respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by the Owner Trustee of any of its
obligations thereunder does not contravene any lease, regulation or
contractual restriction binding on the Owner Trustee or any judgement or
order applicable to or binding on it;
(iv) there are no pending or, to its knowledge, threatened actions or
proceedings against FSBU before any court or administrative agency which
would materially and adversely affect the ability of FSBU, either in its
individual capacity or as the Owner Trustee, as the case may be, to perform
its obligations under this Agreement, the Original Agreements and the
Operative Agreements to which it is or is to be party;
(v) it shall give the Lessee, the Indenture Trustee and the Owner
Participant at least thirty (30) days' prior written notice in the event of
any change in its chief executive office or name;
(vi) neither the execution and delivery by it, either in its
individual capacity or as the Owner Trustee, as the case may be, of any of
the Original Agreements and the Operative Agreements to which it is or is
to be a party nor the performance of its obligations hereunder or
thereunder, requires on the part of FSBU in its individual capacity or any
of its Affiliates the consent or approval of or the giving of notice to,
the registration with, or the taking of any other action in respect of, any
Federal or state or local governmental authority or agency governing its
banking or trust powers;
(vii) on the Delivery Date the Owner Trustee shall have received
whatever title to the Aircraft as was conveyed to it by AVSA, on the
Refunding Date the Aircraft shall be free of Lessor's Liens attributable to
FSBU in its individual capacity and FSBU in its individual capacity is a
Citizen of the United States; and
(viii) the representations and warranties of the Owner Trustee set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date).
(b) Lessor's Liens. FSBU, in its individual capacity, further
represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity against, on or with respect to
the Aircraft or the Lessor's Estate or the Trust Indenture Estate, and that
there will not be any such Lessor's Liens against, on or with respect to the
Aircraft or the Lessor's Estate or the Trust Indenture Estate on the Refunding
Date. The Owner Trustee, in its trust capacity, and at the cost and expense of
the Lessee, covenants that it will in its trust capacity promptly, and in any
event within 30 days after the same shall first become known to it, take such
action as may be necessary to discharge duly any Lessor's Liens attributable
to it in its trust capacity. FSBU, in its individual capacity, covenants and
agrees that it will at its own expense take such action as may be necessary to
duly discharge and satisfy in full, promptly, and in any event within 30 days
after the same shall first become known to it, any Lessor's Liens against, on
or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture
Estate attributable to it in its individual capacity or the consolidated group
of taxpayers of which it (in such capacity) is a part which may arise at any
time after the date of this Agreement.
(c) Indemnity for Lessor's Liens. FSBU, in its individual capacity,
agrees to indemnify and hold harmless the Lessee, the Indenture Trustee, the
Owner Participant, the Pass Through Trustee and the Owner Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Pass Through Trustee or the
Owner Trustee as a result of the failure of FSBU to discharge and satisfy any
Lessor's Liens attributable to it in its individual capacity, as described in
Section 7.04(b) hereof.
(d) Securities Act. None of FSBU, the Owner Trustee or any Person
authorized by either of them to act on its behalf has directly or indirectly
offered or sold or will directly or indirectly offer or sell any interest in
the Lessor's Estate, or in any similar security relating to the Lessor's
Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person. FSBU further represents
and warrants, in its individual capacity and as the Owner Trustee, that
neither it nor anyone acting on its behalf shall own the Certificates.
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee. (a) The Indenture Trustee in its individual capacity
represents as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has the corporate power and authority to enter into and perform its
obligations under the Indenture, this Agreement and the Original Agreements
to which it is a party and to authenticate the Certificates to be delivered
on the Refunding Date;
(ii)the Indenture and this Agreement, and the authentication of the
Certificates to be delivered on the Refunding Date have been duly
authorized by all necessary corporate action on its part, and neither the
execution and delivery thereof nor its performance of any of the terms and
provisions thereof will violate any federal, state or local law or
regulation relating to its banking or trust powers or contravene or result
in any breach of, or constitute any default under, its articles of
association or by-laws;
(iii)each of the Indenture, this Agreement and the Original
Agreements and the other Operative Agreements to which it is a party has
been duly executed and delivered by it and, assuming that each such
agreement is the legal, valid and binding obligation of each other party
thereto, is the legal, valid and binding obligation of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with its
respective terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights;
(iv) neither the execution and delivery by it of this Agreement and
the Original Agreements and the other Operative Agreements to which it is
or is to be a party, nor the performance by it of any of the transactions
contemplated hereby or thereby, requires the consent or approval of, the
giving of notice to, the registration with, or the taking of any other
action in respect of, any Federal, state or local governmental authority or
agency governing its banking and trust powers;
(v) the representations and warranties of the Indenture Trustee set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date); and
(vi)the Indenture Trustee holds the original counterparts of the
Original Lease and the Lease Supplement.
(b) Indenture Trustee's Liens. The Indenture Trustee, in its
individual capacity, further represents, warrants and covenants that there are
no Indenture Trustee's Liens attributable to it in its individual capacity
against, on or with respect to the Aircraft or the Lessor's Estate or the
Trust Indenture Estate, and that there will not be any Indenture Trustee's
Liens against, on or with respect to the Aircraft or the Lessor's Estate or
the Trust Indenture Estate on the Refunding Date. The Indenture Trustee, in
its individual capacity, covenants and agrees that it will at its own expense
take such action as may be necessary to duly discharge and satisfy in full,
promptly, and in any event within 30 days after the same shall first become
known to it, any Indenture Trustee's Liens against, on or with respect to the
Aircraft or the Lessor's Estate or the Trust Indenture Estate.
(c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee,
in its individual capacity, agrees to indemnify and hold harmless the Lessee,
the Owner Participant, the Owner Trustee and the Pass Through Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Owner Trustee or the Pass
Through Trustee as a result of the failure of the Indenture Trustee to
discharge and satisfy any Indenture Trustee's Liens attributable to it in its
individual capacity, as described in Section 7.05(b) hereof.
Section 7.06. Indenture Trustee's Notice of Default. The Indenture
Trustee agrees to give the Owner Participant notice of any Default promptly
upon a Responsible Officer of the Indenture Trustee having actual knowledge
thereof.
Section 7.07. Releases from Indenture. The Indenture Trustee
covenants and agrees, for the benefit of the Lessee and the Owner Participant,
to execute and deliver the instruments of release from the Lien of the
Indenture which it is required to execute and deliver in accordance with the
provisions of Article XIV of the Indenture, and the Owner Participant agrees,
for the benefit of the Lessee, to cause the Owner Trustee to request the
Indenture Trustee to execute and deliver such instruments of release upon
written notice from the Lessee to make such request.
Section 7.08. Covenant of Quiet Enjoyment. The Owner Participant,
the Indenture Trustee, the Pass Through Trustee and the Owner Trustee
covenants and agrees as to itself only that, so long as no Event of Default
under the Lease has occurred and is continuing, neither such Owner Participant
(or the Owner Trustee, the Indenture Trustee or the Pass Through Trustee, as
the case may be) nor any Person lawfully claiming through such Owner
Participant (or the Owner Trustee, the Indenture Trustee or the Pass Through
Trustee, as the case may be) shall interfere with the Lessee's right quietly
to enjoy the Aircraft during the Term without hindrance or disturbance by such
Owner Participant (or the Owner Trustee, the Indenture Trustee or the Pass
Through Trustee as the case may be).
Section 7.09. Original Loan Participants' and Pass Through Trustee's
Representations and Warranties. (a) Each Original Loan Participant
represents and warrants that the representations and warranties made by it in
Sections 7.01(a) and 7.06 of the Original Participation Agreement were correct
on and as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
representations and warranties were correct on and as of such earlier date).
(b) The Pass Through Trustee, in its individual capacity (except
with respect to clause (iii) below), represents and warrants as of the date
hereof (except as otherwise provided), as of the Pass Through Closing Date and
as of the Refunding Date that:
(i) it is a validly existing national banking association duly
organized under the laws of the United States of America, holding a valid
certificate to do business as a national banking association with banking
and trust powers and has the corporate power and authority to enter into
and perform its obligations under the Pass Through Agreement, the Series
Supplements and this Agreement and to execute and authenticate the Pass
Through Certificates to be delivered on the Pass Through Closing Date;
(ii)the execution, delivery and performance of this Agreement, the
Pass Through Agreement and the Series Supplements and the performance of
its obligations hereunder and thereunder (including the execution and
authentication of the Pass Through Certificates to be delivered on the
Pass Through Closing Date) have been fully authorized by all necessary
corporate action on its part, and, subject to (A) the registration of
the issuance and sale of the Pass Through Certificates under the
Securities Act, (B) compliance with any applicable state securities laws
and (C) the qualification of the Pass Through Agreement under the Trust
Indenture Act, neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
Federal or South Carolina law or regulation relating to its banking or
trust powers or contravene or result in any breach of, or constitute any
default under its articles of association, or bylaws or the provisions
of any indenture, mortgage, contract or other agreement to which it is a
party or by which it or its properties may be bound or affected; and
(iii)each of this Agreement and the Pass Through Agreement has been,
and as of the Pass Through Closing Date the Series Supplements will be,
duly executed and delivered by it (in its individual and trust capacities)
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Pass Through Trustee (in its
individual and trust capacities), enforceable in accordance with its
respective terms except as limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 7.10. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Owner Participant, the
Owner Trustee (in its individual or trust capacity), the Pass Through Trustee
(in its individual or trust capacity) and the Indenture Trustee (in its
individual or trust capacity) provided for in this Article 7, and their
respective obligations under any and all of them, shall survive the Closings
and the expiration or other termination of this Agreement, and the other
Operative Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a) Subject
to compliance by the Lessee with all of its obligations under the Operative
Agreements, each of the Owner Participant, the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee covenants and agrees that if
the Lessee elects to terminate the Lease and to purchase the Aircraft pursuant
to Section 4.02(a)(A), (D), (E) or (F) of the Lease, and so long as no Event
of Default shall have occurred and be continuing then, upon compliance with
the applicable provisions of said Section 4.02(a) of the Lease, the Owner
Trustee will transfer to the Lessee, without recourse or warranty (except as
to the absence of Lessor's Liens) but subject to the Lien of the Indenture,
all of the Owner Trustee's right, title and interest in and to the Aircraft,
and if the Lessee, in connection with such purchase, elects pursuant to
Section 4.02(a)(A), (D), (E) or (F) of the Lease to assume the obligations of
the Owner Trustee to the Indenture Trustee and the Holders under the
Indenture, the Certificates and hereunder, and each of the parties shall
execute and deliver appropriate documentation permitting the Lessee to assume
such obligations on the basis of full recourse to the Lessee, maintaining for
the benefit of the Holders the security interest in the Aircraft created by
the Indenture, and upon compliance with the provisions of this Section 7.11
releasing the Owner Participant and the Owner Trustee from all obligations in
respect of the Certificates, the Indenture, this Agreement and all other
Operative Agreements, except any obligations which shall have arisen (or with
respect to events which shall have occurred) prior to such assumption and take
all such other actions as are reasonably necessary to permit such assumption
by the Lessee.
(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument satisfactory
in form and substance to the Indenture Trustee (A) pursuant to which the
Lessee irrevocably and unconditionally assumes and undertakes, with full
recourse to the Lessee, to pay, satisfy and discharge when and as due (at
the stated maturity thereof, by acceleration or otherwise) the principal
of, Make-Whole Premium, if any, interest and all other sums owing on all
Outstanding Certificates (or on the Lessee's substituted obligations) in
accordance with their terms and to punctually perform and observe all of
the covenants and obligations hereunder and under the Indenture and the
Certificates (as the same may be amended in connection with such
assumption) to be performed or observed by the Owner Trustee and (B) which
contains amendments to the Indenture, in form and substance satisfactory to
the Indenture Trustee and the Holders, that incorporate therein such
provisions from the Lease and this Agreement as may be appropriate,
including, without limitation, events of default substantially identical in
scope and effect to those set forth in the Lease and covenants
substantially identical to the covenants of the Lessee hereunder and under
the Lease;
(ii) the instrument referred to in paragraph (i) of this Section
7.11(b), any Uniform Commercial Code financing statements relating thereto,
and any other documents which shall be necessary (or reasonably requested
by the Indenture Trustee) to establish the Lessee's title to and interest
in the Aircraft or to reflect the substitution of the Lessee for the Owner
Trustee under the Operative Agreements or to continue the perfection of the
security interests in the Aircraft and the other rights, Property and
interests included in the Trust Indenture Estate for the benefit of the
Holders (or the Lessee's substituted obligations) shall be filed in such
form, manner and places as are necessary or, in the reasonable opinion of
the Indenture Trustee, advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance report
dated the effective date of such assumption of an independent insurance
broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Article 13 of the Lease
(as it relates to the Indenture Trustee) relating to the insurance with
respect to the Aircraft;
(iv) the Indenture Trustee shall have received evidence that as of
the effectiveness of the assignment on the date of such assumption the
Aircraft is free and clear of all Liens other than the Lien of the
Indenture and other Permitted Liens;
(v) the Indenture Trustee shall have received a certificate from the
Lessee that no Event of Default shall have occurred and be continuing as of
the effective date of such assumption; and
(vi)the Indenture Trustee shall have received (A) from counsel for
the Lessee (who may be the Lessee's General Counsel) a legal opinion, in
form and substance satisfactory to the Indenture Trustee (w) with
respect to the compliance of the assumption contemplated hereby with the
terms, provisions and conditions hereof, (x) with respect to the due
authorization, execution, delivery, validity and enforceability of the
instrument referred to in paragraph (i) of this Section 7.11(b), (y)
with respect to the continued perfection of the first and prior Lien and
security interest in the Aircraft for the benefit of the Holders of the
Certificates (or the Lessee's substituted obligations) referred to in
paragraph (ii) of this Section 7.11(b) and (z) with respect to the
continued availability of the benefits of Section 1110 of the Bankruptcy
Code to the Indenture Trustee for the benefit of the Holders with
respect to the Aircraft after giving effect to such assumption, (B) from
counsel to the Indenture Trustee and Special Aviation Counsel, a legal
opinion comparable to the respective opinions delivered on the Delivery
Date with such changes therein as may be appropriate in light of such
assumption, and (C) in the case of each opinion described in clause (A)
or (B) above, covering such additional matters as the Indenture Trustee
shall reasonably request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Indenture Trustee, the Owner
Trustee and the Owner Participant in connection with such assumption.
Section 7.12. Indebtedness of Owner Trustee. So long as the
Indenture is in effect, the Owner Trustee, not in its individual capacity, but
solely as trustee under the Trust Agreement, shall not incur any indebtedness
for borrowed money except as expressly contemplated herein or in any other
Operative Agreement (excluding the Tax Indemnity Agreement) and shall not
engage in any business or other activity other than the transactions
contemplated herein or in any other Operative Agreement and all necessary or
appropriate activity related thereto.
Section 7.13. Compliance with Trust Agreement, Etc. Each of the
Owner Participant, FSBU and the Owner Trustee agrees with the Lessee, the
Indenture Trustee and the Pass Through Trustee that so long as the Lien of the
Indenture shall be in effect it will (i) comply with all of the terms of the
Trust Agreement applicable to it in its respective capacity, the noncompliance
with which would materially adversely affect any such party and (ii) not take
any action, or cause any action to be taken, to amend, modify or supplement
any provision of the Trust Agreement in a manner that would adversely affect
any such party without the prior written consent of such party. The Owner
Trustee confirms for the benefit of the Lessee, the Indenture Trustee and the
Pass Through Trustee that it will comply with the provisions of Article 2 of
the Trust Agreement. Notwithstanding anything else to the contrary in the
Trust Agreement, so long as the Lease remains in effect, the Owner Participant
agrees not to terminate or revoke the trust created by the Trust Agreement
without the consent of the Lessee. If and so long as the Indenture shall not
have been discharged the consent of the Indenture Trustee shall also be
required in connection with any such termination or revocation and in
addition, the Owner Participant will promptly and duly execute and deliver to
the Indenture Trustee such documents and assurances including, without
limitation, conveyances, financing statements and continuation statements with
respect to financing statements and take such further action as the Indenture
Trustee may from time to time reasonably request and furnish in order to
protect the rights and remedies created or intended to be created in favor of
the Indenture Trustee under the Indenture and to create for the benefit of the
Certificate Holders a valid first priority Lien with respect to, and a first
and prior perfected security interest in, the Trust Indenture Estate.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. The
Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross
receipts, sales, rental, use, value added, property (tangible and intangible),
ad valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
charges, assessments or withholdings of any nature whatsoever, together with
any assessments, penalties, fines, additions to tax or interest thereon
(individually, a "Tax," and collectively called "Taxes"), however imposed
(whether imposed upon any Indemnitee, the Lessee, all or any part of the
Aircraft, Airframe, any Engine or any Part or the Lessor's Estate, Rent or
otherwise), by any Federal, state or local government or taxing authority in
the United States, or by any government or taxing authority of a foreign
country or of any political subdivision or taxing authority thereof or by a
territory or possession of the United States or an international taxing
authority relating to:
(i) the acquisition, financing, use or operation of the Aircraft;
(ii) payments under the Original Agreements and the Operative
Agreements;
(iii)the property, or the income or other proceeds received with
respect to the property after an Event of Default under the Lease, by the
Indenture Trustee under the Indenture;
(iv)otherwise with respect to or by reason of the transactions
described in or contemplated by the Original Agreements and the Operative
Agreements;
(vii)the payment of the principal or interest or other amounts
payable with respect to the Original Loan Certificates or the Certificates;
(viii)the Original Loan Certificates, the Certificates or the Pass
Through Certificates or the issuance, acquisition, or refinancing thereof
or the beneficial interests in the Lessor's Estate or the creation thereof
under the Trust Agreement; or
(ix)any assumption by the Lessee pursuant to Section 7.11 of this
Agreement and Section 2.12 of the Indenture.
(b) Exceptions. The indemnity provided for in Section 8.01(a) shall
not extend to any of the following:
(i) With respect to an Indemnitee other than an Original Loan
Participant, Taxes based upon, measured by or with respect to the net or
gross income, items of tax preference or minimum tax or excess profits, net
receipts, value-added taxes (in the nature of an income tax and not in the
nature of a sales, use or similar tax), capital, franchise, net worth
(whether denominated income, excise, capital stock, or doing business
taxes) (other than, in each case, rental, sales, use, value-added (in
the nature of a sales tax), consumption, ad valorem, stamp, property, or
similar taxes) ("Income Taxes"), provided that any such gross income
and gross receipts taxes and any such foreign taxes shall not be
excluded if such Taxes would not have been imposed absent the location
of the Aircraft, Airframe, any Engine or Part in, the presence,
operations or activities of the Lessee or user of the Aircraft,
Airframe, any Engine or Part in, or the making of payments from, such
jurisdiction, and provided further that income taxes on the Trust Estate
shall not be excluded under this paragraph (b)(i) if the Owner
Participant would not have been subject to such taxes in the absence of
the participation of Owner Trustee in the transaction;
(ii) With respect to an Original Loan Participant, Income Taxes
(other than in the case of a Non-U.S. Person, U.S. federal withholding
taxes on amounts payable with respect to such Holder's Loan Certificate)
except to the extent such Income Tax is imposed (including by way of
increase) by any jurisdiction in which the Indemnitee is subject to tax
(A) as a result of the operation, registration, location, presence,
basing or use of the Aircraft, Airframe, any Engine or any Part thereof,
in such jurisdiction (it being understood that (I) the incremental
Income Taxes described in this clause (A) shall not include any U.S.
Federal income taxes and (II) that to the extent such incremental Income
Taxes give rise to any incremental current Tax benefit in another tax
jurisdiction, that such incremental benefit shall offset and decrease
the incremental Income Taxes determined under this clause (A)) or (B)
solely as a result of the place of incorporation, principal office,
corporate domicile or the activities of the Lessor, Owner Participant,
the Owner Trustee, the Indenture Trustee, the Lessee or any sublessee in
such jurisdiction (it being understood that to the extent that any
Income Taxes described under this clause (B) give rise to any
incremental current Tax benefit in another tax jurisdiction or another
tax period, that such incremental Tax benefit shall offset and decrease
the Income Taxes determined under this clause (B)); provided, however,
that the provisions of this paragraph (b)(ii) relating to Income Taxes
shall not exclude from the indemnity described in Section 8.01(a) any
Income Taxes for which the Lessee would be required to indemnify an
Indemnitee (x) so that any payment under the Operative Agreements,
otherwise required to be made on an After-Tax Basis, is made on an
After-Tax Basis or (y) pursuant to the last sentence of Section 8.02 of
this Agreement;
(iii) Taxes imposed with respect to the Aircraft and arising out of
or measured by acts, omissions, events or periods of time (or any
combination of the foregoing) which occur after the later of (A) the
payment in full of all amounts payable by the Lessee pursuant to and in
accordance with the Operative Agreements, or the earlier discharge in
full of the Lessee's payment obligations under and in accordance with
the Lease and the Operative Agreements (and the Certificates in the case
of the Indenture Trustee or the Trust Indenture Estate if the Lessee
shall have assumed the Certificates pursuant to Section 7.11 of this
Agreement), and (B) the earliest of (x) the expiration of the Term of
the Lease and return of the Aircraft in accordance with Article 12 of
the Lease, (y) the termination of the Lease in accordance with the
applicable provisions of the Lease and return of the Aircraft in
accordance with the Lease, or (z) the termination of the Lease in
accordance with the applicable provisions of the Lease and the transfer
of all right, title and interest in the Aircraft to the Lessee pursuant
to its exercise of any of its purchase options set forth in Section
4.02(a) of the Lease, provided that this exclusion (iii) shall not apply
in respect of any payment made after the dates set forth in clauses (A)
and (B) above or with respect to any event or circumstance occurring on,
with or prior to such return or transfer or period prior to such return
or transfer;
(iv) As to the Owner Trustee, Taxes imposed against the Owner
Trustee upon or with respect to any fees for services rendered in its
capacity as trustee under the Trust Agreement or, as to the Indenture
Trustee, Taxes imposed against the Indenture Trustee upon or with
respect to any fees received by it for services rendered in its capacity
as trustee under the Indenture;
(v) Taxes imposed on an Indemnitee that would not have been imposed
but for the willful misconduct or gross negligence of such Indemnitee or
the breach by such Indemnitee of any representation, warranty or covenant
contained in the Operative Agreements or any document delivered in
connection therewith (unless attributable to a breach of representation,
warranty or covenant of the Lessee);
(vi) Taxes imposed on the Owner Trustee or the Owner Participant or
any successor, assign or Affiliate thereof which became payable by reason
of any voluntary or involuntary transfer or disposition by such Indemnitee
subsequent to the Delivery Date, including revocation of the Trust, of any
interest in some or all of the Aircraft, Airframe, Engines or Parts thereof
or its interest in the Lessor's Estate except, in each case, Taxes
following or as a result of the exercise of remedies or in connection with
the exercise by the Lessee of its Purchase Option other than at Fair Market
Value (it being understood that any disposition of the Aircraft, the
Airframe, any Engine or Part as a result of the substitution, replacement,
modification, thereof by the Lessee or by reason of any action taken by the
Lessee or any other user of the Aircraft, Airframe or any Engine pursuant
to Sections 7, 8, or 9 of the Lease shall not be treated as voluntary, and
that in the event that the Lessee exercises its Purchase Option at Fair
Market Value, Lessee will, to the extent practicable, cooperate to ensure
delivery of the Aircraft in a jurisdiction where there are no sales,
transfer or similar Taxes to be imposed);
(vii) Taxes imposed on the Owner Participant for which the Lessee is
obligated to indemnify the Owner Participant pursuant to the Tax Indemnity
Agreement;
(viii)Taxes imposed on a successor, assign or other transferee
(including, without limitation, a transferee which is a new lending office
of an original Indemnitee) of any entity or Person which on the Refunding
Date is an Indemnitee (for purposes of this clause (viii), an "original
Indemnitee") or such original Indemnitee to the extent that such Taxes
exceed the amount of Taxes that would have been imposed (in the case of an
Original Loan Participant, immediately after giving effect to such
succession, assignment or other transfer) and would have been indemnifiable
pursuant to Section 8.01(a) had there not been a succession, assignment or
other transfer by such original Indemnitee of any such interest of such
Indemnitee in the Aircraft or any part thereof, any interest in or under
any Operative Agreement, or any proceeds thereunder (it being understood
that for purposes of determining the amount of indemnification that
would have been due to such original Indemnitee with respect to a net
income Tax, it shall be assumed that such original Indemnitee would be
subject to taxation on its income at the highest marginal statutory rate
applicable to it); provided, however, that the exclusion provided by
this clause (viii) shall not apply in the case of a succession,
assignment or other transfer (1) while an Event of Default under the
Lease or the Indenture has occurred and is continuing; (2) required by
any provision of the Operative Agreements (other than pursuant to
Section 7.02 hereof) or (3) in the case of the Owner Participant or any
of its Affiliates, to any Tax other than an Income Tax;
(ix) As to any Original Loan Certificate Holder or Certificate
Holder, any U.S. federal withholding taxes imposed on the payment or
receipt of any amounts payable with respect to the Original Loan
Certificates of an Original Loan Certificate Holder or a Certificate of a
Certificate Holder, as the case may be, which is a Non-U.S. Person, unless,
in the case of an Original Loan Certificate Holder, such Indemnitee (I)
either (A) delivers to the Indenture Trustee and the Lessor two Treasury
Department Forms 4224 with respect to any and all payments under the Loan
Certificates, (B) delivers to the Indenture Trustee and the Lessor a
Treasury Department Form 1001 entitling such Holder to a complete exemption
from such U.S. withholding tax on interest, or (C) delivers to Indenture
Trustee and the Lessor a Treasury Department Form W-8, in each case,
evidencing such Indemnitee's partial or complete exemption from United
States withholding taxes, and (II) executes and delivers to the Indenture
Trustee and the Lessor additional Treasury Department Forms 4224, 1001, or
W-8 (or any successor forms), as applicable in such manner and at such
times as may be necessary to evidence such exemption (unless and to the
extent that, in the case of any Loan Participant, such Indemnitee is not
legally entitled to do so as a result of a change in law or regulation
enacted, adopted or promulgated after the acquisition by it of its Loan
Certificates) (in the event that the Lessee assumes the debt, an Original
Loan Participant shall be deemed to have become such when it first acquired
its Original Loan Certificate); provided, however, that the provisions of
this paragraph (b)(viii) shall not apply to any withholding taxes for which
the Lessee would be required to indemnify an Original Loan Certificate
Holder so that any payment under the Operative Agreements, otherwise
required to be made on an After-Tax Basis, is made on an After-Tax Basis;
(x) any Taxes which have been included in the Purchase Price and
which have been paid to the applicable taxing authorities;
(xi) any Taxes which would not have been imposed but for a Lessor's
Lien with respect to the Owner Participant or an Indenture Trustee's Lien
with respect to the Indenture Trustee;
(xii) Taxes imposed on the Owner Participant or any person who is a
"disqualified person", within the meaning of Section 4975(e)(2) of the
Code, or a "party in interest", within the meaning of Section 3(14) of
ERISA, by virtue of such person's relationship to the Owner Participant as
the result of any prohibited transaction, within the meaning of Section 406
of ERISA and Section 4975(c)(1) of the Code, occurring with respect to the
purchase or holding of any Pass Through Certificate (A) over which purchase
or holding the Owner Participant or any Affiliate thereof has discretion or
control (other than in the capacity of a custodian, directed trustee or
other similar nondiscretionary capacity), or (B) by an employee benefit
plan, within the meaning of Section 3(3) of ERISA, or plan subject to
Section 4975 of the Code with respect to which the Owner Participant (or
any Affiliate thereof) is the "plan sponsor" within the meaning of Section
3(16)(B) of ERISA; and
(xiii)Taxes imposed by any jurisdiction that would have been imposed
on the Lessor or the Owner Participant for activities in such jurisdiction
unrelated to the transactions contemplated by the Operative Agreements to
the extent imposed on such unrelated activities.
(c) Withholding. The Pass Through Trustee shall withhold any Taxes
required to be withheld on payments to any holder of a Pass Through
Certificate who is a Non-U.S. Person except to the extent that such holder of
a Pass Through Certificate has furnished evidence to the Pass Through Trustee
sufficient under applicable law to entitle such holder of a Pass Through
Certificate to any exemption from or reduction in the rate of withholding on
interest claimed by such holder of a Pass Through Certificate. The Indenture
Trustee shall withhold any Taxes required to be withheld on any payment to a
Holder pursuant to Section 5.09 of the Indenture. If the Indenture Trustee or
the Pass Through Trustee fails to withhold a Tax required to be withheld with
respect to any Holder of a Certificate or any holder of a Pass Through
Certificate or any claim is otherwise asserted by a taxing authority against
the Owner Trustee or Owner Participant or any of their Affiliates for any
withholding tax, the Lessee will indemnify the Owner Trustee and the Owner
Participant and their Affiliates (and the Indenture Trustee or the Pass
Through Trustee, as the case may be, in turn agrees to indemnify the Lessee)
(without regard to the exclusions set forth in Section 8.01(b) hereof) on an
After-Tax Basis against any such Taxes required to be withheld and any
interest and penalties with respect thereto, along with any other costs
(including reasonable attorney's fees) incurred in connection with any such
claim. The Indenture Trustee or the Pass Through Trustee, as the case may be,
in its individual capacity (and without recourse to the Trust Indenture
Estate), shall indemnify the Lessee on an After-Tax Basis for any payment the
Lessee shall have made pursuant to the preceding sentence.
Section 8.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Tax indemnified against under Section 8.01
shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Tax not
been incurred, provided that the calculation of any additional amounts owing
to any Indemnitee as a result of the Lessee's obligation to indemnify on an
After-Tax Basis shall be made without regard to the exclusions set forth in
Section 8.01(b). If any Indemnitee actually realizes a permanent tax benefit
by reason of the payment of any Tax paid or indemnified against by the Lessee,
such Indemnitee shall promptly pay to the Lessee to the extent such tax
benefit was not previously taken into account in computing such payment, but
not before the Lessee shall have made all payments then due to such Indemnitee
under this Agreement, the Tax Indemnity Agreement, the Original Agreements and
any other Operative Agreement, an amount equal to the lesser of (x) the sum of
such permanent tax benefit plus any other permanent tax benefit actually
realized by such Indemnitee that would not have been realized but for any
payment made by such Indemnitee pursuant to this sentence and not already paid
to the Lessee, and (y) the amount of the payment made under Sections 8.01 and
8.02 by the Lessee to such Indemnitee plus the amount of any other payments by
the Lessee to such Indemnitee theretofore required to be made under Sections
8.01 and 8.02 (and the excess, if any, of the amount described in clause (x)
above over the amount described in clause (y) above shall be carried forward
and applied to reduce pro tanto any subsequent obligations of the Lessee to
make payments to such Indemnitee pursuant to Section 8.01); provided, however,
that notwithstanding the foregoing portions of this sentence, such Indemnitee
shall not be obligated to make any payment to the Lessee pursuant to this
sentence as long as an Event of Default shall have occurred and be continuing
under the Lease. The Lessee shall reimburse on an After-Tax Basis such
Indemnitee (and without regard to Section 8.01(b), except for clause (v)
thereof) for any payment of a tax benefit pursuant to the preceding sentence
(or a tax benefit otherwise taken into account in calculating the Lessee's
indemnity obligation hereunder) to the extent that such tax benefit is
subsequently disallowed or reduced (including the expiration of any tax credit
carryovers or carrybacks of such Indemnitee that would not otherwise have
expired).
Section 8.03. Time of Payment. Any amount payable to an Indemnitee
pursuant to this Article 8 shall be paid within 30 days after receipt of a
written demand therefor from such Indemnitee accompanied by a written
statement describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable, provided that in the case of amounts
which are being contested by the Lessee in good faith or by the Indemnitee in
either case pursuant to Section 8.04, such amount shall be payable 30 days
after the time such contest is finally resolved.
Section 8.04. Contests. If a written claim is made against any
Indemnitee for Taxes with respect to which the Lessee is liable for a payment
or indemnity hereunder, such Indemnitee shall promptly give the Lessee notice
in writing of such claim and shall furnish the Lessee with copies of any
requests for information from any taxing authority relating to such Taxes with
respect to which the Lessee may be required to indemnify hereunder; provided,
however, that the failure of an Indemnitee to give such notice or furnish such
copy shall not terminate any of the rights of such Indemnitee under this
Article 8, except to the extent that the Lessee's contest rights have been
materially and adversely impaired by the failure to provide such notice or
copy. The Indemnitee shall in good faith, with due diligence and at the
Lessee's expense, if timely requested in writing by the Lessee, contest (or,
at the Indemnitee's option, require the Lessee to contest in the name of the
Lessee, if permitted by law) the validity, applicability or amount of such
Taxes by:
(i) resisting payment thereof if lawful and practicable or not paying
the same except under protest if protest is necessary and proper in each
case so long as non-payment will not result in a material risk of the sale,
forfeiture or loss of, or the creation of a Lien other than a Lessor's Lien
on the Aircraft, Airframe or any Engine or any risk of criminal liability;
or
(ii)if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings.
If the Indemnitee, after reasonable discussion with the Lessee and
consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such
Indemnitee shall control the contest and shall determine the manner in which
to contest such Taxes, and shall periodically or upon the Lessee's request
advise the Lessee of the progress of such contest; provided, however, that if
the Indemnitee determines in its sole discretion that such participation will
not adversely affect such Indemnitee's contest of any Taxes not indemnified
hereunder, the Lessee shall have the right to participate in such contest,
including, among other rights, the right to attend governmental or judicial
conferences (to the extent unrelated issues are not discussed) concerning such
claim and the right to be consulted in good faith regarding all submissions to
any governmental or other authority insofar as they relate to the Tax for
which indemnification is sought. Notwithstanding the preceding sentences of
this Section 8.04, such Indemnitee shall not be required to take or continue
any action unless the Lessee shall have (i) agreed to pay and shall pay the
Indemnitee on a current basis all reasonable fees and expenses which such
Indemnitee may incur as a result of contesting such Taxes, (ii) delivered to
the Indemnitee a written acknowledgment of the Lessee's obligation to such
Indemnitee pursuant to this Agreement to the extent that the contest is not
successful and of the inapplicability of any exclusion or defenses thereto,
provided, however, that such acknowledgement shall not preclude the Lessee
from raising defenses to liability under this Agreement if a decision in such
contest is rendered which clearly articulates the cause of such Tax and the
cause, as so articulated, is not one for which the Lessee is responsible to
pay an indemnity hereunder, and (iii) made all payments and indemnities (other
than contested payments and indemnities) then due to the Indemnitee hereunder
or with respect to any of the transactions contemplated by or under the
Operative Agreements. In no event shall such Indemnitee be required to
contest pursuant to this Section 8.04 the imposition of any Tax for which the
Lessee is obligated to indemnify any Indemnitee hereunder unless (i) such
Indemnitee shall have received an opinion of independent tax counsel, at the
Lessee's expense, selected by the Lessee and reasonably satisfactory to such
Indemnitee ("Tax Counsel") to the effect that a reasonable basis exists for
contesting such claim, (ii) such Indemnitee (and, if such Indemnitee is not
the Owner Participant, the Owner Participant and such Indemnitee) shall have
determined that such contest will not result in any material risk of loss,
sale or forfeiture of, or the creation of a Lien (other than Lessor's Liens)
on, the Aircraft or any part thereof or interest thereon or in a risk of
criminal liability, or adversely affect the Trust Indenture Estate, (iii) if
an Event of Default shall have occurred and be continuing, the Lessee shall
have provided security for its obligations hereunder reasonably satisfactory
to the Indemnitee, (iv) if such contest shall be conducted in a manner
requiring payment of the claim in advance, the Lessee shall have advanced
sufficient funds, on an interest free basis, to make the payment required, and
agreed to indemnify the Indemnitee against any additional net adverse tax
consequences on an After-Tax Basis to such Indemnitee of such advance and (v)
the issue shall not be the same as an issue previously contested hereunder and
decided adversely, unless the Indemnitee shall have received, at the Lessee's
sole expense, a written opinion, in form and substance reasonably satisfactory
to such Indemnitee, of Tax Counsel, to the effect that the applicable
circumstances or law has changed and, in light thereof, there is substantial
authority within the meaning of Section 6662(d) of the Code, as interpreted by
the Treasury regulations thereunder, or under similar principles of state or
foreign law (as the case may be) for contesting such claim and (viii) the
amount of the indemnity payments the Lessee would be required to make with
respect to such adjustment, when aggregated with similar adjustments that
could be raised in other taxable years of such Indemnitee is at least $50,000;
provided, that in the event that such Indemnitee is not required under this
paragraph to contest any Tax liability for which the Lessee is obligated to
indemnify any Indemnitee, the Lessee may contest such Tax liability in the
name of the Lessee, if permitted by law.
The Indemnitee shall not appeal and shall not be required to permit
Lessee to appeal any judicial decision unless (i) it receives an opinion of
Tax Counsel, at the Lessee's sole expense, to the effect that Substantial
Authority exists for the Indemnitee's position and (ii) in the case of an
appeal to the U.S. Supreme Court, the amount of the proposed adjustment for
the Lessee's entire fleet exceeds $5,000,000.
Nothing contained in this Section 8.04 shall require any Indemnitee
to contest or continue to contest, or permit Lessee to contest, a claim
which such Indemnitee would otherwise be required to contest pursuant to
this Section 8.04, if such Indemnitee shall waive payment by Lessee of any
amount that might otherwise be payable by Lessee under this Article 8 in
connection with such claim.
Section 8.05. Refunds. Upon receipt by an Indemnitee of a refund of
all or any part of any Taxes which the Lessee shall have paid for such
Indemnitee or for which the Lessee shall have reimbursed or indemnified such
Indemnitee, and provided there shall not have occurred and be continuing any
Event of Default by the Lessee hereunder or under the Lease (in which case
payment shall not be made to the Lessee until such Event of Default shall have
been cured), such Indemnitee shall pay to the Lessee an amount equal to the
amount of such refund less (x) reasonable expenses not previously reimbursed,
(y) all payments then due to such Indemnitee under this Article 8 and (z)
Taxes imposed with respect to the accrual or receipt thereof, including
interest received attributable thereto, plus any permanent tax benefit
actually realized by such Indemnitee as a result of any payment by such
Indemnitee made pursuant to this sentence; provided, however, that such amount
shall not be payable (a) before such time as the Lessee shall have made all
payments or indemnities then due and payable to such Indemnitee under this
Article 8 and (b) to the extent that the amount of such payment would exceed
(i) the amount of all prior payments by the Lessee to such Indemnitee pursuant
to this Article 8 less (ii) the amount of all prior payments by such
Indemnitee to the Lessee pursuant to this Article 8.
Any subsequent loss of such refund or tax benefit shall be treated as
a Tax subject to indemnification under the provisions of this Article 8 (in
the case of any such tax benefit, without regard to Section 8.01(b) hereof).
Section 8.06. Lessee's Reports. In case any report or return is
required to be made with respect to any obligation of the Lessee under this
Article 8, the Lessee shall make such report or return, except for any such
report or return that the Indemnitee has notified the Lessee that it intends
to file, in such manner as will show the ownership of the Aircraft in the
Owner Trustee and shall send a copy of the applicable portions of such report
or return to the Indemnitee and the Owner Trustee or will notify the
Indemnitee of such requirement and make such report or return in such manner
as shall be satisfactory to such Indemnitee and the Owner Trustee. The Lessee
will provide such information reasonably available to the Lessee as the
Indemnitee may reasonably require from the Lessee to enable the Indemnitee to
fulfill its tax filing requirements with respect to the transactions
contemplated by the Operative Agreements (without duplication of the
requirements of Section 3 of Tax Indemnity Agreement) and any audit
information request arising from any such filing. The Indemnitee will provide
such information reasonably available to it as the Lessee may reasonably
require from such Indemnitee to enable the Lessee to fulfill its tax filing
requirements with respect to the transactions contemplated by the Operative
Agreements and any audit information request arising from such filing;
provided that in no event shall any Indemnitee be required to provide copies
of any of its tax returns. The Lessee shall hold the Indemnitee harmless from
and against any liabilities, including penalties, additions to tax, fines and
interest, imposed upon or incurred by such Indemnitee to the extent directly
attributable to any insufficiency or inaccuracy in any return, statement, or
report prepared by the Lessee or information supplied by the Lessee, or
directly attributable to the Lessee's failure to supply reasonably available
information to such Indemnitee as required by this Section 8.06.
Section 8.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 8 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of the Operative Agreements.
Section 8.08. Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft,
Airframe, any Engine or Parts, to the extent permitted by the applicable
federal, state, local or foreign law, the Lessee shall pay such tax directly
to the relevant Taxing authority and file any returns or reports required with
respect thereto; provided, however, that the Lessee shall not make any
statements or take any action which would indicate that the Lessee or any
Person other than the Owner Trustee or Owner Participant is the owner of the
Aircraft, the Airframe, any Engine or any Part or which would otherwise be
inconsistent with the terms of the Lease or the Tax Indemnity Agreement and
the position thereunder of the Owner Trustee and the Owner Participant.
Copies of such returns or reports, together with evidence of payment of any
tax due, shall be sent by the Lessee to the Owner Participant within thirty
(30) days after the date of each payment by the Lessee of any Tax.
Section 8.09. Reimbursements by Indemnitees Generally. If, for any
reason, Lessee is required to make any payment with respect to any Taxes
imposed on any Indemnitee in respect of the transactions contemplated by the
Operative Agreements or on the Aircraft, the Airframe, the Engines, the Parts
of any part thereof, which Taxes are not the responsibility of Lessee with
respect to such Indemnitee, then such Indemnitee shall pay to Lessee within 30
days of Lessee's demand therefor an amount which equals the amount actually
paid by Lessee with respect to such Taxes.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify each
Indemnitee against and agrees to protect, defend, save and keep harmless each
Indemnitee from any and all liabilities, obligations, losses, damages,
penalties, claims, actions, suits, costs, disbursements and expenses
(including reasonable legal fees and expenses (including, without limitation,
the allocated reasonable costs and expenses of in-house counsel to any
Original Loan Participant) and all costs and expenses relating to amendments,
supplements, adjustments, consents, refinancings and waivers under the
Operative Agreements and the Original Agreements except as otherwise provided
in Section 10.01(d)(i) or Section 15 hereof) of every kind and nature (whether
or not any of the transactions contemplated by this Agreement are consummated)
(individually, an "Expense," collectively, "Expenses"), which may be imposed
on, incurred or suffered by or asserted against any Indemnitee, in any way
relating to, based on or arising out of:
(i) the Original Agreements, this Agreement, the Lease, the
Indenture, the Trust Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty
Bill of Sale or any other Operative Agreement or any other document entered
into in connection herewith or any sublease or transfer or any transactions
contemplated hereby or thereby;
(ii)the operation, possession, use, non-use, maintenance, storage,
overhaul, delivery, non-delivery, control, repair or testing of the
Aircraft, Airframe, or any Engine or any engine used in connection with the
Airframe, or any part thereof by the Lessee, any sublessee or any other
Person whatsoever, whether or not such operation, possession, use, non-use,
maintenance, storage, overhaul, delivery, non-delivery, control, repair or
testing is in compliance with the terms of the Lease, including without
limitation, claims for death, personal injury or property damage or other
loss or harm to any Person whatsoever, including, without limitation, any
passengers, shippers or other Persons wherever located, and claims relating
to any laws, rules or regulations, including, without limitation,
environmental control, noise and pollution laws, rules or regulation;
(iii)the manufacture, design, sale, return, purchase, acceptance,
rejection, delivery, non-delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, registration, reregistration, import,
export, performance, non-performance, lease, sublease, transfer,
merchantability, fitness for use, alteration, substitution or replacement
of any Airframe, Engine, or Part under the Lease, the Purchase Agreement,
the Purchase Agreement Assignment, the GTA or the Engine Warranty
Assignment or other transfer of use or possession, or other disposition of
the Aircraft, the Airframe, any Engine or any Part including, without
limitation, latent and other defects, whether or not discoverable, strict
tort liability, and any claims for patent, trademark or copyright
infringement;
(iv)any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Lessee under any of the Operative Agreements or
the Original Agreements, or the falsity or inaccuracy of any representation
or warranty of the Lessee in any of the Operative Agreements or the
Original Agreements (other than representations and warranties in the Tax
Indemnity Agreement);
(v) the enforcement of the terms of the Operative Agreements or the
Original Agreements and the administration of the Trust Indenture Estate;
and
(vi)the offer, issuance, sale or delivery of any Certificate or any
Pass Through Certificate or any Original Loan Certificate, or any refunding
or refinancing thereof, or interest in the Lessor's Estate or the Trust
Agreement or the Original Trust Agreement or any similar interest or in any
way relating to or arising out of the Trust Agreement or the Original Trust
Agreement and the Lessor's Estate, the Indenture or the Original Indenture
or the Trust Indenture Estate (including, without limitation, any claim
arising out of the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, or any other federal or state statute,
law or regulation, or at common law or otherwise relating to
securities), or the action or inaction of the Owner Trustee or Indenture
Trustee as trustees, in the manner contemplated by this Agreement, the
Original Participation Agreement, the Indenture, the Original Indenture,
the Indenture and Security Agreement Supplement, the Trust Agreement or
the Original Trust Agreement and in the case of the Owner Participant,
its obligations arising under Section 6.01 of the Trust Agreement or the
Original Trust Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a
result of their respective ownership or leasing of any interest in the
Aircraft, Airframe, any Engine or Part during the Term, whether or not in the
Lessee's possession or control, insofar as such Expense relates to any
activity or event whatsoever involving such item while it is under lease to
the Lessee (or after termination of the Lease in connection with the exercise
of remedies thereunder to the extent that such Expense is attributable to the
transactions contemplated hereby and by the other Operative Agreements and
Original Agreements), and such Expense does not fall within any of the
exceptions listed in Section 9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a) shall
not extend to any Expense of any Indemnitee:
(i) which would not have occurred but for the willful misconduct or
gross negligence of such Indemnitee;
(ii)in respect of the Aircraft to the extent attributable to acts or
events which occur after the Aircraft is no longer part of the Lessor's
Estate or leased under the Lease or, if the Aircraft remains a part of the
Lessor's Estate, after the expiration of the Term (other than pursuant to
Article 17 of the Lease, in which case the indemnity provided in Section
9.01(a) hereof shall survive for so long as Lessor shall be entitled to
exercise remedies under such Article 17), or to acts or events which occur
after return of possession of the Aircraft by the Lessee in accordance with
the provisions of the Lease but in any such case only to the extent not
fairly attributable to acts or omissions of the Lessee prior to expiration
of the Term, including without limitation the Lessee's failure to fully
discharge all of its obligations under the Lease, the other Operative
Agreements or the Original Agreements;
(iii)which is a Tax, whether or not the Lessee is required to
indemnify therefor pursuant to Article 8 hereof or pursuant to the Tax
Indemnity Agreement;
(iv)which is a cost or expense required to be paid by the Owner
Participant or its permitted transferees (and not by the Lessee) pursuant
to this Agreement or any other Operative Agreement (other than the Owner
Participant's obligations under Section 6.01 of the Trust Agreement) and
for which the Lessee is not otherwise obligated to reimburse the Owner
Participant, directly or indirectly;
(v) which would not have been incurred by such Indemnitee if such
Indemnitee had not been in breach of its representations or warranties, or
had not defaulted in the observance and performance of the terms and
provisions required to be observed and performed by it, in this Agreement,
the Purchase Agreement Assignment, the Lease, the Indenture, the Trust
Agreement, the Original Agreements or any other Operative Agreement to
which it is a party unless such breach or default shall be a result of the
breach or default of any of the foregoing by the Lessee or another
Indemnitee;
(vi)which is a payment required to be made by the Owner Participant
pursuant to Section 2.01(b) hereof, but nothing contained in this Section
9.01(b)(vi) shall be deemed or construed to limit the obligations of the
Lessee to the Indenture Trustee and Holders of the Certificates pursuant to
Section 3.05 of the Lease;
(vii)in the case of the Owner Participant, Lessor's Liens to the
extent attributable to the Owner Participant; in the case of the Owner
Trustee, Lessor's Liens to the extent attributable to the Owner Trustee;
and in the case of the Indenture Trustee, Indenture Trustee's Liens;
(viii) in the case of the Owner Participant or the Owner Trustee, to
the extent attributable to the offer or sale by such Indemnitee after the
Delivery Date of any interest in the Aircraft, the Lessor's Estate or the
Trust Agreement or any similar interest (including an offer or sale
resulting from bankruptcy or other proceedings for the relief of debtors in
which such Indemnitee is the debtor), unless in each case such offer or
sale shall occur (x) in connection with a Refinancing or (y) as a result of
exercise of remedies under Section 17 of the Lease; and
(ix)in the case of the Owner Participant or any person who is a
"disqualified person", within the meaning of Section 4975(e)(2) of the
Code, or a "party in interest", within the meaning of Section 3(14) of
ERISA, by virtue of such person's relationship to the Owner Participant,
which arise as the result of any prohibited transaction, within the meaning
of Section 406 of ERISA and Section 4975(c)(1) of the Code, occurring with
respect to the purchase or holding of any Pass Through Certificate (A) over
which purchase or holding the Owner Participant or any Affiliate thereof
has discretion or control (other than in the capacity of a custodian,
directed trustee or other similar nondiscretionary capacity), or (B) by an
employee benefit plan, within the meaning of Section 3(3) of ERISA, or plan
subject to Section 4975 of the Code with respect to which the Owner
Participant (or any Affiliate thereof) is the "plan sponsor" within the
meaning of Section 3(16)(B) of ERISA.
Section 9.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Expense indemnified against under Section
9.01 shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Expense not
been incurred. If any Indemnitee actually realizes a permanent Tax benefit by
reason of the payment of such Expense paid or indemnified against by the
Lessee which was not considered in the computation thereof, such Indemnitee
shall promptly pay to the Lessee, but not before the Lessee shall have made
all payments theretofore due such Indemnitee under this Agreement, the
Original Agreements, the Tax Indemnity Agreement and any other Operative
Agreement, an amount equal to the lesser of (x) the sum of such Tax benefit
plus any other permanent Tax benefit actually realized by such Indemnitee as
the result of any payment made by such Indemnitee pursuant to this sentence
and (y) the amount of such payment pursuant to this Section 9.02 by the Lessee
to such Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore made pursuant to this Section 9.02 less the amount of
any payments by such Indemnitee to the Lessee theretofore made pursuant to
this Section 9.02 (and the excess, if any, of the amount described in clause
(x) above over the amount described in clause (y) above shall be carried
forward and applied to reduce pro tanto any subsequent obligations of the
Lessee to make payments pursuant to this Section 9.02), it being intended that
no Indemnitee should realize a net Tax benefit pursuant to this Section 9.02
unless the Lessee shall first have been made whole for any payments by it to
such Indemnitee pursuant to this Section 9.02; provided, however, that
notwithstanding the foregoing portions of this sentence, such Indemnitee shall
not be obligated to make any payment to the Lessee pursuant to this sentence
so long as an Event of Default shall have occurred and be continuing. Any
Taxes that are imposed on any Indemnitee as a result of the disallowance or
reduction of such Tax benefit referred to in the next preceding sentence in a
taxable year subsequent to the year of allowance and utilization by such
Indemnitee (including the expiration of any tax credit carryovers or
carrybacks of such Indemnitee that would not otherwise have expired) shall be
indemnifiable pursuant to the provisions of Section 8.01 hereof without regard
to Section 8.01(b) hereof.
Section 9.03. Subrogation. Upon the payment in full of any
indemnity pursuant to this Article 9 by the Lessee (but not earlier), the
Lessee shall be subrogated to any right of the Indemnitee, other than with
respect to any of such Indemnitee's insurance policies or in connection
with any indemnity claim the Person indemnified may have against any other
Indemnitee in respect of the matter against which such indemnity has been
made.
Section 9.04. Notice and Payment. Each Indemnitee and the Lessee
shall give prompt written notice one to the other of any liability of which
such party has knowledge for which the Lessee is, or may be, liable under this
Article 9; provided, however, that failure to give such notice shall not
terminate any of the rights of Indemnitees under this Article 9, except (with
respect to such Indemnitee) to the extent that the Lessee has been materially
prejudiced by the failure to provide such notice. Unless otherwise provided
in the Operative Agreements, any amount payable to an Indemnitee pursuant to
this Article 9 shall be paid within 30 days after receipt of a written demand
therefor from such Indemnitee accompanied by a written statement describing in
reasonable detail the basis for such indemnity and the computation of the
amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a recovery of
all or any part of any amount which the Lessee shall have paid to such
Indemnitee or for which the Lessee shall have reimbursed such Indemnitee under
this Article 9, and provided there shall not have occurred a Payment Default
or an Event of Default (in which case payment shall not be made to the Lessee
until such Payment Default or Event of Default shall have been cured) such
Indemnitee shall pay to the Lessee the amount of any such recovery, including
interest received with respect to the recovery, net of any Taxes paid or
payable as a result of the receipt of the recovery and interest, plus any net
additional permanent income tax benefits actually realized by Indemnitee as
the result of any payment made pursuant to this sentence less any reasonable
costs and expense of any Indemnitee not reimbursed by the Lessee; provided,
however, that such amount shall not be payable (a) before such time as the
Lessee shall have made all payments or indemnities then due and payable to
such Indemnitee under this Article 9 or (b) to the extent that the amount of
such payment would exceed the amount of all prior payments by the Lessee to
such Indemnitee pursuant to this Article 9, less the amount of all prior
payments by such Indemnitee to the Lessee pursuant to this Article 9. Any
subsequent loss of such recovery or tax benefit shall be subject to
indemnification under Article 8 or this Article 9, as the case may be, but
without regard to Section 8.01(b) hereof, other than Section 8.01(b)(v)
hereof.
Section 9.06. Defense of Claims. The Lessee or its insurers shall
have the right (in each such case at the Lessee's sole expense) to investigate
or, provided that (i) the Lessee or its insurers shall not reserve the right
to dispute liability with respect to any insurance policies pursuant to which
coverage is sought, (ii) in the case of the Lessee, no Event of Default shall
have occurred and be continuing and (iii) the Lessee shall have first
acknowledged in writing to such Indemnitee the Lessee's obligation to
indemnify such Indemnitee hereunder in respect of such claim, defend any claim
covered by insurance for which indemnification is sought pursuant to this
Article 9 and each Indemnitee shall cooperate with the Lessee or its insurers
with respect thereto, and provided, further, the Lessee shall not be entitled
to assume and control the defense of any such claim if and to the extent such
Indemnitee reasonably objects to such control on the ground that an actual or
potential material conflict of interest exists where it is advisable for such
Indemnitee to be represented by separate counsel. Subject to the immediately
foregoing sentence, where the Lessee or the insurers under a policy of
insurance maintained by the Lessee undertake the defense of an Indemnitee with
respect to such a claim, no additional legal fees or expenses of such
Indemnitee in connection with the defense of such claim shall be indemnified
hereunder unless the fees or expenses were incurred at the written request of
the Lessee or such insurers. Subject to the requirement of any policy of
insurance applicable to a claim, an Indemnitee may participate at its own
expense at any judicial proceeding controlled by the Lessee or its insurers
pursuant to the preceding provisions, to the extent that such party's
participation does not, in the opinion of the independent counsel appointed by
the Lessee or its insurers to conduct such proceedings, interfere with such
control; and such participation shall not constitute a waiver of the
indemnification provided in this Section 9.06. No Indemnitee shall enter into
any settlement or other compromise with respect to any claim described in this
Section 9.06 without the prior written consent of the Lessee, which consent
shall not unreasonably be withheld or delayed, unless such Indemnitee waives
its right to be indemnified under this Article 9 with respect to such claim.
The Lessee shall not enter into any settlement or compromise which the Lessee
has not agreed to discharge or with respect to which the Lessee has not agreed
to indemnify such Indemnitee to such Indemnitee's satisfaction.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Purchase Agreement
Assignment, the Engine Warranty Assignment, the Lease and the other Operative
Agreements but, as to such indemnities, only with respect to losses,
liabilities, obligations, damages, penalties, claims, actions, suits, costs,
Expenses and disbursements caused by events occurring or existing (or fairly
attributable to the Lessee's acts or omissions) prior to or incurred in the
process of (i) the return or disposition of the Aircraft under Article 12 or
Article 17 of the Lease, or (ii) the termination of the Lease or the Indenture
or, if later, the return of the Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's obligations
under the indemnities provided for in this Agreement shall be those of a
primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
the Lease, the Indenture, the Trust Agreement, or any other document or
instrument, and the Person seeking indemnification from the Lessee pursuant to
any provision of this Agreement may proceed directly against the Lessee
without first seeking to enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee on
demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a) Transaction
Costs. The Owner Participant shall pay (or reimburse the Lessee if the Lessee
shall have previously made such payment), in addition to those items set forth
in Section 10.01(a) of the Original Participation Agreement (other than clause
(vi) thereof) all fees and expenses of the following persons relating to the
public offering of the Pass Through Certificates contemplated by the
Underwriting Agreement and related to the transactions contemplated hereby:
(i) the fees and expenses of counsel for the Owner Participant; (ii) the fees
and expenses of the transaction documentation counsel and counsel for the
Owner Trustee, the Indenture Trustee, the Pass Through Trustee, the Original
Loan Participants and the Underwriters (other than those fees, expenses and
disbursements payable by the Underwriters pursuant to the Underwriting
Agreement); (iii) the fees and expenses of Daugherty, Fowler & Peregrin; (iv)
any initial fees and expenses of the Pass Through Trustee and the fees and
expenses of the Owner Trustee and the Indenture Trustee; (v) any compensation,
commissions and discounts payable to the Underwriters pursuant to the
Underwriting Agreement; (vi) the fees, if any, incurred in printing the Pass
Through Certificates; (vii) the fees and expenses incurred in connection with
printing any amendment to the Registration Statement on Form S-3 bearing
Registration No. 33-56569, printing any Preliminary Prospectus or Prospectus
(as such terms are defined in the Underwriting Agreement) for the offering of
the Pass Through Certificates; (viii) the fees and expenses of Arthur Andersen
& Co.; (ix) the fees and expenses of Moody's and S&P; and (x) the fees and
expenses of First Chicago Leasing Corporation. The fees and expenses
described in clauses (ii) through (x) of this paragraph shall be allocable to
the Owner Participant under this Agreement (1) to the extent incurred
specifically with respect to the Owner Participant or the refunding of the
Original Loan Certificates, and (2) to the extent such fees and expenses are
incurred but are not specifically attributable to the Owner Participant or the
refunding of the Original Loan Certificates, in the proportion that the
principal amount of the Certificates bears to the total amount of the Pass
Through Certificates.
The Owner Participant, the Owner Trustee and the Lessee acknowledge
that the percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth in the Lease have been prepared assuming the aggregate amount
payable by the Owner Participant pursuant to the preceding paragraph and
Section 10.01 of the Original Participation Agreement is 1.78% of the Purchase
Price (the "Estimated Expense Amount").
(b) Continuing Expenses. The continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the entity
acting as Owner Trustee, as lessor under the Lease and as trustee under the
Trust Agreement with respect to the administration of the Lease and the
Lessor's Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses and initial fees relating to the
establishment of any replacement trustee) of the Indenture Trustee, as trustee
under the Indenture with respect to the administration of the Trust Indenture
Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and initial fees relating to the establishment of a
replacement trustee) of the Pass Through Trustee shall be paid as Supplemental
Rent by the Lessee, including without limitation any amounts payable to the
Indenture Trustee or on account of requests by the Indenture Trustee for
indemnification under Article XI of the Indenture.
(c) Amendments, Supplements and Appraisal. Without limitation of
the foregoing, the Lessee agrees:
(i) to pay as Supplemental Rent to the Owner Trustee, the Owner
Participant, the Indenture Trustee and the Pass Through Trustee all costs
and expenses (including reasonable legal fees and expenses) incurred by any
of them in connection with (a) any Default or Event of Default and any
enforcement or collection proceedings resulting therefrom, or (b) the
enforcement of the obligations of the Lessee hereunder or under the
other Operative Agreements, including, without limitation, the entering
into or giving or withholding of any amendments or supplements or
waivers or consents, including without limitation, any amendment,
supplement, waiver or consent resulting from any work-out, restructuring
or similar proceeding relating to the performance or nonperformance by
the Lessee of its obligations under the Operative Agreements or (c) any
amendment, supplement, waiver or consent (whether or not entered into)
under the Original Agreements, this Agreement, the Lease, the Indenture,
the Certificates, the Tax Indemnity Agreement, the Purchase Agreement
Assignment or any other Operative Agreement or document or instrument
delivered pursuant to any of them, which amendment, supplement, waiver
or consent is required by any provision of any Operative Agreement or is
requested by the Lessee or necessitated by the action or inaction of the
Lessee; provided, however, that the Lessee shall not be responsible for
fees and expenses incurred in connection with the offer, sale or other
transfer (whether pursuant to Article 5 of the Trust Agreement or
otherwise) by the Owner Participant or the Owner Trustee after the
Refunding Date of any interest in the Aircraft, the Lessor's Estate or
the Trust Agreement or any similar interest (and the Owner Participant
shall be responsible for all such fees and expenses), unless such offer,
sale or transfer shall occur (A) during a period when an Event of
Default has occurred and is continuing under the Lease, (B) during a
period following an Event of Loss or (C) in connection with the
termination of the Lease or action or direction of the Lessee pursuant
to Section 4.02 or Article 10 of the Lease; and
(ii)to pay the fees, costs and expenses of all appraisers involved in
an independent appraisal of the Aircraft to the extent required under
Section 4.03 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a)
Resignation and Removal. The Owner Trustee or any successor Owner Trustee may
resign or may be removed by the Owner Participant, and a successor Owner
Trustee may be appointed and a Person may become Owner Trustee under the Trust
Agreement only in accordance with the provisions of Section 3.11 of the Trust
Agreement and the provisions of paragraphs (b) and (c) of this Section 11.01.
(b) Conditions to Appointment. The appointment in any manner of a
successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall
be subject to the following conditions:
(i) Such successor Owner Trustee shall be a Citizen of the United
States;
(ii)Such successor Owner Trustee shall be a bank or a trust company
having combined capital, surplus and undivided profits of at least
$100,000,000 or a bank or trust company fully guaranteed by a direct or
indirect parent thereof having a combined capital, surplus and undivided
profits of at least $100,000,000;
(iii) Such appointment shall not violate any provisions of the Act or
any applicable rule or regulation of the applicable regulatory agency or
body of any other jurisdiction in which the Aircraft may then be registered
or create a relationship which would be in violation of the Act or any
applicable rule or regulation of the applicable regulatory agency or body
of any other jurisdiction in which the Aircraft may then be registered;
(iv) Such successor Owner Trustee shall enter into an agreement or
agreements, in form and substance reasonably satisfactory to the Lessee,
the Owner Participant, the Pass Through Trustee and the Indenture
Trustee whereby such successor Owner Trustee confirms that it shall be
deemed a party to this Agreement, the Trust Agreement, the Lease, the
Lease Supplement, the Purchase Agreement Assignment, the Engine Warranty
Assignment, the Indenture, the Indenture Supplement and any other
Operative Agreement to which the Owner Trustee is a party and agrees to
be bound by all the terms of such documents applicable to the Owner
Trustee and makes the representations and warranties contained in
Section 7.04 hereof (except that it may be duly incorporated, validly
existing and in good standing under the laws of the United States of
America or any State thereof); and
(v) All filings of Uniform Commercial Code financing and continuation
statements, filings in accordance with the Act and amendments thereto shall
be made and all further actions taken in connection with such appointment
as may be necessary in connection with maintaining the validity, perfection
and priority of the Lien of the Indenture and the valid and continued
registration of the Aircraft in accordance with the Act.
(c) Appointment. For so long as the Aircraft remains registered
under the Act, the Owner Participant agrees to appoint promptly a successor
Owner Trustee meeting the requirements of Section 11.01(b) hereof in the event
the Owner Participant has knowledge that the Owner Trustee at any time shall
not be a Citizen of the United States.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. The Owner
Participant shall have no obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Trust
Agreement, the Tax Indemnity Agreement or any other Operative Agreement to
which the Owner Participant is a party, and the Owner Participant shall not be
liable for the performance by any party hereto of such other party's
obligations or duties hereunder. Under no circumstances shall the Owner
Participant as such be liable to the Lessee, nor shall the Owner Participant
be liable to any Holder, for any action or inaction on the part of the Owner
Trustee or the Indenture Trustee in connection with this Agreement, the
Indenture, the Lease, the Trust Agreement, the Purchase Agreement Assignment,
the Engine Warranty Assignment, any other Operative Agreement, any Original
Agreement, the ownership of the Aircraft, the administration of the Lessor's
Estate or the Trust Indenture Estate or otherwise, whether or not such action
or inaction is caused by the willful misconduct or gross negligence of the
Owner Trustee or the Indenture Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of a
Certificate shall have no further interest in, or other right with respect to,
the Trust Indenture Estate when and if the principal and interest on all
Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall
have been paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Trust
Agreement and the Indenture and to all of the terms of said documents, and the
Lessee acknowledges receipt of an executed counterpart of each of the Trust
Agreement and the Indenture; it being agreed that such consent shall not be
construed to require the Lessee's consent to any future supplement to, or
amendment, waiver or modification of, the terms of the Trust Agreement, the
Indenture or the Certificates, except that prior to the occurrence and
continuance of an Event of Default, no section of the Indenture or the Trust
Agreement shall be amended or modified in any manner which materially
adversely affects the Lessee without its consent.
Section 13.02. Further Assurances. The Lessee hereby confirms to
the Owner Participant its covenants set forth in and obligations under the
Lease. The Lessee agrees that, except as otherwise provided in the
Indenture, the Owner Trustee may not enter into any amendment, modification
or supplement of, or give any waiver or consent with respect to, or approve
any matter or document as being satisfactory under the Lease without the
prior consent of the Indenture Trustee and the Owner Participant and that,
except as otherwise provided in the Indenture, upon an Indenture Event of
Default, the Indenture Trustee may act as the Lessor under the Lease to the
exclusion of the Owner Trustee. The Lessee further agrees to deliver to
the Indenture Trustee and the Owner Participant a copy of each notice,
statement, request, report or other communication given or required to be
given to the Owner Trustee under the Lease.
Section 13.03. No Retroactive Application. This Agreement, the
Lease, the Indenture and the Trust Agreement each amend and restate, and the
Tax Indemnity Agreement amends, the respective original agreements with no
intention of retroactive application. The applicable original agreements have
been restated for the convenience of the parties and such amendments and
restatements, and such amendment in the case of the Tax Indemnity Agreement,
are not intended to waive or modify the obligations of any party which accrued
or were to have been performed on or prior to the Refunding Date under such
unamended agreements (or, in the case of this Agreement, the effective date
hereof) or to deprive any party of its rights and remedies in respect thereof.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and
other communications required by this Agreement shall be in writing and
shall be deemed received (a) if given by telecopier, when transmitted and
the appropriate telephonic confirmation received if transmitted on a
Business Day and during normal business hours of the recipient, and
otherwise on the next Business Day following transmission, (b) if given by
certified mail, return receipt requested, postage prepaid five Business
Days after being deposited in the United States mails and (c) if given by
FedEx service (or, if a Default or Event of Default shall have occurred and
be continuing, by other comparable courier service), when received or
personally delivered, addressed:
(a) If to the Lessee, to its office at 2007 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a
copy to Senior Vice President and General Counsel at 1980 Nonconnah Drive,
Memphis, Tennessee 38132, telephone (901) 395-3388, facsimile (901)
395-4758, or at such other address as the Lessee shall from time to time
designate in writing to the Lessor, the Indenture Trustee and the Owner
Participant;
(b) If to the Lessor or the Owner Trustee, to its office at 79 South
Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department; telephone (801) 246-5630, facsimile (801) 246-5053, or to such
other address as Lessor shall from time to time designate in writing to the
Lessee and the Indenture Trustee, with a copy to Owner Participant at the
Owner Participant's address as provided in subsection (c) below;
(c) If to the Owner Participant, to its office at One Federal
Street, Boston, Massachusetts 02211, Attention: Equipment Leasing and
Finance, telephone (617) 292-2925, facsimile (617) 292-4399, or to such
other address as the Owner Participant may from time to time designate in
writing to the Lessee and the Indenture Trustee;
(d) If to the Indenture Trustee, to its office at 600 Peachtree
Street, N.E., Suite 900, Atlanta, Georgia 30308, Attention: Corporate
Trust Lease Administration; telephone (404) 607-4681, facsimile (404)
607-6362, or to such other address as the Indenture Trustee shall from time
to time designate in writing to the Lessor, the Lessee, the Pass Through
Trustee and the Owner Participant; and
(e) If to the Pass Through Trustee, to its office at 1301 Gervis
Street, 4th Floor, Columbia, South Carolina 29201; Attention Corporate
Trust Administration; telephone (803) 929-5905, facsimile (803) 929-5922
(with a copy to the Indenture Trustee at the address provided in paragraph
(d) above), or to such other address as the Pass Through Trustee shall from
time to time designate in writing to the Lessor, the Lessee, the Indenture
Trustee and the Owner Participant.
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing. (a) Subject to the terms and
conditions of this Section 15.01, the Lessee may request the Owner Participant
to participate in up to three refinancings (including the refinancing
contemplated by this Agreement on the Refunding Date), in whole but not in
part, of the Certificates prior to the end of the Basic Term (a
"Refinancing"), provided, that, except in connection with the Refinancing
contemplated by this Agreement on the Refunding Date, such Refinancing may not
occur prior to the fifth anniversary of the Refunding Date. Such Refinancings
may be placed in either the private or public markets and shall be denominated
in United States dollars (or in any other foreign currency so long as there is
no foreign currency risk to the Owner Participant), and shall be on terms that
do not materially adversely affect the Owner Participant. The Owner
Participant agrees to negotiate promptly in good faith to conclude an
agreement with the Lessee as to the terms of any such Refinancing transaction
(including the terms of any debt to be issued in connection with such
refinancing and the documentation to be executed in connection therewith).
Without the prior written consent of the Owner Participant, the prospectus and
other offering materials relating to any Refinancing in the form of a public
offering shall not identify the Owner Participant and shall not include any
financial statements of the Owner Participant or any Affiliate thereof. In
connection with any such Refinancing in the form of a public offering, the
Lessee shall indemnify the Owner Participant for any liabilities under
federal, state or foreign securities laws resulting from such offering. The
aggregate principal amount of the new Certificates issued in connection with
each Refinancing shall be the same as the aggregate principal amount
outstanding on the Certificates being refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant shall have received at least 10
Business Days' prior written notice of the closing date of such Refinancing,
the Owner Participant shall have been provided such longer period required for
a reasonable opportunity to review the relevant documentation and the Owner
Participant shall have determined in good faith that neither it nor the Owner
Trustee shall suffer any loss or expense or bear any increased risk as a
result of such Refinancing (including, without limitation, any risk with
respect to taxes or other adverse consequences to the Owner Participant
including the application of Revenue Procedures 75-21 and 75-28 and Section
467 of the Code) for which it has not been or will not have been indemnified
by the Lessee in a manner reasonably satisfactory to the Owner Participant.
Prior to the consummation of any Refinancing pursuant to this Section
15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent, Stipulated Loss Values,
Termination Values and EBO Price payable pursuant to the Lease as a result of
the Refinancing in accordance with Section 3.04 of the Lease, and thereafter
the amounts set forth in such schedule shall become the amounts payable under
the Lease. Upon the consummation of the Refinancing, the evidence of
indebtedness issued pursuant to the Refinancing shall be considered
"Certificates" for purposes of this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall have
no obligation to proceed with any Refinancing transaction as contemplated by
this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the
Owner Participant by agreement in form and substance satisfactory to each of
them, for any liability, obligation (other than the obligation to pay
principal and interest in respect of the refinanced indebtedness), cost or
expense (including, without limitation, reasonable attorneys' fees and
Make-Whole Premium and any other premiums or amounts due under the Indenture),
including any adverse tax consequences or impact, related to or arising out of
any such Refinancing transaction, except to the extent of amounts included in
Transaction Costs and payable by the Owner Participant as provided in Article
10 hereof.
(d) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the
Certificates then outstanding; provided, however, that such Refinancing shall
be subject to the satisfaction of each of the following conditions:
(i) Payment of principal, accrued interest, Make-Whole Premium and
Breakage Costs, if any, and all other sums due and owing on the
Certificates payable under the Indenture;
(ii)Payment in full of all other amounts then due and owing by the
Lessee under this Agreement, the Indenture, the Lease, the Trust Agreement,
and the Certificates then outstanding shall have been made by the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to such Owner Participant, unless the Lessee shall have agreed
to provide an indemnity in respect thereof reasonably satisfactory in form
and substance to the Owner Participant), certificates and other documents
as it may reasonably request, each in form and substance reasonably
satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) The Lessee shall have provided or agreed to provide to the Owner
Participant, as Supplemental Rent under the Lease, sufficient funds to pay
any Breakage Costs, Make-Whole Premium and any other amounts due under the
Indenture;
(vi) The satisfaction or waiver by each other party to this
Agreement of the conditions set forth in this Section 15.01 to such party's
obligations under this Section 15.01;
(vii) No Event of Default shall have occurred and be continuing or
would occur immediately after giving effect to such Refinancing; and
(viii) In the event the Lessee shall not prohibit the purchase of the
Refinancing loan certificates by, or with the assets of, an employee
benefit plan, as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA or a plan, which is subject to Section 4975(c) of the
Code, (individually or collectively, an "ERISA Plan"), Lessee will permit
the placement of the Refinancing loan certificates with an ERISA Plan only
if either (A) if such placement is in the form of pass through
certificates, the sole underwriter or the manager or co-manager of the
underwriting syndicate or the selling or placement agent of the Refinancing
loan certificates represents to Lessee that it has a prohibited transaction
exemption from the U.S. Department of Labor with respect to pass through
certificates (such as Prohibited Transaction Exemption 90-24 or any other
comparable exemption) or (B) purchasers of the Refinancing loan
certificates provide a representation regarding their source of funds used
in acquiring the Refinancing loan certificates and, if such purchasers
represent that they are using funds of an ERISA Plan in acquiring the
Refinancing loan certificates, such purchasers further represent that
either a prohibited transaction exemption from the U.S. Department of Labor
is available with respect to their purchase and holding of the Refinancing
loan certificates or that their purchase and holding of the Refinancing
loan certificates will not constitute a prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code. The reliance on any such
exemption will not be conditional on the Owner Participant's representation
concerning its party in interest or other status with respect to ERISA
Plans. If neither exemption referred to in clause (A) or (B) of this
paragraph (viii) is valid or applicable in any respect to the purchase and
holding of the Refinancing loan certificates, or if the representation in
clause (B) of this paragraph (viii) that such purchase and holding will not
constitute a prohibited transaction is not correct, whichever is applicable
then the Lessee shall indemnify the Owner Participant pursuant to, and to
the extent provided for, under Sections 8 and 9 hereof for Taxes and
Expenses resulting from any "prohibited transaction", within the meaning of
Section 406 of ERISA or Section 4975(c)(1) of the Code, occurring with
respect to the placement of the Refinancing loan certificates with, or the
holding of the Refinancing loan certificates by, any ERISA Plan with
respect to which the Owner Participant is a party in interest, within the
meaning of Section 3(14) of ERISA, or a disqualified person, within the
meaning of Section 4975 of the Code, provided, however, that if Lessee
shall fail to obtain either of the representations set forth in clause (A)
or (B) of this paragraph (viii), such indemnity shall not be subject to the
exception set forth under Sections 8.01(b)(xii)(A) and 9.01(b)(ix)(A)
hereof; and
Section 15.02. Reoptimization. (a) If a Change in Tax Rate occurs
prior to the end of the Basic Term, then, subject to the terms and conditions
of this Section 15.02 and Section 3.04 of the Lease, the Owner Participant
may, upon 30 days' prior notice to the Lessee, the Indenture Trustee, the
Owner Trustee and the Holders, elect to modify the schedule of payments of
principal of the certificates issued ("Refinancing Certificates") in
connection with any Refinancing effected after the Refunding Date using
private debt (not including debt issued pursuant to an exemption from
registration under the Securities Act relying on Rule 144A promulgated
thereunder but otherwise marketed in a manner substantially similar to
securities registered under the Securities Act, and not including debt issued
in connection with any offering of securities registered under the Securities
Act) due on each remaining Rent Payment Date on or commencing on the Rent
Payment Date next succeeding the date mutually agreed to by the Owner
Participant, the Lessee and the Indenture Trustee on which the Owner
Participant shall make such modification (the "Reoptimization Date"). Promptly
after making such modification, the Owner Participant shall furnish each party
hereto written notice of the amounts so recalculated.
(b) Adjustments to Refinancing Certificates. On the Reoptimization
Date, subject to the satisfaction on or before the Reoptimization Date of the
conditions set forth in Section 15.02(c), the Owner Trustee will issue and
deliver and the Indenture Trustee will authenticate, and each holder of a
Refinancing Certificate will accept delivery of, a new Refinancing Certificate
or Refinancing Certificates (in replacement of each Refinancing Certificate
then held by such holder, which Refinancing Certificates shall be surrendered
to the Indenture Trustee for cancellation) containing such changed principal
installments (expressed as a percentage of the original principal amount of
such Refinancing Certificate) as shall have been recalculated by the Owner
Participant, but in the same principal amount as, and containing terms
identical to, except as otherwise contemplated by Section 15.02(d) hereof, the
Refinancing Certificates originally issued in connection with the Operative
Agreements.
(c) Conditions to the Obligations of the Holders of the Refinancing
Certificates on the Reoptimization Date. The obligation of each holder of a
Refinancing Certificate to accept delivery of a new Refinancing Certificate on
the Reoptimization Date, and to surrender on such Reoptimization Date any
Refinancing Certificate then held by it, is subject to the following
conditions precedent having been satisfied on or before the Reoptimization
Date:
(i) the requirements of Section 15.02(d) hereof shall have been
satisfied;
(ii)the following documents, in form and substance satisfactory to
such Holder, shall have been duly authorized, executed and delivered by the
party or parties thereto and shall be in full force and effect: (A) if the
payments of Basic Rent, Stipulated Loss Values and Termination Values with
respect to the Term have been changed, an amendment to the Lease, dated the
Reoptimization Date, (B) an amendment to the Indenture setting forth any
changed repayment schedule to the Refinancing Certificates, dated the
Reoptimization Date and (C) replacement Refinancing Certificates; and
(iii)in connection with any Reoptimization the Owner Participant
shall pay or agree to pay all reasonable costs and expenses incurred by the
Lessee, the Owner Trustee, the Indenture Trustee and each Holder of a
Refinancing Certificate (including, without limitation, reasonable legal
fees and expenses) in connection with any such reoptimization.
(d) Payment Schedules. Except as otherwise provided in this Section
15.02 as long as the Refinancing Certificates remain outstanding, the payment
schedules for the Refinancing Certificates shall not be modified.
ARTICLE 16
[INTENTIONALLY LEFT BLANK]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes. It is hereby agreed
between the Owner Participant and the Lessee (but the Lessee makes no
representation to such effect) that it is the intent of the parties for
Federal, state, local and foreign income tax purposes that the Owner
Participant will be treated as the owner of the Aircraft and the Lessee will
be treated as the lessee of the Aircraft.
Section 17.02. [Intentionally Left Blank.]
Section 17.03. Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
Section 17.04. No Oral Modifications. Neither this Agreement nor
any of its terms may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to the Owner Trustee and the Indenture Trustee. A copy of each such
termination, amendment, supplement, waiver or modification shall also be
delivered to each other party to this Agreement other than the Original Loan
Participants.
The consent of the Pass Through Trustee, in its capacity as a party
to this Agreement and not as a Holder, shall not be required to modify, amend
or supplement this Agreement or to give any consent, waiver, authorization or
approval with respect to this Agreement under the circumstances in which the
consent of the Indenture Trustee would not be required for such modification,
amendment, supplement, consent, waiver or approval in accordance with Section
8.01(b) of the Indenture, provided that the Pass Through Trustee shall be
entitled to receive any Officer's Certificate (as defined in the Pass Through
Agreement) or Opinion of Counsel (as defined in the Pass Through Agreement)
necessary, in its sole discretion, to establish that the Indenture Trustee's
consent would not be required under such circumstances.
Section 17.05. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Owner Participant and its successors and
permitted assigns, the Owner Trustee and its successors as Owner Trustee (and
any additional owner trustee appointed) under the Trust Agreement, the
Indenture Trustee and its successors as Indenture Trustee (and any additional
indenture trustee appointed) under the Indenture and the Pass Through Trustee
and its successors as Pass Through Trustee (and any additional pass through
trustee appointed).
Section 17.07. Concerning the Owner Trustee, Pass Through Trustee
and Indenture Trustee. Each of First Security Bank of Utah, National
Association, Nationsbank, National Association (Carolinas) and NationsBank
of Georgia, National Association is entering into this Agreement solely in
their respective capacities (except to the extent otherwise expressly
indicated), in the case of First Security Bank of Utah, National
Association, not in its individual capacity but solely as trustee under the
Trust Agreement, in the case of Nationsbank, National Association
(Carolinas), not in its individual capacity but solely as pass through
trustee under the Pass Through Agreement and in the case of NationsBank of
Georgia, National Association, as indenture trustee under the Indenture,
and except as otherwise expressly provided in this Agreement or in the
Lease, the Indenture, the Pass Through Agreement or the Trust Agreement,
neither First Security Bank of Utah, National Association, Nationsbank,
National Association (Carolinas), nor NationsBank of Georgia, National
Association, shall be personally liable for or on account of its
statements, representations, warranties, covenants or obligations under
this Agreement; provided, however, that each of First Security Bank of
Utah, National Association, Nationsbank, National Association (Carolinas),
and NationsBank of Georgia, National Association accepts the benefits
running to it under this Agreement, and each agrees that (except as
otherwise expressly provided in this Agreement or any other Operative
Agreement to which it is a party) it shall be liable in its individual
capacity for (a) its own gross negligence or willful misconduct (whether in
its capacity as trustee or in its individual capacity), (b) any breach of
representations and warranties or any breach of covenants made in its
individual capacity pursuant to or in connection with this Agreement or the
other Operative Agreements to which it is a party, (c) any breach, in the
case of the Owner Trustee, of its covenants made in its individual capacity
in Sections 3.05 and 3.08 of the Indenture, (d) the failure to use ordinary
care in receiving, handling and disbursing funds, (e) in the case of the
Owner Trustee, Lessor's Liens attributable to it in its individual
capacity, (f) in the case of the Indenture Trustee, Indenture Trustee's
Liens and (g) taxes, fees or other charges on, or based on, or measured by,
any fees, commissions or compensation received by it in connection with the
transactions contemplated by the Operative Agreements.
Section 17.08. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17.09. Public Release of Information. Subject to applicable
legal requirements (including, without limitation, securities laws
requirements, other regulatory requirements and other legally compelled
disclosures), so long as there shall not have occurred an Event of Default or
Indenture Event of Default, each party shall in each instance obtain the prior
written approval of each other party concerning the exact text and timing of
news releases, articles and other information releases to the public media
concerning any Operative Agreements.
Section 17.10. Certain Limitations on Reorganization. The Indenture
Trustee agrees that, if (i) the Lessor's Estate or the trust created by the
Trust Agreement becomes a debtor subject to the reorganization provisions of
the Bankruptcy Code or any other applicable bankruptcy or insolvency statutes,
(ii) pursuant to such reorganization provision, the Owner Participant is held
to have recourse liability to the debtor or the trustee of the debtor directly
or indirectly on account of any amount payable as principal, interest or
premium on the Certificates, and (iii) the Indenture Trustee actually receives
any Recourse Amount which reflects any payment by the Owner Participant on
account of (ii) above, then the Indenture Trustee, as the case may be, shall
promptly refund to the Owner Participant such Recourse Amount. For purposes
of this Section 17.10, "Recourse Amount" means the amount by which the portion
of such payment by the Owner Participant on account of clause (ii) above
received by the Indenture Trustee exceeds the amount which would have been
received by the Indenture Trustee if the Owner Participant had not become
subject to the recourse liability referred to in (ii) above. Nothing
contained in this Section shall prevent the Indenture Trustee from enforcing
any individual obligation (and retaining the proceeds thereof) of the Owner
Participant under this Agreement or any other Operative Agreement to the
extent herein or therein provided, for which the Owner Participant has
expressly agreed by the terms of this Agreement to accept individual
responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS AND IS BEING DELIVERED IN NEW
YORK.
Section 17.12. Section 1110 Compliance. The Owner Participant, the
Indenture Trustee and the Lessee agree that the transactions contemplated by
the Operative Agreements are expressly intended to be, shall be and should be
construed so as to be entitled to the benefits and protection of Section 1110
of the Bankruptcy Code.
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality. Each party hereto agrees (on behalf
of itself and each of its Affiliates, agents, directors, officers, employees
and representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature, any non-public information supplied to it pursuant to this
Agreement which is identified by the Person supplying the same as being
confidential at the time the same is delivered to such party, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for any of the parties hereto, (iii) to bank examiners, auditors,
insurance regulators, accountants or similar regulatory authorities, (iv) in
connection with any litigation to which any one or more of the parties hereto
is a party relating to the transactions contemplated hereby or by any of the
Operative Agreements, (v) to a subsidiary or Affiliate of the parties hereto,
(vi) to any assignee or participant (or prospective assignee or participant)
so long as such assignee or participant (or prospective assignee or
participant) first executes and delivers to the respective party making such
assignment or participation an agreement in writing to be bound by the
provisions of this Section 18.01 or (vii) in the case of the Owner Participant
or the Owner Trustee (in its individual or trust capacity) to the Owner
Trustee (in its individual or trust capacity) or to the Owner Participant, as
the case may be.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers and
this Participation Agreement shall be effective this ___ day of August,
1995.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name:Robert D. Henning
Title:Assistant Treasurer and Managing
Director - Structured Finance
OWNER PARTICIPANT:
SHAWMUT BANK, NATIONAL ASSOCIATION
By:__________________________________________
Name:
Title:
OWNER TRUSTEE:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual
capacity except as otherwise
expressly provided herein,
but solely as Owner Trustee
By:__________________________________________
Name:
Title:
INDENTURE TRUSTEE:
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION,
not in its individual
capacity except as otherwise
expressly provided herein,
but solely as Indenture Trustee
By:__________________________________________
Name:
Title:
PASS THROUGH TRUSTEE:
NATIONSBANK, NATIONAL ASSOCIATION
(CAROLINAS)
not in its individual
capacity except as otherwise
expressly provided herein,
but solely as Pass Through Trustee
By:__________________________________________
Name:
Title:
ORIGINAL LOAN PARTICIPANTS:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as a Loan Participant and as Agent
By:__________________________________________
Name:
Title:
BANK OF AMERICA NT & SA
By:__________________________________________
Name:
Title:
CIBC INC.
By:__________________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:__________________________________________
Name:
Title:
SCHEDULE I
CERTIFICATE INFORMATION
1. Federal Express Corporation Pass Through Trust, 1995-A1
Federal Express Corporation Trust No. N659FE
Interest Rate: 7.63%
Maturity: January 5, 2014
Principal Amount: $54,974,000
2. Federal Express Corporation Pass Through Trust, 1995-A2
Federal Express Corporation Trust No. N659FE
Interest Rate: 8.06%
Maturity: January 5, 2015
Principal Amount: $6,316,000
SCHEDULE II
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Act; Federal Aviation Act. Title 49 of the United States Code
(which, among other things, recodified the Federal Aviation Act of 1958, as
amended to the time of such recodification), as amended and in effect on the
date of the Lease or as subsequently amended, or any successor or substituted
legislation at the time in effect and applicable, and the regulations
promulgated pursuant thereto.
Additional Insureds. As defined in Article 13 of the Lease.
Aeronautics Authority or FAA. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment received or deemed to
have been received by a Person (the "Original Payment") shall be supplemented
by a further payment to such Person so that the sum of the two payments shall
be equal to the Original Payment, after taking into account (x) all Taxes that
would result from the receipt or accrual of such payments and (y) any
reduction in Taxes that would result from such increased Taxes. In the case
of amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is
at all times subject to Federal income tax at the maximum marginal rate
generally applicable to corporations from time to time and actual state, local
and foreign income taxes.
Agent. The Chase Manhattan Bank (National Association) and its
successors and permitted assigns as Agent for the Original Loan Participants
pursuant to Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Act) as to which there is in force a permit granted under
Section 41302 of the Act.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by
the Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe (or any permitted substitute airframe)
together with the two Engines (or any Replacement Engine or Engines) whether
or not any of such initial or Replacement Engines may from time to time be
installed on such Airframe or may be installed on any other airframe or on any
other aircraft, including any aircraft substituted pursuant to Section 11.03
of the Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) leased by the Lessor to the
Lessee pursuant to the Lease and the initial Lease Supplement and having
the United States FAA Registration Number and manufacturer's serial number
specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any replacement airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement, dated as of August 1, 1995.
Ancillary Agreement. Any written agreement of the Lessee to which
the Lessor is a party or to which the Lessor has consented in writing
entered into on the Delivery Date or the Refunding Date or any date
thereafter in connection with the transactions contemplated by the
Operative Agreements, as such agreement may be amended and supplemented
from time to time with the consent of the Lessor and delivered to the Owner
Trustee, the Indenture Trustee, the Pass Through Trustee and the Owner
Participant.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with a copy of such report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
July 1, 1995, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended,
and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or with the giving of notice or lapse of
time or both would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft throughout
the Basic Term pursuant to Section 3.02 of the Lease, adjusted pursuant to
Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on January 5, 2020, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized
or required to close in New York, New York and Memphis, Tennessee, and so
long as the Lien of the Indenture is in effect, in Atlanta, Georgia,
Columbia, South Carolina and, thereafter, in Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N659FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Act, or any analogous part of any
successor or substituted legislation or regulation at the time in effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, references to the Code shall
mean the Internal Revenue Code of 1986, as amended from time to time.
Commencement Date. January 5, 1996.
Consent and Agreement. The Consent and Agreement dated as of July 1,
1995 executed by the Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Department. The principal office of the Owner
Trustee located at 79 South Main Street, Salt Lake City, Utah 84111 or such
other office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified to the Lessee,
the Indenture Trustee and the Owner Participant.
Corporate Trust Office. The principal office of the Indenture
Trustee located at 600 Peachtree Street, N.E., Suite 900, Atlanta, Georgia
30308, Attention: Corporate Trust Lease Administration or such other office at
which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to the
Lessee, the Owner Participant and the Owner Trustee.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. July 31, 1995.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by its manufacturer's serial number in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease,
together with all Parts related thereto. Except as otherwise provided, at
such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of July 1, 1995,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N659FE), dated as of July 1, 1995 between the
Lessor and the Lessee, as the same may be amended, modified or supplemented
from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. Has the meaning set forth in Section 7.06 of the
Participation Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on
the date on which an insurance settlement with respect to such property on
the basis of a total loss or constructive or compromised total loss shall
occur) or (B) by the Government for a period extending beyond the Term,
provided that no Event of Loss shall be deemed to have occurred, and the
Term shall be extended automatically for a period of six months (or the
date of return of the Aircraft, if shorter, so long as the Lessor receives
at least six months notice of such date of return) beyond the end of the
Term in the event that the Aircraft, the Airframe or any Engine as of the
end of the Lease Term is requisitioned by the Government pursuant to an
activation as part of the Civil Reserve Air Fleet Program described in
Section 7.02(a)(iv) of the Lease; and (iv) as a result of any law, rule,
regulation, order or other action by the Aeronautics Authority or other
governmental body having jurisdiction, the use of the Aircraft or Airframe
in the normal course of air transportation of cargo shall have been
prohibited by virtue of a condition affecting all Airbus A300F-600 series
aircraft equipped with engines of the same make and model as the Engines
for a period of twelve (12) consecutive months, unless the Lessee, prior to
the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of twenty-
four (24) consecutive months or until the end of the Term, if earlier. The
date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of
diligent efforts to recover such property, if earlier); (t) the 61st day
following the date of any destruction, damage beyond economic repair or
rendition of such property permanently unfit for normal use; (u) the date
of any insurance settlement on the basis of a total loss or constructive or
compromised total loss; (v) the date of any condemnation, confiscation,
seizure or requisition of title of such property; (w) the 181st day
following condemnation, confiscation, seizure or requisition for use of
such property by a foreign government referred to in clause (iii)(2)(A)
above (or the end of the Term or the date of any insurance settlement
described therein, if earlier than such 181st day); (x) the last day of
the Term in the case of requisition for use of such property by the
Government; (y) the last day of the 12 month or 24 month period, referred
to in clause (iv) above (or if earlier, the end of the Term or abandonment
of the Lessee's efforts to restore the normal use of the Aircraft). An
Event of Loss with respect to the Aircraft shall be deemed to have occurred
if any Event of Loss occurs with respect to the Airframe. If an Event of
Loss described in any of clauses (i) (A), (iii) or (iv) above shall occur,
Lessor may elect, within 30 days following the date upon which such Event
of Loss is deemed to have occurred, to waive such Event of Loss and the
consequences thereof.
Excepted Payments. Collectively, (i) indemnity or other payments
(and interest thereon to the extent provided in the Operative Agreements)
paid or payable by the Lessee in respect of the Owner Participant, the
Owner Trustee in its individual capacity or any of their respective
successors, permitted assigns, directors, officers, employees, servants and
agents or Affiliates, pursuant to the Participation Agreement or any
indemnity hereafter granted to the Owner Participant or the Owner Trustee
in its individual capacity pursuant to the Lease or the Participation
Agreement, (ii) proceeds of public liability insurance (or government
indemnities in lieu thereof) in respect of the Aircraft payable as a result
of insurance claims paid for the benefit of, or losses suffered by, the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or by the Owner Participant, or their respective successors,
permitted assigns or Affiliates, (iii) proceeds of insurance maintained
with respect to the Aircraft by the Owner Participant (whether directly or
through the Owner Trustee) maintained in accordance with Section 13.05 of
the Lease but not required under Section 13 of the Lease, (iv) payments of
Supplemental Rent by the Lessee in respect of any amounts payable under the
Tax Indemnity Agreement, (v) payments constituting increases in Basic Rent
attributable to payments arising pursuant to Section 5 of the Tax Indemnity
Agreement and (vi) any right to demand, collect or otherwise receive and
enforce the payment of any amount described in clauses (i) through (v)
above.
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
Fair Market Renewal Term. A term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the second
paragraph of Section 4.01(a) thereof and with respect to which the
conditions set forth in the second paragraph of Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease the Aircraft. In such determination, it shall be assumed that the
Aircraft is in the condition required under the Lease in the case of return of
the Aircraft pursuant to Article 12 of the Lease. Fair Market Rental shall be
determined in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal
in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion
to buy and an informed and willing seller unaffiliated with such purchaser
and under no compulsion to sell, assuming that the Aircraft (or other
property) is unencumbered by the Lease. Unless otherwise provided in the
applicable provisions of any Operative Agreement, in such determination it
shall be assumed that the Aircraft is in the condition required under the
Lease in the case of return of the Aircraft pursuant to Article 12 of the
Lease; provided that in connection with any determination pursuant to or
for the purposes of Article 17 of the Lease, the Aircraft shall be
appraised on an "as is, where is" basis. Fair Market Value shall be
determined in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FSBU. First Security Bank of Utah, National Association, a national
banking association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between
the Engine Manufacturer and the Lessee related to the purchase by the
Lessee of the Engines as originally executed or as modified, amended or
supplemented in accordance with the terms thereof, but only insofar as the
General Terms Agreement relates to the Engines, to the extent assigned to
the Owner Trustee pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSBU, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, any Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N659FE), dated as of July 1, 1995, as amended
and restated as of August 1, 1995, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement,
and as said Indenture may from time to time be further supplemented or
amended, including any amendment or supplement thereto entered into from time
to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N659FE) dated July 31, 1995, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. NationsBank of Georgia, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes or Expenses
imposed against the Indenture Trustee which are not required to be indemnified
against by the Lessee pursuant to the Participation Agreement by reason of
Section 8.01(b) or 9.01(b) thereof.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N659FE) dated as of July 1, 1995, as amended and restated as of August 1,
1995, entered into by the Lessor and the Lessee concurrently with the
execution and delivery of the Indenture, as said Lease may from time to
time be supplemented or amended, or its terms waived or modified, to the
extent permitted by, and in accordance with, the terms of the Indenture,
including, without limitation, supplementation by one or more Lease
Supplements entered into pursuant to the applicable provisions of the
Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N659FE) dated July 31, 1995, as such Lease Supplement
shall be amended or supplemented from time to time and any other supplement to
the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessor. First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), the GTA, the Engine Warranty Assignment, the Engine Consent, any
warranty with respect to the Airframe and the Engines, all amounts of Basic
Rent and Supplemental Rent, including without limitation, insurance proceeds
(other than insurance proceeds payable to or for the benefit of the Owner
Trustee in its individual capacity, the Owner Participant or the Indenture
Trustee) and requisition, indemnity or other payments of any kind for or with
respect to the Aircraft (except amounts owing to the Owner Participant, to the
Indenture Trustee, to the Owner Trustee in its individual capacity, or to any
of their respective directors, officers, employees and agents pursuant to
Articles 8 and 9 of the Participation Agreement). Notwithstanding the
foregoing, "Lessor's Estate" shall (i) not include any Excepted Payment and
(ii) include all property intended to be subjected to the Indenture by the
Granting Clause thereof.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, or the Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, (ii)
acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof and which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Articles 10 or 11 of
the Lease and other than a transfer pursuant to the exercise of the remedies
set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to an excess of (i) the
present values of all remaining scheduled payments of such principal amount or
portion thereof and interest thereon (excluding interest accrued from the
immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate per semi-annual period equal to the Debt Rate.
Non-U.S. Person. Any Person other than (i) a citizen or resident of
the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent and
the Tax Indemnity Agreement, each as amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N659FE) dated as of July 1,
1995 between the Owner Trustee and the Indenture Trustee, which together with
the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N659FE) dated July 31, 1995 attached thereto was
recorded as one instrument by the FAA on August 3, 1995 and assigned
Conveyance Number 2A267311.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N659FE) dated as of July 1, 1995 between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N659FE) dated July 31, 1995 attached thereto was
recorded as one instrument by the FAA on August 7, 1995 and assigned
Conveyance Number HH009756.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the first Refinancing after the Delivery
Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N659FE) among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of June 1, 1995.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N659FE) between the Lessee and the
Owner Participant as it was originally executed as of July 1, 1995.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N659FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of June 1, 1995 and filed with the
FAA on July 31, 1995.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Amount. The amount described in Section 2.03 of
the Participation Agreement and set forth on Schedule II to the Lease.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance
with Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSBU, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term and
the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages and the EBO Price, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N659FE), dated as of June 1, 1995, as
amended and restated as of August 1, 1995, among the Lessee, the Original
Loan Participants, the Owner Trustee not in its individual capacity except
as otherwise expressly provided therein, but solely as trustee, the Owner
Participant, the Pass Through Trustee, not in its individual capacity
except as otherwise expressly provided therein, but solely as pass through
trustee and the Indenture Trustee, not in its individual capacity except as
otherwise expressly stated therein, but solely as indenture trustee, as
amended, modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever
nature (other than complete Engines or engines) which may from time to time
be incorporated or installed in or attached to the Airframe or any Engine
or, prior to replacement thereof in accordance with the Lease, which may be
removed therefrom.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
August 1, 1995 between the Lessee and the Pass Through Trustee, as such
Pass Through Agreement may be modified, supplemented or amended from time
to time in accordance with the provisions thereof.
Pass Through Certificates. Any of the 1995 Pass Through
Certificates, Series A1 or 1995 Pass Through Certificates, Series A2, in
each case as issued by the related Pass Through Trust; and "Pass Through
Certificates" means all of the Pass Through Certificates issued by each of
the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1995-A1
or Federal Express Pass Through Trust, 1995-A2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. NationsBank, National Association (Carolinas),
a national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 5 and July 5 commencing January 5, 1996.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Premium Termination Date. With respect to the Certificates having a
Maturity in 2014, February 22, 2007, and with respect to the Certificates
having a Maturity in 2015, May 4, 2015.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of
the Indenture.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase
Agreement, dated as of July 3, 1991 between AVSA and the Lessee, including
all exhibits, appendices and letter agreements attached thereto as
originally executed or as modified, amended or supplemented in accordance
with the terms thereof, but only to the extent that the foregoing relates
to the Aircraft and to the extent assigned pursuant to the Purchase
Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N659FE), dated as of July 1, 1995
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 21 for January 5
Payment Dates and June 20 for July 5 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least ten Business Days prior
to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of
the products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the
payment due on the Maturity of such Certificate, by (ii) the number of
years (calculated to the nearest one-twelfth) which will elapse between
such determination date, and the date on which such payment is scheduled to
be made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 5 and July 5 commencing January 5,
1996.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) manufactured after October 22,
1994 of the same or of equal or greater value, remaining useful life and
utility as the Engine being replaced, together with all Parts relating to such
engine; provided, however, that if such replacement engine is not a General
Electric CF6-80C2-A5F engine, such replacement engine must then be commonly
used in the commercial aviation industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement, in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Department or Corporate
Trust Office (in the Corporate Trust Lease Administration Department), as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, with respect to the Owner Participant, the president or
any vice president with direct responsibility for the transactions
contemplated by the Operative Agreements, and with respect to any other party,
any corporate officer or (except in the case of the Owner Participant) other
employee of a party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Corporation.
Securities Act. The Securities Act of 1933, as amended.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
Series Supplement. The Series Supplement 1995-A1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1995-A2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both of such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value shall
be, under any circumstances and in any event, an amount, together with so much
of the arrears portion of Basic Rent due and owing through the date of payment
of Stipulated Loss Value as does not constitute an Excepted Payment, at least
sufficient to pay in full as of such date of payment the aggregate unpaid
principal amount of and accrued interest on the Certificates outstanding on
such date of payment. Subject to the immediately preceding sentence, it is
understood and agreed that the amounts set forth on Schedule III of the Lease,
for dates other than Rent Payment Dates on which arrears Basic Rent is due,
fully reflect appropriate Basic Rent accruals and credits of unearned Basic
Rent and, accordingly, no further accrual or credit shall be required whenever
Stipulated Loss Value is to be calculated with reference to any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant or
others, including, without limitation, payments of Stipulated Loss Value, EBO
Price and amounts calculated by reference to Termination Value and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after November 2, 2000 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 5, 2010 or January 5, 2012, (ii) Section 4.02(a)(D) or (E) of the
Lease, a Rent Payment Date that is on or after the fifth anniversary of the
Commencement Date and (iii) Section 4.02(a)(F) of the Lease, July 5, 2014.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to
be calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N659FE), dated as of June 1, 1995 as amended and restated as of
August 1, 1995, between the Owner Participant and the Owner Trustee in its
individual capacity, as from time to time modified, amended or supplemented
pursuant to its applicable provisions and in accordance with the Operative
Agreements.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. The several Underwriters named in the Underwriting
Agreement.
Underwriting Agreement. The Underwriting Agreement dated August 16,
1995 among the Lessee, Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Chase Securities, Inc.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Federal Aviation Act, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Federal Aviation
Act and Part 121 of the regulations under such Act, for aircraft capable of
carrying ten (10) or more individuals or 6,000 pounds or more of cargo, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provision thereof or in absence thereof.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Luxembourg
Austria Malaysia
Belgium Mexico
Canada Netherlands
Denmark New Zealand
Finland Norway
France Philippines
Germany Singapore
Iceland Sweden
Ireland Switzerland
Japan United Kingdom
EXHIBIT A(1)(a)
[Letterhead of Federal Express]
[Refunding Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N659FE
Ladies and Gentlemen:
I am the Vice President - Law of Federal Express Corporation, a
Delaware corporation ("Federal"), and am familiar with the transactions
contemplated by the Participation Agreement (Federal Express Corporation Trust
No. N659FE), dated as of June 1, 1995, as amended and restated as of August
1, 1995 (the "Participation Agreement"), among Federal, as Lessee, Shawmut
Bank, National Association, as Owner Participant, The Chase Manhattan Bank
(National Association), Bank of America NT & SA, CIBC Inc. and The First
National Bank of Chicago, as Original Loan Participants, First Security
Bank of Utah, National Association, a national banking association, not in
its individual capacity, except as otherwise stated, but solely as Owner
Trustee under the Trust Agreement, NationsBank of Georgia, National
Association, a national banking association, not in its individual
capacity, except as otherwise stated, but solely as Indenture Trustee under
the Indenture and NationsBank, National Association (Carolinas), as Pass
Through Trustee, relating to the Aircraft. This opinion is being delivered
pursuant to Section 4.01(l)(i) of the Participation Agreement. Capitalized
terms not otherwise defined herein have the meaning assigned thereto in the
Participation Agreement.
The Participation Agreement provides, among other things, for
the refinancing in full of the Original Loan Certificates evidencing the
Original Loan Participants' participation in the payment of the Purchase Price
of one Airbus A300F4-605R aircraft (the "Aircraft"), using the proceeds from
the public offering of the Pass Through Certificates. Two Series of Pass
Through Certificates will be issued by two Pass Through Trusts formed to
acquire, among other securities, the Certificates bearing a particular
interest rate and having a particular Maturity that will be issued under the
Trust Indenture and Security Agreement (Federal Express Corporation Trust No.
N659FE) dated as of July 1, 1995, as amended and restated as of August 1,
1995, as supplemented by the related Indenture and Security Agreement
Supplement ("Indenture"), between the Owner Trustee and the Indenture Trustee.
In connection with the opinions expressed below, I have
examined or caused to be examined by attorneys under my supervision, the
Operative Agreements. We have relied upon originals or copies, certified
or otherwise identified to our satisfaction, of such corporate records,
documents and other instruments as in our judgment are relevant to
rendering the opinions expressed below. As to any facts material to the
opinions expressed below (other than any thereof relating to Federal), we
have relied upon the representations and warranties made in the Operative
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of
all documents submitted to us as originals and the conformity with the
originals of all documents submitted to us as copies. We have also assumed
that each of the parties to each of the Operative Agreements, other than
Federal, has full power, authority and legal right to enter into such
Operative Agreements and that each such Operative Agreement has been duly
authorized, executed and delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, is a
"citizen of the United States" within the meaning of Section 40102(a)(15) of
Title 49 of the United States Code (formerly Section 101(16) of the Federal
Aviation Act of 1958, as amended to the date of recodification (the "Act")),
and has or had, on the date of execution thereof, the corporate power and
authority to carry on its business as currently conducted and to enter into
and perform its obligations under the Original Agreements and the Operative
Agreements to which it is a party. Federal is duly qualified to do business
and is in good standing in the State of Tennessee and each other state of the
United States in which its operations or the nature of its business requires
Federal to so qualify, except where the failure to so qualify would not have a
material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Original Agreements and the Operative
Agreements to which Federal is a party has or had, on the date of execution
thereof, been duly authorized, executed and delivered by Federal and together
constitute the legal, valid and binding obligations of Federal enforceable
against Federal in accordance with its and their terms.
4. Neither the execution and delivery by Federal of the
Original Agreements and the Operative Agreements to which Federal is a party,
nor the consummation of any of the transactions by Federal contemplated
thereby, nor the performance of the obligations thereunder by Federal, did at
the time of execution and delivery, or does presently (a) require any
stockholder approval or violate the certificate of incorporation or by-laws of
Federal or (b) conflict with or contravene the provisions of, or constitutes a
default under, or result in the creation of any Lien (other than Liens
permitted under Section 6.01(a) of the Lease) upon the property of Federal
under any law, governmental rule or regulation, or the charter or bylaws of
Federal or any order, writ, injunction or decree of any court or governmental
authority against Federal or by which any of its properties may be bound or
any indenture, mortgage, contract or other agreement known to me to which
Federal is a party or by which it may be bound or, to my knowledge, any
judgement or order of the State of Tennessee or the United States of America
applicable to or binding on Federal or require the approval or consent of any
trustee or the holders of any indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the
Original Agreements and the Operative Agreements to which it is a party, nor
the consummation of any of the transactions by Federal contemplated thereby,
nor the performance of the obligations thereunder by Federal, did or does, as
the case may be, require the consent or approval of, the giving of notice to,
or (except as described or contemplated in the Participation Agreement and the
Lease, all of which are required to be performed on or prior to the Refunding
Date and which shall have been accomplished on or prior to the Refunding
Date), the registration with, or the taking of any other action in respect of,
the FAA, the Securities and Exchange Commission or any other authority or
agency of the federal government or of the State of Tennessee other than (a)
the registration of the issuance and sale of the Pass Through Certificates
under the Securities Act, (b) compliance with the securities laws of each
applicable state, and (c) the filing of the Indenture, the Lease and the Trust
Agreement with the FAA.
6. There are no pending, or to my knowledge, threatened
actions, suits, investigations or proceedings before or by any court or
administrative agency which individually (or in the aggregate in the case of
any group of related lawsuits) which (A) involve the Aircraft, (B) except for
the matters described under "Legal Proceedings" in Federal's Annual Report on
Form 10-K for the fiscal year ended May 31, 1995, as to which I can express
no opinion at this time concerning Federal's liability (if any) or the effect
of any adverse determination upon the consolidated financial condition,
business or operations of Federal, if adversely determined, would materially
and adversely affect the consolidated financial condition, business or
operations of the Lessee, or (C) if adversely determined would adversely
affect the ability of the Lessee to perform its obligations under the Original
Agreements or the Operative Agreements.
7. Except for the filing and, where appropriate, recording
pursuant to the Act of the Indenture, the Lease, the Trust Agreement, the
filing of the financing statements referred to in Section 4.01(f) of the
Participation Agreement and the taking of possession by the Indenture Trustee
of the original counterpart of the Lease and maintaining possession of the
original counterpart of the Lease Supplement delivered on the Delivery Date,
no further action, including any filing or recording of any document is
necessary or advisable in order to establish and perfect the Owner Trustee's
title to and interest in the Aircraft as against Federal and any third
parties, or to perfect the first security interests in and mortgage Lien on
the Trust Indenture Estate in favor of the Indenture Trustee in each case with
respect to such portion of the Aircraft as is covered by the recording system
established by the Act.
8. Federal is a duly certificated "air carrier" within the
meaning of the Act, and a holder of a certificate under Sections 41102(a) and
41103 of the Act, and an "air carrier operating certificate" issued under
Chapter 447 of the Act for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, and each such certificate is in
full force and effect.
9. Good and marketable title to the Aircraft was,
immediately before delivery of AVSA's FAA Bill of Sale and AVSA's Warranty
Bill of Sale and therefor to the Owner Trustee, vested in Federal free and
clear of all Liens and good and marketable title to the Aircraft was, on
the Delivery Date, duly conveyed by Federal to the Owner Trustee free and
clear of all Liens. Pursuant to the Original Participation Agreement the
Aircraft was duly delivered to the Owner Trustee. Federal, as Lessee, duly
accepted the Aircraft under the Original Lease and the Lease Supplement and
the Term commenced.
10. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in
the State of Tennessee) are located at 2005 Corporate Avenue, Memphis,
Shelby County, Tennessee.
11. Federal is not, and is not directly or indirectly
controlled by or acting on behalf of any Person which is, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in Paragraph 3 above as to the
enforceability of the Original Agreements and the Operative Agreements to
which Federal is a party are based upon the assumption for purposes of such
opinions and without independent analysis that, notwithstanding the respective
choice of laws clauses in the Original Agreements and the Operative
Agreements, the governing law with respect to each of the Original Agreements
and the Operative Agreements is identical in all relevant respects to the law
of the State of Tennessee. Insofar as the foregoing opinion relates to the
enforceability of any instrument, such enforceability is subject to applicable
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally (whether such enforceability is considered in a
proceeding in equity or at law). The enforceability of the remedies provided
under the Lease may also be limited by applicable laws which may affect the
remedies provided therein but which do not in my opinion affect the
validity of the Lease or make such remedies inadequate for the practical
realization of the benefits intended to be provided thereby.
I do not express any opinion as to matters governed by any law
other than the Federal laws of the United States of America, the corporation
law of the State of Delaware and the laws of the State of Tennessee.
As to the matters referred to in paragraphs 7 and 9 above, I
have relied on the opinion of Daugherty, Fowler & Peregrin of even date
herewith, to the extent such matters are addressed in such counsel's opinion
and subject to the assumptions and qualifications expressed therein.
This opinion is delivered to you solely for your use in
connection with the transactions described herein, and may not be used for any
other purpose, and may not be relied upon by any other person, without my
prior written consent.
I rendered an opinion dated July 31, 1995 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. I hereby consent
and agree that the addressees hereto who were not addressees to the
Delivery Date Opinion may rely on the Delivery Date Opinion as fully and
with the same force and effect as if such addressees were originally named
therein on the date of the Delivery Date Opinion.
Very truly yours,
George W. Hearn
SCHEDULE A
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
NationsBank of Georgia, National Association
Corporate Trust Lease Administration
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Pass Through Trustee
NationsBank, National Association
1301 Gervis Street
4th Floor
Columbia, South Carolina 29201
Owner Participant
Shawmut Bank, National Association
One Federal Street
Boston, Massachusetts 02211
Underwriters
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Chase Securities, Inc.
c/o Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower
New York, New York 10281
Original Loan Participants
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
The First National Bank of Chicago
Transportation Division
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
EXHIBIT A(1)(b)
[Letterhead of Davis Polk & Wardwell]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N659FE
Ladies and Gentlemen:
We have acted as special counsel for Federal Express
Corporation, a Delaware corporation ("Federal Express"), in connection with
the transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N659FE), dated as of June 1, 1995, as amended and
restated as of August 1, 1995 (the "Participation Agreement"), among Federal
Express, as Lessee, Shawmut Bank, National Association, as Owner Participant,
The Chase Manhattan Bank (National Association), Bank of America NT & SA, CIBC
Inc. and The First National Bank of Chicago, as the Original Loan
Participants, First Security Bank of Utah, National Association, a national
banking association, not in its individual capacity but solely as Owner
Trustee under the Trust Agreement, NationsBank of Georgia, National
Association, a national banking association, not in its individual capacity,
except as otherwise stated, but solely as Indenture Trustee under the
Indenture, and NationsBank, National Association (Carolinas), as Pass Through
Trustee, relating to the Aircraft. This opinion is being delivered pursuant
to Section 4.01(l)(viii) of the Participation Agreement. Capitalized terms
not otherwise defined herein have the meanings assigned thereto in the
Participation Agreement.
Pursuant to the Original Participation Agreement, the Owner
Participant and the Original Loan Participants participated in the payment
of the Purchase Price of one Airbus A300F4-605R Aircraft which was
purchased by the Owner Trustee pursuant to AVSA's FAA Bill of Sale and
AVSA's Warranty Bill of Sale, subjected to the Lien of the Original
Indenture and leased to Federal Express under the Original Lease. The
Participation Agreement provides, among other things, for the refinancing
of the Original Loan Certificates using the proceeds from the public
offering of the Pass Through Certificates. Two Series of Pass Through
Certificates will be issued by separate Pass Through Trusts, each formed to
acquire, among other securities, the Certificates bearing a particular
interest rate and having a particular Maturity that will be issued under
the Indenture.
In connection with the opinions expressed below, we have
examined the Original Participation Agreement, the Original Trust
Agreement, the Original Lease, the Lease Supplement, the Original
Indenture, the Indenture and Security Agreement Supplement, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement,
the AVSA Consent and Agreement, the Engine Consent, the Airbus Guaranty,
the Original Loan Certificates, the Certificates, the Pass Through
Certificates, the Pass Through Agreement, each Series Supplement, the
Participation Agreement, the Indenture, the Lease and the Trust Agreement.
We have also examined originals, or copies certified to our satisfaction,
of such other agreements, documents, certificates and statements of
governmental officials and corporate officers as we have deemed necessary
or advisable as a basis for such opinions. In such examination, we have
assumed the genuineness of all signatures and the authenticity of all
documents submitted to us as originals and the conformity with the
originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we
have, with your consent, relied on the representations and warranties made in
or pursuant to the Participation Agreement, the Original Participation
Agreement and the other documents referred to therein, the accuracy of which
we have not independently verified. In addition, we have, when relevant facts
were not independently established by us, relied, to the extent we deemed such
reliance proper, upon certificates of public officials and certificates,
telegrams and other written or telephoned statements of officers of the
parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and
the other property included in the Lessor's Estate as may not be covered by
the recording system established by the FAA pursuant to Section 44107 of
the Act, no filing or recording of any document or other action was or is
necessary in order to establish the Owner Trustee's title thereto and
interest therein as against Federal Express and any third parties.
2. The Lease creates a valid leasehold interest in the
Aircraft, the entitlement thereof to the benefits of recordation under the Act
being subject to the due and timely filing and, where appropriate, recording
of (A) the Lease, with the Indenture attached as an exhibit, (B) the Indenture
and (C) the Trust Agreement.
3. The execution, delivery and performance of the Original
Participation Agreement, the Participation Agreement, the Original Trust
Agreement, the Trust Agreement, the Original Indenture, the Indenture, the
Indenture and Security Agreement Supplement, the Original Lease, the Lease and
the Lease Supplement by the Owner Trustee in its individual or trust capacity,
as the case may be, and the issuance, execution, delivery and performance of
the Certificates by the Owner Trustee in its trust capacity do not violate,
and fully comply with, any laws and governmental rules and regulations of the
State of New York that may be applicable to the Owner Trustee in its
individual or trust capacity, as the case may be. The opinion set forth in
this paragraph 3 is rendered without regard to the effect, if any, on such
issuance (in the case of the Certificates), execution, delivery or performance
or the taking of any other action, the conduct of any other business or the
exercise of any other powers by First Security Bank of Utah, National
Association in its individual or in a trust capacity in the State of New York
not related to the transactions contemplated by the Original Agreements or the
Operative Agreements.
4. The execution, delivery and performance of the
Participation Agreement, the Pass Through Agreement and each Series Supplement
by the Pass Through Trustee in its individual or trust capacity, as the case
may be, and the issuance, execution, delivery and performance of the Pass
Through Certificates by the Pass Through Trustee in its trust capacity do not
contravene any laws and governmental rules and regulations of the State of New
York that may be applicable to the Pass Through Trustee in its individual or
trust capacity, as the case may be. The opinion set forth in this paragraph 4
is rendered without regard to the effect, if any, on such issuance (in the
case of the Pass Through Certificates), execution, delivery or performance of
the taking of any other action, the conduct of any other business or the
exercise of any other powers by NationsBank, National Association (Carolinas),
in its individual or in a trust capacity in the State of New York not related
to the transactions contemplated by the Original Agreements, the Operative
Agreements, the Pass Through Agreement and each Series Supplement.
5. (a) Each of the Original Agreements and the Operative
Agreements to which Federal Express is a party has been duly authorized,
executed and delivered by Federal Express.
(b) The execution, delivery and performance by Federal Express
of each of the Original Agreements and each of the Operative Agreements to
which Federal Express is a party do not violate, and fully comply with, any
laws and governmental rules and regulations of the State of New York that may
be applicable to Federal Express. The opinion set forth in this paragraph
5(b) is rendered without regard to the taking of any action or the conduct of
any other business by Federal Express in the State of New York other than the
transactions contemplated by the Original Agreements or the Operative
Agreements.
6. Assuming (i) the due authorization, execution and
delivery of the Original Participation Agreement, the Participation
Agreement, the Original Lease, the Lease, the Lease Supplement, the
Original Indenture, the Indenture, the Indenture and Security Agreement
Supplement, the Original Trust Agreement, the Trust Agreement, the Original
Tax Indemnity Agreement, Amendment No. 1 to the Original Tax Indemnity
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the
Purchase Agreement Assignment, the Consent and Agreement, the AVSA Consent
and Agreement, the Engine Consent, the Airbus Guaranty, the Engine Consent
and Agreement, the Pass Through Agreement, each Series Supplement and each
other Original Agreement and Operative Agreement by each of the parties to
each such document (other than Federal Express), (ii) the due
authorization, execution, issue and delivery by the Owner Trustee, and the
due authentication by the Indenture Trustee, of the Certificates to be
issued under the Indenture in accordance with the terms of the Indenture,
(iii) that the Original Loan Certificates are delivered by the Original
Loan Participants to the Indenture Trustee for cancellation and are
cancelled, (iv) the due authorization, execution, issuance, delivery and
authentication by the Pass Through Trustee of the Pass Through Certificates
to be issued under the Pass Through Agreement and the Series Supplement
relating to such Pass Through Certificates, in each case in accordance with
the terms of the Pass Through Agreement and such Series Supplement, and (v)
that the form of each such document is in compliance with all applicable
laws and governmental rules and regulations (other than Federal laws and
the laws of the State of New York), then: (A) each such document
constitutes a legal, valid and binding agreement of each party thereto
enforceable against each such party in accordance with its terms; (B) the
Original Indenture created, and the Indenture creates, for the benefit of
the Holders, the security interest in the Trust Indenture Estate that they
purport to create; (C) the Certificates, when issued to and acquired by
the Pass Through Trustee, will be legal, valid and binding obligations of
the Owner Trustee enforceable against the Owner Trustee in accordance with
their terms and the terms of the Indenture and will be entitled to the
benefits of the Indenture, including the benefit of the security interest
created thereby; (D) the Pass Through Certificates, when issued to and
acquired by the Underwriters in accordance with the Underwriting Agreement,
will be legal, valid and binding obligations of the Pass Through Trustee
enforceable against the Pass Through Trustee in accordance with their terms
and will be entitled to the benefits of the Pass Through Agreement and the
Series Supplement relating thereto; and (E) the beneficial interest of the
Owner Participant under the Trust Agreement in and to the properties which
are part of the Trust Indenture Estate is subject, to the extent provided
in the Indenture, to the Lien of the Indenture in favor of the Holders.
The opinions set forth in this paragraph 6 are subject to the due filing
and recording, where appropriate, with the FAA of the Indenture, the Lease
and the Trust Agreement.
7. All the properties which are part of the Trust Indenture
Estate (including all right, title and interest of the Owner Trustee pledged
and mortgaged by it pursuant to the Indenture in and to the Aircraft and the
Lease) have been pledged and mortgaged with the Indenture Trustee as part of
the Trust Indenture Estate (subject to the due filing and, where appropriate,
recording of those documents referred to in paragraph 2 above and the
financing statements referred to in Section 4.01(f) of the Participation
Agreement), and the beneficial interests of the Owner Participant under the
Trust Agreement in and to such properties are subject, to the extent provided
in the Indenture, to the Lien of the Indenture in favor of the Holders of the
Certificates issued and to be issued under the Indenture.
8. The Indenture creates, as security for the Certificates
duly issued and to be issued under the Indenture, the first priority security
interest in the Aircraft it purports to create, the perfection and rank
thereof being subject to the registration with the FAA of the Aircraft in the
name of the Owner Trustee and the due and timely filing and, where
appropriate, recording in accordance with the Act of the documents referred to
in paragraph 2 above. We express no opinion with respect to the status of any
security interest in any portion of the Aircraft which does not constitute an
"aircraft" or "aircraft engine", as defined in paragraphs (6) and (7) of
Section 40102(a) of the Act.
9. Federal Express's participation in the transactions
contemplated by the Operative Agreements does not and will not constitute a
violation of Section 7 of the Securities Exchange Act of 1934.
10. It is not necessary, in connection with the creation of
the beneficial interests of the Owner Participant in the Trust Indenture
Estate under the circumstances contemplated by the Participation Agreement to
register such beneficial interest under the Securities Act of 1933, as
amended, or to qualify the Trust Agreement under the Trust Indenture Act of
1939, as amended.
11. The provisions of Section 1110 of the United States
Bankruptcy Code will apply to the Aircraft for the benefit of the Indenture
Trustee.
The foregoing opinions are subject to the following
qualifications:
(a) To the extent that this opinion relates to matters
involving Federal aviation law, we have relied, with your consent,
without independent investigation and verification and subject to the
assumptions and qualifications contained therein, upon the opinion of
Daugherty, Fowler & Peregrin to be delivered to you and dated the
date hereof. We have also relied on the opinion dated the date
hereof of George W. Hearn, Vice President - Law of the Lessee, for
purposes of the matters stated in paragraphs 5(a) (except to the
extent that New York law is applicable) and as to all matters of
Tennessee law.
(b) We are qualified to practice law in the State of New York,
and we do not purport to be experts on, or to express any opinion
herein concerning, any laws other than the laws of the State of New
York, the laws of the United States and the General Corporation Law
of the State of Delaware.
(c) The opinion contained in paragraph 6 above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and (ii) general principles of equity
which may affect the remedies provided in the agreements referred to
in said opinions, which laws and principles, however, do not in our
opinion make the remedies provided in said agreements inadequate for
the practical realization of the benefits of the security intended to
be provided thereby.
(d) This opinion is rendered solely to you at Federal
Express's request in connection with the above matter. This
opinion may not be relied upon by you for any other purpose or
relied upon by any other Person without our prior written consent.
(e) We rendered an opinion dated July 31, 1995 (the "Delivery
Date Opinion"), a copy of which is attached hereto, in connection
with the financing and acquisition of the Aircraft on such date.
We hereby consent and agree that the addressees hereto who were
not addressees to the Delivery Date Opinion may rely on the
Delivery Date Opinion as fully and with the same force and effect
as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Pass Through Trustee
NationsBank, National Association
1301 Gervis Street
4th Floor
Columbia, South Carolina 29201
Indenture Trustee
NationsBank of Georgia, National Association
Corporate Trust Lease Administration
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Owner Participant
Shawmut Bank, National Association
One Federal Street
Boston, Massachusetts 02211
Underwriters
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Chase Securities, Inc.
c/o Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower
New York, New York 10281
Original Loan Participants
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
The First National Bank of Chicago
Transportation Division
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
EXHIBIT A(2)(a)
[Letterhead of Morgan, Lewis & Bockius]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N659FE
Ladies and Gentlemen:
We have acted as special counsel for Shawmut Bank, National
Association, a national banking association (the "Owner Participant"), in
connection with the transactions contemplated by (i) the Participation
Agreement, dated as of June 1, 1995, as amended and restated as of August
1, 1995 (the "Participation Agreement"), among Federal Express Corporation,
as Lessee (the "Lessee"), the Owner Participant, The Chase Manhattan Bank
(National Association), Bank of America NT & SA, CIBC Inc. and The First
National Bank of Chicago, as the Original Loan Participants (the "Original
Loan Participants"), First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement (the "Owner Trustee"), NationsBank
of Georgia, National Association, a national banking association, not in
its individual capacity, except as otherwise stated, but solely as
Indenture Trustee under the Indenture (the "Indenture Trustee"), and
NationsBank, National Association (Carolinas), as Pass Through Trustee,
(ii) the Trust Agreement, dated as of June 1, 1995, as amended and restated
August 1, 1995 (the "Trust Agreement"), by and between the Owner
Participant and the Owner Trustee and (iii) the Tax Indemnity Agreement,
dated as of July 1, 1995, as amended by Amendment No. 1 thereto dated as of
August 1, 1995 (the "Tax Indemnity Agreement"), by and between the Owner
Participant and the Lessee. This opinion is delivered pursuant to Section
4.01(l)(ii) of the Participation Agreement. Unless otherwise defined
herein, all capitalized terms used herein shall have the respective defined
meanings set forth in the Participation Agreement.
In connection with our opinions herein, we have examined
executed counterparts of (i) the Original Participation Agreement, the
Original Trust Agreement and the Original Tax Indemnity Agreement
(collectively, the "Original Owner Participant Documents") and (ii) the
Participation Agreement, the Trust Agreement and the Tax Indemnity
Agreement (collectively, the "Owner Participant Documents"). We have
further examined and relied upon the accuracy of original, certified,
conformed, photographic or telecopied copies of such records, agreements,
certificates, instruments and other documents as we have deemed necessary
or appropriate to enable us to render the opinions expressed herein. In
all such examinations, we have assumed the genuineness of signatures on
original documents and the conformity to such original documents of all
copies submitted to us as certified, conformed, photographic or telecopied
copies and the authenticity of such latter documents, and as to
certificates and telegraphic and telephonic confirmations given by public
officials, we have assumed the same to have been properly given and to be
accurate. As to various questions of fact material to our opinions, we
have relied solely upon the accuracy of the statements, representations and
warranties made in the Original Agreements and the Operative Agreements and
we have made no independent investigation or inquiry with respect to such
factual matters.
With your consent, and for purposes of this opinion, we have
assumed the accuracy of the following matters, but we have not made any
independent investigation or inquiry with respect thereto and we render no
opinion on such matters:
(a) The Original Owner Participant Documents and the Owner
Participant Documents, at the time of execution and delivery by the
Owner Participant, were or will have been, as the case may be, duly
authorized and validly executed and delivered by all parties thereto
(other than the Owner Participant) and constituted or will
constitute, as the case may be, the legal, valid and binding
obligations of such parties, enforceable against such parties in
accordance with their terms.
(b) The parties to the Original Owner Participant Documents
and the Owner Participant Documents, (other than the Owner
Participant, as to which we have not assumed the acquisition of
all consents, permits and approvals under New York law) at the
time of execution and delivery by the Owner Participant, obtained
or have obtained, as the case may be, and there were or are, as
the case may be, in full force and effect at such time, any and
all required consents, permits and approvals required by or from
any and all federal, state, local or foreign governmental agencies
and authorities in connection with the transactions contemplated
thereby, to the extent necessary for the legality, validity,
binding effect or enforceability of the Original Owner Participant
Documents and the Owner Participant Documents.
We have been retained as special counsel to the Owner
Participant in connection with the transactions contemplated by the
Participation Agreement, and have not generally represented the Owner
Participant in its respective business activities and are not familiar with
the nature and extent of such other activities. Accordingly, we also have
assumed without investigation that such other activities are not of such a
nature as to cause the transactions contemplated by the Owner Participant
Documents to be governed by laws or regulations of the State of New York or
the United States of America applicable only because of such other activities
(such as laws relating specifically to the banking, securities, insurance or
utility industries) and not applicable to business corporations generally.
Based upon the foregoing, we are of the opinion that:
(1) Each of the Original Participation Agreement and the Original
Tax Indemnity Agreement on the date of execution thereof
constituted, and each of the Participation Agreement and the Tax
Indemnity Agreement constitutes a legal, valid and binding
obligation of the Owner Participant, enforceable against the Owner
Participant in accordance with their respective terms, except as
the enforceability thereof may be limited by (a) applicable
bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of
creditors', mortgagees' and lessors' rights generally and (b)
general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
(2) Neither the execution and delivery of the Original Owner
Participant Documents and the Owner Participant Documents by the
Owner Participant nor the consummation by the Owner Participant of
any of the transactions therein contemplated, or the fulfillment
of, or compliance with, the terms and provisions of any thereof,
(A) required or requires for the validity the consent or approval
of, the giving of notice to, the registration with, or the taking
of any other action with respect to, any governmental authority or
agency of the State of New York or the Federal government of the
United States of America or (B) contravened or contravenes any
law, governmental rule or regulation of the State of New York or
the federal government of the United States of America.
In rendering the foregoing opinions, we have relied, with your
consent, on the opinion of even date herewith of Richard A. Toomey, Jr., Esq.,
Senior Vice President and General Counsel of the Owner Participant, as to the
matters set forth therein (i) that are governed by the laws of The
Commonwealth of Massachusetts, and (ii) relating to the due authorization,
execution and delivery of the Original Owner Participation Documents and the
Owner Participant Documents by the Owner Participant under the laws of the
United States of America, and our opinions are subject to the same limitations
and exceptions as set forth therein.
The foregoing opinions are subject, however, to the
qualification that we express no opinion as to matters relating to the title
to or sufficiency of description of any property or collateral described in
the Original Owner Participant Documents or the Owner Participant Documents or
the perfection or relative priority of any lien or security interest created
with respect to such property or collateral thereunder. In addition, we
express no opinion as to matters governed by (i) any tax laws, (ii) the
Federal Aviation Act of 1958, as amended and recodified, or by any other laws,
statutes, rules or regulations of the United States particularly relating to
the acquisition, ownership, registration, leasing, use or sale of the
Aircraft, the Airframe or the Engines other than such laws relating to
personal property generally, (iii) any securities laws and (iv) laws
pertaining to the Owner Participant solely because of the business activities
of the Owner Participant and which are not applicable to business corporations
generally.
We are licensed to practice law in the State of New York and we
express no opinions herein as to the laws of any state or jurisdiction other
than the laws of the State of New York and the laws of the United States of
America.
This opinion is furnished by us at your request and at the
Owner Participant's request for your sole benefit, and we agree that you
and your successors and permitted assigns may rely on the opinions
expressed herein. No other Person or entity shall be entitled to rely on
the opinions expressed herein without our express written consent.
We rendered an opinion dated July 31, 1995 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent
and agree that the addressees hereto who were not addressees to the
Delivery Date Opinion may rely on the Delivery Date Opinion as fully and
with the same force and effect as if such addressees were originally named
therein on the date of the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
NationsBank of Georgia, National Association
Corporate Trust Lease Administration
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Pass Through Trustee
NationsBank, National Association
1301 Gervis Street
4th Floor
Columbia, South Carolina 29201
Owner Participant
Shawmut Bank, National Association
One Federal Street
Boston, Massachusetts 02211
Underwriters
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Chase Securities, Inc.
c/o Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower
New York, New York 10281
Original Loan Participants
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
The First National Bank of Chicago
Transportation Division
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
EXHIBIT A(2)(b)
[Letterhead of Shawmut Bank, National Association]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N659FE
Ladies and Gentlemen:
I have acted as counsel to Shawmut Bank, National Association,
a national banking association (the "Owner Participant"), and in that
capacity have acted as counsel to the Owner Participant in connection with
the transactions contemplated by (i) the Participation Agreement, dated as
of June 1, 1995, as amended and restated as of August 1, 1995 (the
"Participation Agreement"), among Federal Express Corporation, as Lessee
(the "Lessee"), the Owner Participant, The Chase Manhattan Bank (National
Association), Bank of America NT & SA, CIBC Inc. and The First National
Bank of Chicago, as the Original Loan Participants (the "Original Loan
Participants"), First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement (the "Owner Trustee"), NationsBank
of Georgia, National Association, a national banking association, not in
its individual capacity, except as otherwise stated, but solely as
Indenture Trustee under the Indenture (the "Indenture Trustee"), and
NationsBank, National Association (Carolinas), as Pass Through Trustee (the
"Pass Through Trustee), (ii) the Trust Agreement, dated as of June 1, 1995,
as amended and restated August 1, 1995 (the "Trust Agreement"), by and
between the Owner Participant and the Owner Trustee and (iii) the Tax
Indemnity Agreement, dated as of July 1, 1995, as amended by Amendment No.
1 thereto (the "Tax Indemnity Agreement"), by and between the Owner
Participant and the Lessee. This opinion is delivered pursuant to Section
4.01(l)(ii) of the Participation Agreement. Unless otherwise defined
herein, all capitalized terms used herein shall have the respective defined
meanings set forth in the Participation Agreement.
For purposes of the opinions expressed below, I have examined
executed counterparts or copies of the Original Participation Agreement,
the Original Trust Agreement, the Original Tax Indemnity Agreement, the
Participation Agreement, the Trust Agreement and the Tax Indemnity
Agreement (collectively, the "Owner Participant Documents"). I have
further examined and relied upon the accuracy of original, certified,
conformed, photographic or telecopied copies of such records, agreements,
certificates and other documents as we have deemed necessary or appropriate
to enable us to render the opinions expressed herein. In all such
examinations, I have assumed the genuineness of signatures on original
documents and the conformity to such original documents of all copies
submitted to me as certified, conformed, photographic or telecopied copies
and as to certificates and telegraphic and telephonic confirmations given
by public officials, I have assumed the same to have been properly given
and to be accurate. As to various questions of fact material to my
opinions, I have relied solely upon the accuracy of the statements,
representations and warranties made in the Owner Participant Documents and
other documents executed or delivered in connection therewith. I have
assumed, except with regard to the Owner Participant, that each of the
Owner Participant Documents have been duly authorized, executed and
delivered by the respective parties thereto and that they constitute the
legal, valid and binding obligations of each other party thereto
enforceable against each such party in accordance with their respective
terms.
Based upon the foregoing and such other information as I have
deemed necessary for purposes hereof, and subject to the assumptions,
qualifications and reliance's set forth herein, I am of the opinion that:
1. The Owner Participant is a national banking association
duly organized, validly existing and in good standing under the
laws of the United States of America and has the full corporate
power, authority and legal right to carry on its present business
and operations, to own or lease its Properties and enter into and
to carry out the transactions contemplated by the Owner
Participant Documents.
2. The Owner Participant is a "citizen of the United States"
as defined in Section 40102(a)(15) of Title 49 of the United
States Code (formerly Section 101(16) of the Federal Aviation Act
of 1958, as amended to the date of recodification).
3. The Owner Participant has duly authorized, executed and
delivered the Owner Participant Documents.
4. None of the execution, delivery or performance by the Owner
Participant of the Owner Participant Documents, nor the compliance
with the terms and provisions thereof by the Owner Participant (a)
requires the consent or approval of, the giving of notice to, the
registration with the recording or filing of any document with, or
the taking or any other action with respect to any governmental
authority or agency of The Commonwealth of Massachusetts or of the
federal government of the United States; or (b) violates any law,
governmental rule or regulation of The Commonwealth of Massachusetts
or of the federal government of the United States or any governmental
authority or agency thereof; or (c) results in the breach of any of
the terms, conditions or provisions of the Articles of Association or
By-Laws of the Owner Participant; or (d) to the best of my knowledge
is in violation of any judgment or order applicable to or binding
upon the Owner Participant or its properties, or would violate or
(except as contemplated by the Owner Participant Documents) would
subject the Trust Estate to any lien under any indenture, mortgage,
bank credit agreement, note or bond purchase agreement, long-term
lease, license or contract or any other agreement or instrument to
which the Owner Participant is a party or by which the Owner
Participant is bound.
5. There are no actions, suits, investigations or proceedings
pending or, to the best of my knowledge without independent
investigation, threatened against or affecting the Owner Participant
in any court or before any administrative agency or arbitrator,
which, if adversely determined, would materially adversely affect the
ability of the Owner Participant to perform its obligations under the
Owner Participant Documents, and I am not aware of any pending or
threatened actions or proceedings before any court, administrative
agency or tribunal involving the Owner Participant in connection with
the transactions contemplated by any of the Owner Participant
Documents.
I am authorized to practice law in The Commonwealth of
Massachusetts and do not hold myself out as an expert on the law of any state
other than The Commonwealth of Massachusetts. Consequently, the foregoing
opinions are limited to the federal laws of the United States of America and
the laws of The Commonwealth of Massachusetts, and I express no opinion as to
the laws of any other state or jurisdiction. Further, I have made no
investigation and express no opinion, as to any aviation law or other laws,
statutes, rules or regulations applicable due to the particular nature of the
equipment subject to the Lease, and I express no opinion as to securities
laws. With respect to the opinion concerning the Owner Participant's
citizenship expressed in paragraph 2 hereof, I have relied as to matters of
fact on the Affidavit of United States Citizenship dated July 26, 1995,
executed on behalf of the Owner Participant.
This opinion is furnished by me at your request for your sole
benefit, and I agree that you and your successors and permitted assigns may
rely on the opinions expressed herein. This opinion may not be relied upon by
you for any other purpose, or relied upon by any other person, firm or
corporation for any purpose without my prior written consent.
We rendered an opinion dated July 31, 1995 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent
and agree that the addressees hereto who were not addressees to the
Delivery Date Opinion may rely on the Delivery Date Opinion as fully and
with the same force and effect as if such addressees were originally named
therein on the date of the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
NationsBank of Georgia, National Association
Corporate Trust Lease Administration
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Pass Through Trustee
NationsBank, National Association
1301 Gervis Street
4th Floor
Columbia, South Carolina 29201
Owner Participant
Shawmut Bank, National Association
One Federal Street
Boston, Massachusetts 02211
Underwriters
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Chase Securities, Inc.
c/o Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower
New York, New York 10281
Original Loan Participants
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
The First National Bank of Chicago
Transportation Division
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
EXHIBIT A(3)
[Letterhead of Powell, Goldstein, Frazer & Murphy]
[Refunding Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N659FE
Ladies and Gentlemen:
We are counsel for NationsBank of Georgia, National
Association, a national banking association (the "Indenture Trustee"). In
such capacity, we have advised the Indenture Trustee with respect to
authorization, execution and delivery by the Indenture Trustee of the Trust
Indenture, Mortgage and Security Agreement (Federal Express Corporation
Trust No. N659FE) dated as of July 1, 1995 (the "Original Indenture")
between First Security Bank of Utah, National Association (the "Owner
Trustee") and the Indenture Trustee, the Participation Agreement (Federal
Express Corporation Trust No. N659FE) dated as of June 1, 1995 (the
"Original Participation Agreement") among Federal Express Corporation
("Federal Express"), Shawmut Bank, National Association, as Owner
Participant (the "Owner Participant"), The Chase Manhattan Bank (National
Association), Bank of America NT & SA, CIBC Inc. and The First National
Bank of Chicago, as Original Loan Participants (the "Original Loan
Participants"), the Owner Trustee and the Indenture Trustee, the Trust
Indenture and Security Agreement (Federal Express Corporation Trust No.
N659FE) dated as of July 1, 1995, as amended and restated as of August 1,
1995 (as amended and restated, the "Indenture") between the Owner Trustee
and the Indenture Trustee, and the Participation Agreement (Federal Express
Corporation Trust No. N659FE) dated as of June 1, 1995, as amended and
restated as of August 1, 1995 (as amended and restated, the "Participation
Agreement") among Federal Express, the Owner Participant, the Original Loan
Participants, the Owner Trustee, the Indenture Trustee, and NationsBank,
National Association (Carolinas), as Pass Through Trustee. Further, we
have advised the Indenture Trustee with respect to the authentication of
one or more equipment trust certificates (the "Certificates") referred to
in the Indenture issued on the date hereof.
This opinion is being delivered pursuant to Section
4.01(l)(iii) of the Participation Agreement. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings set forth or referred to
in the Participation Agreement. Additionally, CIBC Inc. is sometimes referred
to herein as the "Georgia Loan Participant")
In rendering this opinion, we have reviewed the Operative
Agreements, the Original Agreements to which the Indenture Trustee is a party
(which we previously reviewed) and such other documents as we have deemed to
be appropriate and relevant as a basis for the opinions hereinafter set forth,
including, without limitation, certified copies of the Articles of Association
and By-laws of the Indenture Trustee, a certificate of an officer of the
Indenture Trustee as to certain matters, including the incumbency of the
officer of the Indenture Trustee who executed the Indenture and the
Participation Agreement and who authenticated the Certificates and
certificates of the Comptroller of the Currency, Washington, D.C. dated
[______________], as to the Indenture Trustee's existence and authority to do
business as a national banking association and to act in a fiduciary capacity.
In all such examinations we have assumed the authenticity and
completeness of all documents submitted to us as original documents and the
conformity to original documents and completeness of all documents submitted
to us as photostatic, notarial or certified copies. Based on the foregoing,
it is our opinion that:
1. The Indenture Trustee is a national banking association
validly existing and in good standing under the laws of
the United States of America holding a valid certificate
to do business as a national banking association, with
banking and trust powers, is a Citizen of the United
States as that term is defined in Section 40102(a)(15) of
the Act, and has the corporate power and authority to
execute, deliver and perform its obligations under the
Indenture and the Participation Agreement and to
authenticate the Certificates to be delivered on the date
hereof and had on the date of execution thereof the
corporate power and authority to execute, deliver and
perform its obligations under the Original Indenture and
the Original Participation Agreement.
2. The Indenture Trustee, in its individual and trust
capacities, has duly authorized, executed and delivered
the Indenture, the Participation Agreement and each of
the other Operative Agreements to which it is a party and
as of the date of execution thereof had duly authorized,
executed and delivered the Original Indenture, the
Original Participation Agreement and each of the other
Original Agreements to which it was a party. Assuming
the other parties thereto are legally bound, each of the
Indenture and the Participation Agreement constitutes,
and on the date of execution thereof the Original
Indenture and the Original Participation Agreement
constituted, a legal, valid and binding obligation of the
Indenture Trustee in its trust capacity (and, to the
extent provided in each such document, in its individual
capacity) enforceable against the Indenture Trustee in
its trust capacity (and, to the extent provided in each
such document, in its individual capacity) in accordance
with its terms, except as the provisions thereof may be
limited by bankruptcy, reorganization, insolvency,
fraudulent conveyance, moratorium or other similar laws
generally affecting creditors' rights from time to time
in effect. The opinions expressed above as to the
enforceability of the documents referred to above further
are subject in each case to applicable laws and equitable
principles that may render certain remedial provisions in
the documents referred to above invalid or unenforceable,
which laws and principles, however, in our opinion do not
make the remedies provided in such documents inadequate
for the practical realization of the benefits, taken as a
whole, of the security intended to be provided thereby.
3. The Certificates delivered on the date hereof have been
duly authenticated and delivered by the Indenture Trustee
in accordance with the terms of the Indenture.
4. The execution, delivery and performance by the Indenture
Trustee of the Indenture, the Participation Agreement and
each of the other Operative Agreements to which it is a
party are not in violation of the Articles of Association
or By-laws of the Indenture Trustee or any law,
governmental rule or regulation of the United States or
the State of Georgia governing the banking or trust
powers of the Indenture Trustee or, to our knowledge, any
judgment, order, indenture, mortgage, bank credit
agreement, note or bond purchase agreement, long-term
lease, license or other agreement or instrument to which
it is a party or by which it or its properties may be
bound. The execution, delivery and performance by the
Indenture Trustee of the Original Indenture, the Original
Participation Agreement and each of the other Operative
Agreements to which it is a party were not on the date of
execution thereof in violation of the Articles of
Association or By-laws of the Indenture Trustee or any
law, governmental rule or regulation of the United States
or the State of Georgia governing the banking or trust
powers of the Indenture Trustee or, to our knowledge, any
judgment, order, indenture, mortgage, bank credit
agreement, note or bond purchase agreement, long-term
lease, license or other agreement or instrument to which
it is a party or by which it or its properties may be
bound.
5. Neither the execution and delivery by the Indenture
Trustee, in its individual or trust capacity, as the case
may be, of the Original Indenture, the Indenture, the
Original Participation Agreement, the Participation
Agreement or any of the other Operative Agreements to
which it is a party, nor the consummation by the
Indenture Trustee, in its individual or trust capacity,
as the case may be, of any of the transactions
contemplated in any of those documents requires consent
or approval of, giving of notice to, or registration
with, or taking of any other action with respect to, any
federal or state governmental authority or agency having
jurisdiction over the Indenture Trustee.
6. (a) Subject to the assumptions and qualifications set
forth herein and in subparagraph 6(b) below, (i) there
are no fees, taxes or other charges payable by the Owner
Trustee, the Indenture Trustee (except taxes imposed on
fees payable to the Indenture Trustee) to the State of
Georgia or any political subdivision thereof in
connection with the execution, delivery or performance of
any of the Operative Agreements or in connection with the
issuance and acquisition of the Certificates issued to
the Certificate Holders or the beneficial interests of
the Certificate Holders in the Trust Indenture Estate;
(ii) neither the Indenture Trustee nor the trust created
under the Indenture will be subject to any fee, tax or
other governmental charge under the laws of the State of
Georgia or any political subdivision thereof in existence
on the date hereof, on, based on or measured by, directly
or indirectly, the gross receipts, net income or value of
the Trust Indenture Estate; and (iii) there is no fee,
tax or other governmental charge (other than as such as
may be imposed upon the Georgia Loan Participant) under
the laws of the State of Georgia or any political
subdivision thereof in existence on the date hereof, on,
based on or measured by any payments under the
Certificates issued to the Certificate Holders by reason
of the creation of the trust under the Indenture pursuant
to the laws of the State of New York or the Indenture
Trustee's performance of its duties under the Trust
Indenture within the State of Georgia. We express no
opinion, however, as to whether or not any fees, taxes or
other charges are now or hereafter may be payable by the
Original Loan Participants, the Owner Participant or the
Georgia Loan Participant to the State of Georgia or any
political subdivision thereof in connection with (x) the
execution, delivery or performance by any of the
Indenture, the Participation Agreement or any of the
other Operative Agreements, (y) the making by the Owner
Participant of its investment in the Aircraft or (z) with
respect to the Georgia Loan Participant, the issuance and
ownership of the Original Loan Certificates issued to the
Georgia Loan Participant.
(b) The opinions set forth in the immediately preceding
subparagraph 6(a) are subject in relevant part to and
qualified by the following assumptions, which we have
made with your knowledge:
(i) for purposes of taxes which might be imposed
upon the Owner Trustee or the Lessor's Estate under
Chapter 5, Ad Valorem Taxation of Property, or
Chapter 6, Taxation of Intangibles, Title 48,
Revenue and Taxation, Official Code of Georgia
Annotated ("O.C.G.A."), we have assumed that (x)
the Lessee will make, in a timely manner, an annual
property tax return of the Aircraft, in accordance
with Chapter 5, Article 12, Ad Valorem Taxation of
Airline Companies, Title 48, Revenue and Taxation,
O.C.G.A., and (y) the Lessee will pay, in a timely
manner, the tangible property tax, if any, due with
respect to the Aircraft;
(ii) for purposes of taxes which might be imposed
upon the Lessor's Estate or the Owner Trustee under
Chapter 6, Taxation of Intangibles, Title 48,
Revenue and Taxation, O.C.G.A., we have assumed
that as of January 1 of each year there will be no
undistributed funds held in either the Lessor's
Estate or the Trust Indenture Estate, except such
funds as shall be invested in those types of
obligations or evidences of debt as are described
in Section 48-6-22(1), O.C.G.A.;
(iii) for purposes of taxes which might be imposed
upon the Lessor's Estate or the Owner Trustee under
Chapter 7, Income Taxes, Title 48, Revenue and
Taxation, O.C.G.A., we have assumed that (x) the
Lessor's Estate is a "Grantor Trust" for Federal
income tax purposes (i.e., the Owner Participant
will be treated as the owner of the Lessor's Estate
under Subpart E of Part I of Subchapter J of the
Internal Revenue Code) and (y) the Owner Trustee
and the Owner Participant will report on that basis
for Federal income tax purposes; and
(iv) for purposes of taxes which might be imposed
upon the Certificate Holders under Chapter 6,
Taxation of Intangibles or Chapter 7, Income Taxes,
Title 48, Revenue and Taxation, O.C.G.A., neither
the Certificates held by such Certificate Holders
nor the interest income thereon nor any interest of
such Certificate Holders in and to the Trust
Indenture Estate has been derived from or has been
or will be acquired in the conduct of or used
incident to business carried on by such Holders or
property of such Certificate Holders located in the
State of Georgia.
We express no opinion as to the correctness of the foregoing
assumptions, but nothing has come to our attention to cause us to believe that
any such assumption is incorrect; however, we have conducted no independent
investigation in this regard.
We are members of the Bar of the State of Georgia and the
opinions set forth herein are limited to the laws of the State of Georgia and,
subject to the limitations set forth herein, the federal laws of the United
States of America. With respect to the opinions set forth above in paragraph
2 as to the validity, binding effect and enforceability of the Indenture, the
Participation Agreement and the other Operative Agreements, the governing law
of which is expressly stated to be that of the State of New York, we have
assumed with your permission that the Indenture, the Participation Agreement
and the other Operative Agreements constitute legal, valid, binding and
enforceable documents or instruments under the laws of the State of New York
(as to which assumption we express no opinion). Further, without limiting the
generality of the foregoing, we express no opinion with respect to (i) except
as set forth in paragraph 1 of this opinion, with respect to the citizenship
of the Indenture Trustee, the Act and the regulations promulgated thereunder,
the impact of the Act upon matters set forth in this opinion or any other
aviation or other laws, rules or regulations applicable to the particular
nature of the equipment to be acquired by the Owner Trustee; (ii) federal
securities laws, including, without limitation, the Securities Act of 1933, as
amended, and the Trust Indenture Act of 1939, as amended, or state securities
or blue sky laws; (iii) title to any property, real or personal, or the
priority or perfection of any liens or security interests; (iv) the authority
or power of the Indenture Trustee under the laws of any jurisdiction other
than Georgia or federal laws of the United States of America to exercise any
rights or remedies set forth in the Operative Agreements or to perform any
duties or obligations on its part to be performed other than those that can be
performed in the State of Georgia; or (v) ERISA.
This opinion is being furnished only to the parties to whom
this opinion is addressed and is solely for their benefit, and no other
person or entity shall be entitled to rely on this opinion without our
express prior written consent. This opinion may not be used, circulated,
quoted, published or otherwise referred to for any purpose without our
express prior written consent. This opinion is limited to the matters
stated herein, and no opinion is implied or may be inferred beyond the
opinions expressly stated herein.
We rendered an opinion dated July 31, 1995 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent
and agree that the addressees hereto who were not addressees to the
Delivery Date Opinion may rely on the Delivery Date Opinion as fully and
with the same force and effect as if such addressees were originally named
therein on the date of the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
NationsBank of Georgia, National Association
Corporate Trust Lease Administration
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Pass Through Trustee
NationsBank, National Association
1301 Gervis Street
4th Floor
Columbia, South Carolina 29201
Owner Participant
Shawmut Bank, National Association
One Federal Street
Boston, Massachusetts 02211
Underwriters
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Chase Securities, Inc.
c/o Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower
New York, New York 10281
Original Loan Participants
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
The First National Bank of Chicago
Transportation Division
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
EXHIBIT A(4)
[Letterhead of Daugherty, Fowler & Peregrin]
[Refunding Date]
To the Parties Named on Schedule A attached hereto
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section
4.01(l)(iv) of the Participation Agreement (Federal Express Corporation Trust
No. N659FE), dated as of June 1, 1995, as amended and restated as of August 1,
1995 (the "Participation Agreement") among Federal Express Corporation, as
Lessee (the "Lessee"), Shawmut Bank, National Association, as Owner
Participant (the "Owner Participant"), The Chase Manhattan Bank (National
Association), Bank of America NT & SA, CIBC Inc. and The First National Bank
of Chicago, as the Original Loan Participants (the "Original Loan
Participants"), First Security Bank of Utah, National Association, not in its
individual capacity but solely as Owner Trustee (the "Owner Trustee"),
NationsBank of Georgia, National Association, as Indenture Trustee (the
"Indenture Trustee") and NationsBank, National Association (Carolinas), as
Pass Through Trustee, with respect to that portion of Subtitle VII of Title 49
of the United States Code relative to the recordation of instruments and the
registration of aircraft thereunder.
The capitalized terms herein shall, unless otherwise defined,
have the same meanings given them in the Participation Agreement or in Annex I
attached hereto.
We have examined and filed on this date with the Federal
Aviation Administration (the "FAA") the following described instruments at the
respective times listed below:
(a) Trust Agreement (Federal Express Corporation Trust No.
N659FE) dated as of June 1, 1995, as amended and restated
August 1, 1995 and executed on August __, 1995 (the
"Trust Agreement") between the Owner Participant and the
Owner Trustee, which Trust Agreement amends and restates
the Original Trust Agreement, which Trust Agreement was
filed at ____ _.m., C.D.T.;
(b) Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N659FE) dated as of July 1,
1995, as amended and restated August 1, 1995 and
executed on August __, 1995 (the "Indenture") between
the Owner Trustee and the Indenture Trustee, which
Indenture amends and restates the Original Indenture,
which Indenture was filed at ____ _.m., C.D.T.; and,
(c) Lease Agreement (Federal Express Corporation Trust No.
N659FE) dated as of July 1, 1995, as amended and restated
August 1, 1995 and executed on August __, 1995 (the
"Lease") between the Owner Trustee, as lessor, and the
Lessee, as lessee, which Lease amends and restates the
Original Lease, with the Indenture attached thereto,
which Lease with the Indenture attached thereto was
filed at ____ _.m., C.D.T.
The Confidential Omissions were intentionally omitted from the FAA
filing counterparts of the Lease and the Indenture, as containing confidential
financial information.
Based upon our examination of the above described instruments
and of such records of the FAA as we deemed necessary to render this opinion,
it is our opinion that:
1. AC Form 8050-2 Aircraft Bill of Sale dated July 31, 1995 (the
"FAA Bill of Sale") from AVSA S.A.R.L. as seller, conveying
title to the Airframe to the Owner Trustee, has been duly
recorded by the FAA on July 31, 1995 and assigned Conveyance
No. MM010964;
2. the Indenture and the Lease with the Indenture attached are in
due form for recordation by and have been duly filed for
recordation with the FAA pursuant to and in accordance with the
provisions of 49 U.S.C. Section 44107;
3. the Trust Agreement is in due form for filing and has been duly
filed with the FAA pursuant to and in accordance with the
provisions of 49 U.S.C. Section 44103(a);
4. the Original Trust Agreement was duly filed with the FAA on
July 31, 1995 pursuant to and in accordance with the
provisions of 49 U.S.C. Section 44103(a);
5. the Original Indenture with the Indenture and Security
Agreement Supplement attached has been duly filed with and
duly recorded by the FAA pursuant to and in accordance with
the provisions of 49 U.S.C. Section 44107;
6. the Original Lease with the Lease Supplement, the Original
Indenture and the Indenture and Security Agreement Supplement
attached was duly filed with and duly recorded by the FAA
pursuant to and in accordance with the provisions of 49 U.S.C.
Section 44107;
7. the Airframe is duly registered in the name of the Owner
Trustee pursuant to and in accordance with the provisions of
49 U.S.C. Section 44103(a);
8. the Owner Trustee has valid legal title to the Airframe and the
Aircraft is free and clear of all Liens, except (i) the
security interest created by the Original Indenture, as amended
and restated by the Indenture, as supplemented by the Indenture
and Security Agreement Supplement, and (ii) the rights of the
parties under the Original Lease, as amended and restated by
the Lease, as supplemented by the Lease Supplement;
9. the Original Indenture, as amended and restated by the
Indenture, as supplemented by the Indenture and Security
Agreement Supplement, constitutes a duly perfected first
priority security interest in the Aircraft and a duly perfected
first assignment of all the right, title and interest of the
Owner Trustee in, to and under the Original Lease, as amended
and restated by the Lease, as supplemented by the Lease
Supplement (insofar as such assignment affects an interest
covered by the recording system established by the FAA pursuant
to 49 U.S.C. Section 44107), and no other registration of the
Airframe or filings other than filings with the FAA (which have
been duly effected) are necessary in order to perfect in any
applicable jurisdiction in the United States (A) the Owner
Trustee's title to the Airframe or (B) such security interest
and assignment (insofar as such assignment affects an interest
covered by the recording system established by the FAA pursuant
to 49 U.S.C. Section 44107), it being understood that no
opinion is expressed as to the validity, priority or
enforceability of such security interest and assignment under
local law or as to the recognition of the perfection of such
security interest and assignment as against third parties in
any legal proceeding outside the United States;
10. no authorization, approval, consent, license or order of, or
registration with, or the giving of notice to, the FAA is
required for the valid authorization, delivery and performance
of the Original Lease, as amended and restated by the Lease, as
supplemented by the Lease Supplement, the Original Indenture,
as amended and restated by the Indenture, as supplemented by
the Indenture and Security Agreement Supplement, or the
Original Trust Agreement, as amended and restated by the Trust
Agreement, except for such filings as are referred to in our
opinion dated July 31, 1995 (which have been duly effected) and
the filings referred to in clauses (a), (b) and (c) above; and,
11. neither the authorization, issuance and delivery of the
Certificates, the execution and delivery by the parties thereto
of the Original Trust Agreement, the Trust Agreement, the
Original Indenture, the Indenture, the Indenture and Security
Agreement Supplement, the Original Participation Agreement, the
Participation Agreement, the FAA Bill of Sale, the Original
Lease, the Lease and the Lease Supplement or the performance by
the parties thereto of: (i) the Original Trust Agreement, as
amended and restated by the Trust Agreement; (ii) the Original
Indenture, as amended and restated by the Indenture, as
supplemented by the Indenture and Security Agreement
Supplement; (iii) the Original Participation Agreement, as
amended and restated by the Participation Agreement; and (iv)
the Original Lease, as amended and restated by the Lease, as
supplemented by the Lease Supplement, in accordance with the
provisions thereof, nor the consummation by the parties thereto
of any of the transactions contemplated thereby, requires the
consent or approval of, or the giving of notice to, or the
registration with, or the taking of any other action in respect
of, the FAA except for the filings, the recordations and the
filings for recordation specified elsewhere in this opinion.
No opinion is expressed as to the Airframe during any period or
periods of time during which it has not been subject to United States
registration.
No opinion is expressed as to laws other than Federal laws of
the United States. In rendering this opinion, we were subject to the accuracy
of the FAA, its employees and agents, in the filing, indexing and recording of
instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Further, in rendering this
opinion we are assuming the validity and enforceability of the above described
instruments under local law. Since our examination was limited to records
maintained by the FAA, our opinion does not cover liens which are perfected
without the filing of notice thereof with the FAA, such as federal tax liens,
liens arising under 29 U.S.C. Section 1368(a), possessory artisan's liens, or
matters of which the parties have actual notice. In rendering this opinion we
are assuming that there are no documents with respect to the Aircraft which
have been filed for recording under the recording system of the FAA but have
not yet been listed in the available records of such system as having been so
filed.
In rendering this opinion we have relied upon the opinion of the
Assistant Chief Counsel for the Aeronautical Center dated [date] and have
continued to rely upon the opinion of the Assistant Chief Counsel for the
Aeronautical Center dated June 18, 1995, copies of which are attached hereto.
Annex I
Certain Definitions
Airframe, Engines and Aircraft
One (1) Airbus Industrie A300F4-605R aircraft bearing
manufacturer's serial number 757 and U.S. Registration No. N659FE (the
"Airframe") and two (2) General Electric CF6-80C2-A5F aircraft engines bearing
manufacturer's serial numbers 705-227 and 705-228 (the "Engines") (the
Airframe and the Engines are referred to collectively as the "Aircraft").
Original Trust Agreement
Trust Agreement (Federal Express Corporation Trust No. N659FE)
dated as of June 1, 1995 between the Owner Participant and the Owner Trustee,
which was filed with the FAA on July 31, 1995.
Original Indenture
Trust Indenture, Mortgage and Security Agreement (Federal
Express Corporation Trust No. N659FE) dated as of July 1, 1995 between the
Owner Trustee and the Indenture Trustee, which together with the Indenture and
Security Agreement Supplement (as hereinafter defined) attached thereto was
recorded as one instrument by the FAA on August 3, 1995 and assigned
Conveyance No. 2A267311.
Indenture and Security Agreement Supplement
Indenture and Security Agreement Supplement No. 1 (Federal
Express Corporation Trust No. N659FE) dated July 31, 1995 between the Owner
Trustee and the Indenture Trustee, with respect to the Aircraft, which was
attached to and recorded by the FAA as one instrument with the Original
Indenture.
Original Lease
Lease Agreement (Federal Express Corporation Trust No. N659FE)
dated as of July 1, 1995 between the Owner Trustee, as lessor, and the Lessee,
which together with the Lease Supplement (as hereinafter defined), the
Original Indenture and the Indenture and Security Agreement Supplement
attached thereto was recorded as one instrument by the FAA on August 7, 1995
and assigned Conveyance No. HH009756.
Lease Supplement
Lease Supplement No. 1 (Federal Express Corporation Trust No.
N659FE) dated July 31, 1995 between the Owner Trustee, as lessor, and the
Lessee, with respect to the Aircraft, which was attached to and recorded by
the FAA as one instrument with the Original Lease.
Confidential Omissions
The Lease was filed with the FAA, with (i) the Excess Amount
and Basic Rent (Schedule II), (ii) the Stipulated Loss Values (Schedule
III), (iii) the Termination Values (Schedule IV), (iv) the Purchase Option
Schedule (Schedule V) omitted from the FAA filing counterpart thereof as
containing confidential financial information; and (v) the purchase price
under Section 4.02(a)(F) set forth in Ancillary Agreement I, which was not
attached to the FAA filing counterpart of the Lease or otherwise filed with
the FAA for recordation as containing confidential financial information.
The Indenture was filed with the FAA, with the Schedule of
Principal Payments (Schedule I) omitted from the FAA filing counterpart
thereof as containing confidential financial information.
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
NationsBank of Georgia, National Association
Corporate Trust Lease Administration
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Pass Through Trustee
NationsBank, National Association
1301 Gervis Street
4th Floor
Columbia, South Carolina 29201
Owner Participant
Shawmut Bank, National Association
One Federal Street
Boston, Massachusetts 02211
Underwriters
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Chase Securities, Inc.
c/o Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower
New York, New York 10281
Original Loan Participants
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
The First National Bank of Chicago
Transportation Division
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
EXHIBIT A(5)
[Letterhead of Ray, Quinney & Nebeker]
[Refunding Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N659FE
Ladies and Gentlemen:
We have acted as special counsel to First Security Bank of
Utah, National Association, a national banking association ("First
Security"), in connection with the Trust Agreement (Federal Express
Corporation Trust No. N659FE), dated as of June 1, 1995, as amended and
restated as of August 1, 1995 (the "Trust Agreement"), between First
Security and Shawmut Bank, National Association, a national banking
association (the "Owner Participant"). Pursuant to the Participation
Agreement (Federal Express Corporation Trust No. N659FE), dated as of June
1, 1995, as amended and restated August 1, 1995 (the "Participation
Agreement"), among Federal Express Corporation, as Lessee, the Owner
Participant, The Chase Manhattan Bank (National Association), Bank of
America NT & SA, CIBC Inc. and The First National Bank of Chicago, as the
Original Loan Participants, First Security, not in its individual capacity
except as specifically set forth therein but solely as Owner Trustee (the
"Owner Trustee") under the Trust Agreement, NationsBank of Georgia,
National Association, as Indenture Trustee and NationsBank, National
Association (Carolinas), as Pass Through Trustee, one Airbus A300F4-605R
aircraft bearing U.S. Registration No. N659FE (the "Aircraft") is being
refinanced. This opinion is furnished pursuant to Section 4.01(l)(vii) of
the Participation Agreement. Capitalized terms used herein and not
otherwise defined are used as defined in the Participation Agreement,
except that references herein to any instrument shall mean such instrument
as in effect on the date hereof.
We have examined executed counterparts or copies otherwise
identified to our satisfaction of the following documents:
(a) The Participation Agreement;
(b) The Trust Agreement;
(c) The Indenture;
(d) The Indenture and Security Agreement Supplement No. 1
dated July 31, 1995;
(e) The Lease;
(f) The Lease Supplement dated July 31, 1995 (each of the
documents identified in paragraphs (a) through (f) above
being collectively referred to as the "Owner Trustee
Documents"); and
(g) The Certificates being issued today (the "Certificates").
We have also examined originals or copies of such other
documents, such corporate records, certificates and other statements of
governmental officials and corporate officers and other representatives of the
corporations or entities referred to herein and such other instruments as we
have deemed necessary or appropriate for the purposes of this opinion.
Moreover, as to certain facts material to the opinions expressed herein, we
have relied upon representations and warranties contained in the Owner Trustee
Documents.
Based upon the foregoing and upon an examination of such
questions of law as we have considered necessary or appropriate, and subject
to the assumptions, exceptions and qualifications set forth below, we advise
you that, in our opinion:
1. First Security is a national banking association duly
organized and validly existing under the laws of the United States of
America with its principal place of business and chief executive
office (as such terms are used in Article 9 of the Uniform Commercial
Code) at 79 South Main Street, Salt Lake City, Utah, 84111,
Attention: Corporate Trust Department holding a valid certificate to
do business as a national banking association, with banking and trust
powers, is a Citizen of the United States within the meaning of
Section 40102(a)(15) of Title 49 of the United States Code (formerly
Section 101(16) of the Federal Aviation Act of 1958, as amended to
the date of recodification) (the "Act"), and each of First Security
and the Owner Trustee, as the case may be, has or had, on the date of
execution thereof, full corporate power, authority and legal right to
execute, deliver and perform each of the Owner Trustee Documents to
which it is or is to be a party and to issue, execute, deliver and
perform the Certificates.
2. Each of First Security and the Owner Trustee, as the case
may be, has duly authorized, executed and delivered each Owner
Trustee Document to which it is a party; each such document
constitutes a legal, valid and binding obligation of the Owner
Trustee (and, to the extent set forth in the respective Owner
Trustee Document, of First Security) enforceable against the Owner
Trustee (and, to the extent set forth in the respective Owner
Trustee Document, against First Security) in accordance with its
terms; and the Trust Agreement constitutes a legal, valid and
binding obligation of the Owner Participant enforceable against
the Owner Participant in accordance with its terms. The
Certificates have been duly issued, executed and delivered by the
Owner Trustee, pursuant to authorization contained in the Trust
Agreement, and constitute the legal, valid and binding obligations
of the Owner Trustee enforceable against the Owner Trustee in
accordance with their terms and the terms of the Indenture; and
the Certificates are entitled to the benefits and security
afforded by the Indenture in accordance with their terms and the
terms of the Indenture.
3. On the Delivery Date, the Owner Trustee received from AVSA
such title to the Aircraft as AVSA conveyed to the Owner Trustee,
subject to the rights of the Owner Trustee and the Lessee under the
Original Lease and the security interest created pursuant to the
Original Indenture and the Indenture Supplement; and to our
knowledge, there exist no Liens affecting the title of the Owner
Trustee to the Lessor's Estate resulting from claims against First
Security not related to the ownership of the Lessor's Estate or the
administration of the Lessor's Estate or any other transaction
pursuant to the Indenture or any document included in the Trust
Indenture Estate.
4. All the properties which are part of the Trust Indenture
Estate have been pledged and mortgaged with the Indenture Trustee as
part of the Trust Indenture Estate and the beneficial interest of the
Owner Participant under the Trust Agreement in and to such properties
is subject, to the extent provided in the Indenture, to the Lien of
the Indenture in favor of the Holders of the Certificates.
5. To the extent that the Uniform Commercial Code of the State
of Utah (the "UCC") is applicable, except for the Indenture
Trustee's taking possession of all monies and securities
(including instruments) constituting part of the Trust Indenture
Estate, no action, including the filing or recording of any
document, is necessary (i) to create under the UCC the security
interest in the Trust Indenture Estate (including the grant and
assignment unto the Indenture Trustee of the security interest in
all estate, right, title and interest of the Owner Trustee in, to
and under the Lease) which the Indenture by its terms purports to
create in favor of the Indenture Trustee, and (ii) to perfect in
the State of Utah such security interest, except for the filing of
a UCC financing statement complying with the formal requisites of
Section 9-402 of the UCC in the office of the Division of
Corporations and Commercial Code of the State of Utah with respect
to the security interest, which filing has been duly effected, and
the filing of continuation statements with respect thereto
required to be filed at periodic intervals under the UCC.
6. The Trust Agreement duly creates a legal and valid trust
under Utah law, the trust created by the Trust Agreement has been
duly created and exists for the benefit of the Owner Participant,
and the Trust Agreement and the Indenture Supplement create for
the benefit of the Owner Participant the interest in the
properties referred to in Section 1.02 of the Trust Agreement
which the Trust Agreement by its terms purports to create, which
interest is subject and subordinate to the security interests
created by the Indenture to the extent provided in the Indenture.
7. Neither the authorization, execution and delivery by the
Owner Trustee or First Security, as the case may be, of the Owner
Trustee Documents, nor the issuance, execution and delivery by the
Owner Trustee of the Certificates nor the fulfillment or compliance
by the Owner Trustee or First Security with the respective terms and
provisions thereof nor the consummation of any of the transactions by
the Owner Trustee or First Security, as the case may be, contemplated
thereby requires the consent or approval of, the giving of notice to,
the registration with, or the taking of any other action in respect
of, any court or administrative or governmental authority or agency
of the State of Utah or the United States of America governing the
banking or trust powers of First Security.
8. Assuming that (i) the Aircraft is not used in Utah and is
not physically located in Utah at the commencement or termination of
the Term or during such Term, (ii) in connection with any sale of the
Aircraft, such Aircraft will not be physically delivered in Utah to a
buyer nor be shipped from a point within Utah to a buyer, and (iii)
the trust created by the Trust Agreement is treated as a grantor
trust for federal income tax purposes within the contemplation of
Sections 671 through 678 of the Internal Revenue Code of 1986, there
are no fees, taxes, or other charges (except taxes imposed on fees
payable to the Owner Trustee) payable to the State of Utah or any
political subdivision thereof in connection with the execution,
delivery or performance by the Owner Trustee, the Indenture Trustee,
the Lessee or the Owner Participant, as the case may be, of the Owner
Trustee Documents or in connection with the making by the Owner
Participant of its investment in the Aircraft or its acquisition of
the beneficial interest in the Lessor's Estate or in connection with
the issuance and acquisition of the Certificates, and neither the
Owner Trustee, the Lessor's Estate nor the trust created by the Trust
Agreement will be subject to any fee, tax or other governmental
charge (except taxes on fees payable to the Owner Trustee) under the
laws of the State of Utah or any political subdivision thereof on,
based on or measured by, directly or indirectly, the gross receipts,
net income or value of the Lessor's Estate solely by reason of the
creation or continued existence of the trust under the terms of the
Trust Agreement pursuant to the laws of the State of Utah or the
Owner Trustee's performance of its duties under the Trust Agreement.
9. The execution, delivery and performance by the Owner
Trustee or First Security, as the case may be, of each of the
Owner Trustee Documents and the issuance, execution, delivery and
performance of the Certificates by the Owner Trustee are not or
were not, on the date of execution thereof, in violation of the
charter or by-laws of First Security or of any law, governmental
rule, or regulation of the State of Utah or the United States of
America governing the banking or trust powers of First Security
or, to our knowledge, of any indenture, mortgage, bank credit
agreement, note or bond purchase agreement, long-term lease,
license or other agreement or instrument to which it is a party or
by which it is bound or, to our knowledge, of any judgment or
order of the State of Utah or the United States of America
relating to the banking or trust powers of First Security.
10. There is no fee, tax or other governmental charge under
the laws of the State of Utah or any political subdivision thereof
in existence on the date hereof on, based on or measured by any
payments under the Certificates or the beneficial interests in the
Lessor's Estate, by reason of the creation of the trust under the
Trust Agreement, pursuant to the laws of the State of Utah or the
Owner Trustee's performance of its duties under the Trust
Agreement, within the State of Utah, which would not have been
imposed if First Security did not have its principal place of
business and did not perform its obligations under the Owner
Trustee Documents in the State of Utah.
11. Under the Utah Uniform Fraudulent Transfer Act or any
other similar law of the State of Utah relating to fraudulent
conveyances, no filing, recording or publication is necessary or
appropriate to protect the interests of (i) the Owner Trustee as
Lessor or owner with respect to the Aircraft and (ii) the Indenture
Trustee as secured party under the Indenture against claims of
creditors of the Owner Trustee resulting from the sale and lease of
the Aircraft pursuant to the Bills of Sale and the Lease.
12. Neither a Utah Court nor a Federal Court applying Utah
law, if properly presented with the issue and after having properly
considered such issue, would permit the Owner Participant to
terminate the Trust Agreement, except in accordance with its terms or
with the consent of the Indenture Trustee, so long as the Lien of the
Indenture on the Trust Indenture Estate has not been released or
payment of the principal of, and premium, if any, and interest on,
the Certificates has not been made in full. Under the laws of the
State of Utah, so long as the Trust Agreement has not been terminated
in accordance with its terms or with the consent of the Indenture
Trustee, creditors of any person that is an Owner Participant,
holders of a lien against the assets of any such person and
representatives of creditors of any such person, such as trustees,
receivers or liquidators (whether or not an insolvency proceeding has
been commenced) (collectively, the "Creditors") may acquire valid
claims and liens, as to the Lessor's Estate, only against the rights
of such Owner Participant under the Trust Agreement or in the
Lessor's Estate, and do not have, and may not through the enforcement
of such Creditors' rights acquire, any greater rights than such Owner
Participant with respect to the Trust Agreement or the Lessor's
Estate.
The foregoing opinions are subject to the following
assumptions, exceptions and qualifications:
A. The foregoing opinions are limited to the laws of the State
of Utah and the federal laws of the United States of America governing the
banking and trust powers of First Security. In addition, we express no
opinion with respect to (i) federal securities laws, including the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and the Trust Indenture Act of 1939, as amended, (ii) the Federal
Aviation Act of 1958, as amended (except with respect to the opinion set
forth in paragraph 1 above concerning the citizenship of First Security),
(iii) the Federal Communications Act of 1934, as amended, or (iv) state
securities or blue sky laws. Insofar as the foregoing opinions relate to
the validity and enforceability in Utah of the Certificates and the other
Owner Trustee Documents expressed to be governed by the laws of the State
of New York, we have assumed that the Certificates and such Owner Trustee
Documents constitute legal, valid, binding and enforceable documents or
instruments under such laws (as to which we express no opinion).
B. The foregoing opinions regarding enforceability of any
document or instrument are subject to (i) applicable bankruptcy, insolvency,
moratorium, reorganization, receivership and similar laws affecting the rights
and remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
C. We have assumed the due authorization, execution and
delivery by each of the parties thereto, other than First Security and the
Owner Trustee, of the Owner Trustee Documents to which each is a party and
that each of such parties has the full power, authority and legal right to
execute and deliver each such document.
D. The opinion set forth in paragraph 1 above concerning the
citizenship of First Security is based upon the facts contained in an
affidavit of First Security, made by its Assistant Vice President, the facts
set forth in which we have not independently verified.
E. We have assumed the due authentication of the Certificates
by the Indenture Trustee.
F. We have assumed that all signatures (other than those of
the Owner Trustee or First Security) on documents and instruments examined
by us are genuine, that all documents and instruments submitted to us as
originals are authentic, and that all documents and instruments submitted
to us as copies conform with the originals, which facts we have not
independently verified.
G. We do not purport to be experts in respect of, or express
any opinion concerning, aviation law or other laws, rules or regulations
applicable to the particular nature of the equipment to be acquired by the
Owner Trustee.
H. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the Lessor's Estate or the
priority of any mortgage or security interest.
I. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section
406 of the Employee Retirement Income Security Act of 1974.
This opinion is rendered solely for your benefit and may not be
relied upon by any other person or entity for any purpose without our prior
written consent, except that the law firm of Davis Polk & Wardwell may rely on
this opinion in connection with the rendering of its opinion dated the date
hereof in connection with the financing described herein.
We rendered an opinion dated July 31, 1995 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent
and agree that the addressees hereto who were not addressees to the
Delivery Date Opinion may rely on the Delivery Date Opinion as fully and
with the same force and effect as if such addressees were originally named
therein on the date of the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
NationsBank of Georgia, National Association
Corporate Trust Lease Administration
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Pass Through Trustee
NationsBank, National Association
1301 Gervis Street
4th Floor
Columbia, South Carolina 29201
Owner Participant
Shawmut Bank, National Association
One Federal Street
Boston, Massachusetts 02211
Underwriters
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Chase Securities, Inc.
c/o Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower
New York, New York 10281
Original Loan Participants
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
The First National Bank of Chicago
Transportation Division
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
EXHIBIT A(6)
[Letterhead of Powell, Goldstein, Frazer & Murphy]
[Refunding Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N659FE
Ladies and Gentlemen:
We are counsel for NationsBank, National Association
(Carolinas), formerly known as NationsBank of South Carolina, National
Association, a national banking association (herein referred to as the
"Association"), acting as Pass Through Trustee (the "Pass Through Trustee")
with respect to the Pass Through Trust Agreement dated as of February 1, 1993
(the "Pass Through Trust Agreement"), as supplemented by the Series
Supplements dated the date hereof, designated as Series Supplement 1995-A1 and
1995-A2, respectively (the "Series Supplements"). We have advised the
Association with respect to the Pass Through Trust Agreement, the Series
Supplements and the Participation Agreements relating to the Pass Through
Trust Agreement and each designated Series Supplement (the "Participation
Agreements") among the parties listed therein. Further, we have advised the
Pass Through Trustee with respect to the Pass Through Certificates (the
"Certificates") issued on the date hereof. Further, we are counsel for
NationsBank of Georgia, National Association, a national banking association,
an affiliate of the Association, acting as Registrar, Paying Agent and
Authenticating Agent (the "Agent") with respect to the Certificates pursuant
to the Registrar, Authenticating and Paying Agency Agreement dated as of the
date hereof (the "Agency Agreement") among Federal Express Corporation
("Federal Express"), the Association and the Agent. The Association has
requested that we deliver this opinion to you pursuant to the Participation
Agreements and the Underwriting Agreement among Federal Express and the
Underwriters and we understand and agree that you may rely on the opinions
expressed herein.
Unless otherwise defined herein, capitalized terms used herein
shall have the meanings set forth or referred to in the Participation
Agreements, the Pass Through Trust Agreement or the Series Supplements, as
applicable.
In rendering this opinion, we have reviewed the Operative
Agreements in existence on the date hereof and such other documents as we have
deemed to be appropriate and relevant as a basis for the opinions hereinafter
set forth, including, without limitation, certified copies of the By-Laws of
the Association and a certificate of an officer of the Association as to
certain matters, including the incumbency of the officer of the Association
who, on behalf of the Pass Through Trustee executed the Participation
Agreements, the Pass Through Trust Agreement, the Series Supplements and the
Certificates and certificates of the Comptroller of the Currency, Washington,
D.C. dated [date] as to the Association's existence and authority to do
business as a national banking association and to act in a fiduciary
capacity. Additionally, as to certain facts material to the opinions
expressed herein, we have relied upon representations and warranties
contained in the Operative Agreements and upon the certificates above
described, without further investigation.
In all such examinations we have assumed the authenticity and
completeness of all documents submitted to us as original documents and the
conformity to original documents and completeness of all documents submitted
to us as photostatic, facsimile, notarial or certified copies. Further, we
have assumed (x) the due authorization, execution and delivery by each of the
parties thereto, other than the Association and the Pass Through Trustee, of
the Operative Agreements to which each is a party, (y) that each such other
party has the power, authority and legal right to execute, deliver and perform
each such document and (z) that the Operative Agreements constitute the legal,
valid, binding and enforceable obligations of each such other party. Based on
the foregoing and subject to the assumptions and qualifications herein
contained, it is our opinion that:
1. The Association is a national banking association validly
existing and holding a valid certificate to do business as a national banking
association, with trust powers, is a Citizen of the United States as that term
is defined in the Federal Aviation Act of 1958, as amended, and, in its
individual capacity (to the extent provided therein) or as Pass Through
Trustee, has full corporate power and authority to execute, deliver and carry
out the terms of the Participation Agreements, the Pass Through Trust
Agreement, the Series Supplements, the Certificates and the other Operative
Agreements to which it is a party.
2. The Association (in its individual capacity, to the extent
provided therein), or as Pass Through Trustee, has duly authorized, executed
and delivered the Participation Agreements, the Pass Through Trust Agreement
and the Series Supplements, and the Participation Agreements, the Pass Through
Trust Agreement and the Series Supplements constitute the legal, valid,
binding and enforceable obligations of the Association (in its individual
capacity, to the extent provided therein), or as Pass Through Trustee,
enforceable against the Association (in its individual capacity, to the extent
provided therein), or as Pass Through Trustee, in accordance with their
respective terms, except as limited by bankruptcy, insolvency, moratorium,
receivership, fraudulent conveyance or other similar laws affecting creditor's
rights generally, and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
3. The Certificates have been duly authorized and validly
executed, issued, and delivered by the Pass Through Trustee and authenticated
by the Pass Through Trustee, acting through the Agent, pursuant to the
respective Pass Through Trust Agreement, the Series Supplements and the Agency
Agreement; and the Certificates acquired by the Underwriters under the
Underwriting Agreement are enforceable against the Pass Through Trustee and
are entitled to the benefits of the related Pass Through Trust Agreement and
the related Series Supplements.
4. The authorization, execution, delivery and performance by
the Association (in its individual capacity, to the extent provided
therein), or as Pass Through Trustee, of the Participation Agreements, the
Pass Through Trust Agreement, the Series Supplements and the other
Operative Agreements to which it is a party and the consummation of the
transactions therein contemplated and compliance with the terms thereof,
and the issuance of the Certificates thereunder do not and will not result
in the violation of the provisions of the Articles of Association or By-
Laws of the Association, and do not and will not conflict with, or result
in a breach of any terms or provisions of, or constitute a default under,
or result in the creation or the imposition of any Lien upon any property
or assets of the Pass Through Trustee, under any indenture, mortgage or
other agreement or instrument known to us to which the Pass Through Trustee
is a party or by which it or any of its property is bound, or any South
Carolina or Federal law, rule or regulation governing the Association's
banking or trust powers, or of any judgment, order or decree known to us to
be applicable to the Association or the Pass Through Trustee, of any court,
regulatory body, administrative agency, government or governmental body
having jurisdiction over the Association or the Pass Through Trustee or its
properties.
5. No authorization, approval, consent, license or order of,
giving of notice to, registration with, or taking of any other action in
respect of, any Federal or state governmental authority or agency pursuant to
any Federal or South Carolina law governing the banking or trust powers of the
Association, is required for the authorization, execution, delivery and
performance by the Association (in its individual capacity to the extent
provided therein), or as Pass Through Trustee, of the Participation
Agreements, the Pass Through Trust Agreement, the Series Supplements, the
Certificates and the other Operative Agreements to which it is a party or the
consummation of any of the transactions by the Association or the Pass Through
Trustee contemplated thereby or the issuance of the Certificates under the
Pass Through Trust Agreement and the Series Supplements (except such as shall
have been duly obtained, given or taken); and such authorization, execution,
delivery, performance, consummation, and issuance do not conflict with or
result in a breach of the provisions of any such law.
6. There are no proceedings pending, or to the best of our
knowledge, threatened, and to the best of our knowledge there is no
existing basis for any such proceeding against or affecting the Association
before any governmental authority which would, either in any one case or in
the aggregate, if adversely determined, materially and adversely affect the
Association's ability to perform its obligations under any of the Operative
Agreements to which it is a party. To the best of our knowledge, the
Association is not in default with respect to any order of any governmental
authority which default would, either in any one case or in the aggregate,
materially adversely affect the Association's ability to perform its
obligations under any of the Operative Agreements to which it is a party.
7. There are no taxes, fees or other governmental charges
payable under the laws of the State of South Carolina or any political
subdivision thereof in connection with the execution and delivery by the
Association (in its individual capacity, to the extent provided therein) or
the Pass Through Trustee, of the Participation Agreements, the Pass Through
Trust Agreement, the Series Supplements and the other Operative Agreements to
which it is a party or in connection with the execution, issuance and delivery
of the Certificates by the Pass Through Trustee, pursuant to the Pass Through
Trust Agreement and the Series Supplements.
8. Neither of the trusts created by the Pass Through Trust
Agreement and the Series Supplements nor the Pass Through Trustee (either in
its individual capacity or as Pass Through Trustee), nor their respective
Affiliates, successors or assigns, will be subject to any tax (including,
without limitation, net or gross income, tangible or intangible property, net
worth, capital, franchise or doing business tax), fee or other governmental
charge under the laws of the State of South Carolina or any political
subdivision thereof (other than taxes imposed on the fees received by the
Association for acting as Pass Through Trustee under the Pass Through Trust
Agreement and the Series Supplements). Certificate holders who are not
residents of or otherwise subject to tax in South Carolina will not be subject
to any tax (including, without limitation, net or gross income, tangible or
intangible property, net worth, capital, franchise or doing business tax), fee
or other governmental charge under the laws of the State of South Carolina or
any political subdivision thereof as a result of purchasing, owning (including
receiving payments with respect to) or selling a Certificate. There are no
applicable taxes under the laws of the State of South Carolina or any
political subdivision thereof upon or with respect to (a) the construction,
mortgaging, financing, refinancing, purchase, acquisition, acceptance,
rejection, delivery, nondelivery, transport, location, ownership, insurance,
control, assembly, possession, repossession, operation, use, condition,
maintenance, repair, sale, return, abandonment, replacement, preparation,
installation, storage, redelivery, manufacture, leasing, subleasing,
modification, rebuilding, importation, transfer of title, transfer of
registration, exportation or other application or disposition of the Aircraft
or any interest in any thereof, (b) payments of Rent or other receipts, income
or earnings arising therefrom or received with respect to the Aircraft or any
interest in any thereof or payable pursuant to the Lease, (c) any amount paid
or payable pursuant to any Operative Agreements, (d) the Aircraft or any
interest therein or the applicability of the Lease to the Aircraft or any
interest in any thereof, (e) any or all of the Operative Agreements, any or
all of the Certificates or any interest in any or all thereof or the offering,
registration, reregistration, issuance, acquisition, modification, assumption,
reissuance, refinancing or refunding of any or all thereof, and any other
documents contemplated thereby and amendments or supplements hereto and
thereto, (f) the payment of the principal of, or interest or premium on, or
other amounts payable with respect to, any or all of the Certificates, whether
as originally issued or pursuant to any refinancing, refunding, assumption,
modification or reissuance, or any other obligation evidencing any loan in
replacement of the loan evidenced by any or all of the Certificates, or (g)
otherwise with respect to or in connection with the transactions contemplated
by the Operative Agreements, which would not have been imposed if the Pass
Through Trustee had not had its principal place of business in, had not
performed (either in its individual capacity or as Pass Through Trustee) any
or all of its administrative duties under the Operative Agreements in, and had
not engaged in any activities unrelated to the transactions contemplated by
the Operative Agreements in, the State of South Carolina.
With respect to the opinions set forth in paragraphs 7 and 8
above, with your permission we have relied upon, and this opinion is
limited by, the assumptions set forth in the discussion entitled "Certain
South Carolina Taxes" in the Prospectus forming part of Registration
Statement No. 33-56569, as amended (the "Registration Statement") for the
registration of the Certificates with the Securities and Exchange
Commission. In addition, we have assumed that each Pass Through Trust (as
defined in the Registration Statements) will constitute a grantor trust
under Subpart E, Part I of Subchapter J of the Internal Revenue Code of
1986, as amended (the "Code"), and will not be classified as a corporation
or as a Partnership (as defined in Section 7701 of the Code), and each Pass
Through Trust does not otherwise engage in business in South Carolina. We
express no opinion as to the correctness of the foregoing assumptions and
we have conducted no independent investigation in this regard.
The opinions set forth herein are limited to federal laws of
the United States of America and laws of South Carolina governing taxation
and the banking and trust powers of the Association. With respect to the
opinions set forth above in paragraph 2 as to the legality, validity,
binding effect and enforceability of the Participation Agreements, the Pass
Through Trust Agreement and the Series Supplements, the governing law of
which is expressly stated to be that of the State of New York, we have
assumed with your permission that the Participation Agreements, the Pass
Through Trust Agreement, and the Series Supplements constitute legal,
valid, binding and enforceable documents or instruments under the laws of
the State of New York (as to which assumption we express no opinion) and
those opinions are expressed as if the laws of South Carolina were to
govern those documents or instruments. Further, without limiting the
generality of the foregoing, we express no opinion as to (i) federal or
state securities laws or blue sky laws and assume that the Certificates
have been registered, issued and sold in compliance with all applicable
federal and state securities and blue sky laws and that the Pass Through
Trust Agreement and the Series Supplements have been duly qualified under
the provisions of the Trust Indenture Act of 1939, as amended; (ii) any
laws, rules or regulations applicable to the particular nature of the
equipment acquired by the Owner Trustee except as set forth in paragraph 1
above with respect to the citizenship of the Pass Through Trustee; or (iii)
the perfection or priority of security interests.
This opinion is being furnished only to the parties to which it
is addressed and is solely for their benefit. No other Person shall be
entitled to rely on this opinion without our express prior written consent.
This opinion may not be used, circulated, quoted, published or otherwise
referred to for any purpose without our express prior written consent. Our
opinion is limited to the matters stated herein, and no opinion is implied or
may be inferred beyond the opinions expressly stated herein.
Very truly yours,
POWELL, GOLDSTEIN, FRAZER & MURPHY
SCHEDULE A
Lessee
Federal Express Corporation
2007 Corporate Avenue
Memphis, TN 38132
Owner Trustee
First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Indenture Trustee
NationsBank of Georgia, National Association
Corporate Trust Lease Administration
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Pass Through Trustee
NationsBank, National Association
1301 Gervis Street
4th Floor
Columbia, South Carolina 29201
Owner Participant
Shawmut Bank, National Association
One Federal Street
Boston, Massachusetts 02211
Underwriters
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Chase Securities, Inc.
c/o Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower
New York, New York 10281
Original Loan Participants
The Chase Manhattan Bank (National Association)
One Chase Manhattan Plaza
New York, New York 10081
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, California 94520
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
The First National Bank of Chicago
Transportation Division
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
EXHIBIT B
[FORM OF LEASE AGREEMENT]
[See Exhibit 4.g]
EXHIBIT C
[FORM OF INDENTURE]
[See Exhibit 4.c.1]
EXHIBIT D
[FORM OF TRUST AGREEMENT]
[See Exhibit 4.f]
TRUST AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N658FE)
Dated as of May 1, 1995
Amended and Restated as of August 1, 1995
between
AMSOUTH LEASING CORPORATION,
as Trustor
and
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
as Owner Trustee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 752, REGISTRATION NO. N658FE
TABLE OF CONTENTS
PARTIES.................................................................... 1
RECITALS................................................................... 1
ARTICLE 1
THE LESSOR'S ESTATE
SECTION 1.01. Authorization and Direction to Owner Trustee............. 2
SECTION 1.02. Declaration of Trust..................................... 2
SECTION 1.03. Conditions Precedent..................................... 3
ARTICLE 2
DISTRIBUTIONS
SECTION 2.01. Rent, Etc................................................ 3
SECTION 2.02. Excepted Payments........................................ 4
SECTION 2.03. Other Receipts........................................... 4
SECTION 2.04. Distributions after Default.............................. 4
SECTION 2.05. Distributions after Release of Lien of Indenture......... 4
SECTION 2.06. Manner of Making Distributions........................... 5
ARTICLE 3
THE OWNER TRUSTEE
SECTION 3.01. Acceptance of Trust and Duties........................... 5
SECTION 3.02. Limitation on Authority of Owner Trustee................. 6
SECTION 3.03. Notice of Default........................................ 6
SECTION 3.04. Action Upon Instructions................................. 6
SECTION 3.05. Certain Duties and Responsibilities of Owner Trustee..... 7
SECTION 3.06. Certain Rights of Owner Trustee.......................... 8
SECTION 3.07. No Representations or Warranties as to Certain Matters... 10
SECTION 3.08. Status of Moneys Received................................ 10
SECTION 3.09. Self-Dealing............................................. 11
SECTION 3.10. Definition of a Responsible Officer...................... 11
SECTION 3.11. Resignation or Removal of Owner Trustee.................. 11
SECTION 3.12. Estate and Rights of Successor Owner Trustee............. 11
SECTION 3.13. Merger or Consolidation of FSBU.......................... 12
SECTION 3.14. Co-Trustees.............................................. 12
SECTION 3.15. Interpretation of Agreements............................. 13
SECTION 3.16. Not Acting in Individual Capacity........................ 14
SECTION 3.17. Tax Returns.............................................. 14
ARTICLE 4
TERMINATION OF TRUST
SECTION 4.01. Termination.............................................. 14
SECTION 4.02. Distribution of Lessor's Estate upon Termination......... 16
ARTICLE 5
TRANSFER OF BENEFICIAL INTEREST
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. Indemnification.......................................... 18
SECTION 6.02. Supplements and Amendments............................... 19
SECTION 6.03. Nature of Title of Trustor............................... 20
SECTION 6.04. Power of Owner Trustee to Convey......................... 20
SECTION 6.05. Notices.................................................. 20
SECTION 6.06. Situs of Trust; Applicable Law; Severability............. 21
SECTION 6.07. Successors and Assigns................................... 21
SECTION 6.08. Headings and Table of Contents........................... 21
SECTION 6.09. Definitions.............................................. 21
SECTION 6.10. Identification of Trust.................................. 22
SECTION 6.11. Counterparts............................................. 22
SCHEDULE I -- DEFINITIONS
TRUST AGREEMENT
TRUST AGREEMENT (Federal Express Corporation Trust No. N658FE) dated
as of May 1, 1995, as amended and restated as of August 1, 1995 (this
"Agreement"), between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a
national banking association (in its individual capacity, "FSBU", and not in
its individual capacity but solely as trustee hereunder, the "Owner Trustee"),
and AMSOUTH LEASING CORPORATION, an Alabama corporation (together with its
successors and permitted assigns, the "Trustor");
W I T N E S S E T H :
WHEREAS, the Trustor and FSBU have heretofore entered into the
Original Trust Agreement;
WHEREAS, the Original Trust Agreement was duly filed with the Federal
Aviation Administration on May 4, 1995;
WHEREAS, the Original Loan Participants participated in the payment
of the Purchase Price by providing financing as evidenced by the Original Loan
Certificates;
WHEREAS, pursuant to Section 15 of the Original Participation
Agreement, the Lessee, the Trustor and the Owner Trustee desire to refinance
all of the Original Loan Certificates on the Refunding Date; and
WHEREAS, the Trustor and the Owner Trustee desire, in connection with
such refinancing, to amend and restate the Original Trust Agreement in its
entirety as herein provided.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, FSBU and the Trustor agree that the Original Trust Agreement
be and the same is hereby amended and restated in its entirety as follows:
ARTICLE 1
THE LESSOR'S ESTATE
SECTION 1.01. Authorization and Direction to Owner Trustee. The
Trustor hereby authorizes and directs the Owner Trustee, not individually but
solely as the Owner Trustee hereunder:
(a) to execute and deliver each of the other Operative Agreements
and to enter into and perform the transactions contemplated thereby;
(b) to execute and deliver from time to time the Certificates in the
manner and subject to the terms and conditions provided in the
Participation Agreement and the Indenture;
(c) to execute and deliver each other document referred to in the
Operative Agreements and the Original Agreements to which the Owner Trustee
is a party or which the Owner Trustee is required to deliver pursuant to
the Operative Agreements and the Original Agreements;
(d) subject to the terms of this Agreement, to perform the
obligations and duties and, upon instruction of the Trustor, exercise the
rights of the Owner Trustee under the Operative Agreements; and
(e) to execute and deliver all such other instruments, documents or
certificates and take all such other actions in accordance with the
directions of the Trustor, as the Trustor may deem necessary or advisable
in connection with the transactions contemplated hereby, the taking of any
such action by the Owner Trustee in the presence of the Trustor or its
counsel to evidence, conclusively, the direction of the Trustor.
The Trustor hereby ratifies the actions taken by the Owner Trustee in
connection with the delivery of the Aircraft as contemplated by the Original
Indenture and the Original Participation Agreement.
SECTION 1.02. Declaration of Trust. FSBU hereby confirms that it
holds and will continue to hold the Lessor's Estate upon the trusts herein set
forth for the use and benefit of the Trustor, subject, however, to the
provisions of, and the Lien created by, the Indenture.
SECTION 1.03. Conditions Precedent. The right and obligation of the
Owner Trustee to take the actions required by Section 1.01 hereof shall be
subject to the condition that the terms and conditions of Section 4.01 of the
Participation Agreement shall have been complied with in a manner satisfactory
to the Owner Trustee and the Trustor.
ARTICLE 2
DISTRIBUTIONS
SECTION 2.01. Rent, Etc. The Trustor and the Owner Trustee
acknowledge that the Lease will be security for the Certificates pursuant to
the Indenture which provides that all moneys payable by the Lessee to the
Owner Trustee under the Lease (other than Excepted Payments) are to be paid to
the Indenture Trustee while the Lien of the Indenture is in effect. Except as
otherwise provided in Section 2.04 hereof, the Owner Trustee shall promptly
apply each payment of the Owner Participant Amount, Rent (other than Excepted
Payments), Stipulated Loss Value, Termination Value, and any proceeds from the
sale, requisition or disposition of the Aircraft received by it as follows:
(a) prior to the release of the Lien of the Indenture, each such
payment shall be payable directly to the Indenture Trustee (and if any of
the same are received by the Owner Trustee shall, upon receipt, be paid
over to the Indenture Trustee without deduction, set off or adjustment of
any kind) for distribution in accordance with the provisions of Article V
of the Indenture; provided, that any payments received by the Owner Trustee
from (i) the Lessee with respect to FSBU's or the Owner Trustee's fees and
disbursements under this Agreement, or (ii) the Trustor pursuant to Section
6.01 hereof shall not be paid over to the Indenture Trustee but shall be
retained by the Owner Trustee and applied toward the purpose for which such
payments were made;
(b) any amount remaining after application in full in accordance with
paragraph (a) of this Section 2.01 and which represents payments for which
provision as to the application thereof is made in any other Operative
Agreement shall be applied promptly to the purpose for which such payment
shall have been made in accordance with the terms of such Operative
Agreement; and
(c) after application in accordance with paragraphs (a) and (b) of
this Section 2.01, or to the extent received from the Indenture Trustee
under the terms of the Indenture, the balance, if any, remaining shall be
paid to the Trustor.
SECTION 2.02. Excepted Payments. All Excepted Payments at any time
received by the Owner Trustee shall be distributed promptly to the applicable
Person, and such payment shall not be deemed under any circumstances to be
part of the Lessor's Estate.
SECTION 2.03. Other Receipts. Except as otherwise provided in
Section 2.04 hereof, any payment received by the Owner Trustee, other than
those referred to in Sections 2.01 and 2.02 hereof, shall be payable prior to
the release of the Lien of the Indenture directly to the Indenture Trustee
(and if any of the same are received by the Owner Trustee shall, upon receipt,
be paid over to the Indenture Trustee without deduction, set off or adjustment
of any kind) for distribution in accordance with the provisions of Article V
of the Indenture; and following such application or release of Lien, any such
payment for which provision as to the application thereof is made in the other
Operative Agreements shall be applied promptly to the purpose for which such
payment shall have been made in accordance with the terms of the other
Operative Agreements, and any such payment received by the Owner Trustee for
which no provision as to the application thereof is made in the Operative
Agreements or in this Article 2 shall, unless the Trustor shall have otherwise
instructed the Owner Trustee in writing, be distributed promptly to the
Trustor.
SECTION 2.04. Distributions after Default. Subject to the
provisions of Section 2.02 hereof, (i) all payments received and amounts
realized by the Owner Trustee after an Indenture Event of Default shall have
occurred and shall be continuing and after the Certificates shall have become
or been declared due and payable pursuant to Section 7.02(b) or 7.02(c) of the
Indenture or the Lease shall have been declared in default (including, without
limitation, any amounts realized by the Owner Trustee or the Trustor from the
exercise of any remedies pursuant to Section 17.01 of the Lease), as well as
(ii) all funds then held or thereafter received by the Owner Trustee as part
of this Trust Agreement, the Lease or otherwise, shall be distributed to the
Indenture Trustee.
SECTION 2.05. Distributions after Release of Lien of Indenture.
Except as otherwise provided in Sections 2.01, 2.02, 2.03 and 2.04 hereof:
(a) all payments received and amounts realized by the Owner Trustee
under the Lease or otherwise with respect to the Aircraft or any part
thereof (including, without limitation, all payments received pursuant to
Section 17.01 of the Lease and amounts realized upon the sale or lease of
the Aircraft or any part thereof after the termination of the Lease with
respect thereto), to the extent received or realized at any time after the
Lien of the Indenture shall have been released pursuant to the terms of the
Indenture, and
(b) moneys not included in paragraph (a) of this Section 2.05
remaining as part of the Lessor's Estate after payment in full of amounts
described in paragraph (a), shall, to the extent required, be retained by
the Owner Trustee as reimbursement for all expenses hereunder or under the
Lease not theretofore reimbursed under this Agreement, the Lease or
otherwise and to which the Owner Trustee is entitled to be reimbursed
pursuant to the provisions thereof, and any balance remaining thereafter
shall be distributed to the Trustor.
SECTION 2.06. Manner of Making Distributions. The Owner Trustee
shall make distributions or cause distributions to be made to (i) the Trustor
pursuant to this Article 2 by transferring by wire transfer in immediately
available funds the amount to be distributed to the account set forth in the
Participation Agreement or to such other account or accounts of the Trustor as
it may designate from time to time by written notice to the Owner Trustee (and
the Owner Trustee shall use best efforts to cause such funds to be transferred
by wire transfer on the same day as received, but in any case not later than
the next succeeding Business Day), and (ii) the Indenture Trustee pursuant to
this Article 2 by paying the amount to be distributed to the Indenture Trustee
in the manner specified in the Indenture; provided, that the Owner Trustee
shall invest overnight, for the benefit of the Trustor, in investments that
would be permitted by Article 23 of the Lease (but only to the extent funds
are received on or prior to 1:00 P.M. (Eastern Time) and such investments are
available and, if such investments are not available to the Owner Trustee in
investments which, after consultation with the Trustor, the Trustor shall
direct) all funds not transferred by wire transfer on the same day as they
were received. Notwithstanding the foregoing but subject always to the
provisions of, and the Lien created by, the Indenture, the Owner Trustee will,
if so requested by the Trustor by written notice, pay in immediately available
funds any and all amounts payable by the Owner Trustee hereunder to the
Trustor as directed by the Trustor.
ARTICLE 3
THE OWNER TRUSTEE
SECTION 3.01. Acceptance of Trust and Duties. FSBU accepts the trust
hereby created and, subject to Section 1.03 hereof, in its capacity as the
Owner Trustee agrees to perform the same, including without limitation,
subject to Section 1.03 hereof, the actions specified in Section 1.01 hereof
as herein provided. The Owner Trustee agrees to disburse all monies that it
receives under the Operative Agreements in accordance with the terms hereof.
The Owner Trustee shall not be answerable or accountable in its individual
capacity except as a result of or arising from (a) the Owner Trustee's willful
misconduct or gross negligence (in its individual capacity or as trustee), (b)
any breach by the Owner Trustee of its representations, warranties and
covenants given in its individual capacity in this Agreement, Sections
7.01(c), 7.02(a) and (b) and 7.04 of the Participation Agreement or Sections
7.01(c), 7.02(a) and (b) and 7.04 of the Original Participation Agreement or
its covenants given in its individual capacity in Section 3.05 of the
Indenture or Sections 4.01 and 6.03 of the Original Indenture or elsewhere in
the Operative Documents, (c) the failure to use ordinary care in receiving,
handling and disbursing funds, (d) Lessor's Liens attributable to it in its
individual capacity, and (e) taxes, fees, or other charges on, based on, or
measured by, any fees, commissions or compensation received by FSBU or the
Owner Trustee in connection with the transactions contemplated by the Original
Agreements, the Lease, the Indenture and the Operative Agreements including
this Agreement.
SECTION 3.02. Limitation on Authority of Owner Trustee. The Owner
Trustee shall have no power, right, duty or authority to manage, control,
possess, use, sell, lease, dispose of or otherwise deal with the Aircraft,
Airframe, Engines, any Part thereof or any other property at any time
constituting a part of the Lessor's Estate, or otherwise to take or refrain
from taking any action under or in connection with the Operative Agreements,
except (i) to execute and deliver the Operative Agreements, (ii) to exercise
and carry out or cause to be exercised or carried out the rights, duties and
obligations of the Owner Trustee hereunder and under the other Operative
Agreements, or (iii) as expressly provided in written instructions from the
Trustor given pursuant to Section 3.03 or 3.04 hereof; provided, that nothing
in this Section 3.02 shall limit in any manner the obligations of the Owner
Trustee hereunder.
SECTION 3.03. Notice of Default. In the event that a Responsible
Officer in the Corporate Trust Administration of the Owner Trustee shall have
actual knowledge of a Default or an Event of Default, or an Indenture Default
or an Indenture Event of Default, the Owner Trustee shall give or cause to be
given to the Trustor and the Indenture Trustee prompt notice (in any event
within two Business Days of the discovery thereof), in accordance with Article
14 of the Participation Agreement, of such Default, Event of Default,
Indenture Default or Indenture Event of Default. Subject to the terms of
Section 3.06(e) hereof and the rights of the Indenture Trustee under the
Indenture, the Owner Trustee shall take such action with respect to such
Default, Event of Default, Indenture Default or Indenture Event of Default as
shall be specified in written instructions from the Trustor; provided that the
Owner Trustee shall have no duty to take any action whatsoever in the absence
of instructions from the Owner Participant. For all purposes of this
Agreement and the Lease, in the absence of actual knowledge of a Responsible
Officer of the Owner Trustee, the Owner Trustee shall not be deemed to have
knowledge of a Default, Event of Default, Indenture Default or Indenture Event
of Default unless notified in writing by the Lessee, the Trustor, the
Indenture Trustee or any Certificate Holder.
SECTION 3.04. Action Upon Instructions. Upon the written
instructions at any time and from time to time of the Trustor, the Owner
Trustee will take or refrain from taking such action, not inconsistent with
provisions of the Indenture, as may be specified in such instructions.
SECTION 3.05. Certain Duties and Responsibilities of Owner Trustee.
(a)(i) The Owner Trustee undertakes to perform such duties and only such
duties as are specifically set forth herein, and with the degree of care
specified in Section 3.01 hereof, and in accordance with instructions given by
the Trustor hereunder, and no implied duties, covenants or obligations shall
be read into this Agreement, any such instructions or the Operative Agreements
against the Owner Trustee, and the Owner Trustee agrees that it will not
manage, control, possess, use, sell, lease, dispose of or otherwise deal with
the Aircraft or any part of the Lessor's Estate except as required by the
terms of the Operative Agreements, any such instructions and as otherwise
provided herein; and
(ii)in the absence of bad faith on its part, the Owner Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Owner Trustee and conforming to the requirements of this Agreement or
the other Operative Agreements, but in the case of any such certificates or
opinions which by any provisions hereof or thereof are specifically
required to be furnished to the Owner Trustee, the Owner Trustee shall be
under a duty to examine the same to determine whether or not they conform
to the requirements of this Trust Agreement or the Operative Agreements.
(b) No provision hereof shall require the Owner Trustee to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it. Notwithstanding the foregoing, the Owner
Trustee agrees in its individual capacity that it will, at its own cost and
expense, promptly take such action as may be necessary to discharge duly all
Lessor's Liens attributable to it in its individual capacity and will claim no
indemnity therefor hereunder, or under the Participation Agreement or any
Operative Agreement.
(c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Owner Trustee shall be subject to the provisions
of this Section 3.05, except that in the event of a conflict between this
Section 3.05 and Section 3.01 hereof, Section 3.01 hereof shall be controlling.
(d) The Owner Trustee will furnish to the Trustor, promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other instruments
furnished to the Owner Trustee hereunder or under the other Operative
Agreements or the Original Agreements (including those furnished to the
Indenture Trustee pursuant to the terms of the Indenture) and not otherwise
furnished to the Trustor.
(e) Notwithstanding anything herein to the contrary, the Owner
Trustee shall not be authorized and shall have no power to "vary the
investment" of the Owner Participant within the meaning of Treasury
Regulations Section 301.7701-4(c)(1), it being understood that the Owner
Trustee shall have the power and authority to fulfill its obligations under
Section 2.06 hereof and Article 23 of the Lease.
SECTION 3.06. Certain Rights of Owner Trustee. Except as otherwise
provided in Section 3.05 hereof:
(a) in the absence of bad faith on its part, the Owner Trustee may
rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request, direction or authorization by the Trustor or any
other party to any other Operative Agreement shall be sufficiently
evidenced by a request, direction or authorization in writing, delivered to
the Owner Trustee, and signed in the name of such party by any of the
Chairman of the Board, the President, any Vice President, the Treasurer or
Assistant Treasurer or the Secretary or Assistant Secretary or other duly
authorized officer of such party; and any resolution of the Board of
Directors or committee thereof of such party shall be sufficiently
evidenced by a copy of such resolution certified by the Secretary or an
Assistant Secretary of such party, to have been duly adopted and to be in
full force and effect on the date of such certification, and delivered to
the Owner Trustee;
(c) whenever in the administration of this Agreement the Owner Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder or under any of the
other Operative Agreements, the Owner Trustee (unless other evidence be
herein or therein specifically prescribed), absent actual knowledge of a
Responsible Officer of the Owner Trustee to the contrary, may rely in good
faith upon a certificate in writing, delivered to the Owner Trustee and
signed by any of the Chairman of the Board, the President, any Vice
President, the Treasurer or Assistant Treasurer or the Secretary or
Assistant Secretary of the Lessee, the Trustor, or the Indenture Trustee
and notice of such need for such proof or establishment shall be delivered
to the Trustor, who may advise the Owner Trustee in respect of such matter
and the Owner Trustee shall act in conformity with such advice;
(d) the Owner Trustee may exercise its powers and perform its duties
by or through such attorneys, agents and servants as it shall appoint with
due care, and it shall be entitled to rely upon the advice of counsel
reasonably selected by it with due care and shall be protected by the
advice of such counsel in anything done or omitted to be done in accordance
with such advice;
(e) the Owner Trustee shall not be under any obligation to take any
action under this Agreement or under any of the other Operative Agreements
at the request or direction of the Trustor unless the Persons making such
request or direction shall have offered to the Owner Trustee reasonable
security or indemnity against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction; nor
shall the Owner Trustee be required to take any action deemed to impose on
the Owner Trustee any obligation to take any action, if the Owner Trustee
shall have been advised by its counsel that such action is unlawful or is
contrary to the terms of this Agreement or the other Operative Agreements;
(f) the Owner Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order or
other paper or document unless a Responsible Officer of the Owner Trustee
has actual knowledge that the facts or matters stated therein are false or
inaccurate, but the Owner Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit, and,
if the Owner Trustee shall determine to make such further inquiry or
investigation, it shall be entitled, to the same extent permitted to the
Lessor under the Lease, to examine the books and records of the Lessee to
reasonably determine whether the Lessee is in compliance with the terms and
conditions of the Lease and to examine the Aircraft, Airframe, Engines or
any Part thereof personally or by agent or attorney; and
(g) without limiting the generality of Section 3.05 hereof, except as
otherwise provided in written instructions given to the Owner Trustee by the
Trustor or as otherwise provided in the Indenture or the Participation
Agreement, the Owner Trustee shall not have any duty (i) to see to any
recording or filing of the Lease or of this Agreement or any financing
statement or other notice or document relating thereto or contemplated
under the Operative Agreements or to see to the maintenance of any such
recording or filing (other than FAA reporting requirements contained in 14
C.F.R. Sections 47.45 and 47.51), (ii) to see to any insurance on the
Aircraft or any part thereof or to effect or maintain any such insurance,
whether or not the Lessee shall be in default with respect thereto, other
than to forward to the Trustor copies of all certificates, reports and
other written information which it receives from the Lessee pursuant to the
Lease, (iii) to see to the payment or discharge of any tax, assessment or
other governmental charges or any Lien (except any Lessor's Lien
attributable to it in its individual capacity) owing with respect to, or
assessed or levied against any part of the Lessor's Estate, (iv) to confirm
or verify any financial statements or reports of the Lessee, or (v) to
inspect the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of the Lessee's covenants under the Lease.
SECTION 3.07. No Representations or Warranties as to Certain
Matters. NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE
MADE (a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, VALUE, CONDITION, WORKMANSHIP, DESIGN, COMPLIANCE WITH
SPECIFICATIONS, CONSTRUCTION, OPERATION, MERCHANTABILITY OR FITNESS FOR USE
FOR A PARTICULAR PURPOSE OF THE AIRCRAFT, AS TO THE ABSENCE OF LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF
ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON
STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except
that FSBU represents and warrants that on the Delivery Date the Owner Trustee
shall have received whatever right, title and interests in, to and under the
Aircraft were conveyed to it by AVSA and FSBU represents, warrants and
covenants that at all times on and after the Delivery Date the Aircraft shall
be free of all Lessor's Liens attributable to it, and that the Owner Trustee
shall comply with the last sentence of Section 3.05(b) hereof, or (b) any
representation or warranty as to the validity, legality or enforceability of
this Agreement or any other Operative Agreement to which the Owner Trustee is
a party, or any other document or instrument, or as to the correctness of any
statement contained in any thereof, except to the extent that any such
representation, warranty or statement is expressly made herein or therein as a
representation or warranty by the Owner Trustee or FSBU and except that FSBU
hereby represents and warrants that this Agreement has been, and (assuming the
due authorization, execution and delivery of this Agreement by the Trustor)
the other Operative Agreements to which the Owner Trustee is a party have been
(or at the time of execution and delivery of any such instrument by the Owner
Trustee hereunder or pursuant to the terms of the Participation Agreement that
such an instrument will be) duly executed and delivered by one of its officers
who is or will be, as the case may be, duly authorized to execute and deliver
such instruments on behalf of the Owner Trustee and that this Agreement has
been duly authorized, executed and delivered by FSBU and (assuming due
authorization, execution and delivery of this Trust Agreement by the Trustor)
constitutes the legal, valid and binding obligation of FSBU enforceable
against it in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity.
SECTION 3.08. Status of Moneys Received. All moneys received by the
Owner Trustee under or pursuant to any provision of this Agreement or any
Operative Agreement shall constitute trust funds for the purpose for which
they were paid or are held, but need not be segregated in any manner from any
other moneys except to the extent required by law and may be deposited by the
Owner Trustee under such conditions as may be prescribed or permitted by law
for trust funds, or may be invested in direct obligations of the United States.
SECTION 3.09. Self-Dealing. The Owner Trustee in its individual
capacity, or any corporation in or with which the Owner Trustee may be
interested or affiliated, or any officer or director of any such corporation,
may have normal commercial relations, and otherwise deal, in the ordinary
course of business, with the Lessee or any other corporation having relations
with the Lessee to the full extent permitted by law.
SECTION 3.10. Definition of a Responsible Officer. For purposes of
this Trust Agreement only, "Responsible Officer" when used with respect to the
Owner Trustee means the Chairman or the Vice-Chairman of the Board of
Directors, the Chairman or Vice-Chairman of the Executive Committee of the
Board of Directors, the President, any Vice President (whether or not
designated by a number or a word or words added before or after the title
"Vice President"), the Secretary, any Assistant Secretary, or any other
officer in the Corporate Trust Administration of FSBU customarily performing
functions similar to those performed by any of the above designated officers.
SECTION 3.11. Resignation or Removal of Owner Trustee. The Owner
Trustee or any successor thereof (a) shall resign if required to do so
pursuant to Section 7.02(b) of the Participation Agreement and (b) may resign
at any time without cause by giving at least 60 days' prior written notice to
the Trustor and the Indenture Trustee, such resignation in each case to be
effective only upon the appointment of a successor trustee and the acceptance
of such appointment by such successor. In addition, the Trustor may at any
time remove the Owner Trustee without cause by an instrument in writing
delivered to the Owner Trustee and the Indenture Trustee, such removal to be
effective only upon the appointment by the Trustor of a successor Owner
Trustee and the acceptance of such appointment by such successor. Upon the
giving of notice of resignation or removal of the Owner Trustee, the Trustor
may appoint a successor Owner Trustee by an instrument signed by the Trustor.
If the Trustor shall not have so appointed a successor Owner Trustee within 30
days after such resignation or removal, the Owner Trustee, the Indenture
Trustee or the Trustor may apply to any court of competent jurisdiction to
appoint a successor Owner Trustee to act until such time, if any, as a
successor or successors shall have been appointed by the Trustor as above
provided. Any successor Owner Trustee so appointed by a court shall be
superseded by any successor Owner Trustee subsequently appointed by the
Trustor.
The appointment of any successor Owner Trustee shall be subject to the
conditions set forth in Section 11.01 of the Participation Agreement.
SECTION 3.12. Estate and Rights of Successor Owner Trustee. Any
successor Owner Trustee, however appointed, shall execute and deliver to the
predecessor Owner Trustee, with a copy to the Trustor and the Indenture
Trustee, an instrument accepting such appointment, and thereupon each
successor Owner Trustee, without further act, shall become vested with all the
estates, properties, rights, powers, duties and trust of the predecessor Owner
Trustee in the trusts hereunder with like effect as if originally named as an
Owner Trustee herein, but nevertheless upon the written request of such
successor Owner Trustee, such predecessor Owner Trustee shall execute and
deliver an instrument transferring to such successor Owner Trustee, upon the
trust herein expressed, all estates, properties, rights, powers, duties,
property or moneys then held by such predecessor Owner Trustee upon the trusts
herein expressed. Upon any such transfer by a predecessor Owner Trustee, such
predecessor Owner Trustee shall provide the successor Owner Trustee and
Trustor an accounting of the Lessor's Estate and the trusts hereunder.
Upon the appointment of any successor Owner Trustee hereunder, the
predecessor Owner Trustee will use its best efforts to cause registration of
the Aircraft included in the Lessor's Estate to be transferred upon the
records of the Aeronautics Authority or other registry where the Aircraft may
then be registered into the name of the successor Owner Trustee and shall
otherwise use its best efforts to comply, or assist the successor Owner
Trustee in complying, with the provisions of Section 11.01 of the
Participation Agreement.
SECTION 3.13. Merger or Consolidation of FSBU. Any corporation into
which FSBU in its individual capacity may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which FSBU shall be a party, or any corporation to which substantially all the
business of the Owner Trustee in its individual capacity may be transferred,
shall, subject to Section 11.01 of the Participation Agreement, be the Owner
Trustee under this Agreement without further act; provided, that such
corporation shall not also be the Indenture Trustee.
SECTION 3.14. Co-Trustees. At any time, if the Owner Trustee or the
Trustor shall deem it necessary or prudent or desirable in order to conform to
legal requirements of any jurisdiction in which any part of the Lessor's
Estate may at the time be located, the Owner Trustee by an instrument in
writing signed by it, shall appoint one or more Persons approved by the
Trustor to act as co-trustee, or co-trustees, jointly with the Owner Trustee,
or separate trustee or separate trustees (except insofar as local law makes it
necessary or prudent or desirable for any such co-trustee or separate trustee
to act alone), of all or any part of the Lessor's Estate, and to vest in such
Person or Persons, in such capacity, such title to the Lessor's Estate or any
part thereof, and such rights, powers, duties, trusts or obligations as the
Trustor may consider necessary or prudent or desirable. The Owner Trustee
shall not be liable for any act or omission of any co-trustee or separate
trustee appointed under this Section 3.14. No appointment of, or action by,
any co-trustee or separate trustee appointed under this Section 3.14 will
relieve the Owner Trustee of any of its obligations under any Operative
Agreement or otherwise affect any of the terms of the Indenture or adversely
affect the interests of the Indenture Trustee or the Certificate Holders in
the Trust Indenture Estate.
Any co-trustee or separate trustee may, at any time by an instrument
in writing, constitute the Owner Trustee its or his attorney-in-fact and agent
with full power and authority to do all acts and things and to exercise all
discretion on its or his behalf and in its or his name subject to the
conditions of this Agreement.
Every additional trustee hereunder shall be a Citizen of the United
States and, to the extent permitted by law, be appointed and act, and the
Owner Trustee and its successors shall act, subject to the following
provisions and conditions:
(A) all powers, duties, obligations and rights conferred upon the
Owner Trustee in respect of the custody, control and management of monies, the
Aircraft or documents authorized to be delivered hereunder or under the
Participation Agreement shall be exercised solely by the Owner Trustee;
(B) all other rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such additional trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (including the holding of title
to the Lessor's Estate) the Owner Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers, duties and
obligations shall be exercised and performed by such additional trustee;
(C) no power given to, or which is provided hereby may be exercised
by, any such additional trustee, except jointly with, or with the consent in
writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder except as otherwise provided
hereunder; and
(E) the Trustor, at any time, by an instrument in writing may remove
any such additional trustee.
SECTION 3.15. Interpretation of Agreements. In the event that the
Owner Trustee is unsure as to the application of any provision of this
Agreement or any other Operative Agreement or any other agreement relating to
the transactions contemplated by the Operative Agreements or such provision is
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or in the event that this Agreement or any other
Operative Agreement permits any determination by the Owner Trustee or is
silent or incomplete as to the course of action which the Owner Trustee is
required to take with respect to a particular set of facts, the Owner Trustee
shall request in writing sent in accordance with Article 14 of the
Participation Agreement instructions of the Trustor and, to the extent that
the Owner Trustee acts in good faith in accordance with any instructions
received from the Trustor, shall not be liable to any Person; provided, that
in the event that no response is made to the Owner Trustee by the Trustor
within 25 Business Days after such request, the Owner Trustee shall not be
liable to any Person for acts taken by the Owner Trustee in good faith or for
any failure to act, except to the extent provided in the last sentence of
Section 3.01 hereof.
SECTION 3.16. Not Acting in Individual Capacity. In carrying out
the trusts hereby created, the Owner Trustee will act solely as trustee
hereunder and not in its individual capacity except as expressly provided
herein or in the other Operative Agreements to which it is a party; and all
Persons, other than the Trustor as provided in this Agreement, having any
claim against the Owner Trustee by reason of the transactions contemplated
hereby shall look only to the Lessor's Estate for payment or satisfaction
thereof, except to the extent provided in the last sentence of Section 3.01
hereof.
SECTION 3.17. Tax Returns. The Owner Trustee shall be responsible
for the keeping of all appropriate books and records relating to the receipt
and disbursement of all moneys under this Agreement or any Operative
Agreement. The Trustor shall be responsible for causing to be prepared and
filed all income tax returns required to be filed by the Trustor. The Owner
Trustee, upon request, will furnish the Trustor with all such information as
may be reasonably required or necessary from the Owner Trustee in connection
with the preparation of such tax returns and in connection with any other
filing or audit and related litigation obligations. The Owner Trustee shall
be responsible for causing to be prepared at the request of the Trustor and at
the expense of the Lessee all income tax returns required to be filed with
respect to the trust created hereby and shall execute and file such returns;
provided, however, that the Owner Trustee shall send a completed copy of each
such return to the Trustor not more than 60 nor less than 30 days prior to the
due date of such return; provided that the Owner Trustee shall have timely
received all necessary information to complete and deliver to the Trustor such
return. The Trustor, upon request, will furnish the Owner Trustee with all
such information as may be required from the Trustor in connection with the
preparation of such income tax returns.
ARTICLE 4
TERMINATION OF TRUST
SECTION 4.01. Termination. This Agreement and the trust created and
provided for hereby shall cease and be terminated in any one of the following
events, whichever shall first occur:
(a) If the Trustor shall by notice in writing to the Owner Trustee
revoke and terminate the trust on and as of a date stated in such notice,
which date shall not be less than ten nor more than thirty days from the
date of mailing such notice, in which case, on the date specified in such
notice the trust created and provided for hereby shall cease and terminate;
provided, that this trust shall not be subject to revocation or termination
by the Trustor prior to the later of (x) payment in full and discharge of
the Certificates and all other indebtedness secured by the Indenture and
the release of the Lien of the Indenture and the security interest granted
thereby without the consent of the Indenture Trustee and (y) the
termination of the Lease; provided, further, that such notice shall be
accompanied by the written agreement of the Trustor to assume all of the
obligations of the Owner Trustee under the Operative Agreements and all
other obligations of the Owner Trustee incurred by it hereunder in its role
as the Owner Trustee arising from the revocation or termination of the
trust or this Agreement by the Trustor;
(b) The sale or other final disposition by the Owner Trustee of all
of its interest in all property constituting or included in the Lessor's
Estate and, if the Indenture shall then be in effect, the sale or other
disposition by the Indenture Trustee of all of its interest in all property
constituting or included in the Lessor's Estate, and the final disposition
by the Owner Trustee and, if the Indenture shall then be in effect, the
Indenture Trustee, of all moneys or other property or proceeds constituting
part of the Lessor's Estate in accordance with the terms hereof; or
(c) 110 years from the earlier execution of this Agreement by either
party hereto; provided, however, that if the trust shall be or become valid
under applicable law for a period subsequent to 110 years from the earlier
execution of this Agreement by either party hereto or, without limiting the
generality of the foregoing, if legislation shall become effective
providing for the validity or permitting the effective grant of such trust
for a period, in gross, exceeding the period for which such trust is
hereinabove stated to extend and be valid, then such trust shall not
terminate as provided in the first part of this sentence but shall extend
to and continue in effect until, but only if such non-termination and
extension shall then be valid under applicable law, such time as the same
shall, under applicable law, cease to be valid.
In the event of a termination pursuant to this Section 4.01, if the
Indenture is still in effect, the Trustor will promptly and duly execute and
deliver to the Indenture Trustee such documents and assurances including,
without limitation, conveyances, financing statements and continuation
statements with respect to financing statements and take such further action
as the Indenture Trustee may from time to time reasonably request and furnish
in order to protect the rights and remedies created or intended to be created
in favor of the Indenture Trustee under the Indenture and to create for the
benefit of the Certificate Holders a valid first priority Lien with respect
to, and a first and prior perfected security interest in, the Trust Indenture
Estate.
SECTION 4.02. Distribution of Lessor's Estate upon Termination.
Upon any termination of this trust pursuant to the provisions of Section 4.01
hereof, the Owner Trustee shall convey the Lessor's Estate (subject to all
obligations, if any, of the Owner Trustee then existing under the Operative
Agreements to which the Owner Trustee is a party) to such purchaser or
purchasers or the Trustor, as the case may be, and for such amount and on such
terms as shall be specified in written instructions from the Trustor delivered
to the Owner Trustee prior to the date of termination; provided, that in the
event such written instructions are not delivered to the Owner Trustee on or
before the date of termination, the Owner Trustee shall transfer title to the
Lessor's Estate to the Trustor. Upon making such transfer or sale and
accounting for all funds which have come into its hands, the Owner Trustee
shall be entitled to receipt of any sums due and owing to the Owner Trustee
for expenses incurred pursuant hereto as set forth in Section 2.05 hereof.
ARTICLE 5
TRANSFER OF BENEFICIAL INTEREST
At any time after all obligations of the Trustor under Section
2.01(d) of the Participation Agreement have been satisfied in full, the
Trustor may assign, convey or otherwise transfer to a single institutional
investor all (but not less than all) of the Beneficial Interest, provided that
it gives the Lessee and the Indenture Trustee at least 10 Business Days'
notice of such assignment, conveyance or other transfer and provided further
that the Trustor shall remain liable for all obligations of the Trustor under
this Agreement and the Operative Agreements to which the Trustor is a party to
the extent (but only to the extent) incurred on or before the date of such
transfer and provided that the transferee agrees by a written instrument in
form and substance reasonably satisfactory to the Indenture Trustee, the Owner
Trustee and the Lessee to assume primary liability for all obligations as a
trustor under this Agreement and the other Operative Agreements to which such
trustor is a party incurred after the date of transfer and the Trustor shall
remain secondarily liable for all such obligations assumed by its successor as
Trustor; provided, that the Trustor need not so agree to remain and shall not
be so secondarily liable if (a) such transferee is (i) a bank, savings
institution, finance company, leasing company or trust company, national
banking association acting for its own account or in a fiduciary capacity as
trustee or agent under any pension, retirement, profit sharing or similar
trust or fund, insurance company, fraternal benefit society or corporation
acting for its own account having a combined capital and surplus (or, if
applicable, consolidated tangible net worth or its equivalent) of not less
than $75,000,000, (ii) a subsidiary of any Person described in clause (i)
where such Person provides (A) support for the obligations assumed by such
transferee subsidiary satisfactory to the Lessee, the Owner Trustee and the
Indenture Trustee or (B) an unconditional guaranty satisfactory to the Lessee,
the Owner Trustee and the Indenture Trustee of such transferee subsidiary's
obligations, or (iii) an Affiliate of the original Trustor, so long as such
Affiliate has a combined capital and surplus (or, if applicable, consolidated
tangible net worth or its equivalent) of not less than $75,000,000, (b) such
transferee is legally capable of binding itself to the obligations of the
Trustor and expressly agrees to assume all obligations of the Trustor under the
Participation Agreement and this Agreement and (c) such transferee shall
provide representations substantially similar to those contained in Section
7.03(a) of the Participation Agreement. In the event of any such assignment,
conveyance or transfer, the transferee shall become a party to this Agreement
and shall agree to be bound by all the terms of and will undertake all of the
obligations of the Trustor contained in this Agreement and the other Operative
Agreements in such manner as is reasonably satisfactory to the Owner Trustee,
the Indenture Trustee and the Lessee. A transferee hereunder shall be (i) a
"U.S. Person" as defined in Section 7701(a)(30) of the Code (or any successor
provision thereto) or if the transferee shall not be such "U.S. Person" then
each Certificate Holder shall be provided an indemnity in form and substance
satisfactory to each such Certificate Holder, for any Taxes that may be
imposed on such Certificate Holders (currently or in the future) due to such
transferee's failure to be such a "U.S. Person" and (ii) a Citizen of the
United States or has established a voting trust, voting powers or other
arrangement reasonably satisfactory to the Indenture Trustee and the Lessee to
permit the Owner Trustee to be the registered owner of the Aircraft under the
Federal Aviation Act. A transferee hereunder shall not be, and in acquiring
the Beneficial Interest shall not use the assets of, an ERISA Plan. Assuming
the truth of the representations made in Sections 6.01(m) and 7.09 of the
Participation Agreement and compliance with Section 10.06 of the Indenture, no
such assignment, conveyance or transfer shall violate any provision of law or
regulation or create a relationship which would be in violation thereof. The
Owner Trustee shall not be on notice of or otherwise bound by any such
assignment, conveyance or transfer unless and until it shall have received an
executed counterpart of the instrument of such assignment, conveyance or
transfer. Upon any such disposition by the Trustor to a transferee as above
provided, the transferee shall be deemed the "Trustor" for all purposes
hereof, and shall be deemed to have made all the payments previously made by
its transferor and to have acquired the same interest in the Lessor's Estate
as theretofore held by its transferor; and each reference herein to the
"Trustor" shall thereafter be deemed a reference to such transferee.
Notwithstanding anything to the contrary contained in this Article 5, in no
event shall the Trustor transfer its interest in the Beneficial Interest to
any entity whose business is that of a nationwide or worldwide overnight or
expedited delivery small package air courier, cargo or freight deliverer and
which competes with the Lessee.
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. Indemnification. The Trustor and its assigns agree to
reimburse and save FSBU, in its individual capacity, harmless against any and
all loss, damage, liability, claims, demands, disbursements and expenses,
including taxes (excluding taxes imposed against FSBU upon or with respect to
any fees for services rendered in its capacity as Trustee hereunder) and
reasonable counsel fees, which are not required to be indemnified by the
Lessee pursuant to Section 9.01 of the Participation Agreement and which may
be incurred by reason of its being the Owner Trustee or acting hereunder or
under the Operative Agreements or the Original Agreements, but solely by
reason thereof and arising out of or relating solely to this Agreement or the
other Operative Agreements or the Original Agreements or the Aircraft or the
Rents and other sums payable therefor, or by reason of any occurrence directly
relating thereto while so acting, and to secure the payment thereof, FSBU, in
its individual capacity, shall have a Lien on the Lessor's Estate and the
proceeds thereof, including income, prior to any interest therein of the
Trustor and its assigns (but subject to the rights of the Lessee under the
Operative Agreements and the Original Agreements and subject and subordinate
to the Lien of the Indenture), except that FSBU shall not have any such Lien
(and the Owner Participant shall have no obligation) in respect of any such
loss, damage, liability, claims, demands, disbursements and expenses,
including taxes and counsel fees, arising from or as a result of (A) the Owner
Trustee's willful misconduct or gross negligence (in its individual capacity
or as trustee), (B) any inaccuracy of any representation of FSBU or any breach
by FSBU of its warranties and covenants given in its individual capacity in
this Agreement, Article 5 of the Lease, Sections 7.01(c), 7.02(a) and (b) and
7.04 of the Participation Agreement and its representations and warranties in
the Operative Agreements, (C) the failure to use ordinary care in receiving,
handling and disbursing funds, (D) Lessor's Liens attributable to it in its
individual capacity, (E) taxes, fees, or other charges on, based on, or
measured by, any fees, commissions or compensation received by FSBU in
connection with the transactions contemplated by the Lease, the Indenture and
this Agreement, (F) Taxes excluded from indemnification pursuant to Section
8.01(b) of the Participation Agreement (disregarding for the purposes of this
Section 6.01, subsections (ii) and (v) of Section 8.01(b) of the Participation
Agreement) or (G) Expenses excluded from indemnification pursuant to Section
9.01(b) of the Participation Agreement (disregarding for the purposes of this
Section 6.01, subsections (ii), (iv), (vi), and (viii) of Section 9.01(b) of
the Participation Agreement to the extent such subsections relate to actions
of the Owner Participant); provided, that, before asserting any right to
payment or indemnification hereunder, FSBU shall first demand (but need not
exhaust its remedies with respect to) its corresponding right to payment or
indemnification from the Lessee pursuant to the Participation Agreement. It
is further understood that the distribution by the Owner Trustee of all or any
part of the Lessor's Estate as provided in Section 4.02 of this Agreement
shall not impair the right of FSBU to indemnity, payment and reimbursement as
herein provided. In the event FSBU makes any advances at any time to pay or
to provide for the payment of any such loss, damage, liability, claim, demand
or expense, then FSBU, in its individual capacity, shall be entitled, in
addition to reimbursement for the principal of the sum so advanced, to
interest on the amount of such advances at the Prime Rate. The provisions of
this Section shall continue in force and effect notwithstanding the
termination of this trust or the resignation, inability or incapacity to act
or removal of the Owner Trustee. FSBU or the Owner Trustee (in its individual
capacity or as trustee, as the case may be) agrees that it shall have no right
against (except as provided in this Section 6.01) the Trustor or (subject to
the provisions of the Indenture) the Trust Indenture Estate for any fee as
compensation for its services hereunder.
SECTION 6.02. Supplements and Amendments. At any time and from time
to time, only upon the written request of the Trustor (a) FSBU and the Trustor
shall execute a supplement hereto for the purpose of adding provisions to, or
changing or eliminating provisions of, this Agreement as specified in such
request and (b) the Owner Trustee shall, subject to the provisions of Article
XIII of the Indenture, enter into or consent to such written amendment or
modification of or supplement to any of the Operative Agreements as the
Indenture Trustee and any other necessary parties may agree to in writing and
as may be specified in such request, or execute and deliver such written
waiver of the terms of any of the Operative Agreements as may be agreed to in
writing by the Indenture Trustee and as may be specified in such request;
provided, that (i) the Owner Trustee shall not execute any such supplement,
amendment, waiver or modification without the prior written consent of the
Trustor, (ii) if in the reasonable opinion of the Owner Trustee any document
required to be executed by it pursuant to this Section adversely affects any
right or duty of, or immunity or indemnity in favor of, the Owner Trustee
under this Agreement or any other Operative Agreement, the Owner Trustee may
in its discretion decline to execute such document, (iii) any amendment or
supplement to this Agreement that would adversely affect the rights of the
Indenture Trustee or the Holders shall be subject to the prior written consent
of the Indenture Trustee and (iv) any amendment or supplement to this
Agreement that would adversely affect the rights of the Lessee shall be
subject to the prior written consent of the Lessee. It shall not be necessary
that any request pursuant to this Section specify the particular form of the
proposed document to be executed pursuant to such request, but it shall be
sufficient if such request shall indicate the substance thereof. Promptly
after the execution by FSBU or the Owner Trustee of any document pursuant to
this Section, the Owner Trustee shall mail a conformed copy thereof to the
Trustor, the Indenture Trustee and the Lessee, but the failure of the Owner
Trustee to mail such conformed copies shall not impair or affect the validity
of such document.
SECTION 6.03. Nature of Title of Trustor. The Trustor shall not
have any legal title to any part of the Lessor's Estate. No transfer, by
operation of law or otherwise, of the right, title and interest of the Trustor
in and to the Lessor's Estate or the trusts hereunder shall operate to
terminate this Agreement or Lessor's Estate.
SECTION 6.04. Power of Owner Trustee to Convey. Any assignment,
sale, transfer or other conveyance by the Owner Trustee of the interest of the
Owner Trustee in the Operative Agreements or in the Aircraft or any part
thereof pursuant to and in compliance with the terms of this Agreement or the
Operative Agreements shall bind the Trustor and shall be effective to transfer
or convey all right, title and interest of the Owner Trustee and the Trustor
in and to the Operative Agreements or the Aircraft or such part thereof. No
purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such assignment, sale,
transfer or conveyance or as to the application of any sale or other proceeds
with respect thereto by the Owner Trustee.
SECTION 6.05. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mails and (c) if given by Federal Express service (or, if a
Default or Event of Default shall have occurred and be continuing, by other
comparable courier service), when received or personally delivered, addressed:
If to the Owner Trustee:First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Department
Facsimile: (801) 246-5053
If to the Trustor: AmSouth Leasing Corporation
1900 Fifth Avenue North
Eighth Floor
Birmingham, Alabama 35203
Attention: President
Facsimile: (205) 307-4124
If to the Indenture
Trustee: NationsBank of Georgia, N.A.
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Attention: Corporate Trust Lease Administration
Facsimile: (404) 607-6362
or as to any of the foregoing parties at such other address as such party may
designate by notice duly given in accordance with this Section to the other
parties.
SECTION 6.06. Situs of Trust; Applicable Law; Severability. THIS
AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF
VALIDITY, CONSTRUCTION AND PERFORMANCE. If any provision of this Agreement
shall be invalid or unenforceable, the remaining provisions hereof shall
continue to be fully effective; provided, that such remaining provisions do not
increase the obligations or liabilities of the Owner Trustee or the Trustor.
SECTION 6.07. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of, and shall be enforceable by,
the parties hereto and their respective successors and permitted assigns,
including any successive holder of the Beneficial Interest, but only to the
extent the Beneficial Interest has been transferred or assigned in accordance
with the limitations of Article 5 of this Agreement.
SECTION 6.08. Headings and Table of Contents. The headings of the
Articles and Sections of this Agreement and the Table of Contents are inserted
for convenience only and shall not affect the meaning or construction of any
of the provisions hereof.
SECTION 6.09. Definitions. The capitalized terms used herein, unless
otherwise herein defined or the context hereof shall otherwise require, shall
have the respective meanings set forth in Schedule II to the Participation
Agreement (Federal Express Corporation Trust No. N658FE) dated as of May 1,
1995 as amended and restated as of August 1, 1995 among Federal Express
Corporation, Trustor, the Original Loan Participants, FSBU, not in its
individual capacity but solely as Owner Trustee except as otherwise expressly
provided therein, NationsBank, National Association (Carolinas), as Pass
Through Trustee, and NationsBank of Georgia, National Association, as
Indenture Trustee, which schedule is attached hereto as Schedule I and by this
reference incorporated herein.
SECTION 6.10. Identification of Trust. This trust may for
convenience be referred to as the "Federal Express Corporation Trust No.
N658FE."
SECTION 6.11. Counterparts. This instrument may be executed in any
number of counterparts or upon separate signature pages bound together in
several counterparts, each of which when so executed shall be deemed to be an
original, and such counterparts together shall constitute and be one and the
same instrument.
IN WITNESS WHEREOF, FSBU and the Trustor have caused this Agreement
to be duly executed all as of the date first above written.
AMSOUTH LEASING CORPORATION
By: _______________________________________
Name: Charles F. Kiser
Title: President
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
By: _______________________________________
Name:
Title:
SCHEDULE I
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Act; Federal Aviation Act. Title 49 of the United States Code
(which, among other things, recodified the Federal Aviation Act of 1958, as
amended to the time of such recodification), as amended and in effect on the
date of the Lease or as subsequently amended, or any successor or substituted
legislation at the time in effect and applicable, and the regulations
promulgated pursuant thereto.
Additional Insureds. As defined in Article 13 of the Lease.
Aeronautics Authority or FAA. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment received or deemed to
have been received by a Person (the "Original Payment") shall be supplemented
by a further payment to such Person so that the sum of the two payments shall
be equal to the Original Payment, after taking into account (x) all Taxes that
would result from the receipt or accrual of such payments and (y) any
reduction in Taxes that would result from such increased Taxes. In the case
of amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is
at all times subject to Federal income tax at the maximum marginal rate
generally applicable to corporations from time to time and actual state, local
and foreign income taxes.
Agent. The Chase Manhattan Bank (National Association) and its
successors and permitted assigns as Agent for the Original Loan Participants
pursuant to Article 16 of the Original Participation Agreement.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by the
Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Act) as to which there is in force a permit granted under
Section 41302 of the Act.
Aircraft. The Airframe (or any permitted substitute airframe)
together with the two Engines (or any Replacement Engine) whether or not any
of such initial or Replacement Engines may from time to time be installed on
such Airframe or may be installed on any other airframe or on any other
aircraft, including any aircraft substituted pursuant to Section 11.03 of the
Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) leased by the Lessor to the Lessee
pursuant to the Lease and the initial Lease Supplement and having the United
States FAA Registration Number and manufacturer's serial number specified in
the initial Lease Supplement, including (i) all Parts in respect thereof and
(ii) any replacement airframe which may be substituted pursuant to Section
11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement, dated as of August 1, 1995.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on the Delivery Date or the Refunding Date in connection with the transactions
contemplated by the Operative Agreements, as such agreement may be amended and
supplemented from time to time and delivered to the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee and the Owner Participant as
amended from time to time.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with a copy of such report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
May 1, 1995, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or with the giving of notice or lapse of
time or both would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft throughout
the Basic Term pursuant to Section 3.02 of the Lease, adjusted pursuant to
Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on July 5, 2019 or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York and Memphis, Tennessee, and so long as
the Lien of the Indenture is in effect, in Atlanta, Georgia, Columbia, South
Carolina and, thereafter, in Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N658FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Act, or any analogous part of any
successor or substituted legislation or regulation at the time in effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, references to the Code shall
mean the Internal Revenue Code of 1986, as amended from time to time.
Commencement Date. July 5, 1995.
Consent and Agreement. The Consent and Agreement dated as of May 1,
1995 executed by the Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Department. The principal office of the Owner Trustee
located at 79 South Main Street, Salt Lake City, Utah 84111 or such other
office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified to the Lessee, the
Indenture Trustee and the Owner Participant.
Corporate Trust Office. The principal office of the Indenture
Trustee located at 600 Peachtree Street, N.E., Suite 900, Atlanta, Georgia
30308, Attention: Corporate Trust Lease Administration or such other office at
which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to the
Lessee, the Owner Participant and the Owner Trustee.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition, which with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. May 4, 1995.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by its manufacturer's serial number in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease,
together with all Parts related thereto. Except as otherwise provided, at
such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of May 1, 1995, executed
by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N658FE), dated as of May 1, 1995 between the
Lessor and the Lessee, as the same may be amended, modified or supplemented
from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. Has the meaning set forth in Section 7.06 of the
Participation Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use
(A) for a period in excess of 30 days due to theft or disappearance or such
longer period not to exceed 60 days from the end of such initial 30-day period
if and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such loss constitutes an Event of Loss under clause (ii)
of this definition) or (B) for a period in excess of 60 days due to the
destruction, damage beyond economic repair or rendition of such property
permanently unfit for normal use by Lessee for any reason whatsoever; (ii) any
damage to such property which results in an insurance settlement with respect
to such property on the basis of a total loss, or constructive or compromised
total loss; (iii) (1) condemnation, confiscation or seizure of, or requisition
of title to such property by the Government, any foreign government or
purported government or any agency or instrumentality thereof, or (2)
condemnation, confiscation, or seizure of, or requisition or taking of, use of
such property (A) by a foreign government or instrumentality or agency of any
such foreign government, for a period in excess of 180 days (or such shorter
period ending on the earlier of the expiration of the Term or on the date on
which an insurance settlement with respect to such property on the basis of a
total loss or constructive or compromised total loss shall occur) or (B) by
the Government for a period extending beyond the Term, provided that no Event
of Loss shall be deemed to have occurred, and the Term shall be extended
automatically for a period of six months (or the date of return of the
Aircraft, if shorter, so long as the Lessor receives at least six months
notice of such date of return) beyond the end of the Term in the event that
the Aircraft, the Airframe or any Engine is requisitioned by the Government
pursuant to an activation as part of the Civil Reserve Air Fleet Program
described in Section 7.02(a)(iv) of the Lease; and (iv) as a result of any
law, rule, regulation, order or other action by the Aeronautics Authority or
other governmental body having jurisdiction, the use of the Aircraft or
Airframe in the normal course of air transportation of cargo shall have been
prohibited by virtue of a condition affecting all Airbus A300F-600 series
aircraft equipped with engines of the same make and model as the Engines for a
period of six (6) consecutive months, unless the Lessee, prior to the
expiration of such six (6) month period, shall be diligently carrying forward
all steps which are necessary or desirable to permit the normal use of the
Aircraft or Airframe or, in any event, if such use of the Aircraft or the
Airframe shall have been prohibited for a period of twelve (12) consecutive
months, unless the Lessee, prior to the expiration of such twelve (12) month
period shall have conformed at least one Airbus A300F-600 series aircraft (but
not necessarily the Aircraft or the Airframe) to the requirements of any such
law, rule, regulation, order, or other action and shall have commenced regular
commercial use and shall be diligently carrying forward, on a
non-discriminatory basis, all steps necessary or desirable to permit the
normal use of the Aircraft by the Lessee. The date of such Event of Loss
shall be (s) the 31st day or the 91st day, as the case may be, following loss
of such property or its use due to theft or disappearance (or the end of the
Term, if earlier); (t) the 61st day following the date of any destruction,
damage beyond economic repair or rendition of such property permanently unfit
for normal use; (u) the date of any insurance settlement on the basis of a
total loss or constructive or compromised total loss; (v) the date of any
condemnation, confiscation, seizure or requisition of title of such property;
(w) the 181st day following condemnation, confiscation, seizure or requisition
for use of such property by a foreign government referred to in clause
(iii)(2)(A) above (or the end of the Term or the date of any insurance
settlement described therein, if earlier than such 181st day); (x) the last
day of the Term in the case of requisition for use of such property by the
Government; (y) the last day of the 6 month or 12 month period, referred to in
clause (iv) above. An Event of Loss with respect to the Aircraft shall be
deemed to have occurred if any Event of Loss occurs with respect to the
Airframe. If an Event of Loss described in any of clauses (i) (A), (iii),
(iv) or (v) above shall occur, Lessor may elect, within 30 days following the
date upon which such Event of Loss is deemed to have occurred, to waive such
Event of Loss and the consequences thereof.
Excepted Payments. Collectively, (i) indemnity or other payments (and
interest thereon to the extent provided in the Operative Agreements) paid or
payable by the Lessee in respect of the Owner Participant, the Owner Trustee
in its individual capacity or any of their respective successors, permitted
assigns, directors, officers, employees, servants and agents or Affiliates,
pursuant to the Participation Agreement or any indemnity hereafter granted to
the Owner Participant or the Owner Trustee in its individual capacity pursuant
to the Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the
Aircraft payable as a result of insurance claims paid for the benefit of, or
losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
the provisions of but not required under Section 13 of the Lease, (iv)
payments of Supplemental Rent by the Lessee in respect of any amounts payable
under the Tax Indemnity Agreement, (v) any amounts payable by the Lessee to the
Owner Participant or the Owner Trustee in its individual capacity, after the
release thereof from the Lien of the Indenture, (vi) (x) in the case of any
Basic Rent received by the Indenture Trustee on or in respect of any Rent
Payment Date, subject to receipt by the Indenture Trustee of Basic Rent due on
such Rent Payment Date satisfying Section 3.05 of the Lease, payments of Basic
Rent payable on such Rent Payment Date constituting increases in Basic Rent
attributable to payments arising pursuant to Section 5 of the Tax Indemnity
Agreement and (y) in the case of any Basic Rent otherwise received by the
Indenture Trustee, so long as no Payment Default or Indenture Event of Default
shall have occurred and be continuing, payments of Basic Rent constituting
increases in Basic Rent attributable to payments arising pursuant to Section 5
of the Tax Indemnity Agreement, (vii) the payment of incremental out-of-pocket
expenses of the Owner Trustee, the Owner Participant or their respective
authorized representatives payable by the Lessee under Section 6.03(b) of the
Participation Agreement or Section 14.01 of the Lease following any
reregistration of the Aircraft and (viii) any right to demand, collect or
otherwise receive and enforce the payment of any amount described in clauses
(i) through (vii) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease. Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. Unless otherwise provided in the applicable
provisions of any Operative Agreement, in such determination it shall be
assumed that the Aircraft is in the condition required under the Lease in the
case of return of the Aircraft pursuant to Article 12 of the Lease; provided
that in connection with any determination pursuant to or for the purposes of
Article 17 of the Lease, the Aircraft shall be appraised on an "as is, where
is" basis. Fair Market Value shall be determined in accordance with the
provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FSBU. First Security Bank of Utah, National Association, a national
banking association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of the
Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSBU, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, the Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N658FE), dated as of May 1, 1995, as amended and
restated as of August 1, 1995, between the Lessor and the Indenture Trustee,
as supplemented by the Indenture and Security Agreement Supplement, or amended
including any amendment or supplement thereto entered into from time to time.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N658FE) dated May 4, 1995, as such Indenture and Security Agreement Supplement
shall be amended or supplemented from time to time and any other supplement to
the Indenture, substantially in the form of Exhibit A to the Indenture.
Indenture Default. Any event or condition, which with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. NationsBank of Georgia, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes or Expenses
imposed against the Indenture Trustee which are not required to be indemnified
against by the Lessee pursuant to the Participation Agreement by reason of
Section 8.01(b) or 9.01(b) thereof.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N658FE) dated as of May 1, 1995, as amended and restated as of August 1, 1995,
entered into by the Lessor and the Lessee concurrently with the execution and
delivery of the Indenture, as said Lease may from time to time be supplemented
or amended, or its terms waived or modified, to the extent permitted by, and
in accordance with, the terms of the Indenture, including, without limitation,
supplementation by one or more Lease Supplements entered into pursuant to the
applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N658FE) dated May 4, 1995, as such Lease Supplement shall
be amended or supplemented from time to time and any other supplement to the
Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessor. First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), the GTA, the Engine Warranty Assignment, the Engine Consent, any
warranty with respect to the Airframe and the Engines, all amounts of Basic
Rent and Supplemental Rent, including without limitation, insurance proceeds
(other than insurance proceeds payable to or for the benefit of the Owner
Trustee in its individual capacity, the Owner Participant or the Indenture
Trustee) and requisition, indemnity or other payments of any kind for or with
respect to the Aircraft (except amounts owing to the Owner Participant, to the
Indenture Trustee, to the Owner Trustee in its individual capacity, or to any
of their respective directors, officers, employees and agents pursuant to
Articles 8 and 9 of the Participation Agreement). Notwithstanding the
foregoing, "Lessor's Estate" shall (i) not include any Excepted Payment and
(ii) include all property purported to be covered by the Granting Clause of
the Indenture.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, or the Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, (ii)
acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof or which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Articles 7, 8, 9, 10
or 11 of the Lease and other than a transfer pursuant to the exercise of the
remedies set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to an excess of (i) the
present values of all remaining scheduled payments of such principal amount or
portion thereof and interest thereon (excluding interest accrued from the
immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate per semi-annual period equal to the Debt Rate.
Non-U.S. Person. Any Person other than (i) a citizen or resident of
the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which the Lessee in good faith determines to be
obsolete or no longer suitable or appropriate for use on the Airframe or any
Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, any Owner Trustee Guaranty,
any Ancillary Agreement entered into by or with the written consent of the
Indenture Trustee, which by its terms is an Operative Agreement, the
Certificates outstanding at the time of reference, the Indenture, the
Indenture and Security Agreement Supplement, the Consent and Agreement, the
AVSA Consent and Agreement, the Consent and Guaranty (to the extent assigned
by the Purchase Agreement Assignment), the Engine Consent and the Tax
Indemnity Agreement, each as amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N658FE) dated as of May 1,
1995 between the Owner Trustee and the Indenture Trustee, which together with
the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N658FE) dated May 4, 1995 attached thereto was recorded
as one instrument by the FAA on May 5, 1995 and assigned Conveyance Number
NN008445.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N658FE) dated as of May 1, 1995 between the Owner Trustee as lessor,
and the Lessee, which together with Lease Supplement No. 1 (Federal Express
Corporation Trust No. N658FE) dated May 4, 1995 attached thereto was recorded
as one instrument by the FAA on May 5, 1995 and assigned Conveyance Number
NN008446.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the first Refinancing after the Delivery
Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N658FE) among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of May 1, 1995.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N658FE) between the Lessee and the
Owner Participant as it was originally executed as of May 1, 1995.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N658FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of May 1, 1995 and filed with the FAA
on May 4, 1995.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Amount. The amount described in Section 2.03 of the
Participation Agreement and set forth on Schedule II to the Lease.
Owner Participant Guarantor. AmSouth Bank of Alabama, its successors
and permitted assigns and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty dated the
Delivery Date, as amended and restated on the Refunding Date substantially in
the form of Exhibit E to the Participation Agreement, as the same may be
amended, modified or supplemented from time to time.
Owner Trustee. FSBU, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash flow during the Interim Term
and the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages and the EBO Price, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N658FE), dated as of May 1, 1995, as amended and
restated as of August 1, 1995, among the Lessee, the Original Loan
Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as trustee, the Owner
Participant, the Pass Through Trustee, not in its individual capacity except
as otherwise expressly provided therein, but solely as pass through trustee
and the Indenture Trustee, not in its individual capacity except as otherwise
expressly stated therein, but solely as indenture trustee, as amended,
modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or, prior to
replacement thereof in accordance with the Lease, which may be removed
therefrom.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
August 1, 1995 between the Lessee and the Pass Through Trustee, as such Pass
Through Agreement may be modified, supplemented or amended from time to time in
accordance with the provisions thereof.
Pass Through Certificates. Any of the 1995 Pass Through Certificates,
Series A1 or 1995 Pass Through Certificates, Series A2, in each case as issued
by the related Pass Through Trust; and "Pass Through Certificates" means all
of the Pass Through Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1995-A1
or Federal Express Pass Through Trust, 1995-A2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. NationsBank, National Association (Carolinas),
a national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 5 and July 5 commencing July 5, 1995.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Premium Termination Date. With respect to the Certificates having a
Maturity in 2013, February 22, 2007 and with respect to the
Certificates having a Maturity in 2016, May 4, 2015.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of the
Indenture.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase Agreement,
dated as of July 3, 1991 between AVSA and the Lessee, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to the Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N658FE), dated as of May 1, 1995 between
the Lessor and the Lessee, as the same may be amended, modified or supplemented
from time to time.
Purchase Price. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 21 for January 5
Payment Dates and June 20 for July 5 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least ten Business Days prior
to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic Rent,
Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 5 and July 5 commencing July 5, 1995.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of the same or of equal or greater
value, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Department or Corporate
Trust Office (in the Corporate Trust Lease Administration Department), as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, with respect to the Owner Participant, the president or
any vice president with direct responsibility for the transactions
contemplated by the Operative Agreements, and with respect to any other party,
any corporate officer or (except in the case of the Owner Participant) other
employee of a party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Corporation.
Securities Act. The Securities Act of 1933, as amended.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
Series Supplement. The Series Supplement 1995-A1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1995-A2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both of such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value shall
be, under any circumstances and in any event, an amount, together with so much
of the arrears portion of Basic Rent due and owing through the date of payment
of Stipulated Loss Value as does not constitute an Excepted Payment, at least
sufficient to pay in full as of such date of payment the aggregate unpaid
principal amount of and accrued interest on the Certificates outstanding on
such date of payment. Subject to the immediately preceding sentence, it is
understood and agreed that the amounts set forth on Schedule III of the Lease,
for dates other than Rent Payment Dates on which arrears Basic Rent is due,
fully reflect appropriate Basic Rent accruals and credits of unearned Basic
Rent and, accordingly, no further accrual or credit shall be required whenever
Stipulated Loss Value is to be calculated with reference to any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant or
others, including, without limitation, payments of Stipulated Loss Value, EBO
Price and amounts calculated by reference to Termination Value and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after July 5, 2002 in the case of Article 10 of the Lease, and in the
case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling on
January 5, 2011 or January 5, 2014, as the case may be, (ii) Section
4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the
eighth anniversary of the Commencement Date and (iii) Section 4.02(a)(F) of
the Lease, January 5, 2016.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to
be calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N658FE), dated as of May 1, 1995 as amended and restated as of
August 1, 1995, between the Owner Participant and the Owner Trustee in its
individual capacity, as from time to time modified, amended or supplemented
pursuant to its applicable provisions and in accordance with the Operative
Agreements.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. The several Underwriters named in the Underwriting
Agreement.
Underwriting Agreement. The Underwriting Agreement dated August 16,
1995 among the Lessee, Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Chase Securities, Inc.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Federal Aviation Act, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Federal Aviation
Act and Part 121 of the regulations under such Act, for aircraft capable of
carrying ten (10) or more individuals or 6,000 pounds or more of cargo, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provision thereof or in absence thereof.
TRUST AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N659FE)
Dated as of June 1, 1995
Amended and Restated as of August 1, 1995
between
SHAWMUT BANK, NATIONAL ASSOCIATION,
as Trustor
and
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
as Owner Trustee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 757, REGISTRATION NO. N659FE
TABLE OF CONTENTS
PARTIES.................................................................... 1
RECITALS................................................................... 1
ARTICLE 1
THE LESSOR'S ESTATE
SECTION 1.01. Authorization and Direction to Owner Trustee............. 2
SECTION 1.02. Declaration of Trust..................................... 2
SECTION 1.03. Conditions Precedent..................................... 3
ARTICLE 2
DISTRIBUTIONS
SECTION 2.01. Rent, Etc................................................ 3
SECTION 2.02. Excepted Payments........................................ 4
SECTION 2.03. Other Receipts........................................... 4
SECTION 2.04. Distributions after Default.............................. 4
SECTION 2.05. Distributions after Release of Lien of Indenture......... 4
SECTION 2.06. Manner of Making Distributions........................... 5
ARTICLE 3
THE OWNER TRUSTEE
SECTION 3.01. Acceptance of Trust and Duties........................... 5
SECTION 3.02. Limitation on Authority of Owner Trustee................. 6
SECTION 3.03. Notice of Default........................................ 6
SECTION 3.04. Action Upon Instructions................................. 7
SECTION 3.05. Certain Duties and Responsibilities of Owner Trustee..... 7
SECTION 3.06. Certain Rights of Owner Trustee.......................... 8
SECTION 3.07. No Representations or Warranties as to Certain Matters... 10
SECTION 3.08. Status of Moneys Received................................ 11
SECTION 3.09. Self-Dealing............................................. 11
SECTION 3.10. Definition of a Responsible Officer...................... 11
SECTION 3.11. Resignation or Removal of Owner Trustee.................. 11
SECTION 3.12. Estate and Rights of Successor Owner Trustee............. 12
SECTION 3.13. Merger or Consolidation of FSBU.......................... 12
SECTION 3.14. Co-Trustees.............................................. 12
SECTION 3.15. Interpretation of Agreements............................. 14
SECTION 3.16. Not Acting in Individual Capacity........................ 14
SECTION 3.17. Tax Returns.............................................. 14
ARTICLE 4
TERMINATION OF TRUST
SECTION 4.01. Termination.............................................. 15
SECTION 4.02. Distribution of Lessor's Estate upon Termination......... 15
ARTICLE 5
[INTENTIONALLY LEFT BLANK]
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. Indemnification.......................................... 16
SECTION 6.02. Supplements and Amendments............................... 17
SECTION 6.03. Nature of Title of Trustor............................... 18
SECTION 6.04. Power of Owner Trustee to Convey......................... 18
SECTION 6.05. Notices.................................................. 18
SECTION 6.06. Situs of Trust; Applicable Law; Severability............. 19
SECTION 6.07. Successors and Assigns................................... 19
SECTION 6.08. Headings and Table of Contents........................... 19
SECTION 6.09. Definitions.............................................. 19
SECTION 6.10. Identification of Trust.................................. 20
SECTION 6.11. Counterparts............................................. 20
SCHEDULE I -- DEFINITIONS
TRUST AGREEMENT
TRUST AGREEMENT (Federal Express Corporation Trust No. N659FE) dated
as of June 1, 1995, as amended and restated as of August 1, 1995 (this
"Agreement"), between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a
national banking association (in its individual capacity, "FSBU", and not in
its individual capacity but solely as trustee hereunder, the "Owner Trustee"),
and SHAWMUT BANK, NATIONAL ASSOCIATION, a national banking association
(together with its successors and permitted assigns, the "Trustor");
W I T N E S S E T H :
WHEREAS, the Trustor and FSBU have heretofore entered into the
Original Trust Agreement;
WHEREAS, the Original Trust Agreement was duly filed with the Federal
Aviation Administration on July 31, 1995;
WHEREAS, the Original Loan Participants participated in the payment
of the Purchase Price by providing financing as evidenced by the Original Loan
Certificates;
WHEREAS, pursuant to Section 15 of the Original Participation
Agreement, the Lessee, the Trustor and the Owner Trustee desire to refinance
all of the Original Loan Certificates on the Refunding Date; and
WHEREAS, the Trustor and the Owner Trustee desire, in connection with
such refinancing, to amend and restate the Original Trust Agreement in its
entirety as herein provided.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, FSBU and the Trustor agree that the Original Trust Agreement
be and the same is hereby amended and restated in its entirety as follows:
ARTICLE 1
THE LESSOR'S ESTATE
SECTION 1.01. Authorization and Direction to Owner Trustee. The
Trustor hereby authorizes and directs (or has authorized and directed) the
Owner Trustee, not individually but solely as the Owner Trustee hereunder:
(a) to execute and deliver each of the other Operative Agreements
and to enter into and perform the transactions contemplated thereby;
(b) to execute and deliver from time to time the Certificates in the
manner and subject to the terms and conditions provided in the
Participation Agreement and the Indenture;
(c) to execute and deliver each other document referred to in the
Operative Agreements and the Original Agreements to which the Owner Trustee
is a party or which the Owner Trustee is required to deliver pursuant to
the Operative Agreements and the Original Agreements;
(d) subject to the terms of this Agreement, to perform the
obligations and duties and, upon instruction of the Trustor, exercise the
rights of the Owner Trustee under the Operative Agreements; and
(e) to execute and deliver all such other instruments, documents or
certificates and take all such other actions in accordance with the
directions of the Trustor, as the Trustor may deem necessary or advisable
in connection with the transactions contemplated hereby, the taking of any
such action by the Owner Trustee in the presence of the Trustor or its
counsel to evidence, conclusively, the direction of the Trustor.
The Trustor hereby ratifies the actions taken by the Owner Trustee in
connection with the delivery of the Aircraft as contemplated by the Original
Indenture and the Original Participation Agreement.
SECTION 1.02. Declaration of Trust. FSBU hereby confirms that it
holds and will continue to hold the Lessor's Estate upon the trusts herein set
forth for the use and benefit of the Trustor, subject, however, to the
provisions of, and the Lien created by, the Indenture.
SECTION 1.03. Conditions Precedent. The right and obligation of the
Owner Trustee to take the actions required by Section 1.01 hereof shall be
subject to the condition that the terms and conditions of Section 4.01 of the
Participation Agreement shall have been complied with in a manner satisfactory
to the Owner Trustee and the Trustor.
ARTICLE 2
DISTRIBUTIONS
SECTION 2.01. Rent, Etc. The Trustor and the Owner Trustee
acknowledge that the Lease will be security for the Certificates pursuant to
the Indenture which provides that all moneys payable by the Lessee to the
Owner Trustee under the Lease (other than Excepted Payments) are to be paid to
the Indenture Trustee while the Lien of the Indenture is in effect. Except as
otherwise provided in Section 2.04 hereof, the Owner Trustee shall promptly
apply each payment of the Owner Participant Amount, Rent (other than Excepted
Payments), Stipulated Loss Value, Termination Value, and any proceeds from the
sale, requisition or disposition of the Aircraft received by it as follows:
(a) prior to the release of the Lien of the Indenture, each such
payment shall be payable directly to the Indenture Trustee (and if any of
the same are received by the Owner Trustee shall, upon receipt, be paid
over to the Indenture Trustee without deduction, set off or adjustment of
any kind) for distribution in accordance with the provisions of Article V
of the Indenture; provided, that any payments received by the Owner Trustee
from (i) the Lessee with respect to FSBU's or the Owner Trustee's fees and
disbursements under this Agreement, or (ii) the Trustor pursuant to Section
6.01 hereof shall not be paid over to the Indenture Trustee but shall be
retained by the Owner Trustee and applied toward the purpose for which such
payments were made;
(b) any amount remaining after application in full in accordance with
paragraph (a) of this Section 2.01 and which represents payments for which
provision as to the application thereof is made in any other Operative
Agreement shall be applied promptly to the purpose for which such payment
shall have been made in accordance with the terms of such Operative
Agreement; and
(c) after application in accordance with paragraphs (a) and (b) of
this Section 2.01, or to the extent received from the Indenture Trustee
under the terms of the Indenture, the balance, if any, remaining shall be
paid to the Trustor.
SECTION 2.02. Excepted Payments. Notwithstanding any other provision
contained herein, all Excepted Payments at any time received by the Owner
Trustee shall be distributed promptly to the applicable Person, and such
payment shall not be deemed under any circumstances to be part of the Lessor's
Estate.
SECTION 2.03. Other Receipts. Except as otherwise provided in
Section 2.04 hereof, any payment received by the Owner Trustee, other than
those referred to in Sections 2.01 and 2.02 hereof, shall be payable prior to
the release of the Lien of the Indenture directly to the Indenture Trustee
(and if any of the same are received by the Owner Trustee shall, upon receipt,
be paid over to the Indenture Trustee without deduction, set off or adjustment
of any kind) for distribution in accordance with the provisions of Article V
of the Indenture; and following such application or release of Lien, any such
payment for which provision as to the application thereof is made in the other
Operative Agreements shall be applied promptly to the purpose for which such
payment shall have been made in accordance with the terms of the other
Operative Agreements, and any such payment received by the Owner Trustee for
which no provision as to the application thereof is made in the Operative
Agreements or in this Article 2 shall, unless the Trustor shall have otherwise
instructed the Owner Trustee in writing, be distributed promptly to the
Trustor.
SECTION 2.04. Distributions after Default. Subject to the
provisions of Section 2.02 hereof, (i) all payments received and amounts
realized by the Owner Trustee after an Indenture Event of Default shall have
occurred and shall be continuing and after the Certificates shall have become
or been declared due and payable pursuant to Section 7.02(b) or 7.02(c) of the
Indenture or the Lease shall have been declared in default (including, without
limitation, any amounts realized by the Owner Trustee or the Trustor from the
exercise of any remedies pursuant to Section 17.01 of the Lease), as well as
(ii) all funds then held or thereafter received by the Owner Trustee as part
of this Trust Agreement, the Lease or otherwise, shall be distributed to the
Indenture Trustee.
SECTION 2.05. Distributions after Release of Lien of Indenture.
Except as otherwise provided in Sections 2.01, 2.02, 2.03 and 2.04 hereof:
(a) all payments received and amounts realized by the Owner
Trustee under the Lease or otherwise with respect to the Aircraft or
any part thereof (including, without limitation, all payments
received pursuant to Section 17.01 of the Lease and amounts realized
upon the sale or lease of the Aircraft or any part thereof after the
termination of the Lease with respect thereto), to the extent
received or realized at any time after the Lien of the Indenture
shall have been released pursuant to the terms of the Indenture, and
(b) moneys not included in paragraph (a) of this Section 2.05
remaining as part of the Lessor's Estate after payment in full of
amounts described in paragraph (a),
shall, to the extent required, be retained by the Owner Trustee as
reimbursement for all expenses hereunder or under the Lease not theretofore
reimbursed under this Agreement, the Lease or otherwise and to which the Owner
Trustee is entitled to be reimbursed pursuant to the provisions thereof, and
any balance remaining thereafter shall be distributed to the Trustor.
SECTION 2.06. Manner of Making Distributions. The Owner Trustee
shall make distributions or cause distributions to be made to (i) the Trustor
pursuant to this Article 2 by transferring by wire transfer in immediately
available funds the amount to be distributed to the account set forth in the
Participation Agreement or to such other account or accounts of the Trustor as
it may designate from time to time by written notice to the Owner Trustee (and
the Owner Trustee shall use best efforts to cause such funds to be transferred
by wire transfer on the same day as received, but in any case not later than
the next succeeding Business Day), and (ii) the Indenture Trustee pursuant to
this Article 2 by paying the amount to be distributed to the Indenture Trustee
in the manner specified in the Indenture; provided, that the Owner Trustee
shall invest overnight, for the benefit of the Trustor, in investments that
would be permitted by Article 23 of the Lease (but only to the extent funds
are received on or prior to 1:00 P.M. (Eastern Time) and such investments are
available and, if such investments are not available to the Owner Trustee in
investments which, after consultation with the Trustor, the Trustor shall
direct) all funds not transferred by wire transfer on the same day as they
were received. Notwithstanding the foregoing but subject always to the
provisions of, and the Lien created by, the Indenture, the Owner Trustee will,
if so requested by the Trustor by written notice, pay in immediately available
funds any and all amounts payable by the Owner Trustee hereunder to the
Trustor as directed by the Trustor.
ARTICLE 3
THE OWNER TRUSTEE
SECTION 3.01. Acceptance of Trust and Duties. FSBU accepts the trust
hereby created and, subject to Section 1.03 hereof, in its capacity as the
Owner Trustee agrees to perform the same, including without limitation,
subject to Section 1.03 hereof, the actions specified in Section 1.01 hereof
as herein provided. The Owner Trustee agrees to disburse all monies that it
receives under the Operative Agreements in accordance with the terms hereof.
The Owner Trustee shall not be answerable or accountable in its individual
capacity except as a result of or arising from (a) the Owner Trustee's willful
misconduct or gross negligence (in its individual capacity or as trustee), (b)
any breach by the Owner Trustee of its representations, warranties and
covenants given in its individual capacity in this Agreement, Sections
7.01(c), 7.02(a) and (b) and 7.04 of the Participation Agreement or its
covenants given in its individual capacity in Section 3.05 of the Indenture,
(c) the failure to use ordinary care in receiving, handling and disbursing
funds, (d) Lessor's Liens attributable to it in its individual capacity, and
(e) taxes, fees, or other charges on, based on, or measured by, any fees,
commissions or compensation received by FSBU or the Owner Trustee in
connection with the transactions contemplated by the Lease, the Indenture and
the Operative Agreements including this Agreement.
SECTION 3.02. Limitation on Authority of Owner Trustee. The Owner
Trustee shall have no power, right, duty or authority to, and agrees that it
will not, manage, control, possess, use, sell, lease, dispose of or otherwise
deal with the Aircraft, Airframe, Engines, any Part thereof or any other
property at any time constituting a part of the Lessor's Estate, or otherwise
to take or refrain from taking any action under or in connection with the
Operative Agreements, except (i) to execute and deliver the Operative
Agreements, (ii) to exercise and carry out or cause to be exercised or carried
out the rights, duties and obligations of the Owner Trustee hereunder and
under the other Operative Agreements, or (iii) as expressly provided in
written instructions from the Trustor given pursuant to Section 3.03 or 3.04
hereof; provided, that nothing in this Section 3.02 shall limit in any manner
the obligations of the Owner Trustee hereunder.
SECTION 3.03. Notice of Default. In the event that a Responsible
Officer in the Corporate Trust Administration of the Owner Trustee shall have
actual knowledge of a Default or an Event of Default, or an Indenture Default
or an Indenture Event of Default, the Owner Trustee shall give or cause to be
given to the Trustor and the Indenture Trustee prompt telephone or facsimile
notice, followed by prompt confirmation thereof by certified mail, postage
prepaid (in any event within two Business Days of the discovery thereof), in
accordance with Article 14 of the Participation Agreement, of such Default,
Event of Default, Indenture Default or Indenture Event of Default. Subject to
the terms of Section 3.06(e) hereof and the rights of the Indenture Trustee
under the Indenture, the Owner Trustee shall take such action with respect to
such Default, Event of Default, Indenture Default or Indenture Event of
Default as shall be specified in written instructions from the Trustor;
provided that the Owner Trustee shall have no duty to take any (and shall take
no) action whatsoever in the absence of instructions from the Owner
Participant. For all purposes of this Agreement and the Lease, in the absence
of actual knowledge of a Responsible Officer of the Owner Trustee, the Owner
Trustee shall not be deemed to have knowledge of a Default, Event of Default,
Indenture Default or Indenture Event of Default unless notified in writing by
the Lessee, the Trustor, the Indenture Trustee or any Certificate Holder.
SECTION 3.04. Action Upon Instructions. Upon the written
instructions at any time and from time to time of the Trustor, the Owner
Trustee will take or refrain from taking such action, not inconsistent with
provisions of the Indenture, as may be specified in such instructions.
SECTION 3.05. Certain Duties and Responsibilities of Owner Trustee.
(a)(i) The Owner Trustee undertakes to perform such duties and only such
duties as are specifically set forth herein, and with the degree of care
specified in Section 3.01 hereof, and in accordance with instructions given by
the Trustor hereunder, and no implied duties, covenants or obligations shall
be read into this Agreement, any such instructions or the Operative Agreements
against the Owner Trustee, and the Owner Trustee agrees that it will not
manage, control, possess, use, sell, lease, dispose of or otherwise deal with
the Aircraft or any part of the Lessor's Estate except as required by the
terms of the Operative Agreements, any such instructions and as otherwise
provided herein; and
(ii)in the absence of bad faith on its part, the Owner Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Owner Trustee and conforming to the requirements of this Agreement or
the other Operative Agreements, but in the case of any such certificates or
opinions which by any provisions hereof or thereof are specifically
required to be furnished to the Owner Trustee, the Owner Trustee shall be
under a duty to examine the same to determine whether or not they conform
to the requirements of this Trust Agreement or the Operative Agreements.
(b) No provision hereof shall require the Owner Trustee to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it. Notwithstanding the foregoing, the Owner
Trustee agrees in its individual capacity that it will, at its own cost and
expense, promptly take such action as may be necessary to discharge duly all
Lessor's Liens attributable to it in its individual capacity and will claim no
indemnity therefor hereunder, or under the Participation Agreement or any
Operative Agreement.
(c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Owner Trustee shall be subject to the provisions
of this Section 3.05, except that in the event of a conflict between this
Section 3.05 and Section 3.01 hereof, Section 3.01 hereof shall be controlling.
(d) The Owner Trustee will furnish to the Trustor, promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other instruments
furnished to the Owner Trustee hereunder or under the other Operative
Agreements or the Original Agreements (including those furnished to the
Indenture Trustee pursuant to the terms of the Indenture) and not otherwise
furnished to the Trustor.
(e) Notwithstanding anything herein to the contrary, the Owner Trustee
shall not be authorized and shall have no power to "vary the investment" of
the Owner Participant within the meaning of Treasury Regulations Section
301.7701-4(c)(1), it being understood that the Owner Trustee shall have the
power and authority to fulfill its obligations under Section 2.06 hereof and
Article 23 of the Lease.
SECTION 3.06. Certain Rights of Owner Trustee. Except as otherwise
provided in Section 3.05 hereof:
(a) in the absence of bad faith on its part, the Owner Trustee may
rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request, direction or authorization by the Trustor or any
other party to any other Operative Agreement shall be sufficiently
evidenced by a request, direction or authorization in writing, delivered to
the Owner Trustee, and signed in the name of such party by any of the
Chairman of the Board, the President, any Vice President, the Treasurer or
Assistant Treasurer or the Secretary or Assistant Secretary or other duly
authorized officer of such party; and any resolution of the Board of
Directors or committee thereof of such party shall be sufficiently
evidenced by a copy of such resolution certified by the Secretary or an
Assistant Secretary of such party, to have been duly adopted and to be in
full force and effect on the date of such certification, and delivered to
the Owner Trustee;
(c) whenever in the administration of this Agreement the Owner Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder or under any of the
other Operative Agreements, the Owner Trustee (unless other evidence be
herein or therein specifically prescribed), absent actual knowledge of a
Responsible Officer of the Owner Trustee to the contrary, may rely in good
faith upon a certificate in writing, delivered to the Owner Trustee and
signed by any of the Chairman of the Board, the President, any Vice
President, the Treasurer or Assistant Treasurer or the Secretary or
Assistant Secretary of the Lessee, the Trustor, or the Indenture Trustee
and notice of such need for such proof or establishment shall be delivered
to the Trustor, who may advise the Owner Trustee in respect of such matter
and the Owner Trustee shall act in conformity with such advice;
(d) the Owner Trustee may exercise its powers and perform its duties
by or through such attorneys, agents and servants as it shall appoint with
due care, and it shall be entitled to rely upon the advice of counsel
reasonably selected by it with due care and shall be protected by the
advice of such counsel in anything done or omitted to be done in accordance
with such advice;
(e) the Owner Trustee shall not be under any obligation to take any
action under this Agreement or under any of the other Operative Agreements
at the request or direction of the Trustor unless the Persons making such
request or direction shall have offered to the Owner Trustee reasonable
security or indemnity against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction; nor
shall the Owner Trustee be required to take any action deemed to impose on
the Owner Trustee any obligation to take any action, if the Owner Trustee
shall have been advised by its counsel that such action is unlawful or is
contrary to the terms of this Agreement or the other Operative Agreements;
(f) the Owner Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order or
other paper or document unless a Responsible Officer of the Owner Trustee
has actual knowledge that the facts or matters stated therein are false or
inaccurate, but the Owner Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit, and,
if the Owner Trustee shall determine to make such further inquiry or
investigation, it shall be entitled, to the same extent permitted to the
Lessor under the Lease, to examine the books and records of the Lessee to
reasonably determine whether the Lessee is in compliance with the terms and
conditions of the Lease and to examine the Aircraft, Airframe, Engines or
any Part thereof personally or by agent or attorney; and
(g) without limiting the generality of Section 3.05 hereof, except as
otherwise provided in written instructions given to the Owner Trustee by the
Trustor or as otherwise provided in the Indenture or the Participation
Agreement, the Owner Trustee shall not have any duty (i) to see to any
recording or filing of the Lease or of this Agreement or any financing
statement or other notice or document relating thereto or contemplated
under the Operative Agreements or to see to the maintenance of any such
recording or filing (other than FAA reporting requirements contained in 14
C.F.R. Sections 47.45 and 47.51), (ii) to see to any insurance on the
Aircraft or any part thereof or to effect or maintain any such insurance,
whether or not the Lessee shall be in default with respect thereto, other
than to forward to the Trustor copies of all certificates, reports and
other written information which it receives from the Lessee pursuant to the
Lease, (iii) to see to the payment or discharge of any tax, assessment or
other governmental charges or any Lien (except any Lessor's Lien
attributable to it in its individual capacity) owing with respect to, or
assessed or levied against any part of the Lessor's Estate, (iv) to confirm
or verify any financial statements or reports of the Lessee, or (v) to
inspect the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of the Lessee's covenants under the Lease.
SECTION 3.07. No Representations or Warranties as to Certain
Matters. NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE
MADE (a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, VALUE, CONDITION, WORKMANSHIP, DESIGN, COMPLIANCE WITH
SPECIFICATIONS, CONSTRUCTION, OPERATION, MERCHANTABILITY OR FITNESS FOR USE
FOR A PARTICULAR PURPOSE OF THE AIRCRAFT, AS TO THE ABSENCE OF LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF
ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON
STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except
that FSBU represents and warrants that on the Delivery Date the Owner Trustee
shall have received whatever right, title and interests in, to and under the
Aircraft were conveyed to it by AVSA and FSBU represents, warrants and
covenants that at all times on and after the Delivery Date the Aircraft shall
be free of all Lessor's Liens attributable to it, and that the Owner Trustee
shall comply with the last sentence of Section 3.05(b) hereof, or (b) any
representation or warranty as to the validity, legality or enforceability of
this Agreement or any other Operative Agreement to which the Owner Trustee is
a party, or any other document or instrument, or as to the correctness of any
statement contained in any thereof, except to the extent that any such
representation, warranty or statement is expressly made herein or therein as a
representation or warranty by the Owner Trustee or FSBU and except that FSBU
hereby represents and warrants that this Agreement has been, and (assuming the
due authorization, execution and delivery of this Agreement by the Trustor)
the other Operative Agreements to which the Owner Trustee is a party have been
(or at the time of execution and delivery of any such instrument by the Owner
Trustee hereunder or pursuant to the terms of the Participation Agreement that
such an instrument will be) duly executed and delivered by one of its officers
who is or will be, as the case may be, duly authorized to execute and deliver
such instruments on behalf of the Owner Trustee and that this Agreement has
been duly authorized, executed and delivered by FSBU and (assuming due
authorization, execution and delivery of this Trust Agreement by the Trustor)
constitutes the legal, valid and binding obligation of FSBU enforceable
against it in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity.
SECTION 3.08. Status of Moneys Received. All moneys received by the
Owner Trustee under or pursuant to any provision of this Agreement or any
Operative Agreement shall constitute trust funds for the purpose for which
they were paid or are held, but need not be segregated in any manner from any
other moneys except to the extent required by law and may be deposited by the
Owner Trustee under such conditions as may be prescribed or permitted by law
for trust funds, or may be invested in direct obligations of the United States.
SECTION 3.09. Self-Dealing. The Owner Trustee in its individual
capacity, or any corporation in or with which the Owner Trustee may be
interested or affiliated, or any officer or director of any such corporation,
may have normal commercial relations, and otherwise deal, in the ordinary
course of business, with the Lessee or any other corporation having relations
with the Lessee to the full extent permitted by law.
SECTION 3.10. Definition of a Responsible Officer. For purposes of
this Trust Agreement only, "Responsible Officer" when used with respect to the
Owner Trustee means the Chairman or the Vice-Chairman of the Board of
Directors, the Chairman or Vice-Chairman of the Executive Committee of the
Board of Directors, the President, any Vice President (whether or not
designated by a number or a word or words added before or after the title
"Vice President"), the Secretary, any Assistant Secretary, or any other
officer in the Corporate Trust Administration of FSBU customarily performing
functions similar to those performed by any of the above designated officers.
SECTION 3.11. Resignation or Removal of Owner Trustee. The Owner
Trustee or any successor thereof (a) shall resign if required to do so
pursuant to Section 7.02(b) of the Participation Agreement and (b) may resign
at any time without cause by giving at least 60 days' prior written notice to
the Trustor and the Indenture Trustee, such resignation in each case to be
effective only upon the appointment of a successor trustee and the acceptance
of such appointment by such successor. In addition, the Trustor may at any
time remove the Owner Trustee without cause by an instrument in writing
delivered to the Owner Trustee and the Indenture Trustee, such removal to be
effective only upon the appointment by the Trustor of a successor Owner
Trustee and the acceptance of such appointment by such successor. Upon the
giving of notice of resignation or removal of the Owner Trustee, the Trustor
may appoint a successor Owner Trustee by an instrument signed by the Trustor.
If the Trustor shall not have so appointed a successor Owner Trustee within 30
days after such resignation or removal, the Owner Trustee, the Indenture
Trustee or the Trustor may apply to any court of competent jurisdiction to
appoint a successor Owner Trustee to act until such time, if any, as a
successor or successors shall have been appointed by the Trustor as above
provided. Any successor Owner Trustee so appointed by a court shall be
superseded by any successor Owner Trustee subsequently appointed by the
Trustor.
The appointment of any successor Owner Trustee shall be subject to the
conditions set forth in Section 11.01 of the Participation Agreement.
SECTION 3.12. Estate and Rights of Successor Owner Trustee. Any
successor Owner Trustee, however appointed, shall execute and deliver to the
predecessor Owner Trustee, with a copy to the Trustor and the Indenture
Trustee, an instrument accepting such appointment, in form and substance
acceptable to the predecessor Owner Trustee and the Trustor and thereupon each
successor Owner Trustee, without further act, shall become vested with all the
estates, properties, rights, powers, duties and trust of the predecessor Owner
Trustee in the trusts hereunder with like effect as if originally named as an
Owner Trustee herein, but nevertheless upon the written request of such
successor Owner Trustee, such predecessor Owner Trustee shall execute and
deliver an instrument transferring to such successor Owner Trustee, upon the
trusts herein expressed, all estates, properties, rights, powers, duties,
property or moneys then held by such predecessor Owner Trustee upon the trusts
herein expressed. Upon any such transfer by a predecessor Owner Trustee, such
predecessor Owner Trustee shall provide the successor Owner Trustee and
Trustor an accounting of the Lessor's Estate and the trusts hereunder.
Upon the appointment of any successor Owner Trustee hereunder, the
predecessor Owner Trustee will use its best efforts to cause registration of
the Aircraft included in the Lessor's Estate to be transferred upon the
records of the Aeronautics Authority or other registry where the Aircraft may
then be registered into the name of the successor Owner Trustee and shall
otherwise use its best efforts to comply, or assist the successor Owner
Trustee in complying, with the provisions of Section 11.01 of the
Participation Agreement.
SECTION 3.13. Merger or Consolidation of FSBU. Any corporation into
which FSBU in its individual capacity may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which FSBU shall be a party, or any corporation to which substantially all the
business of the Owner Trustee in its individual capacity may be transferred,
shall, subject to Section 11.01 of the Participation Agreement, be the Owner
Trustee under this Agreement without further act; provided, that such
corporation shall not also be the Indenture Trustee.
SECTION 3.14. Co-Trustees. At any time, if the Owner Trustee or the
Trustor shall deem it necessary or prudent or desirable in order to conform to
legal requirements of any jurisdiction in which any part of the Lessor's
Estate may at the time be located, the Owner Trustee by an instrument in
writing signed by it, shall appoint one or more Persons approved by the
Trustor to act as co-trustee, or co-trustees, jointly with the Owner Trustee,
or separate trustee or separate trustees (except insofar as local law makes it
necessary or prudent or desirable for any such co-trustee or separate trustee
to act alone), of all or any part of the Lessor's Estate, and to vest in such
Person or Persons, in such capacity, such title to the Lessor's Estate or any
part thereof, and such rights, powers, duties, trusts or obligations as the
Trustor may consider necessary or prudent or desirable. The Owner Trustee
shall not be liable for any act or omission of any co-trustee or separate
trustee appointed under this Section 3.14. No appointment of, or action by,
any co-trustee or separate trustee appointed under this Section 3.14 will
relieve the Owner Trustee of any of its obligations under any Operative
Agreement or otherwise affect any of the terms of the Indenture or adversely
affect the interests of the Indenture Trustee or the Certificate Holders in
the Trust Indenture Estate.
Any co-trustee or separate trustee may, at any time by an instrument
in writing, constitute the Owner Trustee its or his attorney-in-fact and agent
with full power and authority to do all acts and things and to exercise all
discretion on its or his behalf and in its or his name subject to the
conditions of this Agreement.
Every additional trustee hereunder shall be a Citizen of the United
States and, to the extent permitted by law, be appointed and act, and the
Owner Trustee and its successors shall act, subject to the following
provisions and conditions:
(A) all powers, duties, obligations and rights conferred upon the
Owner Trustee in respect of the custody, control and management of monies,
the Aircraft or documents authorized to be delivered hereunder or under the
Participation Agreement shall be exercised solely by the Owner Trustee;
(B) all other rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such additional trustee
jointly, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (including the holding
of title to the Lessor's Estate) the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations shall be exercised and performed by such
additional trustee;
(C) no power given to, or which is provided hereby may be exercised
by, any such additional trustee, except jointly with, or with the consent
in writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder except as otherwise provided
hereunder; and
(E) the Trustor, at any time, by an instrument in writing may remove
any such additional trustee.
SECTION 3.15. Interpretation of Agreements. In the event that the
Owner Trustee is unsure as to the application of any provision of this
Agreement or any other Operative Agreement or any other agreement relating to
the transactions contemplated by the Operative Agreements or such provision is
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or in the event that this Agreement or any other
Operative Agreement permits any determination by the Owner Trustee or is
silent or incomplete as to the course of action which the Owner Trustee is
required to take with respect to a particular set of facts, the Owner Trustee
shall request in writing sent in accordance with Article 14 of the
Participation Agreement instructions of the Trustor and, to the extent that
the Owner Trustee acts in good faith in accordance with any instructions
received from the Trustor, shall not be liable to any Person; provided, that
in the event that no response is made to the Owner Trustee by the Trustor
within 25 Business Days after such request, the Owner Trustee shall not be
liable to any Person for acts taken by the Owner Trustee in good faith or for
any failure to act, except to the extent provided in the last sentence of
Section 3.01 hereof.
SECTION 3.16. Not Acting in Individual Capacity. In carrying out
the trusts hereby created, the Owner Trustee will act solely as trustee
hereunder and not in its individual capacity except as expressly provided
herein or in the other Operative Agreements to which it is a party; and all
Persons, other than the Trustor as provided in this Agreement, having any
claim against the Owner Trustee by reason of the transactions contemplated
hereby shall look only to the Lessor's Estate for payment or satisfaction
thereof, except to the extent provided in the last sentence of Section 3.01
hereof.
SECTION 3.17. Tax Returns. The Owner Trustee shall be responsible
for the keeping of all appropriate books and records relating to the receipt
and disbursement of all moneys under this Agreement or any Operative
Agreement. The Trustor shall be responsible for causing to be prepared and
filed all income tax returns required to be filed by the Trustor. The Owner
Trustee, upon request, will furnish the Trustor with all such information as
may be reasonably required or necessary from the Owner Trustee in connection
with the preparation of such tax returns and in connection with any other
filing or audit and related litigation obligations. The Owner Trustee shall
be responsible for causing to be prepared at the request of the Trustor and at
the expense of the Lessee all income tax returns required to be filed with
respect to the trust created hereby and shall execute and file such returns;
provided, however, that the Owner Trustee shall send a completed copy of each
such return to the Trustor not more than 60 nor less than 30 days prior to the
due date of such return; provided that the Owner Trustee shall have timely
received all necessary information to complete and deliver to the Trustor such
return. The Trustor, upon request, will furnish the Owner Trustee with all
such information as may be required from the Trustor in connection with the
preparation of such income tax returns.
ARTICLE 4
TERMINATION OF TRUST
SECTION 4.01. Termination. This Agreement and the trust created and
provided for hereby shall cease and be terminated in any one of the following
events, whichever shall first occur:
(a) If the Trustor shall by notice in writing to the Owner Trustee
revoke and terminate the trust on and as of a date stated in such notice,
which date shall not be less than ten nor more than thirty days from the
date of mailing such notice, in which case, on the date specified in such
notice the trust created and provided for hereby shall cease and terminate;
(b) The sale or other final disposition by the Owner Trustee of all
of its interest in all property constituting or included in the Lessor's
Estate and, if the Indenture shall then be in effect, the sale or other
disposition by the Indenture Trustee of all of its interest in all property
constituting or included in the Lessor's Estate, and the final disposition
by the Owner Trustee and, if the Indenture shall then be in effect, the
Indenture Trustee, of all moneys or other property or proceeds constituting
part of the Lessor's Estate in accordance with the terms hereof; or
(c) 21 years from the death of the last survivor of the descendants of
Queen Elizabeth II of England living on the date of this Agreement.
SECTION 4.02. Distribution of Lessor's Estate upon Termination.
Upon any termination of this trust pursuant to the provisions of Section 4.01
hereof, the Owner Trustee shall convey the Lessor's Estate (subject to all
obligations, if any, of the Owner Trustee then existing under the Operative
Agreements to which the Owner Trustee is a party) to such purchaser or
purchasers or the Trustor, as the case may be, and for such amount and on such
terms as shall be specified in written instructions from the Trustor delivered
to the Owner Trustee prior to the date of termination; provided, that in the
event such written instructions are not delivered to the Owner Trustee on or
before the date of termination, the Owner Trustee shall transfer title to the
Lessor's Estate to the Trustor. Upon making such transfer or sale and
accounting for all funds which have come into its hands, the Owner Trustee
shall be entitled to receipt of any sums due and owing to the Owner Trustee
for expenses incurred pursuant hereto as set forth in Section 2.05 hereof.
ARTICLE 5
[INTENTIONALLY LEFT BLANK]
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. Indemnification. The Trustor and its assigns agree to
reimburse and save FSBU, in its individual capacity, harmless against any and
all loss, damage, liability, claims, demands, disbursements and expenses,
including Taxes (excluding Taxes imposed against FSBU upon or with respect to
any fees for services rendered in its capacity as Trustee hereunder) and
reasonable counsel fees which may be incurred by reason of its being the Owner
Trustee or acting hereunder or under the Operative Agreements or the Original
Agreements, but solely by reason thereof and arising out of or relating solely
to this Agreement or the other Operative Agreements or the Original Agreements
or the Aircraft or the Rents and other sums payable therefor, or by reason of
any occurrence directly relating thereto while so acting, and to secure the
payment thereof, FSBU, in its individual capacity, shall have a Lien on the
Lessor's Estate and the proceeds thereof, including income, prior to any
interest therein of the Trustor and its assigns (but subject to the rights of
the Lessee under the Operative Agreements and the Original Agreements and
subject and subordinate to the Lien of the Indenture), except that FSBU shall
not have any such Lien (and the Owner Participant shall have no obligation) in
respect of any such loss, damage, liability, claims, demands, disbursements
and expenses, including Taxes and counsel fees, arising from or as a result of
(A) the Owner Trustee's willful misconduct or gross negligence (in its
individual capacity or as trustee), (B) any inaccuracy of any representation
of FSBU or any breach by FSBU of its warranties and covenants given in its
individual capacity in this Agreement, Article 5 of the Lease, Sections
7.01(c), 7.02(a) and (b) and 7.04 of the Participation Agreement and its
representations and warranties in the Operative Agreements, (C) the failure to
use ordinary care in receiving, handling and disbursing funds, (D) Lessor's
Liens attributable to it in its individual capacity, (E) Taxes, fees, or other
charges on, based on, or measured by, any fees, commissions or compensation
received by FSBU in connection with the transactions contemplated by the
Lease, the Indenture and this Agreement, (F) Taxes excluded from
indemnification pursuant to Section 8.01(b) of the Participation Agreement
(disregarding for the purposes of this Section 6.01, subsections (ii) and (v)
of Section 8.01(b) of the Participation Agreement) or (G) Expenses excluded
from indemnification pursuant to Section 9.01(b) of the Participation Agreement
(disregarding for the purposes of this Section 6.01, subsections (ii), (iv),
(vi), and (viii) of Section 9.01(b) of the Participation Agreement); provided,
that, before asserting any right to payment or indemnification hereunder, FSBU
shall first demand (but need not exhaust its remedies with respect to) its
corresponding right to payment or indemnification from the Lessee pursuant to
the Participation Agreement. It is further understood that the distribution
by the Owner Trustee of all or any part of the Lessor's Estate as provided in
Section 4.02 of this Agreement shall not impair the right of FSBU to
indemnity, payment and reimbursement as herein provided. In the event FSBU
makes any advances at any time to pay or to provide for the payment of any such
loss, damage, liability, claim, demand or expense, then FSBU, in its
individual capacity, shall be entitled, in addition to reimbursement for the
principal of the sum so advanced, to interest on the amount of such advances
at the Prime Rate. The provisions of this Section shall continue in force and
effect notwithstanding the termination of this trust or the resignation,
inability or incapacity to act or removal of the Owner Trustee. FSBU or the
Owner Trustee (in its individual capacity or as trustee, as the case may be)
agrees that it shall have no right against (except as provided in this Section
6.01) the Trustor or (subject to the provisions of the Indenture) the Trust
Indenture Estate for any fee as compensation for its services hereunder.
SECTION 6.02. Supplements and Amendments. At any time and from time
to time, only upon the written request of the Trustor (a) FSBU and the Trustor
shall execute a supplement hereto for the purpose of adding provisions to, or
changing or eliminating provisions of, this Agreement as specified in such
request and (b) the Owner Trustee shall, subject to the provisions of Article
XIII of the Indenture, enter into or consent to such written amendment or
modification of or supplement to any of the Operative Agreements as the
Indenture Trustee and any other necessary parties may agree to in writing and
as may be specified in such request, or execute and deliver such written
waiver of the terms of any of the Operative Agreements as may be agreed to in
writing by the Indenture Trustee and as may be specified in such request;
provided, that (i) the Owner Trustee shall not execute any such supplement,
amendment, waiver or modification without the prior written consent of the
Trustor, (ii) if in the reasonable opinion of the Owner Trustee any document
required to be executed by it pursuant to this Section adversely affects any
right or duty of, or immunity or indemnity in favor of, the Owner Trustee
under this Agreement or any other Operative Agreement, the Owner Trustee may
in its discretion decline to execute such document, (iii) any amendment or
supplement to this Agreement that would adversely affect the rights of the
Indenture Trustee or the Holders shall be subject to the prior written consent
of the Indenture Trustee and (iv) any amendment or supplement to this
Agreement that would adversely affect the rights of the Lessee shall be
subject to the prior written consent of the Lessee. It shall not be necessary
that any request pursuant to this Section specify the particular form of the
proposed document to be executed pursuant to such request, but it shall be
sufficient if such request shall indicate the substance thereof. Promptly
after the execution by FSBU or the Owner Trustee of any document pursuant to
this Section, the Owner Trustee shall mail a conformed copy thereof to the
Trustor, the Indenture Trustee and the Lessee, but the failure of the Owner
Trustee to mail such conformed copies shall not impair or affect the validity
of such document.
SECTION 6.03. Nature of Title of Trustor. The Trustor shall not
have any legal title to any part of the Lessor's Estate. No transfer, by
operation of law or otherwise, of the right, title and interest of the Trustor
in and to the Lessor's Estate or the trusts hereunder shall operate to
terminate this Agreement or Lessor's Estate.
SECTION 6.04. Power of Owner Trustee to Convey. Any assignment,
sale, transfer or other conveyance by the Owner Trustee of the interest of the
Owner Trustee in the Operative Agreements or in the Aircraft or any part
thereof pursuant to and in compliance with the terms of this Agreement or the
Operative Agreements shall bind the Trustor and shall be effective to transfer
or convey all right, title and interest of the Owner Trustee and the Trustor
in and to the Operative Agreements or the Aircraft or such part thereof. No
purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such assignment, sale,
transfer or conveyance or as to the application of any sale or other proceeds
with respect thereto by the Owner Trustee.
SECTION 6.05. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mails and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
If to the Owner Trustee:First Security Bank of Utah, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Department
Facsimile: (801) 246-5053
If to the Trustor: Shawmut Bank, National Association
One Federal Street
Boston, Massachusetts 02211
Attention: Equipment Leasing and Finance
Facsimile: (617) 292-4399
If to the Indenture
Trustee: NationsBank of Georgia, N.A.
600 Peachtree Street, N.E.
Suite 900
Atlanta, Georgia 30308
Attention: Corporate Trust Lease Administration
Facsimile: (404) 607-6362
or as to any of the foregoing parties at such other address as such party may
designate by notice duly given in accordance with this Section to the other
parties.
SECTION 6.06. Situs of Trust; Applicable Law; Severability. THIS
AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF
VALIDITY, CONSTRUCTION AND PERFORMANCE. If any provision of this Agreement
shall be invalid or unenforceable, the remaining provisions hereof shall
continue to be fully effective; provided, that such remaining provisions do not
increase the obligations or liabilities of the Owner Trustee or the Trustor.
SECTION 6.07. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of, and shall be enforceable by,
the parties hereto and their respective successors and permitted assigns,
including any successive holder of the Beneficial Interest, but only to the
extent the Beneficial Interest has been transferred or assigned in accordance
with the limitations of Article 5 of this Agreement.
SECTION 6.08. Headings and Table of Contents. The headings of the
Articles and Sections of this Agreement and the Table of Contents are inserted
for convenience only and shall not affect the meaning or construction of any
of the provisions hereof.
SECTION 6.09. Definitions. The capitalized terms used herein, unless
otherwise herein defined or the context hereof shall otherwise require, shall
have the respective meanings set forth in Schedule II to the Participation
Agreement (Federal Express Corporation Trust No. N659FE) dated as of June 1,
1995, as amended and restated as of August 1, 1995 among Federal Express
Corporation, Trustor, the Original Loan Participants, FSBU, not in its
individual capacity but solely as Owner Trustee except as otherwise expressly
provided therein, NationsBank, National Association (Carolinas), as Pass
Through Trustee, and NationsBank of Georgia, National Association, as
Indenture Trustee, which schedule is attached hereto as Schedule I and by this
reference incorporated herein.
SECTION 6.10. Identification of Trust. This trust may for
convenience be referred to as the "Federal Express Corporation Trust No.
N659FE."
SECTION 6.11. Counterparts. This instrument may be executed in any
number of counterparts or upon separate signature pages bound together in
several counterparts, each of which when so executed shall be deemed to be an
original, and such counterparts together shall constitute and be one and the
same instrument.
IN WITNESS WHEREOF, FSBU and the Trustor have caused this Agreement
to be duly executed all as of the date first above written.
SHAWMUT BANK, NATIONAL ASSOCIATION
By: _______________________________________
Name:
Title:
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION
By: _______________________________________
Name:
Title:
SCHEDULE I
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Act; Federal Aviation Act. Title 49 of the United States Code
(which, among other things, recodified the Federal Aviation Act of 1958, as
amended to the time of such recodification), as amended and in effect on the
date of the Lease or as subsequently amended, or any successor or substituted
legislation at the time in effect and applicable, and the regulations
promulgated pursuant thereto.
Additional Insureds. As defined in Article 13 of the Lease.
Aeronautics Authority or FAA. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment received or deemed to
have been received by a Person (the "Original Payment") shall be supplemented
by a further payment to such Person so that the sum of the two payments shall
be equal to the Original Payment, after taking into account (x) all Taxes that
would result from the receipt or accrual of such payments and (y) any
reduction in Taxes that would result from such increased Taxes. In the case
of amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is
at all times subject to Federal income tax at the maximum marginal rate
generally applicable to corporations from time to time and actual state, local
and foreign income taxes.
Agent. The Chase Manhattan Bank (National Association) and its
successors and permitted assigns as Agent for the Original Loan Participants
pursuant to Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Act) as to which there is in force a permit granted under
Section 41302 of the Act.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by the
Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe (or any permitted substitute airframe)
together with the two Engines (or any Replacement Engine or Engines) whether
or not any of such initial or Replacement Engines may from time to time be
installed on such Airframe or may be installed on any other airframe or on any
other aircraft, including any aircraft substituted pursuant to Section 11.03
of the Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) leased by the Lessor to the Lessee
pursuant to the Lease and the initial Lease Supplement and having the United
States FAA Registration Number and manufacturer's serial number specified in
the initial Lease Supplement, including (i) all Parts in respect thereof and
(ii) any replacement airframe which may be substituted pursuant to Section
11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement, dated as of August 1, 1995.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on the Delivery Date or the Refunding Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Owner Participant.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with a copy of such report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
July 1, 1995, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or with the giving of notice or lapse of
time or both would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft throughout
the Basic Term pursuant to Section 3.02 of the Lease, adjusted pursuant to
Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on January 5, 2020, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York and Memphis, Tennessee, and so long as
the Lien of the Indenture is in effect, in Atlanta, Georgia, Columbia, South
Carolina and, thereafter, in Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N659FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Act, or any analogous part of any
successor or substituted legislation or regulation at the time in effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, references to the Code shall
mean the Internal Revenue Code of 1986, as amended from time to time.
Commencement Date. January 5, 1996.
Consent and Agreement. The Consent and Agreement dated as of July 1,
1995 executed by the Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Department. The principal office of the Owner Trustee
located at 79 South Main Street, Salt Lake City, Utah 84111 or such other
office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified to the Lessee, the
Indenture Trustee and the Owner Participant.
Corporate Trust Office. The principal office of the Indenture
Trustee located at 600 Peachtree Street, N.E., Suite 900, Atlanta, Georgia
30308, Attention: Corporate Trust Lease Administration or such other office at
which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to the
Lessee, the Owner Participant and the Owner Trustee.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. July 31, 1995.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by its manufacturer's serial number in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease,
together with all Parts related thereto. Except as otherwise provided, at
such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of July 1, 1995,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N659FE), dated as of July 1, 1995 between the
Lessor and the Lessee, as the same may be amended, modified or supplemented
from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. Has the meaning set forth in Section 7.06 of the
Participation Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term, provided that
no Event of Loss shall be deemed to have occurred, and the Term shall be
extended automatically for a period of six months (or the date of return of the
Aircraft, if shorter, so long as the Lessor receives at least six months
notice of such date of return) beyond the end of the Term in the event that
the Aircraft, the Airframe or any Engine as of the end of the Lease Term is
requisitioned by the Government pursuant to an activation as part of the Civil
Reserve Air Fleet Program described in Section 7.02(a)(iv) of the Lease; and
(iv) as a result of any law, rule, regulation, order or other action by the
Aeronautics Authority or other governmental body having jurisdiction, the use
of the Aircraft or Airframe in the normal course of air transportation of
cargo shall have been prohibited by virtue of a condition affecting all Airbus
A300F-600 series aircraft equipped with engines of the same make and model as
the Engines for a period of twelve (12) consecutive months, unless the Lessee,
prior to the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if earlier.
The date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of diligent
efforts to recover such property, if earlier); (t) the 61st day following the
date of any destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use; (u) the date of any insurance
settlement on the basis of a total loss or constructive or compromised total
loss; (v) the date of any condemnation, confiscation, seizure or requisition
of title of such property; (w) the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government referred to in clause (iii)(2)(A) above (or the end of the Term or
the date of any insurance settlement described therein, if earlier than such
181st day); (x) the last day of the Term in the case of requisition for use of
such property by the Government; (y) the last day of the 12 month or 24 month
period, referred to in clause (iv) above (or if earlier, the end of the Term
or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe. If an
Event of Loss described in any of clauses (i) (A), (iii) or (iv) above shall
occur, Lessor may elect, within 30 days following the date upon which such
Event of Loss is deemed to have occurred, to waive such Event of Loss and the
consequences thereof.
Excepted Payments. Collectively, (i) indemnity or other payments (and
interest thereon to the extent provided in the Operative Agreements) paid or
payable by the Lessee in respect of the Owner Participant, the Owner Trustee
in its individual capacity or any of their respective successors, permitted
assigns, directors, officers, employees, servants and agents or Affiliates,
pursuant to the Participation Agreement or any indemnity hereafter granted to
the Owner Participant or the Owner Trustee in its individual capacity pursuant
to the Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the
Aircraft payable as a result of insurance claims paid for the benefit of, or
losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Section 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) payments constituting increases
in Basic Rent attributable to payments arising pursuant to Section 5 of the
Tax Indemnity Agreement and (vi) any right to demand, collect or otherwise
receive and enforce the payment of any amount described in clauses (i) through
(v) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
the second paragraph of Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease the Aircraft. In such determination, it shall be assumed that the
Aircraft is in the condition required under the Lease in the case of return of
the Aircraft pursuant to Article 12 of the Lease. Fair Market Rental shall be
determined in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. Unless otherwise provided in the applicable
provisions of any Operative Agreement, in such determination it shall be
assumed that the Aircraft is in the condition required under the Lease in the
case of return of the Aircraft pursuant to Article 12 of the Lease; provided
that in connection with any determination pursuant to or for the purposes of
Article 17 of the Lease, the Aircraft shall be appraised on an "as is, where
is" basis. Fair Market Value shall be determined in accordance with the
provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FSBU. First Security Bank of Utah, National Association, a national
banking association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of the
Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSBU, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, any Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N659FE), dated as of July 1, 1995, as amended
and restated as of August 1, 1995, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement,
and as said Indenture may from time to time be further supplemented or
amended, including any amendment or supplement thereto entered into from time
to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N659FE) dated July 31, 1995, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. NationsBank of Georgia, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes or Expenses
imposed against the Indenture Trustee which are not required to be indemnified
against by the Lessee pursuant to the Participation Agreement by reason of
Section 8.01(b) or 9.01(b) thereof.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N659FE) dated as of July 1, 1995, as amended and restated as of August 1, 1995,
entered into by the Lessor and the Lessee concurrently with the execution and
delivery of the Indenture, as said Lease may from time to time be supplemented
or amended, or its terms waived or modified, to the extent permitted by, and
in accordance with, the terms of the Indenture, including, without limitation,
supplementation by one or more Lease Supplements entered into pursuant to the
applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N659FE) dated July 31, 1995, as such Lease Supplement
shall be amended or supplemented from time to time and any other supplement to
the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessor. First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), the GTA, the Engine Warranty Assignment, the Engine Consent, any
warranty with respect to the Airframe and the Engines, all amounts of Basic
Rent and Supplemental Rent, including without limitation, insurance proceeds
(other than insurance proceeds payable to or for the benefit of the Owner
Trustee in its individual capacity, the Owner Participant or the Indenture
Trustee) and requisition, indemnity or other payments of any kind for or with
respect to the Aircraft (except amounts owing to the Owner Participant, to the
Indenture Trustee, to the Owner Trustee in its individual capacity, or to any
of their respective directors, officers, employees and agents pursuant to
Articles 8 and 9 of the Participation Agreement). Notwithstanding the
foregoing, "Lessor's Estate" shall (i) not include any Excepted Payment and
(ii) include all property intended to be subjected to the Indenture by the
Granting Clause thereof.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, or the Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, (ii)
acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof and which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Articles 10 or 11 of
the Lease and other than a transfer pursuant to the exercise of the remedies
set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to an excess of (i) the
present values of all remaining scheduled payments of such principal amount or
portion thereof and interest thereon (excluding interest accrued from the
immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate per semi-annual period equal to the Debt Rate.
Non-U.S. Person. Any Person other than (i) a citizen or resident of
the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent and
the Tax Indemnity Agreement, each as amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N659FE) dated as of July 1,
1995 between the Owner Trustee and the Indenture Trustee, which together with
the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N659FE) dated July 31, 1995 attached thereto was
recorded as one instrument by the FAA on August 3, 1995 and assigned
Conveyance Number 2A267311.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N659FE) dated as of July 1, 1995 between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N659FE) dated July 31, 1995 attached thereto was
recorded as one instrument by the FAA on August 7, 1995 and assigned
Conveyance Number HH009756.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the first Refinancing after the Delivery
Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N659FE) among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of June 1, 1995.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N659FE) between the Lessee and the
Owner Participant as it was originally executed as of July 1, 1995.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N659FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of June 1, 1995 and filed with the
FAA on July 31, 1995.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii)Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii)Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Amount. The amount described in Section 2.03 of the
Participation Agreement and set forth on Schedule II to the Lease.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance with
Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSBU, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term and
the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages and the EBO Price, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N659FE), dated as of June 1, 1995, as amended and
restated as of August 1, 1995, among the Lessee, the Original Loan
Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as trustee, the Owner
Participant, the Pass Through Trustee, not in its individual capacity except
as otherwise expressly provided therein, but solely as pass through trustee
and the Indenture Trustee, not in its individual capacity except as otherwise
expressly stated therein, but solely as indenture trustee, as amended,
modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or, prior to
replacement thereof in accordance with the Lease, which may be removed
therefrom.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
August 1, 1995 between the Lessee and the Pass Through Trustee, as such Pass
Through Agreement may be modified, supplemented or amended from time to time in
accordance with the provisions thereof.
Pass Through Certificates. Any of the 1995 Pass Through Certificates,
Series A1 or 1995 Pass Through Certificates, Series A2, in each case as issued
by the related Pass Through Trust; and "Pass Through Certificates" means all
of the Pass Through Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1995-A1
or Federal Express Pass Through Trust, 1995-A2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. NationsBank, National Association (Carolinas),
a national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 5 and July 5 commencing January 5, 1996.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Premium Termination Date. With respect to the Certificates having a
Maturity in 2014, February 22, 2007 and with respect to the
Certificates having a Maturity in 2015, May 4, 2015.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of the
Indenture.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase Agreement,
dated as of July 3, 1991 between AVSA and the Lessee, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to the Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N659FE), dated as of July 1, 1995
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 21 for January 5
Payment Dates and June 20 for July 5 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least ten Business Days prior
to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic Rent,
Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 5 and July 5 commencing January 5,
1996.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) manufactured after October 22,
1994 of the same or of equal or greater value, remaining useful life and
utility as the Engine being replaced, together with all Parts relating to such
engine; provided, however, that if such replacement engine is not a General
Electric CF6-80C2-A5F engine, such replacement engine must then be commonly
used in the commercial aviation industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement, in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Department or Corporate
Trust Office (in the Corporate Trust Lease Administration Department), as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, with respect to the Owner Participant, the president or
any vice president with direct responsibility for the transactions
contemplated by the Operative Agreements, and with respect to any other party,
any corporate officer or (except in the case of the Owner Participant) other
employee of a party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Corporation.
Securities Act. The Securities Act of 1933, as amended.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
Series Supplement. The Series Supplement 1995-A1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1995-A2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both of such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value shall
be, under any circumstances and in any event, an amount, together with so much
of the arrears portion of Basic Rent due and owing through the date of payment
of Stipulated Loss Value as does not constitute an Excepted Payment, at least
sufficient to pay in full as of such date of payment the aggregate unpaid
principal amount of and accrued interest on the Certificates outstanding on
such date of payment. Subject to the immediately preceding sentence, it is
understood and agreed that the amounts set forth on Schedule III of the Lease,
for dates other than Rent Payment Dates on which arrears Basic Rent is due,
fully reflect appropriate Basic Rent accruals and credits of unearned Basic
Rent and, accordingly, no further accrual or credit shall be required whenever
Stipulated Loss Value is to be calculated with reference to any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant or
others, including, without limitation, payments of Stipulated Loss Value, EBO
Price and amounts calculated by reference to Termination Value and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after November 2, 2000 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 5, 2010 or January 5, 2012, (ii) Section 4.02(a)(D) or (E) of the
Lease, a Rent Payment Date that is on or after the fifth anniversary of the
Commencement Date and (iii) Section 4.02(a)(F) of the Lease, July 5, 2014.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to
be calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N659FE), dated as of June 1, 1995 as amended and restated as of
August 1, 1995, between the Owner Participant and the Owner Trustee in its
individual capacity, as from time to time modified, amended or supplemented
pursuant to its applicable provisions and in accordance with the Operative
Agreements.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. The several Underwriters named in the Underwriting
Agreement.
Underwriting Agreement. The Underwriting Agreement dated August 16,
1995 among the Lessee, Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Chase Securities, Inc.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Federal Aviation Act, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Federal Aviation
Act and Part 121 of the regulations under such Act, for aircraft capable of
carrying ten (10) or more individuals or 6,000 pounds or more of cargo, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provision thereof or in absence thereof.
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N658FE)
Dated as of May 1, 1995
Amended and Restated as of August 1, 1995
between
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
AS LESSOR
and
FEDERAL EXPRESS CORPORATION,
AS LESSEE
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 752, REGISTRATION NO. N658FE
CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE
AGREEMENT OF FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER
TRUSTEE, HAS BEEN ASSIGNED TO AND IS SUBJECT TO A LIEN AND SECURITY INTEREST
IN FAVOR OF NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, INDENTURE TRUSTEE
UNDER THE TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION
TRUST NO. N658FE) DATED AS OF MAY 1, 1995, AS AMENDED AND RESTATED AS OF
AUGUST 1, 1995 FOR THE BENEFIT OF THE HOLDERS OF THE CERTIFICATES REFERRED TO
IN SUCH TRUST INDENTURE AND SECURITY AGREEMENT. THIS LEASE AGREEMENT HAS BEEN
EXECUTED IN SEVERAL COUNTERPARTS. ONLY THE ORIGINAL COUNTERPART CONTAINS THE
RECEIPT THEREFOR EXECUTED BY NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, ON
THE SIGNATURE PAGES THEREOF.
TABLE OF CONTENTS
Page
Initial Recitals.............................................................1
ARTICLE 1
DEFINITIONS
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Affirmation of Acceptance under the Lease................ 2
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. Intentionally Left Blank................................. 2
Section 3.02. Basic Rent............................................... 2
Section 3.03. Supplemental Rent........................................ 3
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value,
Termination Value and the EBO Price After the
Delivery Date............................................ 3
Section 3.05. Minimum Basic Rent....................................... 5
Section 3.06. Payment to Indenture Trustee............................. 5
Section 3.07. Costs and Expenses....................................... 6
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options.......................................... 6
Section 4.02. Purchase Options......................................... 7
Section 4.03. Appraisal Procedures..................................... 9
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties............. 10
Section 5.02. No Modification of Other Warranties...................... 11
Section 5.03. Certain Agreements of the Lessee......................... 12
ARTICLE 6
LIENS
Section 6.01. Liens.................................................... 12
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation.................. 13
Section 7.02. Possession and Permitted Transfer and Sublease........... 15
Section 7.03. Insignia................................................. 20
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts..................................... 20
Section 8.02. Pooling of Parts......................................... 21
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications................... 22
Section 9.02. Other Alterations and Modifications...................... 22
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus....... 24
Section 10.02. Retention of Aircraft by the Lessor..................... 26
Section 10.03. Voluntary Termination as to Engines..................... 28
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights................................ 28
Section 11.02. Payment of Stipulated Loss Value........................ 28
Section 11.03. Replacement of Airframe and Engines..................... 29
Section 11.04. Event of Loss with Respect to an Engine................. 33
Section 11.05. Application of Payments from the Government or Others... 35
Section 11.06. Requisition of an Airframe and the Installed Engines for
Use by Government..................................... 36
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe............................. 37
Section 11.08. Application of Payments During Existence of Certain
Defaults.............................................. 37
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft...................................... 37
Section 12.02. Return of Engines....................................... 38
Section 12.03. Return of Manuals....................................... 38
Section 12.04. Condition of Aircraft................................... 39
Section 12.05. Delayed Return of Aircraft.............................. 40
Section 12.06. Storage................................................. 41
Section 12.07. Special Markings........................................ 41
Section 12.08. Lessor's Option to Purchase Parts....................... 41
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance................................... 42
Section 13.02. Insurance Against Loss or Damage to Aircraft and
Engines............................................... 44
Section 13.03. Application of Insurance Proceeds....................... 46
Section 13.04. Reports................................................. 47
Section 13.05. Lessor's Insurance...................................... 48
Section 13.06. Self-Insurance.......................................... 48
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection..................................... 48
Section 14.02. No Obligation to Inspect................................ 49
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign................................ 49
Section 15.02. Citizenship............................................. 50
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default....................................... 50
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default.......................... 52
Section 17.02. Cumulative Remedies..................................... 55
Section 17.03. Waiver.................................................. 55
Section 17.04. Lessor's Right to Perform for Lessee.................... 56
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment......................................... 56
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances...................................... 56
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease......................................... 57
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor........................................ 58
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders............ 59
Section 22.02. Intentionally Left Blank................................ 59
Section 22.03. Consent of Lessee to Assignment of Lease as Security.... 59
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds............................ 60
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease............................... 61
ARTICLE 25
NOTICES
Section 25.01. Notices................................................. 62
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Headings and Captions........................... 63
Section 26.02. References.............................................. 63
Section 26.03. APPLICABLE LAW.......................................... 63
Section 26.04. Severability............................................ 63
Section 26.05. No Oral Modification.................................... 63
Section 26.06. Agreement as Chattel Paper.............................. 63
Section 26.07. Counterparts............................................ 63
Section 26.08. Public Release of Information........................... 64
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties................................... 64
Section 27.02. Section 1110 Compliance................................. 64
Schedule I Definitions
Schedule II Owner Participant Amount and Basic Rent
Schedule III Stipulated Loss Values
Schedule IV Termination Values
Schedule V Purchase Option Schedule
LEASE AGREEMENT
(Federal Express Corporation Trust No. N658FE)
Lease Agreement (Federal Express Corporation Trust No. N658FE)
dated as of May 1, 1995, as amended and restated as of August 1, 1995 (this
"Lease"), between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement (as defined in Article 1 below)
(the "Lessor"), and FEDERAL EXPRESS CORPORATION, a Delaware corporation
(the "Lessee").
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have heretofore entered into the
Original Lease dated as of May 1, 1995 as supplemented by Lease Supplement No.
1 dated May 4, 1995.
WHEREAS, the Original Lease was recorded by the FAA on May 5, 1995
and assigned Conveyance Number NN008446.
WHEREAS, pursuant to Article 15 of the Original Participation
Agreement, the Lessee, the Original Loan Participants, the Owner Participant,
the Indenture Trustee and the Lessor desire to refinance, in full, the
Original Loan Certificates on the Refunding Date; and
WHEREAS, in connection with such refinancing, the Lessee, the Owner
Participant, the Lessor and the Indenture Trustee desire that the Original
Lease be amended and restated in its entirety as provided herein;
NOW, THEREFORE, in consideration of the mutual promises herein, and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged by the parties, the Lessor and the Lessee agree that the
Original Lease be and the same is hereby amended and restated in its entirety
as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise requires, the capitalized terms herein
shall have the meanings given in Schedule II to the Participation Agreement, a
copy of which schedule is annexed hereto as Schedule I, for all purposes of
this Lease and shall be equally applicable to both the singular and the plural
forms of the terms defined.
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Affirmation of Acceptance under the Lease. The Lessor,
having accepted delivery of the Aircraft from AVSA on the Delivery Date and
having simultaneously leased the Aircraft to the Lessee, and the Lessee,
having leased the Aircraft from the Lessor on the Delivery Date, as evidenced
by the execution by the Lessor and the Lessee of the initial Lease Supplement
(which is incorporated by reference herein), hereby affirm the terms and
conditions of the Original Lease as herein amended and restated and of the
Purchase Agreement Assignment. This Lease shall last for the Term, at all
times during which full legal title to the Aircraft shall remain vested with
the Lessor to the exclusion of the Lessee, notwithstanding the possession and
use thereof by the Lessee or any other party.
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. Intentionally Left Blank.
Section 3.02. Basic Rent. The Lessee agrees to pay to the Lessor in
immediately available funds, on each Rent Payment Date, Basic Rent for the
Aircraft during the Basic Term, each payment being set forth on Schedule II
hereto opposite the applicable Rent Payment Date, subject to increase or
decrease as provided in Sections 3.04 and 3.08 of this Lease. Each payment of
Basic Rent shall be made in arrears or in advance, all as stated in Schedule
II hereto.
Each payment of Basic Rent designated as advance rent shall be
allocated over the six-month period beginning on the Rent Payment Date on
which such advance rent payment is scheduled to be made, and each installment
of Basic Rent that is designated as payable in arrears shall be accrued over
the six-month period ending on and including the day immediately preceding the
Rent Payment Date on which such arrears payment is scheduled to be made.
Section 3.03. Supplemental Rent. The Lessee agrees to pay or cause
to be paid to the Lessor, or to whomever shall be entitled to it, any and all
Supplemental Rent promptly as the same shall become due. If the Lessee fails
to pay any Supplemental Rent when due, the Lessor shall have all rights,
powers and remedies provided for in this Lease, or by law or equity or
otherwise in the case of nonpayment of Basic Rent. The Lessee will also pay
to the Person entitled thereto, on demand, as Supplemental Rent, to the extent
permitted by applicable law, an amount equal to interest at the Past Due Rate
on any part of any installment of Basic Rent not paid when due, for any period
until the same shall be paid and on any payment of Supplemental Rent not paid
when due, for the period until the same shall be paid. In addition, the
Lessee will pay to the Lessor, as Supplemental Rent, in the case of any
prepayment of the Certificates pursuant to Section 6.02 of the Indenture
(except in the case of any prepayment resulting from an Indenture Event of
Default in the absence of an Event of Default) or any prepayment or purchase
of the Certificates pursuant to clause (ii) of the first sentence of Section
8.02(a) of the Indenture, an amount equal to the aggregate amount of any
Make-Whole Premium payable on such prepayment or purchase. The expiration or
other termination of the Lessee's obligation to pay Basic Rent shall not limit
or otherwise modify the obligations of the Lessee with respect to the payment
of Supplemental Rent.
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value,
Termination Value and the EBO Price After the Delivery Date. The percentages
for Basic Rent referred to in Schedule II hereto and for Stipulated Loss Value
and Termination Value in Schedule III and Schedule IV, respectively, hereto
and the EBO Price shall be adjusted (upward or downward) subject to the
minimum value established by Section 3.05 hereof and the definitions of
Stipulated Loss Value and Termination Value to reflect (i) any costs and
expenses which the Owner Participant causes to be paid by the Lessor pursuant
to Section 10.01 of the Participation Agreement greater or less than the
Estimated Expense Amount, (ii) any Refinancing pursuant to Section 15.01 of
the Participation Agreement, (iii) any reoptimization pursuant to Section
15.02 of the Participation Agreement, (iv) the Owner Participant Amount being
different from the amount set forth on Schedule II hereto or paid, in whole or
in part, on a date other than as set forth on Schedule II hereto or (v)
payments pursuant to Section 5 of the Tax Indemnity Agreement by an adjustment
of Basic Rent. Each such adjustment pursuant to clause (i), (ii), (iv) or
(v) of the first sentence of this Section 3.04 shall maintain the Owner's
Economic Return (and, while maintaining such Return, minimize the aggregate
Net Present Value of Rents to the Lessee) and shall not cause the EBO Price to
be less than the greater of (i) the Termination Value as of such Rent Payment
Date and (ii) the estimate set forth in the Appraisal of the Fair Market Value
of the Aircraft at the time of exercise of the purchase option under Section
4.02(a)(F) hereof. In the event of an adjustment pursuant to clause (iii) of
the first sentence of this Section 3.04, the Owner Participant may recalculate
Basic Rent as set forth in Schedule II hereto in order to maintain the Owner's
Economic Return, recalculate the Owner Participant Amount set forth in
Schedule II and, subject to the provisions of Section 15.02 of the
Participation Agreement, recalculate the schedule of principal repayments, the
Stipulated Loss Value percentages set forth in Schedule III hereto and the
Termination Value percentages set forth in Schedule IV hereto and the EBO
Price in a manner consistent with such recalculation of Basic Rent; provided
that any such recalculations may not (A) increase the Net Present Value of
Rents to the Lessee, (B) increase as of any date the sum of (1) the Net
Present Value of Rents to the Lessee payable through such date plus (2) the
present value of the Stipulated Loss Value or the Termination Value or the EBO
Price as of such date, in each case discounted at the Debt Rate, beyond such
net present values prior to such adjustment, or (C) otherwise result in any
adverse impact (including tax consequences) to the Lessee for which the Owner
Participant has not agreed to indemnify the Lessee on terms reasonably
acceptable to the Lessee. The Owner Participant shall promptly notify the
Lessee and the Lessor and the Lessee shall promptly notify the Owner
Participant and the Lessor of the need for any such adjustment. As promptly
as feasible after any such notification, the Lessor shall furnish the Lessee
with a notice setting forth the amount of any such adjustments together with
the calculations upon which the adjustments are based; provided, however, that
the Lessor and the Owner Participant shall not be required to disclose to the
Lessee in such notice any confidential or proprietary information (including
methodology or assumptions) relating to such calculations. At the request and,
subject to the next succeeding sentence, expense of the Lessee, the accuracy
of the calculation of such adjustments and the consistency of the calculation
with the calculation used to determine Basic Rent, Stipulated Loss Values,
Termination Values and the EBO Price shall be verified first, by First Chicago
Leasing Corporation or such other financial advisor chosen by the Lessee and
second, if such adjustments are still believed to be in error and are not
reconciled with the Owner Participant within fifteen (15) Business Days, by a
firm of nationally recognized independent public accountants selected by the
Lessee and reasonably acceptable to the Owner Participant and, in order to
enable them to verify such adjustments, the Owner Participant shall make
available to such accountants (for their own confidential use and not to be
disclosed to the Lessee or any other Person and subject to the execution of a
confidentiality agreement reasonably satisfactory to the Owner Participant)
all information reasonably necessary for such verification, including the name
of the lease analysis program used by the Owner Participant to calculate such
adjustments. The Lessee will pay the reasonable costs and expenses of the
verification process under this Section 3.04 unless as a result of such
verification process by the independent public accountants Basic Rent is
adjusted and such adjustment causes the Net Present Value of Rents to decline
by 10 or more basis points (in which event the Owner Participant shall pay the
reasonable costs and expenses of such verification process). The Lessor and
the Lessee shall execute and deliver an amendment to this Lease to reflect each
adjustment under this Section 3.04.
All adjustments under this Section 3.04 shall be in compliance with
the requirements of Revenue Procedure 75-21, 1975-1 C.B. 715 and Sections
4.02(5), 4.07(1), 4.07(2) and 4.08(1) of Revenue Procedure 75-28, 1975-1 C.B.
752 and shall be structured so as to not cause the Lease to be a "disqualified
leaseback or long-term agreement" within the meaning of Section 467 of the
Code.
Section 3.05. Minimum Basic Rent. Notwithstanding any other
provisions of the Operative Agreements to the contrary, each installment of
Basic Rent due (together in the case of the Commencement Date with any other
amount scheduled to be made available by the Owner Participant as referred to
in Section 3.01 hereof), on each Rent Payment Date and not constituting an
Excepted Payment, shall be, under any and all circumstances, an amount at
least sufficient to pay in full any installment of principal of and interest
on the Certificates required to be paid pursuant to the Certificates (other
than amounts becoming due on account of the exercise of remedies pursuant to
Article 17 hereof) on such Rent Payment Date. To the extent that the Owner
Participant does not provide the Lessor with funds on the Commencement Date
as referred to in Section 3.01 hereof if and when due, the Lessee shall on
such date make a prepayment of Basic Rent equal to the funds not so provided.
Unless otherwise reimbursed, the Lessee shall be entitled to offset against
any payments due from the Lessee to the Lessor (including, without limitation,
Basic Rent and payments due to the Lessor under Article 9 of the Participation
Agreement or to the Owner Participant under the Tax Indemnity Agreement and
Excepted Payments), until the Lessee has fully offset such prepayment of Basic
Rent plus interest thereon at the Past Due Rate from the date of such
prepayment until the date of such reimbursement or offset; provided, however,
that in the case of any payment due from the Lessee which is distributable
under the terms of the Indenture, the Lessee's right of offset shall be
limited to the amount distributable to the Lessor thereunder (and shall not
include any amounts distributable to the Indenture Trustee in its individual
capacity or to the Holders of the Certificates or any of them). No such
offset or aggregate combined effect of separate offsets shall reduce the
amount of any installment of Basic Rent to an amount insufficient to pay in
full the payments then required to be made on account of the principal of and
interest on the Certificates then Outstanding.
Section 3.06. Payment to Indenture Trustee. All Rent payable by the
Lessee to the Lessor shall be paid to the Lessor at its principal office at 79
South Main Street, Salt Lake City, Utah 84111, or as the Lessor may otherwise
direct, by wire transfer of immediately available funds in U.S. Dollars with
sufficient information to identify sources and applications of such funds no
later than 10:30 a.m., New York time on the due date of such payment;
provided, however, that so long as the Indenture shall not have been
discharged the Lessor hereby directs, and the Lessee agrees, that all Rent
(other than Excepted Payments not constituting Basic Rent, which shall be paid
by the Lessee directly to the Person entitled thereto) (all without set-off
or counterclaim as and to the extent provided in Article 20 hereof) and all
amounts referred to in Section 3.01 hereof shall be paid directly to the
Indenture Trustee at its principal office at 600 Peachtree Street, Suite 900,
Atlanta, Georgia 30308, Attention: Corporate Trust Lease Administration, or
as the Indenture Trustee may otherwise direct by wire transfer of immediately
available funds in U.S. Dollars no later than 10:30 a.m., New York time, on
the due date of such payment. In any case where a scheduled Rent Payment Date
shall not be a Business Day such Rent Payment Date shall be adjourned to the
next succeeding Business Day without interest thereon for the period of such
extension (provided that payment is made on such next succeeding Business Day).
Section 3.07. Costs and Expenses. As between the Lessor and the
Lessee, all obligations under this Lease shall be done, performed and complied
with at the Lessee's cost and expense, whether or not so expressed, unless
otherwise expressly stated to the contrary.
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options. (a) Election to Renew or Purchase.
The Lessee shall provide the Lessor with irrevocable written notice (the
"Preliminary Notice") not more than 360 days nor less than 180 days prior to
the end of the Basic Term or the preceding Renewal Term, as the case may be,
whether it will exercise its options either to renew this Lease pursuant to
this Section 4.01 or to purchase the Aircraft pursuant to Section 4.02(a)(B)
hereof or, if a further Renewal Term is available, pursuant to Section
4.02(a)(C) hereof. Provided that (i) no Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing at the time of
renewal, (ii) this Lease has not otherwise expired or terminated, and (iii) the
Lessee shall have timely delivered the respective Preliminary Notice, the
Lessee may, by irrevocable written notice delivered to the Lessor not less
than 30 days prior to the end of the Basic Term, extend the Term for a Fixed
Renewal Term of one (1) or two (2) years commencing on the expiration of the
Basic Term. The Lessee shall pay the Fixed Renewal Rent during any Fixed
Renewal Term. In addition, provided that (i) no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing at the time
of renewal, (ii) this Lease has not otherwise expired or terminated, and (iii)
the Lessee shall have delivered the Preliminary Notice, the Lessee may, on no
more than two occasions, by written notice delivered to the Lessor not less
than 30 days prior to the end of the Basic Term or the preceding Renewal Term,
as the case may be, elect to extend the Term for a Renewal Term or further
Renewal Term commencing on the expiration of the Basic Term or the preceding
Renewal Term and ending one, two, three or four years thereafter for a rent
equal to the then-current Fair Market Rental of the Aircraft. The Term may be
extended pursuant to this paragraph for an aggregate of no more than four
years following the Basic Term or any Fixed Renewal Term, if applicable. The
Lessee shall pay the Fair Market Rental during any Fair Market Renewal Term.
(b) Terms and Conditions. Any such renewal shall be on the same
terms and conditions as provided herein, except that (i) rent for the Aircraft
due during any Renewal Term shall be payable semi-annually in arrears on the
dates corresponding to the Rent Payment Dates during such Renewal Term, and
(ii) during any Renewal Term, the Stipulated Loss Value for the Aircraft shall
as of any Stipulated Loss Value Determination Date during the Renewal Term be
equal to the higher of the Stipulated Loss Value and the Fair Market Value of
the Aircraft as of the end of the Basic Term.
Section 4.02. Purchase Options. (a) Election to Purchase.
Provided that (i) this Lease has not otherwise expired or terminated, (ii)
either no Event of Default shall have occurred and be continuing at the time
of the notice provided below or, if an Event of Default occurs after such
notice has been given, the Lessee shall have provided evidence reasonably
satisfactory to the Lessor and the Owner Participant of its financial ability
to purchase the Aircraft and (iii) the Lessee shall have previously given the
Preliminary Notice under Section 4.01(a) hereof (in the case of paragraph (B)
below or, if a further Renewal Term is available, paragraph (C) below) or the
applicable notice for each other paragraph below, as the case may be, the
Lessee may:
(A) by written notice delivered to the Lessor and the Owner
Participant, not more than 360 nor less than 90 days prior to the
applicable Rent Payment Date, elect to terminate the Lease and purchase the
Aircraft on the Rent Payment Date falling on either January 5, 2011 or
January 5, 2014, for, at the Lessee's option, either (1) an amount in
immediately available funds equal to the greater of the Fair Market Value
or the Termination Value on such date or (2)(i) the assumption by the
Lessee, pursuant to Section 7.11 of the Participation Agreement, of all of
the obligations of the Lessor under the Indenture, the Certificates and
Section 7.04 of the Participation Agreement and (ii) the payment to the
Lessor of an amount equal to the excess of (A) the greater of the Fair
Market Value or the Termination Value on such date over (B) the unpaid
principal of the Certificates plus accrued interest as of such date. Such
notice (which shall be revocable by the Lessee upon at least 30 days'
written notice prior to the applicable Rent Payment Date) shall either
direct the Lessor to prepay the Certificates in full on such Termination
Date pursuant to Section 6.02 of the Indenture or state that the Lessee
shall exercise its option to assume the Certificates pursuant to Section
7.11 of the Participation Agreement; or
(B) by irrevocable written notice delivered to the Lessor and the
Owner Participant not more than 360 nor less than 30 days prior to the end
of the Basic Term, elect to purchase the Aircraft on the last day of the
Basic Term for an amount equal to the Fair Market Value thereof on such
date; or
(C) by irrevocable written notice delivered to the Lessor and the
Owner Participant not more than 360 days nor less than 180 days (30 days if
a Preliminary Notice shall have been previously given) prior to the end of
any Renewal Term, elect to terminate the Lease and purchase the Aircraft on
the last day of such Renewal Term at a price equal to the Fair Market Value
of the Aircraft on such day; provided, however, that the Lessee shall have
paid all Rent due and payable under this Lease on or prior to the
expiration of any such Renewal Term; or
(D) exercise the purchase option in this Section 4.02(a)(D) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(D) and which shall be in an amount not less than the
greater of the amount specified in Schedule V hereto and Fair Market Value;
(E) exercise the purchase option in this Section 4.02(a)(E) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(E) and which shall be in an amount not less than the
greater of the amount specified in Schedule V hereto and Fair Market Value;
or
(F) to terminate this Lease on January 5, 2016 and purchase the
Aircraft on such Rent Payment Date for an amount equal to the percentage of
the Purchase Price set forth in Ancillary Agreement I with respect to this
Section 4.02(a)(F) which amount shall not be less than the greater of (i)
the Termination Value as of such Rent Payment Date and (ii) the estimate
set forth in the Appraisal of the Fair Market Value at the time of exercise
of the option under this Section 4.02(a)(F).
The Lessee shall give the Lessor, the Owner Participant and the
Indenture Trustee not more than 360 days and not less than 90 days' prior
written notice of its election to purchase pursuant to Section 4.02(a)(D),
4.02(a)(E) or 4.02(a)(F) hereof. Such notice shall either direct the Lessor
to prepay the Certificates in full on such Termination Date pursuant to
Section 6.02 of the Indenture or state that the Lessee shall exercise its
option to assume the Certificates pursuant to Section 7.11 of the
Participation Agreement and Section 2.12 of the Indenture. In the event that
the Lessee shall have given notice to purchase the Aircraft under Section
4.02(a)(A), 4.02(a)(D), 4.02(a)(E) or 4.02(a)(F) hereof and shall fail to make
payment (and, if applicable, assume the Certificates) on the applicable
Termination Date, the Lease shall continue and the Lessee shall pay to the
Owner Trustee any losses, costs and expenses of the Owner Participant incurred
in connection with such failure.
(b) Terms and Conditions. If the Lessee elects to purchase the
Aircraft pursuant to Section 4.02(a) hereof, the Lessee shall pay to the
Lessor on the applicable Termination Date by wire transfer of immediately
available funds any Basic Rent payable on such Termination Date (if payable in
arrears but not if in advance), the applicable purchase price together with
any amounts past due hereunder and all other Supplemental Rent then due under
this Lease including, without limitation, the aggregate amount of any
Make-Whole Premium applicable to any Certificate (if such purchase occurs
prior to the Premium Termination Date for such Certificate) and amounts due
under the Participation Agreement and the Tax Indemnity Agreement, whereupon
(and upon discharge of the Lien of the Indenture in accordance with Section
14.01 thereof) the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest in and to the Aircraft on an "as-is, where is"
basis. In connection with such transfer, the Lessee shall prepare and the
Lessor shall execute or arrange for the execution of a bill of sale evidencing
such transfer and such other documents as the Lessee may reasonably require.
In connection with any termination or proposed termination of this Lease, the
Lessee shall pay, at the time of the applicable Termination Date, all related
reasonable costs and expenses of the Owner Participant, the Lessor and the
Indenture Trustee.
Section 4.03. Appraisal Procedures. (a) Generally. Whenever Fair
Market Rental or Fair Market Value is required to be determined under this
Lease (unless otherwise provided herein), it shall be determined by the mutual
agreement of the Lessor and the Lessee in accordance with the definitions of
such terms in Article 1. If the Lessee and the Lessor cannot agree by the
date 60 days prior to the date for exercise of the applicable option, such
amount shall be determined by independent appraisal conducted by appraisers
selected pursuant to Section 4.03(b) hereof. At any time prior to final
determination of such amount pursuant to Section 4.03(b) hereof, the Lessee
and the Lessor shall be entitled to submit to the appraisers (and shall submit
to each other any bids submitted to the appraisers) any bids from unrelated
third parties, and such bids shall be accorded the weight such appraisers deem
appropriate. The Lessor and the Lessee shall each have an opportunity to
comment on any such bids after receiving a copy thereof.
(b) Selection. If an independent appraisal is required pursuant to
this Lease, the Lessor and the Lessee shall consult for the purpose of
appointing a mutually acceptable, qualified aircraft appraiser. If they are
unable to agree on a single appraiser within ten (10) Business Days, then the
independent appraisal shall be arrived at by mutual agreement of two
nationally recognized, independent aircraft appraisers, one chosen by the
Lessor and one chosen by the Lessee, or, if such appraisers cannot agree on
the amount of such appraisal, their appraisals shall be treated in the manner
described in Section 4.03(c) hereof with an appraisal arrived at by a third
nationally recognized, independent aircraft appraiser chosen by the mutual
consent of such two appraisers; provided, however, that if either party shall
fail to appoint an appraiser within fifteen (15) Business Days after a written
request to do so by the other party, or if such two appraisers cannot agree on
the amount of such appraisal and fail to appoint a third appraiser within
twenty (20) Business Days after the date of the appointment of the second of
such appraisers, then either party may initiate an arbitration proceeding with
the American Arbitration Association for purposes of appointing a nationally
recognized, independent aircraft appraiser.
(c) Valuation. If one appraiser is chosen, the value determined by
such appraiser shall be final and binding upon the Lessor and the Lessee. If
two appraisers are chosen, one appraiser by the Lessor and one by the Lessee,
and such appraisers agree on the value, such value shall be final and binding
upon the Lessor and the Lessee. If three appraisers shall be appointed and
the difference between the determination which is farther from the middle
determination is more than 125% of the difference between the middle
determination and the third determination, then such further determination
shall be excluded, the remaining two determinations shall be averaged, and
such average shall be final and binding upon the Lessor and the Lessee.
Otherwise, the average of all three determinations shall be final and binding
upon the Lessor and the Lessee.
(d) Rules of Appraisal. Any appraisal pursuant to this Section 4.03
shall be conducted in accordance with the commercial rules of the American
Arbitration Association as then in effect, as modified by this Section 4.03
and the definitions of Fair Market Value and Fair Market Rental. All expenses
of any independent appraisal shall be borne by the Lessee, except that each of
the Lessee and the Owner Participant (in the case of the Lessor) shall bear
any fees, costs and expenses of its respective attorneys in connection with
such appraisal except in the case of an Event of Default or in the case of a
revocation by the Lessee of its election to terminate the Lease under Section
4.02 hereof, in which case such expenses shall be borne by the Lessee.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties. THE
LESSEE ACKNOWLEDGES AND AGREES THAT (i) THE AIRFRAME AND EACH ENGINE IS OF A
SIZE, DESIGN, AND CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO THE
LESSEE, (ii) THE LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE IS
SUITABLE FOR ITS PURPOSES, (iii) NEITHER THE OWNER PARTICIPANT NOR THE LESSOR
IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND AND (iv) THE AIRFRAME
AND EACH ENGINE IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND
GOVERNMENTAL REGULATIONS, NOW IN EFFECT OR HEREAFTER ADOPTED, WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR, THE INDENTURE TRUSTEE,
THE OWNER PARTICIPANT OR ANY HOLDER. THE LESSOR LEASES THE AIRFRAME AND EACH
ENGINE, AS-IS, WHERE-IS, AND NEITHER THE LESSOR, THE INDENTURE TRUSTEE, THE
OWNER PARTICIPANT NOR ANY HOLDER MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE
MADE, AND EACH HAS AND WILL HAVE BEEN DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY
WARRANTY OR REPRESENTATION EITHER EXPRESS OR IMPLIED, AS TO (A) THE TITLE,
AIRWORTHINESS, WORKMANSHIP, CONDITION, VALUE, FITNESS FOR ANY PARTICULAR USE
OR PURPOSE, DESIGN, OPERATION OR MERCHANTABILITY OF THE AIRFRAME, EACH ENGINE
OR ANY PART THEREOF, (B) THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR
NOT DISCOVERABLE, (C) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK
OR COPYRIGHT, (D) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN
TORT, (E) THE LESSOR'S TITLE THERETO, (F) THE LESSEE'S OR ANY SUBLESSEE'S
RIGHT TO THE QUIET ENJOYMENT THEREOF (EXCEPT AS PROVIDED IN ARTICLE 18 HEREOF)
OR (G) ANY OTHER MATTER WHATSOEVER. IT IS AGREED THAT ALL RISKS INCIDENT TO
THE MATTERS DISCUSSED IN THE PRECEDING SENTENCE, AS AMONG THE LESSOR, THE
INDENTURE TRUSTEE, THE OWNER PARTICIPANT AND THE LESSEE, ARE TO BE BORNE BY
THE LESSEE. The provisions of this Section 5.01 have been negotiated by the
Lessor and the Lessee and, except as provided in Article 7 of the
Participation Agreement, are intended to be a complete exclusion and negation
of any representations or warranties of the Lessor, the Indenture Trustee and
the Owner Participant, express or implied, with respect to the Airframe and
each Engine that may arise pursuant to any law now or hereafter in effect, or
otherwise.
Section 5.02. No Modification of Other Warranties. None of the
provisions of this Article 5 or any other provision of this Lease shall be
deemed to amend, modify or otherwise affect the representations, warranties or
other obligations (express or implied) of the Lessee, AVSA, the Manufacturer
or the Engine Manufacturer or any of their respective subcontractors or
suppliers, with respect to the Airframe, the Engines or any Parts incorporated
or installed in or attached to the Airframe or Engines, or to release the
Lessee, AVSA, the Manufacturer or the Engine Manufacturer or any of their
respective subcontractors or suppliers from any such representation, warranty
or obligation. So long as an Event of Default shall not have occurred and be
continuing under this Lease and to the extent permitted under the applicable
warranty, patent indemnity, or service-life policy, (i) the Lessor shall
assign or otherwise make available to the Lessee such rights as the Lessor may
have under any warranty, patent indemnity, or service-life policy made or
given by the Manufacturer, AVSA or Engine Manufacturer or any of their
respective subcontractors or suppliers, and any other claims against the
Manufacturer, AVSA and Engine Manufacturer or any such subcontractor or
supplier with respect to the Aircraft, including all rights to demand, accept
and retain all rights in and to property (other than the Aircraft), data and
services of any kind which the Manufacturer, AVSA and Engine Manufacturer are
obligated to provide and do provide pursuant to the Purchase Agreement or the
GTA with respect to the Aircraft; and (ii) all payments pursuant to any
manufacturer's or subcontractor's warranty, patent indemnity, or service-life
policy obligation shall be paid to the Lessee and the Lessee shall apply such
payments to the cost of repair or correction of any condition of the Aircraft
which gave rise to such payments.
Section 5.03. Certain Agreements of the Lessee. The Lessee agrees
with the Lessor for the benefit of the Owner Participant that the Lessee shall
perform the agreements, covenants and indemnities of the Lessee set forth in
the Participation Agreement to the extent the same are applicable to the Owner
Participant, as fully and to the same extent and with the same force and
effect as if set forth in full in this Article 5.
ARTICLE 6
LIENS
Section 6.01. Liens. The Lessee will not directly or indirectly
create, incur, assume or suffer to exist, and will promptly, at its own cost
and expense, take such action as may be necessary to discharge, any Lien on or
with respect to the Lessor's Estate or this Lease or the Aircraft, the
Airframe or any Engine or any Part or title thereto or any interest therein
except:
(a) the respective rights of the Lessor and the Lessee as provided
in this Lease, the security interest and Lien of the Indenture and the
rights of the Owner Participant, the Lessor and the Indenture Trustee under
the Trust Agreement, the Indenture and the Participation Agreement;
(b) the rights of any sublessee or transferee or other Person under a
sublease, transfer, assignment or other such arrangement expressly
permitted by the terms of this Lease;
(c) Lessor's Liens and Indenture Trustee's Liens to the extent
required to be discharged by the Owner Participant, the Lessor or the
Indenture Trustee, as the case may be, in accordance with Section 7.03(b),
7.04(b) or 7.05(b) of the Participation Agreement;
(d) Liens for taxes imposed against the Lessee either not yet due or
being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein or any material risk of civil
liabilities (unless the Owner Trustee, the Indenture Trustee and the Owner
Participant shall be indemnified to its satisfaction against such
liabilities by the Lessee) or any risk of the assertion of criminal charges
against the Lessor, the Owner Participant, the Indenture Trustee or any
Holder;
(e) materialmen's, mechanics', workmen's, repairmen's, employees' or
other like Liens arising against the Lessee in the ordinary course of the
Lessee's business for amounts the payment of which is either not yet due or
is being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein; and
(f) Liens arising from judgments or awards against the Lessee with
respect to which (i) at the time an appeal or proceeding for review is
being prosecuted in good faith and with respect to which there shall have
been secured a stay of execution pending such appeal or proceeding for
review and then only for the period of such stay and (ii) there is not, and
such proceedings do not involve, any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, Airframe or any
Engine or any interest therein.
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation. The Lessee,
at its own cost and expense, shall:
(a) cause the Aircraft to remain at all times duly registered in the
name of the Lessor as owner, pursuant to the Act and, subject to the
proviso to Section 6.03(b) of the Participation Agreement, to remain at all
times duly registered pursuant to the Act and at all times act in
accordance with the rules and regulations of the Aeronautics Authority or
the applicable laws, rules and regulations of any other jurisdiction in
which the Aircraft may then be registered in accordance with Section
6.03(b) of the Participation Agreement;
(b) maintain, inspect, service, repair, test and overhaul the
Aircraft (or cause the same to be done) so as to keep the Aircraft (and any
engine which is not an Engine but is installed on the Aircraft) in as good
operating condition as when delivered to the Lessor on the Delivery Date,
ordinary wear and tear excepted, and in any event (i) in accordance with
the applicable regulations of the Aeronautics Authority or of the
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered pursuant to Section 6.03(b) of the Participation
Agreement and the Lessee's maintenance program approved by the Aeronautics
Authority or such agency or body, (ii) in the same manner and with the same
care used by the Lessee with respect to other A300-600 aircraft and
CF6-80C2-A5F series engines (or other engines permitted by the terms of
this Lease to be used on the Aircraft) owned, operated or leased by the
Lessee, to the extent that the same regulations, and the Lessee's
FAA-approved maintenance program shall apply to any such aircraft and
related engines, owned or leased by the Lessee, and utilized in similar
circumstances, and without discriminating against the Aircraft, with
respect to its use, operation or maintenance in contemplation of the
expiration or termination of this Lease other than withdrawal of the
Aircraft from use and operation as is necessary to prepare the Aircraft for
return to the Lessor upon such expiration or termination and (iii) so as to
keep the Aircraft in such condition as may be necessary to enable its
airworthiness certification to be maintained in good standing at all times
under the Act or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered;
(c) maintain, or cause to be maintained, all records, logs and other
materials in respect of the Aircraft required by the Aeronautics Authority,
or the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered, all such records and logs to be
maintained in the English language, to the extent required by the Federal
Aviation Act (which records, logs and other materials shall, as between the
Lessor and the Lessee and all parties claiming through the Lessee, be the
property of the Lessor but shall become the property of the Lessee upon
purchase by the Lessee of the Aircraft pursuant to the terms of this Lease
or upon the occurrence of an Event of Loss and the Lessee's compliance with
Section 11.03 hereof);
(d) promptly furnish to the Lessor such information within the
Lessee's possession as may be required to enable the Lessor to file any
reports to be filed by the Lessor with any governmental authority because
of the Lessor's ownership of or the Owner Participant's interest in the
Aircraft;
(e) not maintain, service, repair, overhaul, use or operate the
Aircraft or any Engine in violation of any airworthiness certificate or
registration relating thereto, or in violation of any law or any license,
rule, regulation or order of or by any government or governmental authority
having jurisdiction over the Lessee or the Aircraft or any Engine or for
any purpose for which the Aircraft or any Engine is not designed; provided,
however, that the Lessee (or if a sublease shall then be in effect, the
sublessee thereunder) may in good faith contest the validity or application
of any such law, license, rule, regulation or order in any manner that does
not adversely affect the Lessor, its right, title or interest in the
Aircraft or any Engine or the interests of the Indenture Trustee or the
Owner Participant therein, or in any Operative Agreement (excluding any
interests indemnified for under the Tax Indemnity Agreement) and such
contest or non-compliance will not result in any material risk of loss,
forfeiture or damage to the Aircraft or in any risk of criminal liability
to the Lessor, the Indenture Trustee or the Owner Participant; and if any
such law, license, rule, regulation or order requires alteration of the
Aircraft or any Engine, the Lessee will conform the same therewith at its
own cost and expense and will maintain the Aircraft or any Engine in
compliance with such law, license, rule, regulation or order; and
(f) not operate or locate the Airframe or any Engine, or suffer the
Airframe or any Engine to be operated or located (x) in any area excluded
from coverage by any insurance policy required by the terms of Article 13
hereof or (y) in any war zone or in the Lessee's reasonable judgment, area
of recognized hostilities, unless the Lessee has obtained, prior to the
operation or location of the Airframe or any Engine in such area,
indemnification from the Government, or other insurance, against the risks
and in the amounts required by, and in compliance with, Article 13 hereof
covering such area (except, in the case of a requisition for use by the
Government, to the extent that the Lessee certifies that such insurance is
unobtainable after diligent effort or is obtainable only at unreasonably
high rates or on unduly financially burdensome terms and conditions) (and
naming the Lessor, or so long as this Lease is assigned to the Indenture
Trustee, the Indenture Trustee, as loss payee in respect of indemnification
or insurance payable in respect of casualties to the Aircraft) or unless
the Aircraft is only temporarily located in such area as a result of an
isolated occurrence attributable to a hijacking, medical emergency,
equipment malfunction, weather conditions, navigational error or other
similar unforeseen circumstances and the Lessee is using its good faith
efforts to remove the Aircraft from such area.
The Lessee may, at any time during the Term, install an engine or
engines on the Airframe and operate the Aircraft with such engine or engines
installed thereon and the Lessor shall have no right, title or interest in and
to any such engine until such time, if any, that such engine is returned to
the Lessor under Section 12.02 hereof.
Section 7.02. Possession and Permitted Transfer and Sublease. (a)
Conditions. The Lessee will not, without the prior written consent of the
Lessor, sublease or otherwise in any manner deliver, transfer or relinquish
possession of the Aircraft, the Airframe or any Engine or install any Engine,
or permit any Engine to be installed, on any airframe other than the Airframe;
provided, that, so long as (i) in the case of clause (i) below, no Payment
Default, Bankruptcy Default or Event of Default shall have occurred and be
continuing, (ii) the Lien of the Indenture is not impaired thereby, (iii) all
applicable governmental approvals in connection therewith have been obtained
and (iv) the Lessee shall comply with the provisions of Article 13 hereof, the
Lessee may without the prior written consent of the Lessor:
(i) so long as the sublessee is generally meeting its material
obligations as they come due and is not subject to a proceeding or final
order under applicable bankruptcy, insolvency or reorganization laws on the
date the sublease is entered into (and on the date of notice from the
Lessee) and with 30 days' prior written notice to the Lessor and the Owner
Participant, (A) sublease the Aircraft or any Engine to a U.S. Air Carrier,
(B) sublease the Aircraft or any Engine to an Air Carrier which is
principally based in and domiciled in one of the countries listed on
Schedule III of the Participation Agreement, (C) sublease the Aircraft or
any Engine to an Air Carrier that is principally based in and a domiciliary
of a country which is a party to the International Convention on the
Recognition of Rights in Aircraft, or (D) sublease the Aircraft or any
Engine to any other Air Carrier not described in this Section which shall
be reasonably acceptable to the Lessor as evidenced by its prior written
consent; provided, that, with respect to clauses (B) and (C) above, at the
time of any such sublease the United States of America maintains full
diplomatic relations with the country in which such Air Carrier is
principally based and domiciled. In the case of any sublease (x) such
sublease shall include the provisions required by Section 7.02(b) hereof
and expressly require the sublessee to operate and maintain the Aircraft in
compliance with the applicable provisions of this Lease, (y) such sublease
shall provide that such sublessee will not transfer possession of, or any
other rights to, the subleased Airframe or any Engine to any other Person
without the prior written consent of the Lessor (except as permitted by
subparagraphs (ii) through (viii) below) and (z) such sublease shall expire
not later than the expiration of the Basic Term or any applicable Renewal
Term hereof. Prior to any sublease to an Air Carrier permitted under
Section 7.02(a)(i)(C): (I) the maintenance standards of the aeronautical
authority of the country of domicile or principal operation of the
sublessee taken as a whole shall not be materially less stringent than
those of the FAA and the sublease will provide that the maintenance
performed during such sublease will meet in all material respects such
maintenance standards; (II) the Lessee will provide opinions of counsel
(such counsel and the form and substance of such opinions to be reasonably
satisfactory to the Lessor and the Indenture Trustee) with respect to (A)
the legality, validity and enforceability of the Operative Agreements and
the sublease in such country, (B) that the laws of such country require
fair compensation by the government of such country payable in a currency
freely convertible into U.S. dollars for the loss of the use of or title to
the Aircraft in the event of a requisition of use or title by such
government, (C) the Lessor's title to the subleased equipment will be
recognized, (D) the required agreement of such foreign air carrier that its
rights under the sublease are subject and subordinate to all the terms of
this Lease is enforceable against such foreign air carrier under applicable
law (subject only to customary exceptions to enforceability), (E) that it
is not necessary for the Owner Participant, the Lessor or the Indenture
Trustee to register or qualify to do business in such country as a result
of the proposed sublease or in order for the Owner Participant, the Lessor
or the Indenture Trustee to enforce the terms and conditions of the
Operative Agreements, (F) there is no tort liability of the owner of an
aircraft not in possession thereof or of Persons lending money to such an
owner for the purchase of an aircraft, under the laws of such jurisdiction
other than tort liability which might have been imposed on such owner or
Persons under the laws of the United States or any state thereof (it being
understood that, in the event that such latter opinion cannot be given in a
form satisfactory to the Lessor, such opinion shall be waived if insurance
reasonably satisfactory to the Lessor is available to cover such risk to
the Owner Participant and is provided at or before the execution of such a
sublease, at the Lessee's cost and expense) and (G) that there exist no
possessory rights in favor of such sublessee under the laws of such country
which would, upon bankruptcy or insolvency of the Lessee (and assuming that
at such time such sublessee is not bankrupt or insolvent) prevent the
return of the Aircraft in accordance with the terms of this Lease; (III)
all necessary governmental approvals required for the subleased equipment,
the Airframe or any Engine, as the case may be, to be imported and, to the
extent reasonably obtainable, exported from the applicable country of
domicile upon repossession of such subleased equipment by the Lessor (and
the Lessee as sublessor), shall have been procured at the Lessee's own cost
and expense by the Lessee prior to commencement of any such sublease; (IV)
duties and tariffs, if applicable, shall be paid for by the Lessee; and (V)
the Lessee shall effect or cause to be effected at the Lessee's own cost
and expense all recordings and filings that are required to continue the
Lessor's right, title and interest to the Aircraft and rights under the
Lease (and sublease) and to perfect and maintain the priority of the Lien
of the Indenture;
(ii)subject the Airframe or permit the Airframe to be subjected to
normal interchange agreements or subject the Engines or permit any Engine
to be subjected to normal interchange or pooling agreements or
arrangements, in each case customary in the airline industry, entered into
by the Lessee in the ordinary course of its business with a vendor
domiciled in the United States or in a country with which the United States
maintains full diplomatic relations or (x) any United States air carrier
certificated under Section 41102(a) of the Act or any successor provision
or (y) any "foreign air carrier" (as such term is defined in the Act) as to
which there is in force a permit granted under Section 41302 of the Act and
which is (I) organized in a country listed on Schedule III to the
Participation Agreement, (II) organized in a country with which the United
States then maintains full diplomatic relations, (III) is a party to the
Convention on the International Recognition of Rights in Aircraft or (IV)
otherwise provides equivalent protection to owners, lessors and mortgagees
of aircraft; provided that no transfer of the registration of the Airframe
or any Engine shall be effected and that throughout the period that the
Airframe or any Engine is subjected to such interchange or pooling
agreement or arrangement the terms of this Lease shall be observed; and
provided, further, that no such agreement or arrangement contemplates or
requires the transfer of title to or registration of the Airframe or any
Engine, and if the Lessor's title to any Engine shall nonetheless be
divested under any such agreement or arrangement, such divestiture shall be
deemed to be an Event of Loss with respect to such Engine and the Lessee
shall comply with Section 11.04 of this Lease in respect of such Engine;
(iii)deliver or permit the delivery of possession of the Airframe or
any Engine to their respective manufacturers or certified maintenance
providers for testing, service, repair, maintenance or overhaul work or for
alterations or modifications in or additions to the Airframe or any Engine
to the extent required or permitted by the terms of Article 9 hereof;
(iv)transfer or permit the transfer of possession of the Airframe or
any Engine pursuant to a contract or agreement with the Government or
pursuant to the Civil Reserve Air Fleet Program ("CRAF Program")
administered pursuant to Executive Order No. 12056, as amended, or any
similar or substitute programs of the Government, so long as the Lessee (or
any permitted sublessee or transferee pursuant to this Section) shall
promptly notify the Lessor upon such transfer of possession and provide the
Lessor and the Indenture Trustee with the name and address of the
Contracting Officer or representative of the Military Aircraft Command of
the United States Air Force to whom notices must be given in respect of the
Aircraft, provided, that if such transfer of possession continues beyond the
end of the Basic Term or the then-current Renewal Term, the Basic Term or
the Renewal Term, as applicable, shall be automatically extended (including
the obligation to pay Rent per diem at a rate equal to the Fair Market
Rental or such higher compensation being paid by the Government pursuant to
the CRAF Program) for six (6) months after the end of the Term (or, if
shorter, until the date of return of the Aircraft, so long as the Lessor
receives at least six (6) months' notice of such date of return);
(v) install or permit the installation of an Engine on an airframe
which is owned by the Lessee or any permitted sublessee free and clear of
all Liens, except (A) Liens of the type permitted under Section 6.01
hereof, (B) Liens which apply only to the engines (other than an Engine),
appliances, parts, instruments, appurtenances, accessories, furnishings and
other equipment (other than Parts) installed on such airframe and which do
not apply to substantially all of such airframe and (C) the rights of an
Air Carrier under normal interchange or pooling agreements which are
customary in the airline industry and do not contemplate or require the
transfer of title to such airframe or the engines installed on it;
(vi)install or permit the installation of an Engine on an airframe
leased to the Lessee or any permitted sublessee or transferee or purchased
by the Lessee subject to a conditional sale or other security agreement,
provided that (A) such lease, conditional sale or other security agreement
does not cover the Engine so installed and the Lessee shall have received
from the lessor, conditional vendor or secured party of such airframe an
agreement (which may be the lease or conditional sale or other security
agreement covering such airframe), whereby such lessor, conditional vendor
or secured party expressly agrees that neither it nor its successors or
assigns will acquire or claim any right, title or interest in any Engine by
reason of such Engine being installed on such airframe at any time, and (B)
such airframe is and remains free and clear of all Liens except the rights
of the parties to the lease or conditional sale or other security agreement
covering such airframe and Liens of the type permitted by subparagraph (v)
of this Section 7.02(a);
(vii)install or permit the installation of an Engine on an airframe
owned by the Lessee, leased to the Lessee or purchased by the Lessee
subject to a conditional sale or other security agreement under
circumstances where neither subparagraph (v) nor subparagraph (vi) of this
Section 7.02(a) is applicable, provided that such installation shall be
deemed an Event of Loss with respect to such Engine and the Lessee shall
comply with Section 11.04 hereof in respect of such Engine, the Lessor not
intending to waive any right, title or interest it may have to or in such
Engine under applicable law until compliance by the Lessee with such
Section 11.04; and
(viii) enter into a wet lease under which the Lessee has effective
control of the Aircraft in the ordinary course of the Lessee's business
which shall not be considered a transfer of possession hereunder, provided
that the Lessee's obligations under this Lease shall continue in full force
and effect notwithstanding any such wet lease.
(b) Rights of Transferee. Notwithstanding the provisions of Section
7.02(a) hereof, the rights of any transferee who takes possession of the
Aircraft, the Airframe or any Engine by reason of a transfer permitted by
Section 7.02(a) hereof shall be subject and subordinate to, and any sublease
or wet lease permitted by Section 7.02(a) hereof shall be made expressly
subject and subordinate to, all the terms of this Lease, including, without
limitation, the Lessor's right to repossession pursuant to Article 17 hereof
and to avoid such sublease upon such repossession, and the Lessee shall remain
primarily liable for the performance of all the terms of this Lease to the
same extent as if such sublease or transfer had not occurred. Any such
sublease shall include appropriate provisions for the maintenance, inspection
(as required by Section 14.01 hereof), operation, use and insurance of the
Aircraft, the Airframe and each Engine in accordance with the provisions of
this Lease and shall provide assurances reasonably satisfactory to the Lessor
that the sublessee may not further sublease any of such equipment. The Lessee
shall give the Lessor, the Owner Participant and the Indenture Trustee 10
Business Days' prior written notice of any sublease of the Airframe with a
term in excess of one year. The Lessee shall promptly provide the Lessor, the
Owner Participant and the Indenture Trustee a copy of any sublease which has a
term in excess of one year (and, if so requested by the Lessor, a copy of any
other sublease) and, prior to execution and delivery of any sublease deliver
to Lessor all other documents required hereunder relating to such sublease or
transfer of possession.
(c) No Release of Lessee/Costs of Subleasing. No sublease,
interchange or pooling agreement or other relinquishment of possession
permitted under this Article 7 of any of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of the Lessee's obligations
to the Lessor, the Indenture Trustee or the Owner Participant under this
Lease, the Participation Agreement or the Tax Indemnity Agreement or
constitute a waiver of any of the Lessor's rights and remedies hereunder or
thereunder or extend beyond the end of the Term (except as provided in Section
7.02(a)(iv) hereof). Subject to the terms and conditions of this Lease, the
Lessee will retain the right to cure any default by any sublessee permitted
pursuant to this Section 7.02 and to terminate such sublease upon such
default. The Lessee shall pay all costs of the Owner Participant, the
Indenture Trustee and the Lessor incurred in connection with any subleasing or
proposed subleasing.
Section 7.03. Insignia. (a) Nameplate. On or prior to the
Delivery Date or as soon thereafter as possible, the Lessee agrees to affix to
and maintain in the cockpit of the Airframe, in a clearly visible location,
and on each Engine, a clearly visible metal nameplate bearing the inscription
"FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE, OWNER
AND LESSOR," and, so long as such Airframe or Engines shall be subject to the
Lien of the Indenture, the additional inscription "NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, MORTGAGEE" (such nameplate to be
replaced, if necessary, from time to time with a nameplate reflecting the name
of any successor Lessor or successor Indenture Trustee, in each case as
permitted by the Operative Agreements).
(b) Lessee's Marks. Except as provided in Section 7.03(a) hereof,
the Lessee will not allow the name of any Person to be placed on the Airframe
or any Engine as a designation that might be interpreted as a claim of
ownership; provided, that during the Term, the Lessee may cause the Aircraft
to be lettered "Federal Express Corporation" or may letter, paint or mark it
in some other appropriate manner for convenience of identification of the
Lessee's interest or the interest of any permitted sublessee (including but
not limited to the Lessee's or any permitted sublessee's customary colors and
insignia) and to bear insignia plates or other markings identifying the
supplier or manufacturer of the Airframe or the Engines or any Parts of either.
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts. (a) Generally. The Lessee, at
its own cost and expense, will replace or cause to be replaced as promptly as
practicable all Parts which may from time to time be incorporated or installed
in or attached to the Airframe or any Engine and which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason, except as
otherwise provided in Section 9.01 or 9.02 hereof. In addition, the Lessee
may, at its own cost and expense, remove or cause to be removed in the
ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, provided that the
Lessee, except as otherwise provided in Sections 9.01 or 9.02 hereof, will, at
its own cost and expense, replace such Parts as promptly as practicable. All
replacement parts shall be free and clear of Liens (except for pooling
arrangements to the extent permitted by Section 8.02 hereof and Liens
permitted under Section 6.01 hereof) and shall be in at least as good
operating condition as, and shall have a value and utility at least equal to,
the Parts replaced, and in any event not less than the condition and repair
required to be maintained by the provisions of this Lease.
(b) Title. All Parts at any time removed from the Airframe or any
Engine shall remain the property of the Lessor until such Parts shall be
replaced by parts which have been incorporated or installed in or attached to
the Airframe or such Engine and which meet the requirements for replacement
parts specified in Section 8.01(a) hereof. Immediately upon any replacement
part (other than, to the extent permitted by Section 8.02 hereof, a
replacement part subject to a pooling arrangement) becoming incorporated or
installed in or attached to the Airframe or any Engine, and without further
act:
(i) title to the replaced Part shall vest in the Lessee, free and
clear of all rights of the Lessor, and such replaced Part shall no longer
be deemed a Part under this Lease;
(ii)title to such replacement part shall vest in the Lessor free and
clear of all Liens (except for Liens permitted by Section 6.01 hereof) and
shall thereupon be and become a Part; and
(iii)such replacement part shall become subject to this Lease and to
the Lien of the Indenture, and shall be deemed part of the Airframe or such
Engine for all purposes to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe or such Engine.
Section 8.02. Pooling of Parts. Any Part removed from the Airframe
or any Engine as permitted in Section 8.01(a) hereof may be subjected by the
Lessee to any normal pooling arrangement customary in the U.S. airline
industry and entered into with vendors and other Air Carriers in the ordinary
course of the Lessee's business, provided that the part replacing such removed
Part shall be incorporated or installed in or attached to the Airframe or such
Engine in accordance with Section 8 hereof, as promptly as practicable after
the removal of such removed Part. In addition, any replacement part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 8.01(a) hereof may be owned by another Air Carrier
subject to such normal pooling arrangement, provided that the Lessee, at its
own cost and expense and as promptly as possible, either:
(a) causes title to such replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof by the Lessee acquiring title to
such replacement part for the benefit of, and transferring such title to,
the Lessor free and clear of all Liens (other than Liens permitted under
Section 6.01 hereof); or
(b) replaces such replacement part by incorporating or installing in
or attaching to the Airframe or such Engine a further replacement part
owned by the Lessee free and clear of all Liens (other than Liens permitted
under Section 6.01 hereof) and by causing title to such further replacement
part to vest in the Lessor in accordance with Section 8.01(b) hereof.
All such replacement parts and further replacement parts shall meet
the standards set forth in the last sentence of Section 8.01(a) hereof.
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications. The Lessee,
at its own cost and expense, shall make or cause to be made such alterations
and modifications in and additions to the Airframe and each Engine as may be
required from time to time to meet the applicable requirements of the
Aeronautics Authority or any other governmental authority with jurisdiction
over the Lessee's or any sublessee's operations and aircraft; provided,
however, that the Lessee or sublessee, as the case may be, may in good faith
contest the validity or application of any such requirements in any reasonable
manner that does not involve any material risk of civil liabilities (unless
indemnified by the Lessee) or any risk of criminal penalties being imposed on
or against the Indenture Trustee, the Owner Participant or the Lessor, that
does not involve any material risk or danger of loss, forfeiture or sale of
the Aircraft or any Engine and that does not adversely affect the Lessor, its
title or interest in the Aircraft or any Engine, the first and prior perfected
Lien and security interest of the Indenture, or the interests of the Indenture
Trustee or the Owner Participant in the Airframe or any Engine, or in any
Operative Agreement (excluding any interests indemnified for under the Tax
Indemnity Agreement). All such alterations, modifications or additions shall
be made on or before the date mandated therefor, taking into account authorized
postponements resulting from a contest or otherwise and shall be made at such
time and in such a manner so as not to discriminate against the Aircraft
whether by reason of its leased status or otherwise.
Section 9.02. Other Alterations and Modifications. (a) Generally.
The Lessee, at its own cost and expense, may from time to time make such
alterations and modifications in and additions to the Airframe or any Engine
as the Lessee may deem desirable in the proper conduct of its business,
including, without limitation, removal of Obsolete Parts, provided that no
such alteration, modification, addition or removal, individually or in the
aggregate, shall create any adverse tax consequences for the Owner Participant
not otherwise indemnified for, diminish the value, remaining useful life, or
utility of the Airframe or the value or utility of any Engine or impair its
condition or airworthiness below its value, remaining useful life (in the case
of the Airframe only), utility, condition and state of airworthiness
immediately prior to such alteration, modification, addition or removal,
assuming that the Airframe or such Engine was then in the condition and
airworthiness required to be maintained by the terms of this Lease, or cause
the Airframe or any Engine to become "limited use property" within the meaning
of Revenue Procedure 76-30, 1976-2 C.B. 647, except that the value (but not
the remaining useful life, utility, condition or airworthiness) of the
Aircraft may be reduced by the value, if any, of any such Obsolete Parts which
shall have been removed; provided that in no event shall the aggregate value
of all such Obsolete Parts which shall have been so removed and not replaced
exceed $500,000.
(b) Title to Installed Parts. Title to each part incorporated or
installed in or attached or added to the Airframe or any Engine as the result
of any alteration, modification, removal or addition made pursuant to Section
9.01 or 9.02(a) hereof shall without further act vest in the Lessor and become
subject to this Lease; provided, however, that the Lessee may remove any such
Part at any time during the Term if:
(i) such Part is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or
attached or added to the Airframe or such Engine on the Delivery Date or
any Part in replacement of, or substitution for, any such Part;
(ii)such Part is not required to be incorporated or installed in or
attached or added to the Airframe or such Engine pursuant to the terms of
Article 7 hereof or the first sentence of Section 9.01 hereof; and
(iii)such Part can be removed from the Airframe or such Engine
without (A) causing material damage to the Airframe or such Engine (it
being understood that the Lessee shall repair any damage caused by a
permitted removal) or diminishing or impairing the value, utility,
condition or airworthiness or remaining useful life of the Airframe
required to be maintained by the terms of this Lease or (B) diminishing the
value, utility or remaining useful life (in the case of the Airframe) or
the value and utility (in the case of such Engine) which the Airframe or
such Engine would have had at such time had such alteration, modification,
removal or addition not occurred, assuming the Airframe or such Engine was
then in the condition required to be maintained by the terms of this Lease.
(c) Title to Removed Parts. Upon the removal by the Lessee of any
such Part as provided in subsection (b) above, title thereto shall, without
further act, vest in the Lessee and such Part shall no longer be deemed a
Part. Any Part not removed by the Lessee as above provided prior to the
return of the Aircraft to the Lessor hereunder shall remain the property of
the Lessor and subject to this Lease.
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus.
(a) Option to Terminate. So long as no Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing, the Lessee shall
have the right, at its option, on any Termination Date, on at least 180 days'
prior written notice (which notice shall state the proposed Termination Date
(the "Proposed Termination Date")) to the Lessor and the Owner Participant to
terminate this Lease as of a Termination Date if the Aircraft shall have
become obsolete or surplus to the operations of the Lessee; provided that the
Lessee shall have furnished to the Lessor, the Indenture Trustee and the Owner
Participant a certificate of the Lessee's President, Chief Executive Officer,
Chief Financial Officer, Chief Operating Officer, Treasurer or Assistant
Treasurer stating the determination of the Lessee that the Aircraft is
obsolete or surplus to its needs. Unless the Lessor has elected to retain the
Aircraft as herein provided, the Lessee shall on no more than two occasions
have the right to revoke its notice of termination not less than ten (10) days
prior to the Proposed Termination Date whereupon this Lease shall continue in
full force and effect; provided that the Lessee may not revoke its notice if a
cash bid which is for an amount greater than or equal to Termination Value has
been submitted for the purchase of the Aircraft.
(b) Sale Procedure. During the period from the giving of notice
pursuant to Section 10.01(a) hereof until the Proposed Termination Date, the
Lessee, as non-exclusive agent for the Lessor, shall use its reasonable
efforts to obtain bids for the cash purchase on the Proposed Termination Date
(or such earlier date as shall be consented to in writing by the Lessor) of
the Aircraft. On the Proposed Termination Date, the Engines shall be
installed on the Airframe (provided that the Airframe may be sold with engines
meeting the requirements set forth herein for Replacement Engines in lieu of
the Engines so long as the aggregate number of Engines and Replacement Engines
being sold with the Airframe equals two). The Lessor may, if it desires to do
so, seek to obtain such bids. The Owner Participant shall not inspect any bids
received by the Lessee with respect to the Aircraft, unless the Owner
Participant has given to the Lessee binding and irrevocable notice that
neither the Owner Participant nor any of its Affiliates nor any Person acting
for the Owner Participant or such Affiliate will submit a bid for the purchase
of the Aircraft and if such notice has been given, the Lessee will provide the
Lessor with copies of bids received by the Lessee. No bid may be submitted by
the Lessee or any Person affiliated with the Lessee (or with whom or which
there is any arrangement or understanding as to the subsequent use of the
Aircraft by the Lessee or any of its Affiliates) or any agent or Person acting
on behalf of the Lessee. The Lessee may reject any bid which is less than the
sum of the applicable Termination Value, the aggregate amount of any
Make-Whole Premium and all other expenses incurred by the Lessor, the Owner
Participant and the Indenture Trustee in connection with the sale. Subject to
the provisions of Section 10.02 hereof, on the Proposed Termination Date or
such earlier date of sale as shall be consented to in writing by the Lessor,
the Lessee shall deliver the Airframe which shall have the Engines installed
on it (provided that the Airframe may be delivered with installed engines
meeting the requirements set forth herein for Replacement Engines in lieu of
the Engines so long as the aggregate number of Engines and Replacement Engines
being delivered with the Airframe equals two and the Lessee shall comply with
the provisions of Section 11.04 hereof as if an Event of Loss occurred with
regard to the Engines) to the bidder which shall have submitted the highest
cash bid (whether certified to the Lessor by the Lessee or directly received
by the Lessor and certified to the Lessee) in the same manner as if delivery
were made to the Lessor pursuant to Article 12 hereof, at a location specified
by such bidder, and shall duly transfer to the Lessor title to any such
engines not owned by the Lessor, and the Lessor shall, upon payment in full of
the bid price and all amounts due and owing pursuant to Section 10.01(c)
hereof by wire transfer of immediately available funds and upon discharge of
the Lien of the Indenture in accordance with Article XIV thereof, sell the
Airframe and Engines or engines to such bidder without recourse or warranty
(except as to the absence of Lessor's Liens).
(c) Payments to the Lessor. The total selling price realized at a
sale pursuant to Section 10.01(b) hereof net of all expenses of the sale
(including commissions and any sales or transfer taxes) (the "Net Sales
Price") shall be retained by the Lessor (or the Indenture Trustee as long as
the Indenture is in force) and, in addition, on or before the Proposed
Termination Date, the Lessee shall pay to the Lessor (or the Indenture Trustee
as long as the Indenture is in force), by wire transfer of immediately
available funds, the sum of:
(i) the excess, if any, of the Termination Value for the Aircraft
computed as of the Proposed Termination Date over the Net Sales Price; plus
(ii)the installment of Basic Rent due with respect to the Aircraft on
the Proposed Termination Date if payable in arrears but not if payable in
advance; plus
(iii)all other amounts then due and payable by the Lessee (including,
without limitation, the aggregate amount of any Make-Whole Premium, if the
Proposed Termination Date occurs prior to the applicable Premium Termination
Date) under this Lease and any other Operative Agreement.
(d) Transfer of Uninstalled Engines. Upon payment of the amounts
described in Section 10.01(c) hereof and upon transfer to the Lessor of title
to engines which have been returned in lieu of Engines as provided in Section
10.01(b) hereof, and upon payment of all other amounts then due under this
Lease, the Lessor will transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to any Engines which were replaced with engines pursuant
to Section 10.01(b) hereof, and shall deliver to the Lessee such instrument as
the Lessor shall have received from the Indenture Trustee releasing such
Engines from the Lien of the Indenture.
(e) Limitation on the Lessor's Duties. The Lessor shall be under no
duty to solicit bids, to inquire into the efforts of the Lessee to obtain bids
or otherwise to take any action in connection with any such sale other than to
transfer to the purchaser named in the highest cash bid (determined as
described in Section 10.01(b) above) as referred to above (or to such
purchaser and to the Lessee, as the case may be), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to the Aircraft, against receipt by the Lessor of the
payments provided for.
(f) Termination of the Lessee's Obligations. Upon the sale of the
Aircraft pursuant to this Section 10.01 and upon compliance by the Lessee with
the further provisions of this Article 10, the obligation of the Lessee to pay
Basic Rent with respect to the Aircraft shall cease for any Rent Payment Date
occurring after the Proposed Termination Date and the Term shall end effective
as of the Proposed Termination Date. If no sale shall have occurred on or
before the Proposed Termination Date, this Lease shall continue in full force
and effect and, for purposes of Section 10.01(a) hereof, it shall be deemed
that the Lessee has rescinded its notice of termination, and the Lessee shall
pay the expenses incurred by the Lessor, the Indenture Trustee and the Owner
Participant in connection with the proposed sale.
Section 10.02. Retention of Aircraft by the Lessor. (a) Generally.
Notwithstanding Section 10.01 hereof, the Lessor may, subject to Section
10.02(b) hereof, elect to retain the Aircraft after receipt of the Lessee's
notice of termination given in accordance with Section 10.01(a) hereof, by
giving the Lessee and the Indenture Trustee written irrevocable notice of such
election not less than thirty (30) days prior to the Proposed Termination
Date. If the Lessor so elects, the Lessee shall pay to the Lessor on the
Proposed Termination Date, by wire transfer of immediately available funds the
sum of:
(i) the installment of Basic Rent due with respect to the Aircraft on
the Proposed Termination Date if payable in arrears but not if payable in
advance; plus
(ii)all other amounts then due and payable by the Lessee under this
Lease and any other Operative Agreement, including the aggregate amount of
any Make-Whole Premium (if the Proposed Termination Date occurs prior to
the applicable Premium Termination Date), on or prior to the Payment Date.
(b) Payment of the Certificates. It shall be an absolute condition
precedent to the Lessor's right to retain the Aircraft and to the termination
of the Term pursuant to this Section 10.02 that the Lessor (or the Lessee to
the extent set forth in Section 10.02(a) hereof) shall have paid to the
Holders and such Holders shall have received the entire outstanding principal
amount of, the aggregate amount of any Make-Whole Premium and accrued interest
on the Certificates on the Termination Date and all other sums due and owing
to the Indenture Trustee and the Holders on or prior to the Termination Date
under this Lease, the Indenture or any other Operative Agreement.
(c) Delivery of Aircraft to Lessor; Title to Engines. If the Lessor
elects to retain the Aircraft pursuant to this Section 10.02, the Lessee shall
deliver the Airframe and the Engines (provided that the Airframe may be
delivered with engines meeting the requirements set forth herein for
Replacement Engines in lieu of the Engines so long as the aggregate number of
Engines and engines being delivered with the Airframe equals two and provided
that the other requirements of Section 11.04 hereof are met as if an Event of
Loss has occurred with regard to the Engines) to the Lessor in the same manner
as if delivery were made to the Lessor pursuant to Article 12 hereof, and shall
duly transfer to the Lessor right, title and interest to any such engines not
owned by the Lessor, all in accordance with Article 12 hereof. Upon such
delivery of the Airframe and Engines or engines to the Lessor and payment by
the Lessee of any amounts required to be paid by the Lessee pursuant to
Section 10.02(a) hereof, the Lessor will transfer to the Lessee, without
recourse or warranty (except as to the absence of Lessor's Liens), all of the
Lessor's right, title and interest in and to any Engines which were replaced
by engines pursuant to this Section 10.02(c), and shall deliver to the Lessee
such instrument as the Lessor shall have received from the Indenture Trustee
releasing such Engines from the Lien of the Indenture.
(d) Termination of the Lessee's Obligations. Upon compliance by the
Lessor and the Lessee with the provisions of this Section 10.02 and upon
compliance by the Lessee with the further provisions of this Article 10, the
obligation of the Lessee to pay Basic Rent with respect to the Aircraft shall
cease for any Rent Payment Date occurring after the Termination Date and the
Term shall end effective as of the Termination Date.
Section 10.03. Voluntary Termination as to Engines. The Lessee
shall have the right at its option and at any time, on at least thirty (30)
days' prior written notice to the Lessor, to terminate this Lease with respect
to any Engine not then installed or held for use on the Airframe, provided
that prior to the date of such termination, the Lessee shall comply with the
terms of Section 11.04 hereof to the same extent as if an Event of Loss had
occurred with respect to such Engine.
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights. The Lessee shall notify
the Lessor, the Indenture Trustee and the Owner Participant as soon as
practicable but in no event more than 10 Business Days following the
occurrence of an event which constitutes, or would with the passage of time
constitute, an Event of Loss with respect to the Airframe or with respect to
the Airframe and the Engines or engines then installed on the Airframe. By
written notice to the Lessor, the Indenture Trustee and the Owner Participant
delivered within 60 days of the occurrence of any Event of Loss, the Lessee
shall have the right to elect the alternative set forth in Section 11.02
hereof or the alternative set forth in Section 11.03 hereof. The Lessee's
failure to make such election within said 60-day period shall be deemed to be
an election of the alternative set forth in Section 11.02 hereof.
Section 11.02. Payment of Stipulated Loss Value. (a) The Lessee
shall, if it has so elected or is deemed to have so elected under Section
11.01 hereof, pay to the Lessor, by wire transfer of immediately available
funds on the earlier of (i) the third Business Day following receipt in full
of insurance proceeds or requisition proceeds, described in Section 11.05
hereof, in connection with such Event of Loss and (ii) the 120th day after the
occurrence of such Event of Loss (the earlier of such dates being referred to
herein as the "Loss Payment Date"), the sum of (A) the Stipulated Loss Value
for the Aircraft, determined as of the Stipulated Loss Value Determination Date
next preceding the Loss Payment Date (or, if the Loss Payment Date occurs on a
Stipulated Loss Value Determination Date, determined as of such Stipulated
Loss Value Determination Date) together with interest on such amount at the
Debt Rate from such Stipulated Loss Value Determination Date to the Loss
Payment Date, plus (B) any and all Basic Rent due and payable on or prior to
the relevant Stipulated Loss Value Determination Date and unpaid, plus (C) any
and all Supplemental Rent due and payable on or prior to such Loss Payment
Date, plus (D) all other amounts owing by the Lessee or the Owner Trustee to
the Indenture Trustee or the Holders under the Indenture and the other
Operative Agreements, plus (E) any reasonable out-of-pocket expenses incurred
in connection with such Event of Loss and the related prepayment of the
Certificates by the Lessor, the Owner Participant and the Indenture Trustee,
minus (F) if the relevant Stipulated Loss Value Determination Date is a Rent
Payment Date, the portion, if any, of the Basic Rent installment due and paid
by the Lessee on such Stipulated Loss Value Determination Date pursuant to
Section 3.02 hereof to the extent such Basic Rent installment (or portion
thereof) is designated on Schedule II hereto as being payable in advance,
together with an imputed interest amount in respect of such advance payment of
Basic Rent (or portion thereof) at the Debt Rate from the date of payment of
such Basic Rent installment (or portion thereof) by the Lessee to the Loss
Payment Date; provided that in no event shall there be subtracted pursuant to
clause (F) an amount such that the Holders shall not be paid in full.
(b) Termination of Lease; Title Transfer. Upon payment in full of
the amounts due pursuant to Section 11.02(a) hereof, the obligation of the
Lessee to pay Basic Rent on any Rent Payment Date occurring subsequent to the
payment of such amounts shall terminate and the Term shall end. Further, upon
such payment, the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest, if any, in and to the Airframe, Engines and engines
with respect to which such Event of Loss occurred, as well as all of the
Lessor's right, title and interest in and to any Engines constituting part of
the Aircraft but not installed on the Airframe when such Event of Loss
occurred, and will deliver to the Lessee such instrument as the Lessor shall
have received from the Indenture Trustee, releasing such Aircraft from the
Lien of the Indenture.
Section 11.03. Replacement of Airframe and Engines. (a) Generally.
So long as no Payment Default, Bankruptcy Default or Event of Default shall
have occurred and be continuing, and subject to Section 11.01 hereof, if the
Lessee has elected to replace the Airframe and Engines suffering an Event of
Loss pursuant to this Section 11.03, the Lessee shall cause to be duly
conveyed to the Lessor within one hundred twenty (120) days after the
occurrence of such Event of Loss, as replacement for the Airframe and Engines
with respect to which such Event of Loss has occurred, good and marketable
title to an Airbus A300F4-605R airframe manufactured no earlier than 1994 (the
"Replacement Airframe") and good and marketable title to a number of
Replacement Engines equal to the number of Engines with respect to which an
Event of Loss has occurred, provided that following compliance with all other
terms of this Section 11.03 each Engine shall be of identical make and model
and, in the case of such Replacement Airframe and each such Replacement
Engine, owned by the Lessee free and clear of all Liens not excepted in
Section 6.01(a), (b), (c) and (e) hereof, duly certified as an airworthy
aircraft by the Aeronautics Authority, and having in the case of the
Replacement Airframe a value, remaining useful life and utility, and in the
case of the Replacement Engines a value and utility, at least equal to, and
being in as good operating condition as, the Airframe and Engines with respect
to which such Event of Loss occurred, assuming that the Airframe and Engines
were then in the condition and state of airworthiness required to be
maintained by the terms of this Lease immediately prior to the occurrence of
such Event of Loss. In such case and as a condition to such substitution the
Lessee, at its own cost and expense, will also promptly:
(i) furnish the Indenture Trustee with originals of, and the Lessor
with copies of, full warranty bills of sale, in form and substance
satisfactory to the Lessor and the Indenture Trustee, with respect to such
Replacement Airframe and Replacement Engines together with an assignment in
form and substance satisfactory to the Lessor and the Indenture Trustee of
any and all manufacturer's warranties applicable thereto and a consent
reasonably satisfactory to the Lessor and the Indenture Trustee from such
manufacturer or manufacturers to such assignment;
(ii)cause such Replacement Airframe and Replacement Engines to be duly
registered in the name of the Lessor pursuant to the Act or the applicable
laws of any other jurisdiction in which the Aircraft may then be registered
in accordance with Section 6.03(b) of the Participation Agreement;
(iii)cause a Lease Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessee and
recorded pursuant to the Act, or the applicable laws, rules and regulations
of any other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement;
(iv)furnish the Lessor, the Indenture Trustee and the Owner
Participant with an appraisal or other report of a nationally recognized
aircraft appraiser based on an inspection of such Replacement Airframe and
Replacement Engines reasonably satisfactory to the Indenture Trustee and
the Owner Participant certifying that such Replacement Airframe has a
value, remaining useful life and utility, and such Replacement Engines have
a utility and, in the aggregate, value, at least equal to, and are in as
good operating condition as, the Airframe and Engines replaced, assuming
such Airframe and Engines were in the condition and repair required by the
terms of this Lease immediately prior to the occurrence of such Event of
Loss;
(v) furnish the Lessor, the Indenture Trustee and the Owner
Participant with such evidence as the Lessor or the Indenture Trustee may
reasonably request of compliance with the insurance provisions of Article
13 hereof with respect to such Replacement Airframe and Replacement Engines;
(vi)provide the Owner Participant and the Lessor with (A) an opinion
of counsel selected by the Owner Participant and reasonably acceptable to
the Lessee (which opinion shall be reasonably satisfactory in form and
substance to the Owner Participant and the Lessor) that it will suffer no
adverse tax consequence not otherwise indemnified for as of the Delivery
Date as a result of such substitution or (B) an indemnity reasonably
acceptable to the Lessor and the Owner Participant against such
consequences, which indemnity shall be bonded or otherwise secured to the
reasonable satisfaction of the Lessor and the Owner Participant, together
with an opinion of counsel (otherwise complying with clause (vi)(A) above)
that there is Substantial Authority (as defined in the Tax Indemnity
Agreement) that neither the Owner Participant nor the Lessor will suffer
any adverse tax consequences as a result of such substitution or, at the
Lessee's discretion, a More Likely than Not Opinion (as so defined) to the
same effect;
(vii)comply with the provisions of Section 9.08 of the Indenture;
(viii) cause an Indenture Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessor and the
Indenture Trustee and recorded pursuant to the Act, or the applicable laws,
rules and regulations of any other jurisdiction in which the Aircraft may
then be registered as permitted by Section 6.03(b) of the Participation
Agreement in order that the Lien of the Indenture shall constitute a first
and prior perfected Lien and security interest on and in respect of such
Replacement Airframe and Replacement Engines;
(ix)take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as a secured party with the
Secretary of State of Utah and the filing of a notice with the Secretary of
State of Tennessee, as the Lessor or the Indenture Trustee may reasonably
request in order that such Replacement Airframe and Replacement Engines
shall be duly and properly titled in the Lessor, leased under this Lease
and subjected to the Lien of the Indenture to the same extent as the
replaced Airframe and Engines;
(x) furnish the Indenture Trustee with an opinion (reasonably
satisfactory in form and substance to the Lessor, the Owner Participant and
the Indenture Trustee) of counsel to the Lessee (which may be the Lessee's
General Counsel) addressed to the Indenture Trustee and the Owner
Participant to the effect that (A) the Lessor has good title to such
Replacement Airframe and Replacement Engines, and (B) such Replacement
Airframe and Replacement Engines have been validly subjected to the Lien of
the Indenture (with the effect and result that the Indenture constitutes a
first priority duly perfected security interest and Lien on such
Replacement Airframe and Replacement Engines); and
(xi)cause to be delivered to the Lessor, the Owner Participant and the
Indenture Trustee an opinion of counsel to the Lessee addressed to the
Lessor, the Owner Participant and the Indenture Trustee as to the due
registration of the Aircraft and the due recordation of the requisite
documents or instruments and the validity and perfection of the Lien in
such Replacement Airframe and Replacement Engines.
(b) Title to Replaced Equipment. Upon compliance by the Lessee with
the terms of Section 11.03(a) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Airframe and Engines with respect to which
such Event of Loss occurred. In connection with such transfer, the Lessee
shall prepare and the Lessor shall execute or forward to the Indenture Trustee
for execution, as the case may be, all in recordable form, a bill of sale
evidencing such transfer, a release of the Airframe and Engines with respect to
which such Event of Loss occurred from the Indenture and such other documents
as the Lessee reasonably requests, all at the Lessee's sole cost and expense.
Any Engine constituting part of the Aircraft, but not installed on the
Airframe when such Event of Loss occurred, shall continue to be property of
the Lessor and leased under this Lease as part of the same equipment as the
Replacement Airframe and Replacement Engines.
(c) Definitions. Each Replacement Airframe and Replacement Engine
shall be deemed part of the property leased under this Lease, each such
Replacement Airframe shall be deemed an "Airframe," each such Replacement
Engine shall be deemed an "Engine" and each such Replacement Airframe and
Replacement Engine shall be deemed part of the same Aircraft as was the
Airframe or Engine replaced.
(d) Rent Adjustments. An Event of Loss covered by this Section
11.03 shall not result in any change in Basic Rent, Stipulated Loss Values or
Termination Values but may result in payments pursuant to the Tax Indemnity
Agreement and the Participation Agreement.
(e) Time Limitations. If the Lessee has elected to proceed under
this Section 11.03 but has not fully performed its obligations under this
Section 11.03 within 120 days of the occurrence of the applicable Event of
Loss, in the event that any amounts held by the Lessor (or, so long as the
Indenture shall be in effect, the Indenture Trustee) in respect of such Event
of Loss are less than the Stipulated Loss Value thereof, the Lessee will
deposit with the Lessor or the Indenture Trustee, as the case may be, the
amount of any deficiency as security on such 120th day. If the Lessee has
elected to proceed under this Section 11.03 but has not fully performed its
obligations under this Section 11.03 within 180 days of the occurrence of such
Event of Loss, the Lessee shall be deemed to have elected to proceed under
Section 11.02 hereof and shall immediately perform its obligations thereunder,
and the Indenture Trustee, or the Lessor if the Indenture shall have been
discharged, shall apply the amounts held by it pursuant to the preceding
sentence as a credit against such obligations.
Section 11.04. Event of Loss with Respect to an Engine. (a)
Generally. Upon the occurrence of an Event of Loss with respect to an Engine
under circumstances in which there has not occurred an Event of Loss with
respect to the Airframe, the Lessee shall give the Lessor and the Indenture
Trustee prompt written notice thereof and shall, as soon as practicable but in
any event within sixty (60) days after the occurrence of such Event of Loss,
duly convey or cause to be conveyed to the Lessor, a Replacement Engine for
the Engine with respect to which such Event of Loss occurred, good and
marketable title to a Replacement Engine, free and clear of all Liens not
excepted in Section 6.01(a), (b), (c) and (e) hereof and having a value and
utility at least equal to, and being in as good operating condition as, the
Engine with respect to which such Event of Loss occurred, assuming such Engine
was of the value and utility and in the condition and repair required by the
terms of this Lease immediately prior to the occurrence of such Event of Loss,
provided that after any replacement, each Engine shall be of identical make
and model and any Replacement Engines of a different manufacturer than the
original Engines shall be then commonly in use in the commercial aviation
industry on Airbus A300-600 airframes. The standards set forth in this
Section with respect to Replacement Engines shall apply upon any replacement
or substitution of an Engine with a Replacement Engine pursuant to any other
provision of this Lease.
(b) Conditions Precedent. Prior to or at the time of any conveyance
of an Engine pursuant to Section 11.04(a) hereof, the Lessee, at its own cost
and expense will:
(i) furnish the Lessor with an original of, and the Indenture Trustee
with a copy of, a full warranty bill of sale, in form and substance
satisfactory to the Lessor, with respect to such Replacement Engine
together with an assignment in form and substance satisfactory to the
Lessor and the Indenture Trustee of any and all manufacturer's warranties
applicable thereto and a consent reasonably satisfactory to the Lessor and
the Indenture Trustee from such manufacturer to such assignment;
(ii)cause a Lease Supplement covering such Replacement Engine to be
duly executed by the Lessee and filed for recordation pursuant to the Act,
or the applicable laws, rules and regulations of any other jurisdiction in
which the Aircraft may then be registered as permitted by Section 6.03(b)
of the Participation Agreement and, if the Engine being replaced was
registered under the jurisdiction in which the Aircraft is then registered,
the Replacement Engine shall be registered in the same fashion;
(iii)furnish the Lessor and the Indenture Trustee with a certificate
of a nationally recognized aircraft appraiser reasonably satisfactory to
the Lessor and the Indenture Trustee certifying that such Replacement
Engine has a value and utility at least equal to, and is in as good
operating condition as, the Engine replaced, assuming such Engine was in at
least the condition and repair required by the terms of this Lease
immediately prior to the occurrence of such Event of Loss;
(iv)furnish the Lessor with such evidence of compliance with the
insurance provisions of Article 13 hereof with respect to such Replacement
Engine as the Lessor or the Indenture Trustee may reasonably request;
(v) provide the Owner Participant and the Lessor with (A) an opinion
of counsel selected by the Owner Participant and reasonably acceptable to
the Lessee (which opinion shall be reasonably satisfactory in form and
substance to the Owner Participant and the Lessor) that it will suffer no
adverse tax consequences not otherwise indemnified for as of the effective
date of this Agreement as a result of such substitution or (B) an indemnity
reasonably acceptable to the Lessor and the Owner Participant against such
consequences, which indemnity shall be bonded or otherwise secured to the
reasonable satisfaction of the Lessor and the Owner Participant;
(vi)comply with the provisions of Section 9.08 of the Indenture;
(vii)cause an Indenture Supplement with respect to such Replacement
Engine to be duly executed by the Lessor and the Indenture Trustee and
recorded pursuant to the Act, or the applicable laws, rules and regulations
of any other jurisdiction in which the Aircraft may be registered as
permitted by Section 6.03(b) of the Participation Agreement in order that
the Indenture shall constitute a first priority duly perfected Lien and
security interest on and in respect of such Replacement Engine;
(viii) take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as Secured Party with the Secretary
of State of Utah and a notice filing with the Secretary of State of
Tennessee, as the Lessor or the Indenture Trustee may reasonably request in
order that such Replacement Engine be duly and properly titled in the
Lessor, leased under this Lease and subjected to the Lien of the Indenture
to the same extent as the replaced Engine;
(ix)furnish the Lessor, the Owner Participant and the Indenture
Trustee with an opinion (reasonably satisfactory in form and substance to
the Lessor, the Owner Participant and the Indenture Trustee) of counsel to
the Lessee (which may be the Lessee's General Counsel) addressed to the
Lessor, the Indenture Trustee and the Owner Participant to the effect that
(A) the Lessor has good title to such Replacement Engine, and (B) such
Replacement Engine has been validly subjected to the Lien of the Indenture
(with the effect and result that the Indenture constitutes a first priority
duly perfected security interest and Lien on such Replacement Engine); and
(x) take such other action as the Indenture Trustee may reasonably
request in order that such Replacement Engine be duly and properly
subjected to the Lien of the Indenture to the same extent as the replaced
Engine.
(c) Title Transfer. Upon compliance by the Lessee with the terms of
Sections 11.04(a) and (b) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Engine with respect to which such Event of
Loss occurred. In connection with such transfer, the Lessee shall prepare and
the Lessor shall execute or forward to the Indenture Trustee for execution, as
the case may be, all in recordable form, a bill of sale evidencing such
transfer, a release of the Engine with respect to which such Event of Loss
occurred from the Indenture and such other documents as the Lessee reasonably
requests, all at the Lessee's sole cost and expense. Each Replacement Engine
shall, after such conveyance, be deemed part of the property leased under this
Lease. An Event of Loss covered by this Section 11.04 shall not result in any
change in Basic Rent, Stipulated Loss Values or Termination Values, but may
result in payments to be made pursuant to the Tax Indemnity Agreement and the
Participation Agreement.
Section 11.05. Application of Payments from the Government or
Others. (a) Generally. Any payments (other than insurance proceeds the
application of which is provided for in Section 13.03 hereof) received at any
time by the Lessor or by the Lessee from any governmental authority or any
other party, foreign or domestic, with respect to an Event of Loss resulting
from the condemnation, confiscation, theft or seizure of, or requisition of
title to or use of, the Airframe or any Engine will be applied, as
appropriate, in accordance with Section 11.05(b) or Section 11.05(c) hereof.
(b) Payments of Stipulated Loss Value. If the payments described in
Section 11.05(a) hereof are received with respect to the Airframe or with
respect to the Airframe and Engines or engines then installed on the Airframe
and the Lessee has elected the alternative set forth in Section 11.02 hereof,
so much of such payments as shall not exceed the amount required to be paid by
the Lessee pursuant to Section 11.02 hereof shall be paid to the Lessor (or,
if the Lien of the Indenture has not been discharged, the Indenture Trustee)
in reduction of the Lessee's obligations under Section 11.02 hereof if not
already paid by the Lessee, or, if such obligations have already been
discharged in full by the Lessee, such payments shall be applied to reimburse
the Lessee for its payment of such Stipulated Loss Value and, if and to the
extent specifically included in such payment, to pay to the Lessee interest on
such amount of Stipulated Loss Value at the rate included in such payment if
any, or otherwise at the applicable Debt Rate, for the period from the date of
payment by the Lessee of the Stipulated Loss Value to the date of
reimbursement of the Lessee under this Section 11.05(b). The excess, if any,
remaining after such application shall be divided between the Lessor and the
Lessee as their respective interests may appear.
(c) Payment if the Lessee Elects Replacement. If the payments
described in Section 11.05(a) hereof are received with respect to the Airframe
or with respect to the Airframe and the Engines or engines then installed on
the Airframe and the Lessee has elected the alternative set forth in Section
11.03 hereof, or if such payments are received with respect to an Engine not
then installed on the Airframe under the circumstances contemplated by Section
11.04 hereof, all such payments shall, subject to Section 11.08 hereof, be
paid over to or retained by the Lessee, provided that the Lessee shall have
fully performed its obligations pursuant to Section 11.03 or Section 11.04
hereof, as the case may be, with respect to the Event of Loss for which such
payments are made.
Section 11.06. Requisition of an Airframe and the Installed Engines
for Use by Government. In the event of the requisition for use by the
Government or any other government of registry of the Aircraft, or any agency
or instrumentality of either (a "Requisitioning Government") of the Airframe
and the Engines or engines then installed on the Airframe during the Term,
which requisition does not constitute an Event of Loss, the Lessee shall
promptly notify the Lessor, the Indenture Trustee and the Owner Participant of
such requisition and all of the Lessee's obligations under this Lease with
respect to such Airframe and Engines or engines shall continue to the same
extent as if such requisition had not occurred except to the extent that any
failure or delay in the performance or observance of such obligations (other
than obligations for the payment of Rent and, subject to Section 7.01(f)
hereof, the maintenance of required insurance) by the Lessee shall have been
caused by such requisition. All payments received by the Lessor, the Lessee
or any permitted sublessee or transferee from the Requisitioning Government
for such use of the Airframe and Engines or engines during the Term (other
than any such requisition which constitutes an Event of Loss, as to which the
provisions of Section 11.05 hereof shall govern) shall, subject to Section
11.08 hereof, be paid over to, or retained by the Lessee or such permitted
sublessee or transferee unless a Payment Default, Bankruptcy Default or Event
of Default shall have occurred and be continuing (in which case such proceeds
shall be held (unless applied) pursuant to Section 23.01 hereof as security
for Lessee's obligations hereunder and under the Participation Agreement).
All payments received by the Lessor, the Lessee or any such permitted
sublessee or transferee from the Requisitioning Government for the use of the
Airframe and Engines or engines after the Term shall be paid over to, or
retained by, the Lessor (or the Lessee if it shall have purchased the Lessor's
interest therein in accordance with the provisions hereof). In the event of
any such requisition for use, the Lessee agrees to use reasonable efforts to
obtain reimbursement from the Requisitioning Government to the Lessor for
damages suffered by the Lessor and the Owner Participant as a result of such
requisition for use. The Lessee will endeavor to keep the Lessor informed as
to any negotiations between the Lessee and/or any permitted sublessee or
transferee and a Requisitioning Government with respect to any such
requisition and will consult with the Lessor regarding methods or procedures
that are appropriate to effect recovery from such Requisitioning Government
for any damages suffered by the Lessor and the Owner Participant by reason of
such requisition for use.
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe. In the event of the requisition for use by a
Requisitioning Government of registry of the Aircraft or any agency or
instrumentality thereof of any Engine not then installed on the Airframe, the
Lessee shall replace such Engine by complying with the terms of Section 11.04
hereof to the same extent as if an Event of Loss had occurred with respect to
such Engine as of the date of such requisition, and any payments received by
the Lessor or the Lessee from the Requisitioning Government with respect to
such requisition shall, subject to Section 11.08 hereof, be paid over to or
retained by the Lessee, provided that the Lessee shall have fully performed
its obligations under Section 11.04 hereof.
Section 11.08. Application of Payments During Existence of Certain
Defaults. Any amount referred to in Section 11.05, 11.06 or 11.07 hereof
which is payable to the Lessee shall not be paid to the Lessee, or, if it has
been previously paid directly to the Lessee, shall not be retained by the
Lessee, if at the time of such payment a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing, but shall be paid
to and held by the Lessor (or the Indenture Trustee so long as the Lien of the
Indenture is in effect) as provided in Article 23 hereof as security for the
obligations of the Lessee under this Agreement, and at such time as there
shall not be continuing any such Payment Default, Bankruptcy Default or Event
of Default, such amount to the extent not theretofor applied as provided
herein, shall be paid to the Lessee.
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft. Unless the Aircraft is purchased
by the Lessee as provided in Section 4.02 hereof, at the end of the Term, or
upon the termination of this Lease pursuant to Article 10 or Article 17 hereof
or otherwise, the Lessee, at its own cost and expense, will return the
Aircraft by delivering it to the Lessor on the last day of the Term or on the
Termination Date, as the case may be, at the Lessee's principal maintenance
facility in Memphis, Tennessee or such other location specified by the Lessor
pursuant to the next succeeding sentence (and reasonably acceptable to the
Lessee), within the continental United States (on the Lessee's route structure
as in effect on the return date) and the Airframe shall be fully equipped with
two Engines of the same or an improved make and model as were delivered on the
Delivery Date (or Replacement Engines), free and clear of all Liens (other
than Lessor's Liens), including any rights of third parties under pooling,
interchange, overhaul, repair or similar agreements or arrangements, it being
understood that all such Engines and Replacement Engines so returned shall be
of identical make and model and that any Replacement Engine shall be in at
least as good operating condition and have at least the same value and utility
as the Engines being replaced, assuming such Engines were in the condition
required hereunder. The Lessor will give the Lessee at least thirty (30) (or
five (5) in the case of a return pursuant to Article 17 hereof) days' prior
written notice of the place of such return; provided, however, that if the
Lessor shall have made the request for storage pursuant to Section 12.06
hereof, the Lessee shall return the Aircraft to the Lessor at the site of the
storage and provided further that if notice is not delivered the Aircraft
shall be returned in Memphis, Tennessee.
Section 12.02. Return of Engines. If any engine not owned by the
Lessor shall be delivered with the Airframe as set forth in Section 12.01
hereof, the Lessee, concurrently with such delivery, will, at its own cost and
expense furnish the Lessor with (i) a full warranty bill of sale, in form and
substance reasonably satisfactory to the Lessor, with respect to such engine,
(ii) an opinion of the Lessee's counsel to the effect that, upon such return,
the Lessor will acquire full right, title and interest to such engine free and
clear of all Liens (other than Lessor's Liens) and (iii) a certificate as
described in Section 11.04(b)(iii) hereof. The Lessee shall take such other
action as the Lessor may reasonably request in order that such Replacement
Engine shall be duly and properly titled in the Lessor free and clear of all
Liens (other than Lessor's Liens), and the Lessor will then (i) transfer to
the Lessee, without recourse or warranty (except as to the absence of Lessor's
Liens), and subject to the disclaimers provided in Section 5.01 hereof, all
the Lessor's right, title and interest in and to any Engine in lieu of which a
Replacement Engine has been delivered pursuant to Section 12.01 hereof, "as
is, where is" and (ii) deliver to the Lessee such instrument as the Lessor
shall have received from the Indenture Trustee, releasing such Engine from the
Lien of the Indenture.
Section 12.03. Return of Manuals. Upon the return of the Aircraft,
the Lessee shall deliver to the Lessor all original (or photocopied or
microfilmed copies thereof, if then permitted to be maintained in such form
under applicable law) logs, manuals (including, any service kits previously
furnished by a manufacturer at no cost to the Lessee), certificates and
technical data, and inspection, modification and overhaul records pertaining
to the Airframe, Engines or engines, which are required to be maintained under
applicable rules and regulations of the Aeronautics Authority or pursuant to
the Lessee's or any permitted sublessee's Aeronautics Authority-approved
maintenance program or which the Lessee would otherwise discard upon such
return and all original (or photocopied or microfilmed copies thereof, if then
permitted to be maintained in such form under applicable law) records
maintained with respect to the Aircraft under the maintenance program approved
by the aeronautical authority of any other country of registry of the
Aircraft. All records shall be returned in the format necessary to allow the
Lessee or any sublessee to comply with Section 12.04(a)(i) hereof.
Section 12.04. Condition of Aircraft. (a) Required Condition. The
Aircraft when returned to the Lessor shall, at the Lessee's own cost and
expense, meet the following requirements:
(i) it shall, unless otherwise requested by the Lessor not less than
90 days prior to the end of the Term to retain the then-existing
registration of the Aircraft, be duly registered in the name of the Lessor
or its designee pursuant to the Act;
(ii)it shall be clean by airline and cargo handling operating
standards;
(iii)the Airframe shall be returned with the Engines, or any
replacements thereto as herein authorized, provided that the Airframe shall
have an aggregate of two Engines or engines (as herein authorized under
Section 12.02 hereof), both of the same make and model, installed thereon,
together with the equipment, accessories or parts installed thereon on the
Delivery Date or replacements therefor (as herein authorized) and
alterations, modifications and additions thereto made in accordance with
the provisions of this Lease;
(iv)it shall be in the condition required by Section 12.04(b) hereof
and in as good operating condition as when delivered to the Lessor on the
Delivery Date, ordinary wear and tear excepted;
(v) it shall have a currently effective airworthiness certificate
issued by the Aeronautics Authority;
(vi)it shall comply with any then applicable rules and regulations
imposed by the Aeronautics Authority and, without limitation of the
foregoing, terminate all airworthiness directives of, and mandatory
modifications required by, the Aeronautics Authority (or any government or
governmental authority, domestic or foreign, having jurisdiction over the
Aircraft) to be terminated during the Term of the Lease and each Engine
(including any Replacement Engine) shall be serviceable in accordance with
the Lessee's Aeronautics Authority approved maintenance program;
(vii)it shall be free and clear of all Liens and rights of others
(other than the Lessor's Liens) including, without limitation, rights of
third parties under pooling, interchange, overhaul, repair and other
similar agreements or arrangements referred to in Section 7.02(a) hereof;
and
(viii) it shall be in a standard cargo configuration.
(b) Remaining Time. If, at the time of return of the Aircraft, the
Airframe is not being maintained under a continuous maintenance program, then
the Airframe shall have remaining until the next scheduled "C" check at least
25% of the allowable hours between "C" checks permitted under the Lessee's
FAA-approved maintenance program. If, at the time of return of the Aircraft,
the Airframe is subject to a continuous maintenance program, there will be no
time-before-overhaul requirement. If, at the time of return of the Aircraft,
the Engines are not being maintained under an on-condition maintenance
program, then the average number of hours on such Engines remaining until the
next scheduled engine heavy maintenance visit shall be at least 25% of the
allowable hours between engine heavy maintenance visits permitted under the
Lessee's FAA-approved maintenance program. If, at the time of return of the
Aircraft, the Engines are subject to an on-condition maintenance program,
there will be no time-before-overhaul requirement. With respect to
maintenance under the Lessee's maintenance program approved by the Aeronautics
Authority, the Lessee shall have treated the Aircraft in a nondiscriminatory
manner with other Airbus A300F-600 series aircraft in the Lessee's fleet, and
the Aircraft shall be free and clear of all Liens and rights of others other
than the Lessor's Liens and shall be in compliance in every material respect
with the Lessee's maintenance program as if the Term were not ending.
Section 12.05. Delayed Return of Aircraft. (a) If the return of
the Aircraft to the Lessor in compliance with the terms of this Lease shall be
delayed beyond the scheduled end of the Term because of the occurrence of an
event described in clause (iii)(2)(B) of the definition of Event of Loss, this
Lease shall not terminate but shall continue in full force and effect until
the expiration of the six-month period (or, so long as the Lessor shall have
received at least six month's notice of the date on which such shorter period
ends, such shorter period referred to in said clause (iii)(2)(B)) after the
scheduled end of the Term, provided that (i) Stipulated Loss Value and
Termination Value during such extension shall be an amount determined in
accordance with Section 4.01(b) hereof, (ii) the Lessee shall pay on demand,
as Basic Rent for each day of such delay and this Lease shall continue, an
amount equal to the daily equivalent of the average Basic Rent paid during the
Basic Term and any then expiring Renewal Term, in each case with such Basic
Rent to include for this purpose the amounts referred to in Section 3.01
hereof, or such higher compensation being paid by the Government pursuant to
the Civil Reserve Airfleet Program and (iii) neither the Lessee nor any other
Person shall use or operate the Aircraft in any manner, except pursuant to the
activation of such Civil Reserve Airfleet Program.
(b) In any other situation in which the Aircraft is not returned to
the Lessor upon the expiration of the Term (other than due to a purchase of
the Aircraft by the Lessee pursuant to this Lease or by a purchaser under
Article 10 hereof), the Lessee shall pay on demand as Basic Rent for each day
of such delay an amount equal to the Rent per diem at a rate equal to the Fair
Market Rental and this Lease shall continue for up to six (6) months after the
end of the Term; provided, however, that nothing in this paragraph shall be
deemed (i) to relieve the Lessee in any respect from any Default or Event of
Default or claims with respect thereto arising from the failure to return the
Aircraft at the time or in the condition required by the Operative Agreements
or (ii) to permit the Lessee or any sublessee to operate or use the Aircraft
otherwise than in connection with effecting such return.
Section 12.06. Storage. Upon any expiration or termination of this
Lease, at the written request of the Lessor given at least 15 days prior to
such expiration or termination, the Lessee will arrange, or will cause to be
arranged, at no charge to the Lessor (subject, however, to the last sentence
of this Section 12.06), storage at a ramp storage facility for the Aircraft at
the Lessee's principal maintenance facilities in Memphis, Tennessee or one of
the Lessee's other maintenance facilities or at a location selected by the
Lessee used as a location for the parking or storage of aircraft for a period
of up to 30 days; provided that if storage is available at no additional cost
or expense to the Lessee at the location at which the Lessor has specified
pursuant to Section 12.01 hereof that return of the Aircraft shall take place,
the Lessee shall provide storage at such location. At the end of such 30 day
period, if the Lessor so requests within 10 days of before the end of such
period, the Lessee will continue to provide such ramp storage facility at such
facility or location for an additional 30 days at the Lessor's expense. If
the Lessee is required to move the Aircraft from one storage facility to
another, such move shall be at the risk and expense of the Lessor. The
maintenance and risk of loss of, and responsibility for obtaining insurance
on, the Aircraft shall be the responsibility of the Lessor during any period
of storage; provided, however, the Lessee will, upon written request of the
Lessor and at the Lessor's expense, not to exceed the Lessee's incremental
cost of such service, obtain insurance for such property (including, if
possible, coverage through its fleet policy).
Section 12.07. Special Markings. If requested by the Lessor, the
Lessee shall, at the Lessee's cost, remove or paint over all insignias and
other distinctive markings of the Lessee or any sublessee on the Aircraft and
repaint the stripped down areas in a workmanlike manner to match exterior
colors.
Section 12.08. Lessor's Option to Purchase Parts. At any time after
the Lessee has advised the Lessor that it has determined not to renew this
Lease or purchase the Aircraft, or the Aircraft is otherwise to be returned to
the Lessor, the Lessee shall advise the Lessor of any Part which the Lessee
intends, and is permitted, to remove as provided in Section 9.02(b) above, and
the Lessor may, at its option, upon 30 days' notice to the Lessee, purchase
any or all of such Parts from the Lessee upon the expiration of the Term at
their then Fair Market Value determined in accordance with the provisions of
Section 4.03 hereof. Upon any return of the Aircraft pursuant to this Article
12, if the Lessor does not elect to exercise its option under this Section
12.08, the Lessee will, at its own cost and expense, remove such Parts
described in subparagraph (i), (ii) or (iii) of Section 9.02(b) hereof as the
Lessor may request.
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability Insurance. (a) Comprehensive Airline Liability and Property Damage
Liability Insurance. The Lessee, at its own cost and expense, will maintain
or cause to be maintained with respect to the Aircraft, comprehensive airline
liability insurance including, without limitation, passenger legal liability
and property damage liability insurance and cargo legal liability in such
amounts, against such risks (including, without limitation, contractual
liability and war risk and allied perils liability), with such retentions as
the Lessee customarily maintains with respect to similar aircraft and engines
which comprise the fleet of the Lessee (subject to the limitations set forth in
Section 13.06 hereof), and with such insurers (which shall be insurers of
recognized responsibility), and such insurance against such other risks as is
usually carried by similar corporations engaged in the same or similar
business and similarly situated as the Lessee and owning or operating aircraft
and engines similar to the Aircraft and Engines; provided that in no event
shall the limits of liability for all comprehensive airline liability
insurance be less than the amount, per occurrence, as set forth on the
insurance certificate delivered on the Delivery Date unless and only so long
as the Aircraft is not operated and appropriate insurance for the Aircraft on
the ground is maintained. The Lessee will also be required to maintain war
risk insurance if the Aircraft is operated in a war zone if such insurance is
available on commercially reasonable terms and if it is the custom for major
international Air Carriers flying comparable routes to carry such insurance.
(b) Government Indemnification. Notwithstanding Section 13.01(a)
hereof, in the event of the requisition for use by the Government of the
Airframe or the Airframe and the Engines or engines then installed on the
Airframe, the Lessee shall maintain throughout the period of such requisition
such insurance as would otherwise be required under this Section 13.01;
provided that the Lessor shall accept, in lieu of such insurance coverage,
written indemnification or insurance from the Government which is
substantially the same as otherwise required under this Article 13.
(c) Policy Terms. Any policy of insurance carried and maintained in
accordance with this Section 13.01, and any policy taken out in substitution or
replacement for any such policy subject to the terms, conditions and
limitations thereof, shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft, the Indenture Trustee in its capacity as
such, the Owner Participant and each of their respective officers and
directors in their respective capacities as such as additional insureds
(hereinafter in this paragraph (c) sometimes referred to as "Additional
Insured");
(ii)provide that, in respect of the interest of any Additional
Insured in such policies, the insurance shall not be invalidated by any
action or inaction of the Lessee or any Additional Insured as defined under
the policy of insurance required under this Section 13.01 (other than any
action or inaction of such Additional Insured) and shall insure each
Additional Insured regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Lessee or any
other Additional Insured (other than any breach or violation of any
warranty, declaration or condition by such Additional Insured) as defined
under the policy of insurance required under this Section 13.01;
(iii)provide that if such insurance is cancelled for any reason, or
any substantial change is made in the policies which adversely affect the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to any Additional Insured for thirty (30) days (except
in the case of war risk coverage in which event the applicable period shall
be seven (7) days or such other period as may be customary) after receipt
by each such Additional Insured of written notice from such insurers or
such insurers' broker of such cancellation, change or lapse;
(iv)provide that the insurers shall waive any rights of subrogation
against each Additional Insured, to the extent that the Lessee has waived
its rights under this Lease and the Participation Agreement; provided that
the exercise by insurers of rights of subrogation derived from rights
retained by the Lessee shall not, in any way, delay payment of any claim
that would otherwise be payable by such insurers but for the existence of
rights of subrogation derived from rights retained by the Lessee;
(v) provide that all of the provisions of such policy shall operate
in the same manner as if there were a separate policy covering each
Additional Insured; provided, that such policies shall not operate to
increase any insurer's limit of liability;
(vi)be primary, without right of contribution from any other
insurance which is carried by any Additional Insured with respect to its
interest in the Aircraft;
(vii)provide that no Additional Insured shall have any obligation or
liability for premiums or other payments, if any, in connection with such
insurance; and
(viii) provide that such insurer shall waive the right of such
insurer to any set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any Additional
Insured.
Section 13.02. Insurance Against Loss or Damage to Aircraft and
Engines. (a) Hull Insurance. The Lessee, at its own cost and expense, shall
maintain or cause to be maintained in effect, with insurers of recognized
responsibility, all-risk ground and flight aircraft hull insurance covering
the Aircraft and all-risk coverage with respect to any Engines and Parts while
temporarily removed from the Aircraft and not replaced by similar Engines or
Parts, including in each case war-risk and allied perils, hijacking (air
piracy) and governmental confiscation and expropriation insurance (except in
the country of registry) with such retentions (subject to the limitations set
forth in Section 13.06 hereof) and in such form, upon such terms and
conditions (including coverage for cost of claims), and in amounts as the
Lessee customarily maintains with respect to the aircraft in the Lessee's
fleet of the same type and model and operated on the same routes as the
Aircraft (except that the Lessee shall be required to maintain war-risk,
hijacking (air piracy) and governmental confiscation and expropriation
insurance (except in the country of registry) if the Aircraft is operated on
routes where the custom is for major international Air Carriers flying
comparable routes to carry such insurance), provided that such insurance shall
at all times while the Aircraft is subject to this Lease and the Lien of the
Indenture be on an agreed-value basis for an amount not less than an amount
equal to the Stipulated Loss Value for the relevant period for the Aircraft as
set forth on Schedule III to this Lease.
(b) Policy Terms. Any policies carried and maintained in accordance
with this Section 13.02 and any policies taken out in substitution or
replacement for any such policies subject to the terms, conditions and
limitations thereof shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft (or, so long as the Indenture shall not have
been discharged, the Indenture Trustee) as sole loss payee (hereinafter in
this paragraph (b) sometimes referred to as "Loss Payee");
(ii)provide with respect to coverage provided under this Section
13.02, that (i) in the event of a loss involving proceeds in the aggregate
in excess of $6,000,000, the proceeds in respect of such loss up to an
amount equal to the Stipulated Loss Value for the Aircraft shall be payable
to the Lessor (or, so long as the Indenture shall not have been discharged,
the Indenture Trustee), it being understood and agreed that in the case of
any payment to the Lessor (or the Indenture Trustee) otherwise than in
respect of an Event of Loss, the Lessor (or the Indenture Trustee) shall,
unless a Payment Default, a Bankruptcy Default or an Event of Default shall
have occurred and be continuing, upon receipt of evidence satisfactory to
it that the damage giving rise to such payment shall have been repaired or
that such payment shall then be required to pay for repairs then being
made, pay the amount of such payment to the Lessee or its order, and (ii)
the entire amount of any loss involving proceeds in the aggregate of
$6,000,000 or less or the amount of any proceeds of any loss in excess of
the Stipulated Loss Value for the Aircraft shall be paid to the Lessee or
its order unless a Payment Default, a Bankruptcy Default or an Event of
Default shall have occurred and be continuing and the insurers have been
notified thereof by the Lessor or the Indenture Trustee (and if the
insurers have notice of a Payment Default, a Bankruptcy Default or an Event
of Default, such payment shall be made to the Indenture Trustee);
(iii)provide that if such insurance is cancelled for any reason or any
substantial change is made in the policies which adversely affects the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to the Loss Payee for thirty days (except in the case
of war-risk coverage in which event the applicable period shall be seven
(7) days or such other period as may be customary) after receipt by the
Loss Payee of written notice from such insurer of such cancellation, change
or lapse;
(iv)provide that, in respect of the interest of the Lessor (in its
individual capacity and as the Owner Trustee), the Owner Participant or the
Indenture Trustee (in their respective capacities as such) in such
policies, the insurance shall not be invalidated by any action or inaction
of the Lessee or the Loss Payee (other than any action or inaction of such
Loss Payee) and shall insure the Lessor (in its individual capacity and as
Owner Trustee), the Owner Participant and the Indenture Trustee regardless
of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or the Loss Payee (other than any
breach or violation of any warranty, declaration or condition by the Loss
Payee) as defined under the policy of insurance required under this Section
13.02;
(v) provide that the insurers shall waive any rights of subrogation
against the Lessor (in its individual capacity and as Owner Trustee), the
Owner Participant and the Indenture Trustee to the extent that the Lessee
has waived its rights under this Lease or the Participation Agreement;
provided that the exercise by insurers of rights of subrogation derived
from rights retained by the Lessee shall not, in any way, delay payment of
any claim that would otherwise be payable by such insurers but for the
existence of rights of subrogation derived from rights retained by the
Lessee;
(vi)be primary and without rights of contribution from any other
insurance which is carried by the Loss Payee with respect to its interest
in the Aircraft;
(vii)provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines, or spare parts, as the case may be)
such insurer shall waive any right of such insurer to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of the Loss Payee;
(viii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines or spare parts, as the case may be)
no Loss Payee shall have any obligation or liability for premiums or other
payments, if any, in connection with such insurance; and
(ix)in the event that separate policies are maintained to cover
all-risk ground and flight aircraft, hull and war risks and allied perils
insurance, include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by the Lessee with
respect to all other aircraft in the Lessee's fleet, and a copy of the
50/50 provisional claims settlement clause in effect on the Delivery Date
shall be attached to the insurance certificate issued on the Delivery Date.
Section 13.03. Application of Insurance Proceeds. (a) Generally.
All insurance proceeds (other than proceeds from policies carried by the
Lessor, the Indenture Trustee or the Owner Participant) received under
policies described in Section 13.02 hereof as the result of the occurrence of
an Event of Loss with respect to the Airframe or an Engine will be applied as
follows:
(i) if such proceeds are received with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe and the Lessee has elected or is deemed to have elected the
alternative set forth in Section 11.02 hereof, so much of such proceeds as
shall not exceed the amounts required to be paid by the Lessee pursuant to
said Section 11.02 hereof shall be applied in reduction of the Lessee's
obligation to pay such amounts if not already paid by the Lessee, or if
already paid by the Lessee, shall be applied to reimburse the Lessee for
its payment of such amounts, provided that no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing, and the
balance, if any, of such proceeds remaining will be paid to the order of the
Lessee; if and so long as the foregoing proviso is not satisfied, such
proceeds shall be held (unless applied) pursuant to Section 23.01 hereof as
security for the Lessee's obligations hereunder and under the Participation
Agreement; or
(ii)if such proceeds are received with respect to the Airframe or the
Airframe and the Engines or engines then installed on the Airframe and the
Lessee has elected the alternative set forth in Section 11.03 hereof, or if
such proceeds are received with respect to an Engine not then installed on
the Airframe and not replaced by an Engine or engine under the
circumstances contemplated by Section 11.04 hereof, all such proceeds shall
be paid to the Indenture Trustee (unless the Indenture has been discharged
in which case paid to the Lessor) for disbursement to the order of the
Lessee, after the Lessee shall have fully performed the terms of Sections
11.03 or 11.04 hereof, as applicable, with respect to the Event of Loss for
which such proceeds are paid, provided that no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing; if and
so long as the foregoing proviso is not satisfied, such proceeds shall be
held (unless applied) pursuant to Section 23.01 hereof as security for the
Lessee's obligations hereunder and under the Participation Agreement.
(b) Payment if no Event of Loss. The insurance proceeds of any
property damage loss not constituting an Event of Loss with respect to the
Airframe or an Engine will be applied in payment (or to reimburse the Lessee)
for repairs or for replacement property in accordance with Articles 7 and 8
hereof, if not already paid for by the Lessee, and any balance remaining after
compliance with said Articles 7 and 8 hereof with respect to such loss shall
be paid to the order of the Lessee, provided that no Payment Default,
Bankruptcy Default or Event of Default shall have occurred and be continuing;
if and so long as the foregoing proviso is not satisfied, such proceeds shall
be held (unless applied) pursuant to Section 23.01 hereof as security for the
Lessee's obligations hereunder and under the Participation Agreement.
(c) Information. If any Additional Insured becomes subject to any
claim covered by any insurance policy maintained pursuant to this Article 13,
the Lessee shall make available any information required by such Additional
Insured in connection with such claim.
Section 13.04. Reports. On or before the Delivery Date and
thereafter annually on or before the scheduled expiration date for such policy
during the Term, the Lessee shall cause an aviation insurance broker to
furnish to the Lessor and the Indenture Trustee a signed report, stating in
reasonable detail the types of coverage and limits carried and maintained on
the Aircraft and certifying that such insurance complies with the terms and
conditions of this Lease. The Lessee will cause its aviation insurance broker
to advise the Lessor, the Owner Participant and the Indenture Trustee in
writing promptly of any default in the payment of any premium and of any other
act or omission on the part of the Lessee of which it has knowledge and which
might invalidate, cause cancellation of or render unenforceable all or any
part of any insurance carried by the Lessee with respect to the Aircraft. The
Lessee will cause such insurance broker to agree to advise the Lessor, the
Indenture Trustee and the Owner Participant in writing if and when it becomes
evident to such broker that any insurance policy carried and maintained on the
Aircraft pursuant to this Article 13 will not be renewed at the expiration
date. If the Lessee shall fail to maintain insurance as required, the Lessor
may, at its option, provide such insurance, and in such event, the Lessee
shall, upon demand, reimburse the Lessor, as Supplemental Rent, for the cost
of such insurance; provided, however, that no exercise of said option shall
affect the provisions of this Lease, including the provisions that failure by
the Lessee to maintain the prescribed insurance shall constitute an Event of
Default or otherwise constitute a waiver of any other rights the Lessor may
have against the Lessee.
Section 13.05. Lessor's Insurance. The Lessor, the Indenture
Trustee or the Owner Participant may insure the Airframe or any Engine at its
own cost and expense, including insuring the Aircraft for amounts in excess of
the Stipulated Loss Value of the Aircraft, provided that any insurance so
maintained by the Lessor, the Indenture Trustee or the Owner Participant shall
not result in a reduction of coverage or amounts payable under insurance
required or permitted to be maintained by the Lessee under this Article 13 or
increase the cost to the Lessee of maintaining such insurance; provided
further, that any insurance policies of the Lessor, the Indenture Trustee or
the Owner Participant insuring the Airframe or any Engine shall provide for a
release to the Lessee of any and all salvage rights in and to the Airframe or
any Engine.
Section 13.06. Self-Insurance. The Lessee may self-insure the risks
required to be insured against by Sections 13.01 and 13.02 hereof in such
reasonable amounts as are then applicable to other aircraft or engines of the
Lessee of value comparable to the Aircraft, but in no case shall such
self-insurance with respect to all aircraft in the Lessee's fleet in aggregate
exceed for any 12-month policy year an amount equal to the lesser of (i) 50%
of the highest insured value of any single aircraft in the Lessee's fleet and
(ii) 1.5% of the average aggregate insured value from time to time of the
Lessee's entire aircraft fleet provided that a standard deductible per
occurrence per aircraft not in excess of the amount customarily allowed as a
deductible in the industry shall be permitted in addition to the
above-mentioned self-insurance. The foregoing shall not permit the Lessee to
discriminate as between insurance coverage on the Aircraft and insurance which
the Lessee maintains with respect to similar aircraft owned or operated by the
Lessee operating on similar routes in similar locations.
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection. At reasonable times, and upon
at least five (5) Business Days' prior written notice to the Lessee, the
Lessor, the Indenture Trustee or the Owner Participant, or their respective
authorized representatives, may inspect the Aircraft and upon at least ten
(10) Business Days' prior written notice, all Aeronautics Authority-required
books and records of the Lessee and any sublessee relating to the maintenance
of the Aircraft and such Persons shall keep any information obtained thereby
confidential and shall not disclose the same to any Person, except to a Person
described in Section 18.01 of the Participation Agreement. Any such
inspection of the Aircraft shall be a visual, walk-around inspection of the
interior and exterior of the Aircraft and shall not include opening any panel,
bays or the like without the express consent of the Lessee (except to the
extent any such inspection takes place when any such panel, bays or the like
are open). Notwithstanding the previous sentence, unless a Payment Default,
Bankruptcy Default, material Default relating to maintenance (without giving
effect to the provisos to Section 7.01(b) hereof) or an Event of Default shall
have occurred and be continuing, the Lessor, the Indenture Trustee, the Owner
Participant or their respective authorized representatives shall each be
entitled to inspect the Aircraft only one time during any consecutive
twelve-month period. If following any reregistration of the Aircraft, the
Aircraft is located outside the United States at the time of a proposed
inspection, the Lessee shall have thirty (30) days to relocate the Aircraft
within the United States and, if unable to do so within such time period,
shall pay the reasonable incremental out-of-pocket costs of the Lessor, the
Owner Participant or their authorized representatives incurred in connection
with any such inspection outside the United States. The Lessee shall make any
permitted sublease or transfer permitted under Section 7.02 hereof expressly
subject to inspection rights consistent with this Article 14. The Lessee
agrees to respond in a timely fashion to any of the Owner Trustee's, the
Indenture Trustee's or the Owner Participant's inquiries regarding (x) the
location of the Aircraft or any Engine or (y) the scheduling of any letter
check or heavy maintenance visit with respect to the Aircraft (at which
representatives of the Owner Participant, the Lessor or the Indenture Trustee
may be present without regard to the one-year limitation set forth above).
Section 14.02. No Obligation to Inspect. None of the Lessor, the
Indenture Trustee or the Owner Participant shall have any duty to make any
inspection pursuant to Section 14.01 hereof and no such party shall incur any
liability or obligation by reason of making or not making any such inspection.
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign. The Lessee shall not, and
shall have no authority or power to assign, convey or sublease any of its
rights under this Lease without the prior written consent of the Lessor except
(i) as expressly provided in Section 7.02 hereof, or in the case of any
requisition by the Government referred to in Section 7.01 of this Lease, or
(ii) to a wholly-owned domestic subsidiary of the Lessee which shall be a
certificated U.S. Air Carrier. Any such assignment, conveyance or sublease
shall in no way relieve the Lessee from any obligation hereunder or under any
other Operative Agreement or any written agreement of the Lessee entered into
in connection with the transactions contemplated by the Operative Agreements,
which shall be and remain obligations of the Lessee. The Lessor agrees that
it will not assign or convey its right, title and interest in and to this
Lease or the Aircraft except as contemplated by or provided in this Lease, the
Trust Agreement, the Indenture or the Participation Agreement. The terms and
provisions of this Lease shall be binding upon and inure to the benefit of the
Lessor and the Lessee and their respective successors and permitted assigns,
and shall inure, to the extent expressly provided herein and therein, to the
direct benefit of, and in accordance with the provisions of the Indenture and
the Participation Agreement shall be enforceable by, the Indenture Trustee,
the Lessor and their respective successors and permitted assigns.
Section 15.02. Citizenship. The Lessee will at all times be a duly
certificated U.S. Air Carrier under the Act.
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default. Each of the following events shall
constitute an Event of Default, whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body:
(a) the Lessee shall fail to make any payment of Basic Rent, Renewal
Rent, Stipulated Loss Value or Termination Value within ten Business Days
after the date when due (except that with respect to any failure to pay
Excepted Payments, such failure shall constitute an Event of Default at the
discretion of the Owner Participant); or
(b) the Lessee shall fail to make any payment of Supplemental Rent
(other than amounts described in clause (a) above) within 30 days after the
Lessee has received written notice from the Person entitled to receive such
payment stating that such payment is due (except that with respect to any
failure to pay Excepted Payments for such period, such failure shall
constitute an Event of Default at the discretion of the Owner Participant);
or
(c) (i) the Lessee shall fail to procure, carry and maintain
insurance on or in respect of the Aircraft at any time in accordance with
the provisions of Article 13 or such insurance lapses or is cancelled,
provided that no such lapse or cancellation shall constitute an Event of
Default until the earlier of (A) 20 days (or seven days or such shorter
time as may be standard in the industry with respect to war risk coverage)
after receipt by any Additional Insured of written notice of such lapse or
cancellation and (B) the date that such lapse or cancellation is effective
as to any Additional Insured and provided further that such failure shall
not constitute an Event of Default as long as the Aircraft is insured as
required while on the ground and not operated, or (ii) the Aircraft shall
be operated at any time when comprehensive airline liability insurance
required under Section 13.01 hereof shall not be in effect (it being
understood that the Lessee is not required to maintain such insurance under
Section 13.01 hereof while the indemnification or insurance referred to in
the proviso to Section 13.01(b) hereof is in effect); or
(d) the Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it under any
Operative Agreement (excluding the Tax Indemnity Agreement) or any other
written agreement of the Lessee entered into in connection with the
transactions contemplated by the Operative Agreements and such failure
shall continue unremedied for a period of thirty (30) days after the date a
Responsible Officer of the Lessee has actual knowledge of the failure or
the Lessee shall have received written notice from the Lessor or the Owner
Participant of such failure, provided, that in the event such failure is
curable and so long as (but for no longer than 150 days after such 30-day
period) the Lessee shall have promptly undertaken such cure after the
earlier of actual knowledge of a Responsible Officer of the Lessee or
notice thereof which undertaking shall be diligently and continuously
pursued using the Lessee's reasonable best efforts, such failure shall not
constitute an Event of Default; provided, further, that failure of the
Lessee to maintain the registration of the Aircraft under the Act pursuant
to the Lessee's covenants and agreement in Section 6.03(b) of the
Participation Agreement and in Section 7.01(a) of this Lease, when the
lapse of such registration is solely because the Owner Participant or the
Lessor has ceased to be a Citizen of the United States, shall not
constitute a Default or an Event of Default; or
(e) an order for relief shall be entered in respect of the Lessee by
a court having jurisdiction in the premises in an involuntary case under
the federal bankruptcy laws as now or hereafter in effect; or the Lessee
shall consent to the appointment of a custodian, receiver, trustee or
liquidator of itself or of a substantial part of its property; or the
Lessee is not paying, or shall admit in writing its inability to pay, its
debts generally as they come due or shall make a general assignment for the
benefit of creditors; or the Lessee shall file, or the Board of Directors
of the Lessee shall authorize the filing of, or grant one or more persons
authority (at their discretion) to make a filing for, a voluntary petition
in bankruptcy or a voluntary petition or an answer seeking reorganization
in a proceeding under any bankruptcy laws (as now or hereafter in effect)
or an answer admitting the material allegations of a petition filed against
the Lessee in any such proceeding; or the Lessee shall file, or the Board
of Directors of the Lessee shall authorize the Lessee to, or grant one or
more persons authority (at their discretion) to, seek relief by voluntary
petition, answer or consent, under the provisions of any other or future
bankruptcy or other similar law providing for the reorganization or
winding-up of corporations, or providing for an agreement, composition,
extension or adjustment with its creditors; or
(f) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Lessee, a
custodian, receiver, trustee, or liquidator of the Lessee or of any
substantial part of its property, or sequestering any substantial part of
the property of the Lessee, or granting any other relief in respect of the
Lessee under the federal bankruptcy laws or other insolvency laws, and any
such order, judgment or decree of appointment or sequestration shall remain
in force undismissed or unvacated for a period of ninety (90) days after
the date of its entry; or
(g) a petition against the Lessee in a proceeding under the federal
bankruptcy law or other insolvency laws (as now or hereafter in effect)
shall be filed and shall not be withdrawn or dismissed within ninety (90)
days, or under the provisions of any law providing for reorganization or
winding-up of corporations which may apply to the Lessee, any court of
competent jurisdiction shall assume jurisdiction, custody or control of the
Lessee or of any substantial part of its property and such jurisdiction,
custody or control shall remain in force unrelinquished or unterminated for
a period of ninety (90) days; or
(h) any representation or warranty made by the Lessee in this Lease
or in the Participation Agreement or in any document or certificate
furnished by the Lessee in connection with or pursuant to this Lease or the
Participation Agreement (except for the Tax Indemnity Agreement) shall at
any time prove to have been incorrect at the time made in any respect
material to the transactions contemplated by this Lease and, if originally
made by the Lessee in good faith, shall remain material and unremedied for
a period of thirty (30) days after a Responsible Officer of the Lessee
shall have actual knowledge or the Lessee shall have received written
notice of such misstatement.
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default. (a) Remedies
Generally. Upon the occurrence of any Event of Default and at any time after
such occurrence so long as the same shall be continuing, the Lessor may, at
its option, declare this Lease to be in default (except that no such
declaration shall be required in the case of an Event of Default pursuant to
paragraphs (e), (f) or (g) of Section 16.01 hereof and this Lease shall be
deemed declared in default without any further act or notice), and at any time
thereafter the Lessor may do, and the Lessee shall comply with, one or more
of the following with respect to all or any part of the Airframe and the
Engines, as the Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with, any mandatory requirements of
applicable law then in effect:
(i) Demand in writing that the Lessee shall, and upon such written
demand the Lessee shall, at the Lessee's own cost and expense, return
promptly to the Lessor all or such part of the Airframe and the Engines as
the Lessor may demand in the manner and condition required by, and
otherwise in accordance with all of the provisions of this Lease (provided
that, unless the Lessor shall require otherwise, the Aircraft shall be
returned within the continental United States), or the Lessor, at its
option, may enter upon the premises where such Airframe or Engines are
located or believed to be located and take immediate possession of and
remove such Airframe and Engines (together with any engine which is not an
Engine but is installed on the Airframe, subject to all of the rights of
the owner, lessor, Lien holder or secured party of such engine) without the
necessity for first instituting proceedings, or by summary proceedings or
otherwise, all without liability of the Lessor to the Lessee for or by
reason of such entry or taking of possession, whether for the restoration
of damage to property caused by such action or otherwise;
(ii)With or without taking possession thereof, sell or otherwise
dispose of the Airframe or any Engine, at public or private sale and with
or without advertisement or notice to the Lessee, as the Lessor may
determine, and the Lessor may hold the Lessee liable for any installment of
Basic Rent and Renewal Rent due on or before the date of such sale (and, if
Basic Rent or Renewal Rent is payable in arrears, the pro rata portion of
the installment of Basic Rent or Renewal Rent due on the next succeeding
Rent Payment Date in respect of any period commencing on the immediately
preceding Rent Payment Date to the date of such sale), or hold, use,
operate, lease to others or keep idle all or any part of the Airframe or any
Engine as the Lessor, in its sole discretion, may determine, in any such
case free and clear of any rights of the Lessee except as otherwise set
forth in this Article 17, and without any duty to account to the Lessee
with respect to such action or inaction or for any proceeds except to the
extent required by Section 17.01(a)(iv) hereof; in the event the Lessor
elects to exercise its rights under said Section, and in connection with
any sale of the Aircraft or any part thereof pursuant to this Article 17,
the Lessor, the Indenture Trustee, the Owner Participant or any Holder may
bid for and purchase such property;
(iii)Whether or not the Lessor shall have exercised or shall later at
any time exercise any of its rights under Section 17.01(a)(i) or
17.01(a)(ii) hereof, the Lessor, by written notice to the Lessee specifying
a payment date not earlier than 10 days from the date of such notice, may
demand that the Lessee pay to the Lessor, and the Lessee shall pay to the
Lessor on the payment date specified in such notice, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Basic Rent or
Renewal Rent due on Rent Payment Dates occurring after the payment date
specified in such notice), any installment of Basic Rent, Renewal Rent and
any Supplemental Rent due on or before such payment date (and, if Basic
Rent or Renewal Rent is payable in arrears, the pro rata portion of the
installment of Basic Rent or Renewal Rent due on the next succeeding Rent
Payment Date in respect of the period commencing on the Stipulated Loss
Value Determination Date referred to below and ending on the date of such
payment), plus an amount equal to the excess, if any, of the Stipulated
Loss Value for the Aircraft, computed as of the Stipulated Loss Value
Determination Date on or next preceding the payment date specified in such
notice over the Fair Market Value of the Aircraft, computed as of such
Stipulated Loss Value Determination Date, together with (A), if Basic Rent
is payable in advance, interest, to the extent permitted by applicable law,
at the Debt Rate on the amount of such Stipulated Loss Value from such
Stipulated Loss Value Determination Date to the date for payment set forth
in such notice from the Lessor and (B) in all cases, interest, to the
extent permitted by applicable law at the Past Due Rate on the excess of
such Stipulated Loss Value over such Fair Market Value, from the date as of
which such Stipulated Loss Value is payable to the date of actual payment
of such amount; provided, however, that if (and in any event prior to the
time for payment hereunder) the Lessor is unable within a reasonable period
of time to recover possession of the Aircraft, or any portion thereof,
pursuant to clause (i) above unencumbered by this Lease and free and clear
of all Liens (other than Lessor's Liens), the Fair Market Value of the
Aircraft or such portion shall, at the option of the Lessor to the extent
legally enforceable, be zero and, if the Fair Market Value of the Aircraft
is deemed to be zero, after payment in full by the Lessee of the amount
specified above and all other amounts due from the Lessee under this Lease
and the other Operative Agreements, the Lessor shall promptly transfer
(without recourse or warranty other than as to the absence of the Lessor's
Liens) all of its right, title and interest in the Aircraft or such
portion, to the Lessee;
(iv)In the event the Lessor, pursuant to Section 17.01(a)(ii) hereof,
shall have sold the Airframe and/or any Engine, the Lessor, in lieu of
exercising its rights under Section 17.01(a)(iii) hereof, may, if it shall
so elect, demand that the Lessee pay the Lessor, and the Lessee shall pay
to the Lessor, on the date of such sale, as liquidated damages for loss of
a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent
due after the date on which such sale occurs) any unpaid Basic Rent or
Renewal Rent due on or before the date on which such sale occurs (and, if
Basic Rent or Renewal Rent is payable in arrears, the pro rata portion of
the installment of Basic Rent or Renewal Rent due on the next succeeding
Rent Payment Date in respect of any period commencing on the Stipulated
Loss Value Determination Date referred to below and ending on the date of
such sale), and any Supplemental Rent due on or before the date on which
such sale occurs, plus an amount equal to the excess, if any, of (A) the
Stipulated Loss Value for the Aircraft, computed as of the Stipulated Loss
Value Determination Date next preceding the sale date, over (B) the net
proceeds of such sale (after deduction of all of the Lessor's costs and
expenses of such sale, including, without limitation, sales or transfer
taxes, costs of storage, overhaul, maintenance, preparation and
transportation of the Aircraft and brokers' and attorneys' fees) together
with (x), if Basic Rent is payable in advance, interest, to the extent
permitted by applicable law, at the Debt Rate on such Stipulated Loss Value
from such Stipulated Loss Value Determination Date to the date of such sale
and (y) in all cases, interest to the extent permitted by applicable law at
the Past Due Rate, on the amount of such excess from the date of such sale
to the date of actual payment by the Lessee;
(v) Proceed by appropriate court action to enforce the terms of this
Lease or to recover damages for its breach;
(vi)Terminate or rescind this Lease as to the Airframe or any or all
of the Engines; or
(vii)Exercise any other right or remedy which may be available to the
Lessor under applicable law.
(b) Cost of Exercise of Remedies. In addition, the Lessee shall be
liable, except as otherwise provided above, for any and all unpaid Rent due
before, after or during the exercise of any of the Lessor's remedies, for all
amounts payable by the Lessee under the Participation Agreement before or
after any termination hereof, and for all reasonable legal fees and other
costs and expenses incurred by the Lessor, the Indenture Trustee or the Owner
Participant by reason of the occurrence of any Event of Default or the
exercise of the Lessor's remedies, including, without limitation, all costs
and expenses incurred in connection with the return of the Airframe or any
Engine in accordance with the terms of Article 12 hereof or in placing the
Airframe or Engines in the condition and airworthiness required by such
Article or in connection with any inspection, use, operation, maintenance,
insurance, storage, or leasing carried out as part of such exercise.
Section 17.02. Cumulative Remedies. Except as otherwise provided, no
remedy referred to in this Article 17 is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to the Lessor at law or in equity; and the exercise or
beginning of exercise by the Lessor of any one or more of such remedies shall
not preclude the simultaneous or later exercise by the Lessor of any or all of
such other remedies.
Section 17.03. Waiver. No express or implied waiver by the Lessor
of any Event of Default shall in any way be, or be construed to be, a waiver
of any future or subsequent Event of Default. To the extent permitted by
applicable law, the Lessee waives any rights now or in the future conferred by
statute or otherwise which may require the Lessor to sell, lease or otherwise
use the Airframe or any Engine in mitigation of the Lessor's damages or which
may otherwise limit or modify any of the Lessor's rights or remedies under
this Article 17. The Lessor's access to the Aircraft is of the essence and
shall not be impaired.
Section 17.04. Lessor's Right to Perform for Lessee. If the Lessee
fails to make any required payment of Rent or fails to perform or comply with
any of its agreements contained in this Lease, whether or not such failure
shall constitute an Event of Default hereunder, the Lessor may (but shall not
be obligated to) make such payments or perform or comply with such agreement,
and the amount of such payment and the amount of the reasonable costs and
expenses of the Lessor incurred in connection with such payment or the
performance of or compliance with such agreement, together with interest (to
the extent permitted by applicable law) at the Past Due Rate from the date of
the making of such payment or the incurring of such costs and expenses by the
Lessor to the date of payment of such Rent or other amount by the Lessee,
shall be deemed Supplemental Rent payable by the Lessee upon demand. No such
payment or performance by the Lessor shall be deemed to waive any Default or
Event of Default or relieve the Lessee of its obligations hereunder.
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment. So long as no Event of Default
shall have occurred and be continuing, the Lessor covenants that neither it
nor any other Person lawfully claiming through it (other than the holder of a
Lien which the Lessee is obligated to discharge pursuant to Article 6 hereof,
and it being understood that the Lessor shall not be liable for any act or
omission of the Indenture Trustee or any other Person claiming through the
Indenture Trustee) shall interfere with the Lessee's right to quietly enjoy
the Aircraft without hindrance or disturbance by it or any such other Person.
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances. Promptly upon the execution and
delivery of this Lease, the Trust Agreement and the Indenture, the Lessee will
cause each of them to be duly filed for recordation in accordance with the Act
and will maintain the recordation of the Indenture until the Lien of the
Indenture shall have been discharged pursuant to the terms of the Indenture.
In addition, the Lessee will, at the Lessee's own cost and expense, promptly
and duly execute and deliver to the Lessor, the Owner Participant and the
Indenture Trustee such further documents and assurances to carry out the
intent and purpose of this Lease and the Indenture and to establish and
protect the rights and remedies created or intended to be created in favor of
the Lessor under this Lease, and of the Owner Participant under the Trust
Agreement, and of the Indenture Trustee under the Indenture, including, without
limitation, the execution and filing of Uniform Commercial Code financing and
continuation statements, the execution and delivery of supplements and
amendments to this Lease and the Indenture, in recordable form, subjecting to
this Lease and the Indenture any Replacement Airframe and/or Replacement
Engines delivered by the Lessee pursuant to Section 11.03 hereof and any
Replacement Engine delivered by the Lessee pursuant to Section 11.04 hereof
and the recording and filing of counterparts of this Lease and the Indenture
in accordance with the laws of such jurisdictions as the Lessor or the
Indenture Trustee may from time to time deem advisable. The foregoing does
not impose upon the Lessor any additional liabilities not otherwise
contemplated by this Lease.
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease. (a) This Lease is a net lease, it
being the intention of the parties hereto that the obligations of the Lessee
to pay all costs and expenses of every character, whether seen or unforeseen,
ordinary or extraordinary, or structural or nonstructural, in connection with
the use, operation, maintenance, repair and reconstruction of the Airframe and
each Engine by the Lessee, including, without limitation, the costs and
expenses particularly set forth in this Lease (unless expressly excluded from
the terms hereof, the costs and expenses of the Lessor and the Owner
Participant shall include the reasonable fees and expenses of their respective
outside counsel), shall be absolute and unconditional, shall be separate and
independent covenants and agreements, and shall continue unaffected unless and
until the covenants have been terminated pursuant to an express provision of
this Lease. The obligation to pay Rent and all amounts payable by the Lessee
under this Lease or the Participation Agreement shall be absolute and
unconditional and (except as otherwise expressly provided with respect to
Supplemental Rent) shall be paid without notice or demand and such obligation
shall not be affected by any circumstance, including, without limitation:
(i) any set-off (except to the extent set forth in Section 3.05
hereof), counterclaim, recoupment, defense or other right which the Lessee
may have against the Lessor, the Owner Participant, any Holder, the
Indenture Trustee or anyone else for any reason (including, without
limitation, any breach by the Lessor or the Owner Participant or the
Indenture Trustee or any Holder of their respective representations,
warranties, agreements or covenants contained in any of the Operative
Agreements);
(ii)any defect in the title, airworthiness, registration, eligibility
for registration under the Act (and the regulations thereunder) or under
any of the laws or regulations of any other country of registry of the
Aircraft, condition, design, operation, merchantability or fitness for use
of, suitability for a particular purpose of, or any damage to or loss or
destruction of, the Aircraft or any portion thereof, or any interruption or
cessation in the use or possession of the Aircraft by the Lessee or any
sublessee for any reason including, without limitation, by reason of
governmental action or any doctrine of force majeure or impossibility of
performance;
(iii)any insolvency, bankruptcy, reorganization or similar case or
proceedings by or against the Lessor, the Lessee, the Indenture Trustee or
the Owner Participant or any other Person;
(iv)any Liens, encumbrances or rights of any other Person with
respect to the Aircraft, the invalidity or unenforceability or lack of due
authorization or other infirmity of this Lease or any other Operative
Agreement or document or instrument executed pursuant hereto or thereto, or
any lack of right, power or authority of the Lessor or the Lessee or any
sublessee or any other party to any other Operative Agreement to enter into
this Lease or any other Operative Agreement or any such document or
instrument; or
(v) any other circumstance, happening or event whatsoever, whether or
not unforeseen, or similar to any of the foregoing.
(b) To the extent permitted by applicable law, the Lessee waives any
and all rights which it may now have or which at any time it may have
conferred upon it, by statute or otherwise, to terminate, cancel, quit,
rescind or surrender this Lease, the Airframe, or any Engine or part thereof,
other than in accordance with the terms hereof.
(c) Except as expressly provided herein, each payment of Rent made
by the Lessee shall be final as to the Lessor and the Lessee, and the Lessee
will not seek to return nor to recover, abate, suspend, defer or reduce all or
any part of any such payment of Rent from the Lessor or from the Indenture
Trustee for any reason.
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor. The Lessee agrees that in the case
of the appointment of any successor trustee for the Lessor pursuant to the
terms of the Participation Agreement, such successor trustee shall, upon
written notice by such successor to the Lessee, succeed to all the rights,
powers and title of the Lessor under this Lease and shall be deemed to be the
Lessor and the owner of the Aircraft for all purposes of this Lease without
the necessity of any consent or approval by the Lessee and without in any way
altering the terms of this Lease or the Lessee's obligations. One such
appointment and designation of a successor trustee shall not exhaust the right
to appoint and designate a further successor trustee pursuant to the
Participation Agreement, but such right may be exercised repeatedly so long as
this Lease shall be in effect.
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders. In
order to secure the indebtedness evidenced by the Certificates, the Indenture
provides among other things, for the assignment by the Lessor to the Indenture
Trustee of this Lease and the Lease Supplement and for the creation of a first
mortgage and security interest in favor of the Indenture Trustee on the
Aircraft. The Lessee consents to and acknowledges such assignment (subject to
the reservations and conditions therein set forth) and the receipt of a copy
of the Indenture.
Section 22.02. Intentionally Left Blank.
Section 22.03. Consent of Lessee to Assignment of Lease as Security.
The Lessee hereby accepts and consents, pursuant to the terms of the
Indenture, the Indenture Trustee's rights to receive payments (other than
Excepted Payments not constituting Basic Rent) due under this Lease, the right
to transfer or assign title to the Aircraft subject to this Lease, to make all
waivers and agreements except as otherwise provided in the Indenture, to give
all notices, consents and releases and to take all action upon the happening
of a Default or Event of Default under this Lease (except as otherwise
specifically provided in the Indenture), or to do any and all other things
whatsoever which the Lessor is or may become entitled to do under this Lease
(except as otherwise provided in the Indenture); all or any of which rights,
obligations, benefits and interests may, pursuant to the terms of the
Indenture, be reassigned or retransferred by the Indenture Trustee at any time
and from time to time (except as otherwise provided in the Indenture);
provided, however, that the Lessor, except to the extent, and for such time
as, it is unable to do so by virtue of the Indenture, shall remain liable for
the performance of all the terms, conditions, covenants and provisions for
which it is obligated under this Lease notwithstanding such assignment.
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds. (a) Any amounts
otherwise payable to the Lessee shall be held by the Lessor as security for,
and may be applied by the Lessor against, the obligations of the Lessee under
this Lease during such time as there shall have occurred and be continuing a
Payment Default, Bankruptcy Default or Event of Default, and, at such times as
there shall not be continuing a Payment Default, Bankruptcy Default or Event
of Default, such amounts, net of any amounts which have been applied by the
Lessor against the Lessee's obligations hereunder, shall be paid to the
Lessee. Any amounts which are held by the Lessor pending payment to the
Lessee shall, until paid to the Lessee or applied against the Lessee's
obligations hereunder, be invested by the Lessor, as directed from time to
time, in writing (and in the absence of a written direction by the Lessee, the
Lessor shall invest such monies in direct obligations of the United States of
America), by the Lessee and at the expense and risk of the Lessee, in the
following securities (which in the case of securities referred to in
subparagraphs (i) through (iv) of this Section 23.01(a) hereof shall mature
within ninety (90) days of the date of purchase):
(i) direct obligations of the United States of America; or
(ii)obligations fully guaranteed by the United States of America; or
(iii)certificates of deposit issued by, or bankers' acceptances of,
or time deposits or a deposit account with, any bank, trust company or
national banking association incorporated or doing business under the laws
of the United States of America or one of its States (which may include the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof), having a combined capital and surplus
of at least $500,000,000 and having a rating of "A" or better from Moody's
or S&P; or
(iv)commercial paper rated A-1/P-1 by S&P and Moody's respectively
(or if neither such organization shall rate such commercial paper at any
time, by any nationally recognized statistical rating organization in the
United States of America) equal to the highest rating assigned by such
rating organization (which may include commercial paper issued by the Owner
Trustee or the Indenture Trustee in their respective individual capacities
or any Affiliate thereof).
(b) At any time any invested funds are distributed to the Lessee,
there shall be promptly remitted to the Lessee any gain (including interest
received) realized as the result of any investment pursuant to Section
23.01(a) hereof (net of any fees, commissions and other costs and expenses, if
any, incurred by the Lessor in connection with such investment), unless a
Payment Default, Bankruptcy Default or Event of Default shall have occurred
and be continuing in which case such funds shall be applied in the same manner
as the principal so invested. The Lessee shall be responsible for and will
promptly pay to the Indenture Trustee or the Lessor, as the case may be, on
demand, the amount of any loss realized as the result of any such investment
(together with any fees, commissions and other costs and expenses, if any,
incurred by the Indenture Trustee or the Lessor in connection with such
investment), such amount to be disposed of in accordance with the terms of the
Indenture or the Lease, as the case may be.
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01. Lessor's Entry Into Lease. Except as expressly
provided herein, the Lessor and the Lessee agree that this Lease is executed
by First Security Bank of Utah, National Association not individually but
solely as Owner Trustee under the Trust Agreement in the exercise of the power
and authority conferred and vested in it as such Owner Trustee, that each and
all of the representations, undertakings and agreements by the Lessor herein
are for the purpose and with the intention of binding only the Lessor's
Estate, and that in no case whatsoever shall First Security Bank of Utah,
National Association be personally liable for any loss in respect of such
representations, undertakings and agreements, that actions to be taken by the
Lessor pursuant to its obligation hereunder may, in certain instances, be
taken by the Lessor only upon specific authority of the Owner Participant,
that nothing herein contained shall be construed as creating any liability on
First Security Bank of Utah, National Association, individually or personally,
to perform any covenant, either express or implied, herein, all such
liability, if any, being expressly waived by the Lessee and by each and every
Person now or hereafter claiming by, through or under the Lessee except with
respect to the gross negligence or willful misconduct of First Security Bank
of Utah, National Association, and that so far as First Security Bank of Utah,
National Association, individually or personally is concerned, the Lessee and
any Person claiming by, through or under the Lessee shall look solely to the
Lessor's Estate for the performance by the Lessor of any of its obligations
under this Lease; provided, that nothing in this Section 24.01 shall be
construed to limit in scope or substance those representations and warranties
of First Security Bank of Utah, National Association in its individual
capacity set forth in the Participation Agreement or the Trust Agreement. The
term "Lessor" as used in this Lease shall include any trustee succeeding First
Security Bank of Utah, National Association as Owner Trustee under the Trust
Agreement. Any obligation of the Lessor hereunder may be performed by the
Owner Participant, and any such performance shall not be construed as
revocation of the trust created by the Trust Agreement. Nothing contained in
this Lease shall restrict the operation of the provisions of the Trust
Agreement with respect to its revocation of the resignation or removal of the
Owner Trustee hereunder.
ARTICLE 25
NOTICES
Section 25.01. Notices. All notices, demands, declarations and
other communications required by this Lease shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid, five Business Days after being deposited
in the United States mails and (c) if given by Federal Express (or, if a
Default or Event of Default shall have occurred and be continuing, by other
comparable courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2005 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Senior Vice President and Chief
Financial Officer with a copy to Senior Vice President and General Counsel;
telephone (901) 395-3388, facsimile (901) 395-4758; or at such other
address as the Lessee shall from time to time designate in writing to the
Lessor, Indenture Trustee and the Owner Participant;
(b) If to the Lessor or Owner Trustee, to its office at 79 South
Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department; telephone (801) 246-5826, facsimile (801) 246-5053; or to such
other address as the Lessor shall from time to time designate in writing to
the Lessee and the Indenture Trustee, with a copy to Owner Participant at
the Owner Participant's address as provided in subsection (c) below;
(c) If to the Owner Participant, in accordance with the Participation
Agreement; and
(d) If to the Indenture Trustee, to its office at 600 Peachtree
Street, N.E., Suite 900, Atlanta, Georgia 30308, Attention: Corporate
Trust Lease Administration; telephone (404) 607-4681, facsimile (404)
607-6362; or to such other address as the Indenture Trustee shall from time
to time designate in writing to the Lessor, the Lessee and the Owner
Participant.
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Headings and Captions. All article and
section headings and captions used in this Lease are purely for convenience
and shall not affect the interpretation of this Lease.
Section 26.02. References. Any reference to a specific article or
section number shall be interpreted as a reference to that article or section
of this Lease unless otherwise expressly provided.
Section 26.03. APPLICABLE LAW. THIS LEASE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN NEW YORK.
Section 26.04. Severability. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 26.05. No Oral Modification. The terms and provisions of
this Lease may not be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against which enforcement
of the change, waiver, discharge or termination is sought. Any such change,
waiver, discharge or termination is also subject to the provisions of Section
8.01 and Article XIII of the Indenture.
Section 26.06. Agreement as Chattel Paper. To the extent that this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease may be created through the transfer or possession of
any counterpart other than the original counterpart, which shall be the
counterpart containing the receipt executed by the Indenture Trustee on its
signature page.
Section 26.07. Counterparts. This Lease may be executed in any
number of counterparts, each of which shall be an original (except that only
the counterpart bearing the receipt executed by the Indenture Trustee shall be
the original for purposes of perfecting a security interest therein as chattel
paper under the Uniform Commercial Code), but all of which taken together
shall constitute one and the same instrument and any of the parties hereto may
execute this Lease by signing any such counterpart.
Section 26.08. Public Release of Information. Provided no Event of
Default shall have occurred and be continuing, each party shall in each
instance obtain the prior written approval of each party concerning the exact
text and timing of news releases, articles and other informational releases to
the public media concerning this Lease.
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties. It is the intent of the
parties to this Lease that for all purposes (including, without limitation,
U.S. Federal income tax purposes) this Lease will be a true lease, and that
this Lease conveys to the Lessee no right, title or interest in the Aircraft
except as a lessee.
Section 27.02. Section 1110 Compliance. Notwithstanding any
provision herein or elsewhere contained to the contrary, it is understood and
agreed among the parties hereto that the transactions contemplated by this
Lease and the other Operative Agreements are expressly intended to be, shall
be and should be construed so as to be, entitled to the full benefits of
Section 1110 of the Bankruptcy Code and any successor provision thereof.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease to be duly executed as of the date first above written.
LESSOR: FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: ______________________________________________
Name:
Title:
LESSEE: FEDERAL EXPRESS CORPORATION
By: _______________________________________________
Name:Robert D. Henning
Title:Assistant Treasurer and
Managing Director - Structured Finance
Receipt of this original counterpart of the Lease is hereby
acknowledged on this __ day of August 1995.
Indenture Trustee: NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Indenture Trustee
By: _____________________________________________
Name:
Title:
SCHEDULE I
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Act; Federal Aviation Act. Title 49 of the United States Code
(which, among other things, recodified the Federal Aviation Act of 1958, as
amended to the time of such recodification), as amended and in effect on the
date of the Lease or as subsequently amended, or any successor or substituted
legislation at the time in effect and applicable, and the regulations
promulgated pursuant thereto.
Additional Insureds. As defined in Article 13 of the Lease.
Aeronautics Authority or FAA. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment received or deemed to
have been received by a Person (the "Original Payment") shall be supplemented
by a further payment to such Person so that the sum of the two payments shall
be equal to the Original Payment, after taking into account (x) all Taxes that
would result from the receipt or accrual of such payments and (y) any
reduction in Taxes that would result from such increased Taxes. In the case
of amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is
at all times subject to Federal income tax at the maximum marginal rate
generally applicable to corporations from time to time and actual state, local
and foreign income taxes.
Agent. The Chase Manhattan Bank (National Association) and its
successors and permitted assigns as Agent for the Original Loan Participants
pursuant to Article 16 of the Original Participation Agreement.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by the
Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Act) as to which there is in force a permit granted under
Section 41302 of the Act.
Aircraft. The Airframe (or any permitted substitute airframe)
together with the two Engines (or any Replacement Engine) whether or not any
of such initial or Replacement Engines may from time to time be installed on
such Airframe or may be installed on any other airframe or on any other
aircraft, including any aircraft substituted pursuant to Section 11.03 of the
Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) leased by the Lessor to the Lessee
pursuant to the Lease and the initial Lease Supplement and having the United
States FAA Registration Number and manufacturer's serial number specified in
the initial Lease Supplement, including (i) all Parts in respect thereof and
(ii) any replacement airframe which may be substituted pursuant to Section
11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement, dated as of August 1, 1995.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on the Delivery Date or the Refunding Date in connection with the transactions
contemplated by the Operative Agreements, as such agreement may be amended and
supplemented from time to time and delivered to the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee and the Owner Participant as
amended from time to time.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with a copy of such report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
May 1, 1995, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or with the giving of notice or lapse of
time or both would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft throughout
the Basic Term pursuant to Section 3.02 of the Lease, adjusted pursuant to
Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on July 5, 2019 or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York and Memphis, Tennessee, and so long as
the Lien of the Indenture is in effect, in Atlanta, Georgia, Columbia, South
Carolina and, thereafter, in Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N658FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Act, or any analogous part of any
successor or substituted legislation or regulation at the time in effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, references to the Code shall
mean the Internal Revenue Code of 1986, as amended from time to time.
Commencement Date. July 5, 1995.
Consent and Agreement. The Consent and Agreement dated as of May 1,
1995 executed by the Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Department. The principal office of the Owner Trustee
located at 79 South Main Street, Salt Lake City, Utah 84111 or such other
office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified to the Lessee, the
Indenture Trustee and the Owner Participant.
Corporate Trust Office. The principal office of the Indenture
Trustee located at 600 Peachtree Street, N.E., Suite 900, Atlanta, Georgia
30308, Attention: Corporate Trust Lease Administration or such other office at
which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to the
Lessee, the Owner Participant and the Owner Trustee.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition, which with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. May 4, 1995.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by its manufacturer's serial number in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease,
together with all Parts related thereto. Except as otherwise provided, at
such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of May 1, 1995, executed
by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N658FE), dated as of May 1, 1995 between the
Lessor and the Lessee, as the same may be amended, modified or supplemented
from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. Has the meaning set forth in Section 7.06 of the
Participation Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use
(A) for a period in excess of 30 days due to theft or disappearance or such
longer period not to exceed 60 days from the end of such initial 30-day period
if and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such loss constitutes an Event of Loss under clause (ii)
of this definition) or (B) for a period in excess of 60 days due to the
destruction, damage beyond economic repair or rendition of such property
permanently unfit for normal use by Lessee for any reason whatsoever; (ii) any
damage to such property which results in an insurance settlement with respect
to such property on the basis of a total loss, or constructive or compromised
total loss; (iii) (1) condemnation, confiscation or seizure of, or requisition
of title to such property by the Government, any foreign government or
purported government or any agency or instrumentality thereof, or (2)
condemnation, confiscation, or seizure of, or requisition or taking of, use of
such property (A) by a foreign government or instrumentality or agency of any
such foreign government, for a period in excess of 180 days (or such shorter
period ending on the earlier of the expiration of the Term or on the date on
which an insurance settlement with respect to such property on the basis of a
total loss or constructive or compromised total loss shall occur) or (B) by
the Government for a period extending beyond the Term, provided that no Event
of Loss shall be deemed to have occurred, and the Term shall be extended
automatically for a period of six months (or the date of return of the
Aircraft, if shorter, so long as the Lessor receives at least six months
notice of such date of return) beyond the end of the Term in the event that
the Aircraft, the Airframe or any Engine is requisitioned by the Government
pursuant to an activation as part of the Civil Reserve Air Fleet Program
described in Section 7.02(a)(iv) of the Lease; and (iv) as a result of any
law, rule, regulation, order or other action by the Aeronautics Authority or
other governmental body having jurisdiction, the use of the Aircraft or
Airframe in the normal course of air transportation of cargo shall have been
prohibited by virtue of a condition affecting all Airbus A300F-600 series
aircraft equipped with engines of the same make and model as the Engines for a
period of six (6) consecutive months, unless the Lessee, prior to the
expiration of such six (6) month period, shall be diligently carrying forward
all steps which are necessary or desirable to permit the normal use of the
Aircraft or Airframe or, in any event, if such use of the Aircraft or the
Airframe shall have been prohibited for a period of twelve (12) consecutive
months, unless the Lessee, prior to the expiration of such twelve (12) month
period shall have conformed at least one Airbus A300F-600 series aircraft (but
not necessarily the Aircraft or the Airframe) to the requirements of any such
law, rule, regulation, order, or other action and shall have commenced regular
commercial use and shall be diligently carrying forward, on a
non-discriminatory basis, all steps necessary or desirable to permit the
normal use of the Aircraft by the Lessee. The date of such Event of Loss
shall be (s) the 31st day or the 91st day, as the case may be, following loss
of such property or its use due to theft or disappearance (or the end of the
Term, if earlier); (t) the 61st day following the date of any destruction,
damage beyond economic repair or rendition of such property permanently unfit
for normal use; (u) the date of any insurance settlement on the basis of a
total loss or constructive or compromised total loss; (v) the date of any
condemnation, confiscation, seizure or requisition of title of such property;
(w) the 181st day following condemnation, confiscation, seizure or requisition
for use of such property by a foreign government referred to in clause
(iii)(2)(A) above (or the end of the Term or the date of any insurance
settlement described therein, if earlier than such 181st day); (x) the last
day of the Term in the case of requisition for use of such property by the
Government; (y) the last day of the 6 month or 12 month period, referred to in
clause (iv) above. An Event of Loss with respect to the Aircraft shall be
deemed to have occurred if any Event of Loss occurs with respect to the
Airframe. If an Event of Loss described in any of clauses (i) (A), (iii),
(iv) or (v) above shall occur, Lessor may elect, within 30 days following the
date upon which such Event of Loss is deemed to have occurred, to waive such
Event of Loss and the consequences thereof.
Excepted Payments. Collectively, (i) indemnity or other payments (and
interest thereon to the extent provided in the Operative Agreements) paid or
payable by the Lessee in respect of the Owner Participant, the Owner Trustee
in its individual capacity or any of their respective successors, permitted
assigns, directors, officers, employees, servants and agents or Affiliates,
pursuant to the Participation Agreement or any indemnity hereafter granted to
the Owner Participant or the Owner Trustee in its individual capacity pursuant
to the Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the
Aircraft payable as a result of insurance claims paid for the benefit of, or
losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
the provisions of but not required under Section 13 of the Lease, (iv)
payments of Supplemental Rent by the Lessee in respect of any amounts payable
under the Tax Indemnity Agreement, (v) any amounts payable by the Lessee to the
Owner Participant or the Owner Trustee in its individual capacity, after the
release thereof from the Lien of the Indenture, (vi) (x) in the case of any
Basic Rent received by the Indenture Trustee on or in respect of any Rent
Payment Date, subject to receipt by the Indenture Trustee of Basic Rent due on
such Rent Payment Date satisfying Section 3.05 of the Lease, payments of Basic
Rent payable on such Rent Payment Date constituting increases in Basic Rent
attributable to payments arising pursuant to Section 5 of the Tax Indemnity
Agreement and (y) in the case of any Basic Rent otherwise received by the
Indenture Trustee, so long as no Payment Default or Indenture Event of Default
shall have occurred and be continuing, payments of Basic Rent constituting
increases in Basic Rent attributable to payments arising pursuant to Section 5
of the Tax Indemnity Agreement, (vii) the payment of incremental out-of-pocket
expenses of the Owner Trustee, the Owner Participant or their respective
authorized representatives payable by the Lessee under Section 6.03(b) of the
Participation Agreement or Section 14.01 of the Lease following any
reregistration of the Aircraft and (viii) any right to demand, collect or
otherwise receive and enforce the payment of any amount described in clauses
(i) through (vii) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease. Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. Unless otherwise provided in the applicable
provisions of any Operative Agreement, in such determination it shall be
assumed that the Aircraft is in the condition required under the Lease in the
case of return of the Aircraft pursuant to Article 12 of the Lease; provided
that in connection with any determination pursuant to or for the purposes of
Article 17 of the Lease, the Aircraft shall be appraised on an "as is, where
is" basis. Fair Market Value shall be determined in accordance with the
provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FSBU. First Security Bank of Utah, National Association, a national
banking association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of the
Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSBU, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, the Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N658FE), dated as of May 1, 1995, as amended and
restated as of August 1, 1995, between the Lessor and the Indenture Trustee,
as supplemented by the Indenture and Security Agreement Supplement, or amended
including any amendment or supplement thereto entered into from time to time.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N658FE) dated May 4, 1995, as such Indenture and Security Agreement Supplement
shall be amended or supplemented from time to time and any other supplement to
the Indenture, substantially in the form of Exhibit A to the Indenture.
Indenture Default. Any event or condition, which with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. NationsBank of Georgia, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes or Expenses
imposed against the Indenture Trustee which are not required to be indemnified
against by the Lessee pursuant to the Participation Agreement by reason of
Section 8.01(b) or 9.01(b) thereof.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N658FE) dated as of May 1, 1995, as amended and restated as of August 1, 1995,
entered into by the Lessor and the Lessee concurrently with the execution and
delivery of the Indenture, as said Lease may from time to time be supplemented
or amended, or its terms waived or modified, to the extent permitted by, and
in accordance with, the terms of the Indenture, including, without limitation,
supplementation by one or more Lease Supplements entered into pursuant to the
applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N658FE) dated May 4, 1995, as such Lease Supplement shall
be amended or supplemented from time to time and any other supplement to the
Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessor. First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), the GTA, the Engine Warranty Assignment, the Engine Consent, any
warranty with respect to the Airframe and the Engines, all amounts of Basic
Rent and Supplemental Rent, including without limitation, insurance proceeds
(other than insurance proceeds payable to or for the benefit of the Owner
Trustee in its individual capacity, the Owner Participant or the Indenture
Trustee) and requisition, indemnity or other payments of any kind for or with
respect to the Aircraft (except amounts owing to the Owner Participant, to the
Indenture Trustee, to the Owner Trustee in its individual capacity, or to any
of their respective directors, officers, employees and agents pursuant to
Articles 8 and 9 of the Participation Agreement). Notwithstanding the
foregoing, "Lessor's Estate" shall (i) not include any Excepted Payment and
(ii) include all property purported to be covered by the Granting Clause of
the Indenture.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, or the Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, (ii)
acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof or which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Articles 7, 8, 9, 10
or 11 of the Lease and other than a transfer pursuant to the exercise of the
remedies set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to an excess of (i) the
present values of all remaining scheduled payments of such principal amount or
portion thereof and interest thereon (excluding interest accrued from the
immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate per semi-annual period equal to the Debt Rate.
Non-U.S. Person. Any Person other than (i) a citizen or resident of
the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which the Lessee in good faith determines to be
obsolete or no longer suitable or appropriate for use on the Airframe or any
Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, any Owner Trustee Guaranty,
any Ancillary Agreement entered into by or with the written consent of the
Indenture Trustee, which by its terms is an Operative Agreement, the
Certificates outstanding at the time of reference, the Indenture, the
Indenture and Security Agreement Supplement, the Consent and Agreement, the
AVSA Consent and Agreement, the Consent and Guaranty (to the extent assigned
by the Purchase Agreement Assignment), the Engine Consent and the Tax
Indemnity Agreement, each as amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N658FE) dated as of May 1,
1995 between the Owner Trustee and the Indenture Trustee, which together with
the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N658FE) dated May 4, 1995 attached thereto was recorded
as one instrument by the FAA on May 5, 1995 and assigned Conveyance Number
NN008445.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N658FE) dated as of May 1, 1995 between the Owner Trustee as lessor,
and the Lessee, which together with Lease Supplement No. 1 (Federal Express
Corporation Trust No. N658FE) dated May 4, 1995 attached thereto was recorded
as one instrument by the FAA on May 5, 1995 and assigned Conveyance Number
NN008446.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the first Refinancing after the Delivery
Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N658FE) among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of May 1, 1995.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N658FE) between the Lessee and the
Owner Participant as it was originally executed as of May 1, 1995.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N658FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of May 1, 1995 and filed with the FAA
on May 4, 1995.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Amount. The amount described in Section 2.03 of the
Participation Agreement and set forth on Schedule II to the Lease.
Owner Participant Guarantor. AmSouth Bank of Alabama, its successors
and permitted assigns and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty dated the
Delivery Date, as amended and restated on the Refunding Date substantially in
the form of Exhibit E to the Participation Agreement, as the same may be
amended, modified or supplemented from time to time.
Owner Trustee. FSBU, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash flow during the Interim Term
and the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages and the EBO Price, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N658FE), dated as of May 1, 1995, as amended and
restated as of August 1, 1995, among the Lessee, the Original Loan
Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as trustee, the Owner
Participant, the Pass Through Trustee, not in its individual capacity except
as otherwise expressly provided therein, but solely as pass through trustee
and the Indenture Trustee, not in its individual capacity except as otherwise
expressly stated therein, but solely as indenture trustee, as amended,
modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or, prior to
replacement thereof in accordance with the Lease, which may be removed
therefrom.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
August 1, 1995 between the Lessee and the Pass Through Trustee, as such Pass
Through Agreement may be modified, supplemented or amended from time to time in
accordance with the provisions thereof.
Pass Through Certificates. Any of the 1995 Pass Through Certificates,
Series A1 or 1995 Pass Through Certificates, Series A2, in each case as issued
by the related Pass Through Trust; and "Pass Through Certificates" means all
of the Pass Through Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1995-A1
or Federal Express Pass Through Trust, 1995-A2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. NationsBank, National Association (Carolinas),
a national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 5 and July 5 commencing July 5, 1995.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Premium Termination Date. With respect to the Certificates having a
Maturity in 2013, February 22, 2007, and with respect to the Certificates
having a Maturity in 2016, May 4, 2015.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of the
Indenture.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase Agreement,
dated as of July 3, 1991 between AVSA and the Lessee, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to the Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N658FE), dated as of May 1, 1995 between
the Lessor and the Lessee, as the same may be amended, modified or supplemented
from time to time.
Purchase Price. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 21 for January 5
Payment Dates and June 20 for July 5 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least ten Business Days prior
to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic Rent,
Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 5 and July 5 commencing July 5, 1995.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of the same or of equal or greater
value, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Department or Corporate
Trust Office (in the Corporate Trust Lease Administration Department), as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, with respect to the Owner Participant, the president or
any vice president with direct responsibility for the transactions
contemplated by the Operative Agreements, and with respect to any other party,
any corporate officer or (except in the case of the Owner Participant) other
employee of a party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Corporation.
Securities Act. The Securities Act of 1933, as amended.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
Series Supplement. The Series Supplement 1995-A1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1995-A2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both of such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value shall
be, under any circumstances and in any event, an amount, together with so much
of the arrears portion of Basic Rent due and owing through the date of payment
of Stipulated Loss Value as does not constitute an Excepted Payment, at least
sufficient to pay in full as of such date of payment the aggregate unpaid
principal amount of and accrued interest on the Certificates outstanding on
such date of payment. Subject to the immediately preceding sentence, it is
understood and agreed that the amounts set forth on Schedule III of the Lease,
for dates other than Rent Payment Dates on which arrears Basic Rent is due,
fully reflect appropriate Basic Rent accruals and credits of unearned Basic
Rent and, accordingly, no further accrual or credit shall be required whenever
Stipulated Loss Value is to be calculated with reference to any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant or
others, including, without limitation, payments of Stipulated Loss Value, EBO
Price and amounts calculated by reference to Termination Value and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after July 5, 2002 in the case of Article 10 of the Lease, and in the
case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling on
January 5, 2011 or January 5, 2014, as the case may be, (ii) Section
4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the
eighth anniversary of the Commencement Date and (iii) Section 4.02(a)(F) of
the Lease, January 5, 2016.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to
be calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N658FE), dated as of May 1, 1995 as amended and restated as of
August 1, 1995, between the Owner Participant and the Owner Trustee in its
individual capacity, as from time to time modified, amended or supplemented
pursuant to its applicable provisions and in accordance with the Operative
Agreements.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. The several Underwriters named in the Underwriting
Agreement.
Underwriting Agreement. The Underwriting Agreement dated August 16,
1995 among the Lessee, Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Chase Securities, Inc.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Federal Aviation Act, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Federal Aviation
Act and Part 121 of the regulations under such Act, for aircraft capable of
carrying ten (10) or more individuals or 6,000 pounds or more of cargo, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provision thereof or in absence thereof.
SCHEDULE II
OWNER PARTICIPANT AMOUNT
(As a Percentage of Purchase Price)
Date Amount
January 5, 1996 0%
BASIC RENT
(As a Percentage of Purchase Price)
Rent
Payment
Date Advance Arrears
[On each Payment Date, Lessee will pay as Basic Rent an amount that
will be at least sufficient to pay in full, as of such Payment Date,
the aggregate unpaid principal amount of due and unpaid installments
on the Certificates outstanding on such Payment Date, together with
the accrued and unpaid interest thereon.]
SCHEDULE III
STIPULATED LOSS VALUES
Stipulated Loss
Date Value Factor
[Stipulated Loss Value will be an amount at least sufficient to pay
in full, as of the date of payment thereof, the aggregate unpaid
principal amount of the Certificates outstanding on such date of
payment, together with the accrued and unpaid interest thereon.]
SCHEDULE IV
TERMINATION VALUES
Termination Termination
Date Value Factor
[Termination Value will be an amount at least sufficient to pay in
full, as of the date of payment thereof, the aggregate unpaid
principal amount of the Certificates outstanding on such date of
payment, together with the accrued and unpaid interest thereon.]
SCHEDULE V
PURCHASE OPTION SCHEDULE
(D) Purchase Option Referred to in Section 4.02 (a)(D) of the Lease.
In the event of any Significant Expenditure (as defined below) with respect
to the Aircraft, which the Lessee has certified in a certificate of the
Lessee's President, Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer, Treasurer or Assistant Treasurer furnished to the
Lessor, the Indenture Trustee and the Owner Participant, is (as determined
by the Lessee in its sole discretion) necessary, desirable or required to
be made at any time on or after the eighth anniversary of the Commencement
Date, the Lessee may elect to terminate the Lease and purchase the Aircraft
on the first Rent Payment Date occurring at least six months after the
Owner Participant has notified the Lessee that they will not permit such
Significant Expenditure to be financed as contemplated in clause (ii) of the
definition of "Significant Expenditure" below, for, at the Lessee's option,
either (1) the payment to the Lessor in immediately available funds of an
amount equal to the greater of the Fair Market Value of the Aircraft and
Termination Value for the Aircraft, determined in each case as of such Rent
Payment Date, or (2) the assumption by the Lessee, pursuant to Section 7.11
of the Participation Agreement, of all of the Lessor's obligations under
the Indenture, the Certificates and Section 7.04 of the Participation
Agreement, and the payment to the Lessor in immediately available funds of
an amount equal to the excess of (A) the greater of (I) Termination Value
for the Aircraft, and (II) the Fair Market Value of the Aircraft, both
computed as of such Rent Payment Date, over (B) the unpaid principal of the
Certificates outstanding plus accrued interest as of such date; it being
understood that the Fair Market Value for this purpose shall be determined
without regard to any Significant Expenditure not yet made.
For purposes of this paragraph (D) the term "Significant Expenditure"
means a single expenditure or a series of related expenditures in respect
of non-severable improvements (i.e. improvements which cannot by the terms
of Section 9.02(b) of the Lease be removed from the Aircraft) which (i) in
the Lessee's reasonable judgment would exceed $10,000,000, and (ii) the
Owner Participant will not permit to be financed on similar terms and
conditions then available for similar transactions through the issuance of
additional non-recourse notes of the Lessor or through additional equity
investments of the Owner Participant or both (it being understood that this
Section 4.02(a)(D) shall not impose any obligation on the Owner Participant
to provide such financing). The Lessee, prior to notifying the Owner
Participant and the Indenture Trustee in accordance with Paragraph (F) of
this Schedule V of its election to purchase the Aircraft pursuant to
Section 4.02(a)(D) of the Lease, shall notify the Owner Participant of the
non-severable improvements which would satisfy the conditions described in
clause (i) of the preceding sentence, and provide the Owner Participant
with a reasonable opportunity to permit the financing thereof as
contemplated in clause (ii) of such sentence. The Owner Participant shall
notify the Lessee of their decision with respect to such financing within
60 days after the Lessee has given the notice described in the preceding
sentence.
(E) Purchase Option Referred to in Section 4.02 (a)(E) of the Lease.
In the event that a Burdensome Indemnity Payment shall occur at any time on
or after the eighth anniversary of the Commencement Date, the Lessee may
elect to terminate the Lease and purchase the Aircraft on the first Rent
Payment Date (the "Burdensome Indemnity Payment Date") following the date
that the Owner Participant provides the Lessee with a written notice of any
Loss (as defined in Section 5 of the Tax Indemnity Agreement) that is a
Burdensome Indemnity Payment for, at the Lessee's option, either (1) the
payment to the Lessor in immediately available funds of an amount equal to
the greater of the Fair Market Value of the Aircraft and Termination Value
for the Aircraft, determined in each case as of such Burdensome Indemnity
Payment Date, or (2) the assumption by the Lessee, pursuant to Section 7.11
of the Participation Agreement, of all of the obligations of the Lessor
under the Indenture, the Certificates and Section 7.04 of the Participation
Agreement and the payment to the Lessor in immediately available funds, of
an amount equal to the excess of (A) the greater of (I) Termination Value
for the Aircraft and (II) the Fair Market Value of the Aircraft, both
computed as of the Burdensome Indemnity Payment Date, over (B) the unpaid
principal of the Certificates outstanding plus accrued interest as of such
date.
For purposes of this paragraph (E), the term "Burdensome Indemnity
Payment" means a Loss as defined in the Tax Indemnity Agreement resulting
from any act, event or circumstance which is outside the control of the
Lessee or any Affiliate of the Lessee which causes the aggregate net
present value as of the determination date, discounted semi-annually at the
rate set forth in Section 3.08 hereof, of all such Losses (but excluding
any Losses for which the Owner Participant shall have waived its right to
payment under the Tax Indemnity Agreement) paid or payable by the Lessee
which can be avoided through a purchase by the Lessee of the Aircraft, to
exceed 3.0% of the Purchase Price.
(F) Notice from the Lessee. The Lessee shall give the Lessor, the
Owner Participant and the Indenture Trustee not more than 360 days nor less
than 90 days prior written notice of its election to purchase pursuant to
Section 4.02(a)(D) or 4.02(a)(E) of the Lease. Such notice shall either
direct the Lessor to prepay the Certificates in full on such Termination
Date pursuant to Section 6.02 of the Indenture or state that the Lessee
shall exercise its option to assume the Certificates pursuant to Section
7.11 of the Participation Agreement. The Lessee's notice pursuant to
Section 4.02(a)(D) or 4.02(a)(E) hereof shall become irrevocable 10 days
prior to the applicable purchase date designated in such notice but if any
such notice is revoked, the Lessee shall no longer be entitled to purchase
the Aircraft as a result of the facts and circumstances originally giving
rise to such right.
LEASE AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N659FE)
Dated as of July 1, 1995
Amended and Restated as of August 1, 1995
between
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
AS LESSOR
and
FEDERAL EXPRESS CORPORATION,
AS LESSEE
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 757, REGISTRATION NO. N659FE
CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE
AGREEMENT OF FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER
TRUSTEE, HAS BEEN ASSIGNED TO AND IS SUBJECT TO A LIEN AND SECURITY INTEREST
IN FAVOR OF NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, INDENTURE TRUSTEE
UNDER THE TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION
TRUST NO. N659FE) DATED AS OF JULY 1, 1995, AS AMENDED AND RESTATED AS OF
AUGUST 1, 1995 FOR THE BENEFIT OF THE HOLDERS OF THE CERTIFICATES REFERRED TO
IN SUCH TRUST INDENTURE AND SECURITY AGREEMENT. THIS LEASE AGREEMENT HAS BEEN
EXECUTED IN SEVERAL COUNTERPARTS. ONLY THE CHATTEL-PAPER "ORIGINAL"
COUNTERPART CONTAINS THE RECEIPT THEREFOR EXECUTED BY NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION, ON THE SIGNATURE PAGES THEREOF.
TABLE OF CONTENTS
Page
Initial Recitals.............................................................1
ARTICLE 1
DEFINITIONS
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Affirmation of Acceptance under the Lease................ 2
Section 3.01. Owner Participant Payment................................ 2
Section 3.02. Basic Rent............................................... 3
Section 3.03. Supplemental Rent........................................ 3
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value,
Termination Value and the EBO Price After the Delivery
Date..................................................... 3
Section 3.05. Minimum Basic Rent....................................... 5
Section 3.06. Payment to Indenture Trustee............................. 6
Section 3.07. Costs and Expenses....................................... 6
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01. Renewal Options.......................................... 6
Section 4.02. Purchase Options......................................... 7
Section 4.03. Appraisal Procedures..................................... 10
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. Disclaimer of Representations and Warranties............. 11
Section 5.02. No Modification of Other Warranties...................... 12
Section 5.03. Certain Agreements of the Lessee......................... 12
ARTICLE 6
LIENS
Section 6.01. Liens.................................................... 13
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01. Registration, Maintenance and Operation.................. 14
Section 7.02. Possession and Permitted Transfer and Sublease........... 16
Section 7.03. Insignia................................................. 20
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01. Replacement of Parts..................................... 21
Section 8.02. Pooling of Parts......................................... 22
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01. Required Alterations and Modifications................... 23
Section 9.02. Other Alterations and Modifications...................... 23
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus....... 24
Section 10.02. Retention of Aircraft by the Lessor..................... 27
Section 10.03. Voluntary Termination as to Engines..................... 28
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01. Lessee's Election Rights................................ 28
Section 11.02. Payment of Stipulated Loss Value........................ 29
Section 11.03. Replacement of Airframe and Engines..................... 30
Section 11.04. Event of Loss with Respect to an Engine................. 33
Section 11.05. Application of Payments from the Government or Others... 35
Section 11.06. Requisition of an Airframe and the Installed Engines for
Use by Government....................................... 36
Section 11.07. Requisition for Use by Government of an Engine Not
Installed on the Airframe............................... 37
Section 11.08. Application of Payments During Existence of Certain
Defaults................................................ 37
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01. Return of Aircraft...................................... 37
Section 12.02. Return of Engines....................................... 38
Section 12.03. Return of Manuals....................................... 38
Section 12.04. Condition of Aircraft................................... 39
Section 12.05. Delayed Return of Aircraft.............................. 40
Section 12.06. Storage................................................. 41
Section 12.07. Special Markings........................................ 41
Section 12.08. Lessor's Option to Purchase Parts....................... 41
ARTICLE 13
INSURANCE
Section 13.01. Comprehensive Airline Liability and Property Damage
Liability
Insurance................................................. 42
Section 13.02. Insurance Against Loss or Damage to Aircraft and Engines..
44
Section 13.03. Application of Insurance Proceeds....................... 46
Section 13.04. Reports................................................. 47
Section 13.05. Lessor's Insurance...................................... 48
Section 13.06. Self-Insurance.......................................... 48
ARTICLE 14
INSPECTION
Section 14.01. Right of Inspection..................................... 48
Section 14.02. No Obligation to Inspect................................ 49
ARTICLE 15
ASSIGNMENT
Section 15.01. Lessee's Right to Assign................................ 49
Section 15.02. Citizenship............................................. 49
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01. Events of Default....................................... 50
ARTICLE 17
REMEDIES
Section 17.01. Remedies Upon Lessee's Default.......................... 52
Section 17.02. Cumulative Remedies..................................... 55
Section 17.03. Waiver.................................................. 55
Section 17.04. Lessor's Right to Perform for Lessee.................... 55
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01. Quiet Enjoyment......................................... 56
ARTICLE 19
FURTHER ASSURANCES
Section 19.01. Further Assurances...................................... 56
ARTICLE 20
NET LEASE
Section 20.01. Nature of Lease......................................... 57
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01. Successor Lessor........................................ 58
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01. Security for Lessor's Obligations to Holders............ 59
Section 22.02. Intentionally Left Blank................................ 59
Section 22.03. Consent of Lessee to Assignment of Lease as Security.... 59
ARTICLE 23
SECURITY FUNDS
Section 23.01. Investment of Security Funds............................ 59
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01.Lessor's Entry Into Lease............................. 61
ARTICLE 25
NOTICES
Section 25.01. Notices................................................. 62
ARTICLE 26
MISCELLANEOUS
Section 26.01. Section Headings and Captions........................... 63
Section 26.02. References.............................................. 63
Section 26.03. APPLICABLE LAW.......................................... 63
Section 26.04. Severability............................................ 63
Section 26.05. No Oral Modification.................................... 63
Section 26.06. Agreement as Chattel Paper.............................. 63
Section 26.07. Counterparts............................................ 63
Section 26.08. Public Release of Information........................... 64
ARTICLE 27
TRUE LEASE
Section 27.01. Intent of the Parties................................... 64
Section 27.02. Section 1110 Compliance................................. 64
Section 27.03. Finance Lease........................................... 64
Schedule I Definitions
Schedule II Owner Participant Amount and Basic Rent
Schedule III Stipulated Loss Values
Schedule IV Termination Values
Schedule V Purchase Option Schedule
LEASE AGREEMENT
(Federal Express Corporation Trust No. N659FE)
Lease Agreement (Federal Express Corporation Trust No. N659FE) dated
as of July 1, 1995, as amended and restated as of August 1, 1995 (this
"Lease"), between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national
banking association, not in its individual capacity but solely as Owner
Trustee under the Trust Agreement (as defined in Article 1 below) (the
"Lessor"), and FEDERAL EXPRESS CORPORATION, a Delaware corporation (the
"Lessee").
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have heretofore entered into the
Original Lease dated as of July 1, 1995 as supplemented by Lease Supplement
No. 1 dated July 31, 1995.
WHEREAS, the Original Lease was recorded by the FAA on August 7, 1995
and assigned Conveyance Number HH009756.
WHEREAS, pursuant to Article 15 of the Original Participation
Agreement, the Lessee, the Original Loan Participants, the Owner Participant,
the Indenture Trustee and the Lessor desire to refinance, in full, the
Original Loan Certificates on the Refunding Date; and
WHEREAS, in connection with such refinancing, the Lessee, the Owner
Participant, the Lessor and the Indenture Trustee desire that the Original
Lease be amended and restated in its entirety as provided herein;
NOW, THEREFORE, in consideration of the mutual promises herein, and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged by the parties, the Lessor and the Lessee agree that the
Original Lease be and the same is hereby amended and restated in its entirety
as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the capitalized terms
herein shall have the meanings given in Schedule II to the Participation
Agreement, a copy of which schedule is annexed hereto as Schedule I, for all
purposes of this Lease and shall be equally applicable to both the singular
and the plural forms of the terms defined.
ARTICLE 2
ACCEPTANCE UNDER THE LEASE
Section 2.01. Affirmation of Acceptance under the Lease. The Lessor,
having accepted delivery of the Aircraft from AVSA on the Delivery Date and
having simultaneously leased the Aircraft to the Lessee, and the Lessee,
having leased the Aircraft from the Lessor on the Delivery Date, as evidenced
by the execution by the Lessor and the Lessee of the initial Lease Supplement
(which is incorporated by reference herein), hereby affirm the terms and
conditions of the Original Lease as herein amended and restated and of the
Purchase Agreement Assignment. This Lease shall last for the Term, at all
times during which full legal title to the Aircraft shall remain vested with
the Lessor to the exclusion of the Lessee, notwithstanding the possession and
use thereof by the Lessee or any other party.
ARTICLE 3
RENT AND RENT ADJUSTMENT
Section 3.01. Owner Participant Payment. The Owner Participant has
agreed, so long as no Event of Default has occurred and is continuing, to make
available to the Lessor funds sufficient to pay to the Indenture Trustee on the
Commencement Date an amount equal to the difference between the amounts
scheduled to be paid on the Certificates on such date and the amount of Basic
Rent, if any, scheduled to be paid by the Lessee on such date (without regard
to Section 3.05 hereof), all in accordance with the provisions of Section 2.03
of the Participation Agreement. To the extent such amount is not paid when
due on the Commencement Date, the Lessee shall make an advance on behalf of
the Owner Participant as described in Section 3.05 hereof equal to such amount
and, if not otherwise reimbursed, the Lessee shall have the right to offset
such amount pursuant to Section 3.05 hereof.
Section 3.02. Basic Rent. The Lessee agrees to pay to the Lessor in
immediately available funds, on each Rent Payment Date, Basic Rent for the
Aircraft during the Basic Term, each payment being set forth on Schedule II
hereto opposite the applicable Rent Payment Date, subject to increase or
decrease as provided in Sections 3.04 and 3.08 of this Lease. Each payment of
Basic Rent shall be made in arrears or in advance, all as stated in Schedule
II hereto. Each payment of Basic Rent designated as advance rent shall be
allocated over the six-month period beginning on the Rent Payment Date on
which such advance rent payment is scheduled to be made, and each installment
of Basic Rent that is designated as payable in arrears shall be accrued over
the six-month period ending on and including the day immediately preceding the
Rent Payment Date on which such arrears payment is scheduled to be made.
Section 3.03. Supplemental Rent. The Lessee agrees to pay or cause
to be paid to the Lessor, or to whomever shall be entitled to it, any and all
Supplemental Rent promptly as the same shall become due. If the Lessee fails
to pay any Supplemental Rent when due, the Lessor shall have all rights,
powers and remedies provided for in this Lease, or by law or equity or
otherwise in the case of nonpayment of Basic Rent. The Lessee will also pay
to the Person entitled thereto, on demand, as Supplemental Rent, to the extent
permitted by applicable law, an amount equal to interest at the Past Due Rate
on any part of any installment of Basic Rent not paid when due, for any period
until the same shall be paid and on any payment of Supplemental Rent not paid
when due, for the period until the same shall be paid. In addition, the
Lessee will pay to the Lessor, as Supplemental Rent, in the case of any
prepayment of the Certificates pursuant to Section 6.02 of the Indenture
(except in the case of any prepayment resulting from an Indenture Event of
Default in the absence of an Event of Default) or any prepayment or purchase
of the Certificates pursuant to clause (ii) of the first sentence of Section
8.02(a) of the Indenture, an amount equal to the aggregate amount of any
Make-Whole Premium payable on such prepayment or purchase. The expiration or
other termination of the Lessee's obligation to pay Basic Rent shall not limit
or otherwise modify the obligations of the Lessee with respect to the payment
of Supplemental Rent.
Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value,
Termination Value and the EBO Price After the Delivery Date. The percentages
for Basic Rent referred to in Schedule II hereto and for Stipulated Loss Value
and Termination Value in Schedule III and Schedule IV, respectively, hereto
and the EBO Price shall be adjusted (upward or downward) subject to the
minimum value established by Section 3.05 hereof and the definitions of
Stipulated Loss Value and Termination Value to reflect (i) any costs and
expenses paid by the Lessor or the Owner Participant pursuant to Section 10.01
of the Participation Agreement being greater or less than the Estimated
Expense Amount, (ii) any Refinancing pursuant to Section 15.01 of the
Participation Agreement, (iii) any reoptimization pursuant to Section 15.02 of
the Participation Agreement, (iv) the Owner Participant Amount being different
from the amount set forth on Schedule II hereto or paid, in whole or in part,
on a date other than as set forth on Schedule II hereto or (v) payments
pursuant to Section 5 of the Tax Indemnity Agreement by an adjustment of Basic
Rent. Each such adjustment pursuant to clause (i), (ii), (iv) or (v) of the
first sentence of this Section 3.04 shall maintain the Owner's Economic Return
(and, while maintaining such Return, minimize the aggregate Net Present Value
of Rents to the Lessee) and shall not cause the EBO Price to be less than the
greater of (i) the Termination Value as of such Rent Payment Date and (ii) the
estimate set forth in the Appraisal of the Fair Market Value of the Aircraft
at the time of exercise of the purchase option under Section 4.02(a)(F)
hereof. In the event of an adjustment pursuant to clause (iii) of the first
sentence of this Section 3.04, the Owner Participant may recalculate Basic
Rent as set forth in Schedule II hereto in order to maintain the Owner's
Economic Return, recalculate the Owner Participant Amount set forth in
Schedule II and, subject to the provisions of Section 15.02 of the
Participation Agreement, recalculate the schedule of principal repayments, the
Stipulated Loss Value percentages set forth in Schedule III hereto and the
Termination Value percentages set forth in Schedule IV hereto and the EBO
Price in a manner consistent with such recalculation of Basic Rent; provided
that any such recalculations may not (A) increase the Net Present Value of
Rents to the Lessee, (B) increase as of any date the sum of (1) the Net
Present Value of Rents to the Lessee payable through such date plus (2) the
present value of the Stipulated Loss Value or the Termination Value or the EBO
Price as of such date, in each case discounted at the Debt Rate, beyond such
net present values prior to such adjustment, or (C) otherwise result in any
adverse impact (including tax consequences) to the Lessee for which the Owner
Participant has not agreed to indemnify the Lessee on terms reasonably
acceptable to the Lessee. The Owner Participant shall promptly notify the
Lessee and the Lessor and the Lessee shall promptly notify the Owner
Participant and the Lessor of the need for any such adjustment. As promptly
as feasible after any such notification, the Lessor shall furnish the Lessee
with a notice setting forth the amount of any such adjustments together with
the calculations upon which the adjustments are based; provided, however, that
the Lessor and the Owner Participant shall not be required to disclose to the
Lessee in such notice any confidential or proprietary information (including
methodology or assumptions) relating to such calculations. At the request
and, subject to the next succeeding sentence, expense of the Lessee, the
accuracy of the calculation of such adjustments and the consistency of the
calculation with the calculation used to determine Basic Rent, Stipulated Loss
Values, Termination Values and the EBO Price shall be verified first, by First
Chicago Leasing Corporation or such other financial advisor chosen by the
Lessee and second, if such adjustments are still believed to be in error and
are not reconciled with the Owner Participant within fifteen (15) Business
Days, by a firm of nationally recognized independent public accountants
selected by the Lessee and reasonably acceptable to the Owner Participant and,
in order to enable them to verify such adjustments, the Owner Participant
shall make available to such accountants (for their own confidential use and
not to be disclosed to the Lessee or any other Person and subject to the
execution of a confidentiality agreement reasonably satisfactory to the Owner
Participant) all information reasonably necessary for such verification,
including the name of the lease analysis program used by the Owner Participant
to calculate such adjustments. The Lessee will pay the reasonable costs and
expenses of the verification process under this Section 3.04 unless as a
result of such verification process by the independent public accountants
Basic Rent is adjusted and such adjustment causes the Net Present Value of
Rents to decline by 10 or more basis points (in which event the Owner
Participant shall pay the reasonable costs and expenses of such verification
process). The Lessor and the Lessee shall execute and deliver an amendment to
this Lease to reflect each adjustment under this Section 3.04.
All adjustments under this Section 3.04 shall be in compliance with
the requirements of Revenue Procedure 75-21, 1975-1 C.B. 715 and Sections
4.02(5), 4.07(1), 4.07(2) and 4.08(1) of Revenue Procedure 75-28, 1975-1 C.B.
752 and shall be structured so as to not cause the Lease to be a "disqualified
leaseback or long-term agreement" within the meaning of Section 467 of the
Code.
Section 3.05. Minimum Basic Rent. Notwithstanding any other
provisions of the Operative Agreements to the contrary, each installment of
Basic Rent due (together in the case of the Commencement Date with any other
amount scheduled to be made available by the Owner Participant as referred to
in Section 3.01 hereof), on each Rent Payment Date and not constituting an
Excepted Payment, shall be, under any and all circumstances, an amount at
least sufficient to pay in full any installment of principal of and interest
on the Certificates required to be paid pursuant to the Certificates (other
than amounts becoming due on account of the exercise of remedies pursuant to
Article 17 hereof) on such Rent Payment Date. To the extent that the Owner
Participant does not provide the Lessor with funds on the Commencement Date
as referred to in Section 3.01 hereof if and when due, the Lessee shall on
such date advance on behalf of the Owner Participant (and such advance shall
be deemed a demand loan owing to the Lessee from the Owner Participant bearing
interest at the Past Due Rate plus 3%) an amount equal to the funds not so
provided. Unless otherwise reimbursed, the Lessee shall, in addition to all
other rights and remedies under applicable law but subject to Article 20
hereof, be entitled to offset against any payments due from the Lessee to the
Lessor (including, without limitation, Basic Rent and payments due to the
Lessor under Article 9 of the Participation Agreement or to the Owner
Participant under the Tax Indemnity Agreement and Excepted Payments), until
the Lessee has fully offset such advance plus interest thereon at the Past Due
Rate plus 3% from the date of such advance until the date of such
reimbursement or offset; provided, however, that in the case of any payment
due from the Lessee which is distributable under the terms of the Indenture,
the Lessee's right of offset shall be limited to the amount distributable to
the Lessor thereunder (and shall not include any amounts distributable to the
Indenture Trustee in its individual capacity or to the Holders of the
Certificates or any of them). No such offset or aggregate combined effect of
separate offsets shall reduce the amount of any installment of Basic Rent to
an amount insufficient to pay in full the payments then required to be made on
account of the principal of and interest on the Certificates then Outstanding.
If the Owner Participant is not required to provide such funds under Section
3.01 hereof, the Lessee shall make a payment of Basic Rent in an amount equal
to the Owner Participant Amount.
Section 3.06. Payment to Indenture Trustee. All Rent payable by the
Lessee to the Lessor shall be paid to the Lessor at its principal office at 79
South Main Street, Salt Lake City, Utah 84111, or as the Lessor may otherwise
direct, by wire transfer of immediately available funds in U.S. Dollars with
sufficient information to identify sources and applications of such funds no
later than 10:30 a.m., New York time on the due date of such payment;
provided, however, that so long as the Indenture shall not have been
discharged the Lessor hereby directs, and the Lessee agrees, that all Rent
(other than Excepted Payments, which shall be paid by the Lessee directly to
the Person entitled thereto) (all without set-off or counterclaim as and to the
extent provided in Article 20 hereof) and all amounts referred to in Section
3.01 hereof shall be paid directly to the Indenture Trustee at its principal
office at 600 Peachtree Street, Suite 900, Atlanta, Georgia 30308, Attention:
Corporate Trust Lease Administration, or as the Indenture Trustee may
otherwise direct within the United States by wire transfer of immediately
available funds in U.S. Dollars no later than 10:30 a.m., New York time, on
the due date of such payment. In any case where a scheduled Rent Payment Date
shall not be a Business Day such Rent Payment Date shall be adjourned to the
next succeeding Business Day without interest thereon for the period of such
extension (provided that payment is made on such next succeeding Business Day).
Section 3.07.Costs and Expenses. As between the Lessor and the
Lessee, all obligations under this Lease shall be done, performed and complied
with at the Lessee's cost and expense, whether or not so expressed, unless
otherwise expressly stated to the contrary.
ARTICLE 4
RENEWAL OPTIONS AND PURCHASE OPTIONS
Section 4.01.Renewal Options. (a) Election to Renew or Purchase.
The Lessee shall provide the Lessor with irrevocable written notice (the
"Preliminary Notice") not more than 360 days nor less than 180 days prior to
the end of the Basic Term or the preceding Renewal Term, as the case may be,
whether it will exercise its options either to renew this Lease pursuant to
this Section 4.01 or to purchase the Aircraft pursuant to Section 4.02(a)(B)
hereof or, if a further Renewal Term is available, pursuant to Section
4.02(a)(C) hereof. If, following delivery of a Preliminary Notice, the Lessee
shall not have notified the Lessor, at least 30 days prior to the end of the
Basic Term or a current Renewal Term, that it is renewing this Lease in
accordance with this Section 4.01, the Lessee's Preliminary Notice shall be
deemed an irrevocable notice of purchase satisfying Section 4.02(a)(B) hereof.
Provided that (i) no Event of Default shall have occurred and be continuing at
the time of renewal, (ii) this Lease has not otherwise expired or terminated,
and (iii) the Lessee shall have timely delivered the respective Preliminary
Notice, the Lessee may, by irrevocable written notice delivered to the Lessor
not less than 30 days prior to the end of the Basic Term, extend the Term for
a Fixed Renewal Term of one (1) or two (2) years commencing on the expiration
of the Basic Term. If the Lessee elects to extend the Term for a Fixed
Renewal Term of one (1) year as described in the preceding sentence and so
elects upon 30 days' written notice to the Lessor prior to the end of such
one-year Fixed Renewal Term, the Lessee may elect to extend the Term for a
further Fixed Renewal Term of one year, provided that the conditions of
clauses (i), (ii) and (iii) of the preceding sentence are met. The Lessee
shall pay the Fixed Renewal Rent during any Fixed Renewal Term.
In addition, provided that (i) no Event of Default shall have
occurred and be continuing at the time of renewal, (ii) this Lease has not
otherwise expired or terminated, and (iii) the Lessee shall have delivered the
Preliminary Notice, the Lessee may, on no more than two occasions, by written
notice delivered to the Lessor not less than 30 days prior to the end of the
Basic Term or the preceding Renewal Term, as the case may be, elect to extend
the Term for a Renewal Term or further Renewal Term commencing on the
expiration of the Basic Term or the preceding Renewal Term and ending one, two
or three years thereafter for a rent equal to the then-current Fair Market
Rental of the Aircraft. The Term may be extended pursuant to this paragraph
for an aggregate of no more than three years following the Basic Term or any
Fixed Renewal Term. The Lessee shall pay the Fair Market Rental during any
Fair Market Renewal Term.
(b) Terms and Conditions. Any such renewal shall be on the same
terms and conditions as provided herein, except that (i) rent for the Aircraft
due during any Renewal Term shall be payable semi-annually in arrears on the
dates corresponding to the Rent Payment Dates during such Renewal Term, and
(ii) during any Renewal Term, the Stipulated Loss Value for the Aircraft shall
as of any Stipulated Loss Value Determination Date during the Renewal Term be
equal to the higher of the Stipulated Loss Value and the Fair Market Value of
the Aircraft as of the end of the Basic Term or the next preceding Renewal
Term, if applicable.
Section 4.02.Purchase Options. (a) Election to Purchase. Provided
that (i) this Lease has not otherwise expired or terminated, (ii) either no
Event of Default shall have occurred and be continuing at the time of the
notice provided below or, if an Event of Default occurs after such notice has
been given, the Lessee shall have provided evidence reasonably satisfactory to
the Lessor and the Owner Participant of its financial ability to purchase the
Aircraft and (iii) the Lessee shall have previously given the Preliminary
Notice under Section 4.01(a) hereof (in the case of paragraph (B) below or, if
a further Renewal Term is available, paragraph (C) below) or the applicable
notice for each other paragraph below, as the case may be, the Lessee may:
(A) by written notice delivered to the Lessor and the Owner
Participant, not more than 180 nor less than 90 days prior to the
applicable Rent Payment Date, elect to terminate the Lease and purchase the
Aircraft on the Rent Payment Date falling on either January 5, 2010 or
January 5, 2012, for, at the Lessee's option, either (1) an amount in
immediately available funds equal to the greater of the Fair Market Value
or the Termination Value on such date or (2)(i) the assumption by the
Lessee, pursuant to Section 7.11 of the Participation Agreement, of all of
the obligations of the Lessor under the Indenture, the Certificates and
Section 7.04 of the Participation Agreement and (ii) the payment to the
Lessor of an amount equal to the excess of (A) the greater of the Fair
Market Value or the Termination Value on such date over (B) the unpaid
principal of the Certificates plus accrued interest as of such date. Such
notice (which shall be revocable by the Lessee upon at least 10 days'
written notice prior to the applicable Rent Payment Date) shall either
direct the Lessor to prepay the Certificates in full on such Termination
Date pursuant to Section 6.02 of the Indenture or state that the Lessee
shall exercise its option to assume the Certificates pursuant to Section
7.11 of the Participation Agreement and Section 2.12 of the Indenture; or
(B) by irrevocable written notice delivered to the Lessor and the
Owner Participant not more than 180 nor less than 30 days prior to the end
of the Basic Term (or deemed given pursuant to the second sentence of
Section 4.01(a) hereof), elect to purchase the Aircraft on the last day of
the Basic Term for an amount equal to the Fair Market Value thereof on such
date; or
(C) by irrevocable written notice delivered to the Lessor and the
Owner Participant not more than 270 days nor less than 30 days prior to the
end of any Renewal Term, elect to terminate the Lease and purchase the
Aircraft on the last day of such Renewal Term at a price equal to the Fair
Market Value of the Aircraft on such day; provided, however, that the
Lessee shall have paid all Rent due and payable under this Lease on or
prior to the expiration of any such Renewal Term; or
(D) exercise the purchase option in this Section 4.02(a)(D) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(D) and which shall be in an amount not less than the
greater of the amount specified in Schedule V hereto and Fair Market Value;
(E) exercise the purchase option in this Section 4.02(a)(E) which is
more particularly described in Schedule V hereto by reference to this
Section 4.02(a)(E) and which shall be in an amount not less than the
greater of the amount specified in Schedule V hereto and Fair Market Value;
or
(F) by irrevocable written notice delivered to the Lessor and the
Owner Participant not more than 180 nor less than 90 days prior to July 5,
2014, elect to terminate this Lease and purchase the Aircraft on such Rent
Payment Date for an amount equal to the percentage of the Purchase Price
set forth in Ancillary Agreement I with respect to this Section 4.02(a)(F)
which amount shall not be less than the greater of (i) the Termination
Value as of such Rent Payment Date and (ii) the estimate set forth in the
Appraisal of the Fair Market Value at the time of exercise of the option
under this Section 4.02(a)(F).
The Lessee shall give the Lessor, the Owner Participant and the
Indenture Trustee not more than 180 and not less than 90 days' prior written
notice of its election to purchase pursuant to Section 4.02(a)(D), 4.02(a)(E)
or 4.02(a)(F) hereof. Such notice shall either direct the Lessor to prepay
the Certificates in full on such Termination Date pursuant to Section 6.02 of
the Indenture or state that the Lessee shall exercise its option to assume the
Certificates pursuant to Section 7.11 of the Participation Agreement and
Section 2.12 of the Indenture. In the event that the Lessee shall have given
notice to purchase the Aircraft under Section 4.02(a)(A), 4.02(a)(D),
4.02(a)(E) or 4.02(a)(F) hereof and shall fail to make payment (and, if
applicable, assume the Certificates) on the applicable Termination Date, the
Lease shall continue and the Lessee shall pay to the Owner Trustee any losses,
costs and expenses of the Owner Participant incurred in connection with such
failure.
(b) Terms and Conditions. If the Lessee elects to purchase the
Aircraft pursuant to Section 4.02(a) hereof, the Lessee shall pay to the
Lessor on the applicable Termination Date by wire transfer of immediately
available funds any Basic Rent payable on such Termination Date (to the extent
payable in arrears but not to the extent payable in advance), the applicable
purchase price together with any other amounts past due hereunder or due on
the applicable Termination Date and all other Supplemental Rent then due under
this Lease including, without limitation, the aggregate amount of any
Make-Whole Premium applicable to any Certificate (if such purchase occurs
prior to the Premium Termination Date for such Certificate) and amounts due
under the Participation Agreement and the Tax Indemnity Agreement, whereupon
(and upon discharge of the Lien of the Indenture in accordance with Section
14.01 thereof) the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest in and to the Aircraft on an "as-is, where is"
basis. In connection with such transfer, the Lessee shall prepare and the
Lessor shall execute or arrange for the execution of a bill of sale evidencing
such transfer and such other documents as the Lessee may reasonably require.
In connection with any termination or proposed termination of this Lease, the
Lessee shall pay, at the time of the applicable Termination Date, all related
reasonable costs and expenses of the Owner Participant, the Lessor and the
Indenture Trustee.
Section 4.03.Appraisal Procedures. (a) Generally. Whenever Fair
Market Rental or Fair Market Value is required to be determined under this
Lease (unless otherwise provided herein), it shall be determined by the mutual
agreement of the Lessor and the Lessee in accordance with the definitions of
such terms in Article 1. If the Lessee and the Lessor cannot agree by the
date 60 days prior to the date for exercise of the applicable option, such
amount shall be determined by independent appraisal conducted by appraisers
selected pursuant to Section 4.03(b) hereof. At any time prior to final
determination of such amount pursuant to Section 4.03(b) hereof, the Lessee
and the Lessor shall be entitled to submit to the appraisers (and shall submit
to each other any bids submitted to the appraisers) any bids from unrelated
third parties, and such bids shall be accorded the weight such appraisers deem
appropriate. The Lessor and the Lessee shall each have an opportunity to
comment on any such bids after receiving a copy thereof.
(b) Selection. If an independent appraisal is required pursuant to
this Lease, the Lessor and the Lessee shall consult for the purpose of
appointing a mutually acceptable, qualified aircraft appraiser. If they are
unable to agree on a single appraiser within ten (10) Business Days, then the
independent appraisal shall be arrived at by mutual agreement of two
nationally recognized, independent aircraft appraisers, one chosen by the
Lessor and one chosen by the Lessee, or, if such appraisers cannot agree on
the amount of such appraisal, their appraisals shall be treated in the manner
described in Section 4.03(c) hereof with an appraisal arrived at by a third
nationally recognized, independent aircraft appraiser chosen by the mutual
consent of such two appraisers; provided, however, that if either party shall
fail to appoint an appraiser within fifteen (15) Business Days after a written
request to do so by the other party, or if such two appraisers cannot agree on
the amount of such appraisal and fail to appoint a third appraiser within
twenty (20) Business Days after the date of the appointment of the second of
such appraisers, then either party may initiate an arbitration proceeding with
the American Arbitration Association for purposes of appointing a nationally
recognized, independent aircraft appraiser.
(c) Valuation. If one appraiser is chosen, the value determined by
such appraiser shall be final and binding upon the Lessor and the Lessee. If
two appraisers are chosen, one appraiser by the Lessor and one by the Lessee,
and such appraisers agree on the value, such value shall be final and binding
upon the Lessor and the Lessee. If three appraisers shall be appointed and
the difference between the determination which is farther from the middle
determination is more than 125% of the difference between the middle
determination and the third determination, then such further determination
shall be excluded, the remaining two determinations shall be averaged, and
such average shall be final and binding upon the Lessor and the Lessee.
Otherwise, the average of all three determinations shall be final and binding
upon the Lessor and the Lessee.
(d) Rules of Appraisal. Any appraisal pursuant to this Section 4.03
shall be conducted in accordance with the commercial rules of the American
Arbitration Association as then in effect, as modified by this Section 4.03
and the definitions of Fair Market Value and Fair Market Rental. All expenses
of any independent appraisal shall be borne by the Lessee, except that each of
the Lessee and the Owner Participant (in the case of the Lessor) shall bear
any fees, costs and expenses of its respective attorneys in connection with
such appraisal except in the case of an Event of Default or in the case of a
revocation by the Lessee of its election to terminate the Lease under Section
4.02 hereof, in which case such expenses shall be borne by the Lessee.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01.Disclaimer of Representations and Warranties. THE LESSEE
ACKNOWLEDGES AND AGREES THAT (i) THE AIRFRAME AND EACH ENGINE IS OF A SIZE,
DESIGN, AND CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO THE LESSEE,
(ii) THE LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE IS SUITABLE FOR
ITS PURPOSES, (iii) NEITHER THE OWNER PARTICIPANT NOR THE LESSOR IS A
MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND AND (iv) THE AIRFRAME AND
EACH ENGINE IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND
GOVERNMENTAL REGULATIONS, NOW IN EFFECT OR HEREAFTER ADOPTED, WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR (IN ITS INDIVIDUAL
CAPACITY OR AS OWNER TRUSTEE), THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT OR
ANY HOLDER. THE LESSOR LEASES THE AIRFRAME AND EACH ENGINE, AS-IS, WHERE-IS,
AND NEITHER THE LESSOR (IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE), THE
INDENTURE TRUSTEE, THE OWNER PARTICIPANT NOR ANY HOLDER MAKES, HAS MADE OR
SHALL BE DEEMED TO HAVE MADE, AND EACH HAS AND WILL HAVE BEEN DEEMED TO HAVE
EXPRESSLY DISCLAIMED, ANY WARRANTY OR REPRESENTATION EITHER EXPRESS OR
IMPLIED, AS TO (A) THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, VALUE,
FITNESS FOR ANY PARTICULAR USE OR PURPOSE, DESIGN, OPERATION OR
MERCHANTABILITY OF THE AIRFRAME, EACH ENGINE OR ANY PART THEREOF, (B) THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, (C) THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, (D) THE
ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, (E) THE LESSOR'S
TITLE THERETO, (F) THE LESSEE'S OR ANY SUBLESSEE'S RIGHT TO THE QUIET
ENJOYMENT THEREOF (EXCEPT AS PROVIDED IN ARTICLE 18 HEREOF) OR (G) ANY OTHER
MATTER WHATSOEVER. IT IS AGREED THAT ALL RISKS INCIDENT TO THE MATTERS
DISCUSSED IN THE PRECEDING SENTENCE, AS AMONG THE LESSOR, THE INDENTURE
TRUSTEE, THE OWNER PARTICIPANT AND THE LESSEE, ARE TO BE BORNE BY THE LESSEE.
The provisions of this Section 5.01 have been negotiated by the Lessor and the
Lessee and, except as provided in Article 7 of the Participation Agreement,
are intended to be a complete exclusion and negation of any representations or
warranties of the Lessor, the Indenture Trustee and the Owner Participant,
express or implied, with respect to the Airframe and each Engine that may
arise pursuant to any law now or hereafter in effect, or otherwise.
Section 5.02.No Modification of Other Warranties. None of the
provisions of this Article 5 or any other provision of this Lease shall be
deemed to amend, modify or otherwise affect the representations, warranties or
other obligations (express or implied) of the Lessee, AVSA, the Manufacturer
or the Engine Manufacturer or any of their respective subcontractors or
suppliers, with respect to the Airframe, the Engines or any Parts incorporated
or installed in or attached to the Airframe or Engines, or to release the
Lessee, AVSA, the Manufacturer or the Engine Manufacturer or any of their
respective subcontractors or suppliers from any such representation, warranty
or obligation. So long as an Event of Default shall not have occurred and be
continuing under this Lease and to the extent permitted under the applicable
warranty, patent indemnity, or service-life policy, (i) the Lessor shall
assign or otherwise make available to the Lessee such rights as the Lessor may
have under any warranty, patent indemnity, or service-life policy made or
given by the Manufacturer, AVSA or Engine Manufacturer or any of their
respective subcontractors or suppliers, and any other claims against the
Manufacturer, AVSA and Engine Manufacturer or any such subcontractor or
supplier with respect to the Aircraft, including all rights to demand, accept
and retain all rights in and to property (other than the Aircraft), data and
services of any kind which the Manufacturer, AVSA and Engine Manufacturer are
obligated to provide and do provide pursuant to the Purchase Agreement or the
GTA with respect to the Aircraft; and (ii) all payments pursuant to any
manufacturer's or subcontractor's warranty, patent indemnity, or service-life
policy obligation shall be paid to the Lessee; provided that the Lessee shall
apply such payments to the cost of repair or correction of any condition of
the Aircraft which gave rise to such payments.
Section 5.03.Certain Agreements of the Lessee. The Lessee agrees with
the Lessor for the benefit of the Owner Participant that the Lessee shall
perform the agreements, covenants and indemnities of the Lessee set forth in
the Participation Agreement to the extent the same are applicable to the Owner
Participant, as fully and to the same extent and with the same force and
effect as if set forth in full in this Article 5.
ARTICLE 6
LIENS
Section 6.01.Liens. The Lessee will not directly or indirectly
create, incur, assume or suffer to exist, and will promptly, at its own cost
and expense, take such action as may be necessary to discharge, any Lien on or
with respect to the Lessor's Estate or this Lease or the Aircraft, the
Airframe or any Engine or any Part or title thereto or any interest therein
except:
(a) the respective rights of the Lessor and the Lessee as provided
in this Lease, the security interest and Lien of the Indenture and the
rights of the Owner Participant, the Lessor and the Indenture Trustee under
the Trust Agreement, the Indenture and the Participation Agreement;
(b) the rights of any sublessee or transferee or other Person under a
sublease, transfer, assignment or other such arrangement expressly
permitted by the terms of this Lease;
(c) Lessor's Liens and Indenture Trustee's Liens to the extent
required to be discharged by the Owner Participant, the Lessor or the
Indenture Trustee, as the case may be, in accordance with Section 7.03(b),
7.04(b) or 7.05(b) of the Participation Agreement;
(d) Liens for taxes imposed against the Lessee either not yet due or
being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein or any material risk of civil
liabilities (unless the Owner Trustee, the Indenture Trustee and the Owner
Participant shall be indemnified to its satisfaction against such
liabilities by the Lessee) or any risk of the assertion of criminal charges
against the Lessor, the Owner Participant, the Indenture Trustee or any
Holder;
(e) materialmen's, mechanics', workmen's, repairmen's, employees' or
other like Liens arising against the Lessee in the ordinary course of the
Lessee's business for amounts the payment of which is either not yet due or
is being contested in good faith by appropriate proceedings so long as such
Liens or proceedings do not involve any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or
any Engine or any interest therein; and
(f) Liens arising from judgments or awards against the Lessee with
respect to which (i) at the time an appeal or proceeding for review is
being prosecuted in good faith and with respect to which there shall have
been secured a stay of execution pending such appeal or proceeding for
review and then only for the period of such stay and (ii) there is not, and
such proceedings do not involve, any material danger of the sale,
forfeiture or loss of the Lessor's Estate, the Aircraft, Airframe or any
Engine or any interest therein.
ARTICLE 7
AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION
Section 7.01.Registration, Maintenance and Operation. The Lessee, at
its own cost and expense, shall:
(a) cause the Aircraft to remain at all times duly registered in the
name of the Lessor as owner, pursuant to the Act and, subject to the
proviso to Section 6.03(b) of the Participation Agreement, to remain at all
times duly registered pursuant to the Act and at all times act in
accordance with the rules and regulations of the Aeronautics Authority or
the applicable laws, rules and regulations of any other jurisdiction in
which the Aircraft may then be registered in accordance with Section
6.03(b) of the Participation Agreement;
(b) maintain, inspect, service, repair, test and overhaul the
Aircraft (or cause the same to be done) so as to keep the Aircraft (and any
engine which is not an Engine but is installed on the Aircraft) in as good
operating condition as when delivered to the Lessor on the Delivery Date,
ordinary wear and tear excepted, and in any event (i) in accordance with
the applicable regulations of the Aeronautics Authority or of the
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered pursuant to Section 6.03(b) of the Participation
Agreement and the Lessee's maintenance program approved by the Aeronautics
Authority or such agency or body, (ii) in the same manner and with the same
care used by the Lessee with respect to other A300-600 series aircraft and
CF6-80C2-A5F series engines (or other engines permitted by the terms of
this Lease to be used on the Aircraft) owned, operated or leased by the
Lessee, to the extent that the same regulations, and the Lessee's
FAA-approved maintenance program shall apply to any such aircraft and
related engines, owned or leased by the Lessee, and utilized in similar
circumstances, and without discriminating against the Aircraft, with
respect to its use, operation or maintenance in contemplation of the
expiration or termination of this Lease other than withdrawal of the
Aircraft from use and operation as is necessary to prepare the Aircraft for
return to the Lessor upon such expiration or termination, and (iii) so as
to keep the Aircraft in such condition as may be necessary to enable its
airworthiness certification to be maintained in good standing at all times
under the Act or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered;
(c) maintain, or cause to be maintained, all records, logs and other
materials in respect of the Aircraft required by the Aeronautics Authority,
or the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered, all such records and logs to be
maintained in the English language, to the extent required by the Federal
Aviation Act (which records, logs and other materials shall, as between the
Lessor and the Lessee and all parties claiming through the Lessee, be the
property of the Lessor but shall become the property of the Lessee upon
purchase by the Lessee of the Aircraft pursuant to the terms of this Lease
or upon the occurrence of an Event of Loss and the Lessee's compliance with
Section 11.03 hereof);
(d) promptly furnish to the Lessor such information within the
Lessee's possession as may be required to enable the Lessor to file any
reports to be filed by the Lessor with any governmental authority because
of the Lessor's ownership of or the Owner Participant's interest in the
Aircraft;
(e) not maintain, service, repair, overhaul, use or operate the
Aircraft or any Engine in violation of any airworthiness certificate or
registration relating thereto, or in violation of any law or any license,
rule, regulation or order of or by any government or governmental authority
having jurisdiction over the Lessee or the Aircraft or any Engine or for
any purpose for which the Aircraft or any Engine is not designed; provided,
however, that the Lessee (or if a sublease shall then be in effect, the
sublessee thereunder) may in good faith contest the validity or application
of any such law, license, rule, regulation or order in any manner that does
not adversely affect the Lessor, its right, title or interest in the
Aircraft or any Engine or the interests of the Indenture Trustee or the
Owner Participant therein, or in any Operative Agreement (excluding any
interests indemnified for under the Tax Indemnity Agreement) and such
contest or non-compliance will not result in any material risk of loss,
forfeiture or damage to the Aircraft or in any risk of criminal liability
to the Lessor, the Indenture Trustee or the Owner Participant; and if any
such law, license, rule, regulation or order requires alteration of the
Aircraft or any Engine, the Lessee will conform the same therewith at its
own cost and expense and will maintain the Aircraft or any Engine in
compliance with such law, license, rule, regulation or order; and
(f) not operate or locate the Airframe or any Engine, or suffer the
Airframe or any Engine to be operated or located in any area excluded from
coverage by any insurance policy required by the terms of Article 13
hereof, unless the Lessee has obtained, prior to the operation or location
of the Airframe or any Engine in such area, indemnification from the
Government, or other insurance, against the risks and in the amounts
required by, and in compliance with, Article 13 hereof covering such area
(except, in the case of a requisition for use by the Government and in the
absence of indemnities, to the extent that the Lessee certifies that such
insurance is unobtainable after diligent effort or is obtainable only at
unreasonably high rates or on unduly financially burdensome terms and
conditions) (and naming the Lessor, or so long as this Lease is assigned to
the Indenture Trustee, the Indenture Trustee, as loss payee in respect of
indemnification or insurance payable in respect of casualties to the
Aircraft) or unless the Aircraft is only temporarily located in such area
as a result of an isolated occurrence attributable to a hijacking, medical
emergency, equipment malfunction, weather conditions, navigational error or
other similar unforeseen circumstances and the Lessee is using its good
faith efforts to remove the Aircraft from such area.
The Lessee may, at any time during the Term, install an engine or
engines on the Airframe and operate the Aircraft with such engine or engines
installed thereon and the Lessor shall have no right, title or interest in and
to any such engine until such time, if any, that such engine is returned to
the Lessor under Section 12.02 hereof.
Section 7.02.Possession and Permitted Transfer and Sublease. (a)
Conditions. The Lessee will not, without the prior written consent of the
Lessor, sublease or otherwise in any manner deliver, transfer or relinquish
possession of the Aircraft, the Airframe or any Engine or install any Engine,
or permit any Engine to be installed, on any airframe other than the Airframe;
provided, that, so long as (i) in the case of clause (i) below, no Event of
Default shall have occurred and be continuing, (ii) the Lien of the Indenture
is not impaired thereby, (iii) all applicable governmental approvals in
connection therewith have been obtained and (iv) the Lessee shall comply with
the provisions of Article 13 hereof, the Lessee may without the prior written
consent of the Lessor:
(i) so long as the sublessee is generally meeting its material
obligations as they come due and is not subject to a proceeding or final
order under applicable bankruptcy, insolvency or reorganization laws on the
date the sublease is entered into and with 30 days' prior written notice to
the Lessor and the Owner Participant, (A) sublease the Aircraft or any
Engine to a U.S. Air Carrier, (B) sublease the Aircraft or any Engine to an
Air Carrier which is principally based in and domiciled in one of the
countries listed on Schedule III of the Participation Agreement, (C)
sublease the Aircraft or any Engine to an Air Carrier that is principally
based in and a domiciliary of a country which is a party to the
International Convention on the Recognition of Rights in Aircraft, or (D)
sublease the Aircraft or any Engine to any other Air Carrier not described
in this Section which shall be reasonably acceptable to the Lessor as
evidenced by its prior written consent; provided, that, with respect to
clauses (B) and (C) above, at the time of any such sublease the United
States of America maintains full diplomatic relations with the country in
which such Air Carrier is principally based and domiciled. In the case of
any sublease (x) such sublease shall include the provisions required by
Section 7.02(b) hereof and expressly require the sublessee to operate and
maintain the Aircraft in compliance with the applicable provisions of this
Lease, (y) such sublease shall provide that such sublessee will not
transfer possession of, or any other rights to, the subleased Airframe or
any Engine to any other Person without the prior written consent of the
Lessor (except as permitted by subparagraphs (ii) through (viii) below and
except that, in the case of subparagraph (iv), possession of the Aircraft
may only be transferred at the direction of the Lessee) and (z) such
sublease shall expire not later than the expiration of the Basic Term or
any applicable Renewal Term hereof. Prior to any sublease to an Air
Carrier permitted under Section 7.02(a)(i)(C): (I) the maintenance
standards of the aeronautical authority of the country of domicile or
principal operation of the sublessee taken as a whole shall not be
materially less stringent than those of the FAA or at least comparable to
those, taken as a whole, required by the central civil aviation authority
of any of the United Kingdom, France, Canada, Japan or Germany; (II) the
Lessee will provide opinions of counsel (such counsel and the form and
substance of such opinions to be reasonably satisfactory to the Lessor and
the Indenture Trustee) with respect to (A) the legality, validity and
enforceability of the Operative Agreements and the sublease in such
country, (B) that the laws of such country require fair compensation by the
government of such country payable in a currency freely convertible into
U.S. dollars for the loss of the use of or title to the Aircraft in the
event of a requisition of use or title by such government, (C) the Lessor's
title to the subleased equipment will be recognized, (D) the required
agreement of such foreign air carrier that its rights under the sublease
are subject and subordinate to all the terms of this Lease is enforceable
against such foreign air carrier under applicable law (subject only to
customary exceptions to enforceability), (E) that it is not necessary for
the Owner Participant, the Lessor or the Indenture Trustee to register or
qualify to do business in such country as a result of the proposed sublease
or in order for the Owner Participant, the Lessor or the Indenture Trustee
to enforce the terms and conditions of the Operative Agreements, (F) there
is no tort liability of the owner of an aircraft not in possession thereof
or of Persons lending money to such an owner for the purchase of an
aircraft, under the laws of such jurisdiction other than tort liability
which might have been imposed on such owner or Persons under the laws of
the United States or any state thereof (it being understood that, in the
event that such latter opinion cannot be given in a form satisfactory to
the Lessor, such opinion shall be waived if insurance reasonably
satisfactory to the Lessor is available to cover such risk to the Owner
Participant and is provided at or before the execution of such a sublease,
at the Lessee's cost and expense), (G) that there exist no possessory
rights in favor of such sublessee under the laws of such country which
would, upon bankruptcy or insolvency of the Lessee (and assuming that at
such time such sublessee is not bankrupt or insolvent) or of the sublessee,
prevent the return of the Aircraft in accordance with the terms of this
Lease and (H) all necessary governmental approvals required for the
subleased equipment, the Airframe or any Engine, as the case may be, to be
imported and, to the extent reasonably obtainable, exported from the
applicable country of domicile upon repossession of such subleased
equipment by the Lessor (and the Lessee as sublessor), shall have been
procured at the Lessee's own cost and expense by the Lessee prior to
commencement of any such sublease; (III) duties and tariffs, if applicable,
shall be paid for by the Lessee and (IV) the Lessee shall effect or cause
to be effected at the Lessee's own cost and expense all recordings and
filings that are required, or reasonably requested by the Lessor, to
continue the Lessor's right, title and interest to the Aircraft and rights
under the Lease (and sublease) and to perfect and maintain the priority of
the Lien of the Indenture;
(ii) subject the Airframe or permit the Airframe to be subjected to
normal interchange agreements or subject the Engines or permit any Engine
to be subjected to normal interchange or pooling agreements or
arrangements, in each case customary in the airline industry, entered into
by the Lessee in the ordinary course of its business with a vendor
domiciled in the United States or in a country with which the United States
maintains full diplomatic relations or (x) any United States air carrier
certificated under Section 41102(a) of the Act or any successor provision
or (y) any "foreign air carrier" (as such term is defined in the Act) as to
which there is in force a permit granted under Section 41302 of the Act and
which is (I) organized in a country listed on Schedule III to the
Participation Agreement, (II) organized in a country with which the United
States then maintains full diplomatic relations, (III) is a party to the
Convention on the International Recognition of Rights in Aircraft or (IV)
otherwise provides equivalent protection to owners, lessors and mortgagees
of aircraft; provided that no transfer of the registration of the Airframe
or any Engine shall be effected and that throughout the period that the
Airframe or any Engine is subjected to such interchange or pooling
agreement or arrangement the terms of this Lease shall be observed; and
provided, further, that no such agreement or arrangement contemplates or
requires the transfer of title to or registration of the Airframe or any
Engine, and if the Lessor's title to any Engine shall nonetheless be
divested under any such agreement or arrangement, such divestiture shall be
deemed to be an Event of Loss with respect to such Engine and the Lessee
shall comply with Section 11.04 of this Lease in respect of such Engine;
(iii) deliver or permit the delivery of possession of the Airframe or
any Engine to their respective manufacturers or certified maintenance
providers for testing, service, repair, maintenance or overhaul work or for
alterations or modifications in or additions to the Airframe or any Engine
to the extent required or permitted by the terms of Article 9 hereof;
(iv) transfer or permit the transfer of possession of the Airframe
or any Engine pursuant to a contract or agreement with the Government or
pursuant to the Civil Reserve Air Fleet Program ("CRAF Program")
administered pursuant to Executive Order No. 12056, as amended, or any
similar or substitute programs of the Government, so long as the Lessee (or
any permitted sublessee or transferee pursuant to this Section) shall
promptly notify the Lessor upon such transfer of possession and provide the
Lessor and the Indenture Trustee with the name and address of the
Contracting Officer or representative of the Military Aircraft Command of
the United States Air Force to whom notices must be given in respect of the
Aircraft, provided, that if such transfer of possession continues beyond the
end of the Basic Term or the then-current Renewal Term, the Basic Term or
the Renewal Term, as applicable, shall be automatically extended (including
the obligation to pay Rent per diem at a rate equal to the Fair Market
Rental) for six (6) months after the end of the Term (or, if shorter, until
the date of return of the Aircraft);
(v) install or permit the installation of an Engine on an airframe
which is owned by the Lessee or any permitted sublessee free and clear of
all Liens, except (A) Liens of the type permitted under Section 6.01
hereof, (B) Liens which apply only to the engines (other than an Engine),
appliances, parts, instruments, appurtenances, accessories, furnishings and
other equipment (other than Parts) installed on such airframe and which do
not apply to substantially all of such airframe and (C) the rights of an
Air Carrier under normal interchange or pooling agreements which are
customary in the airline industry and do not contemplate or require the
transfer of title to such airframe or the engines installed on it;
(vi) install or permit the installation of an Engine on an airframe
leased to the Lessee or any permitted sublessee or transferee or purchased
by the Lessee subject to a conditional sale or other security agreement,
provided that (A) such lease, conditional sale or other security agreement
does not cover the Engine so installed and the Lessee shall have received
from the lessor, conditional vendor or secured party of such airframe an
agreement (which may be the lease or conditional sale or other security
agreement covering such airframe), whereby such lessor, conditional vendor
or secured party expressly agrees that neither it nor its successors or
assigns will acquire or claim any right, title or interest in any Engine
by reason of such Engine being installed on such airframe at any time, and
(B) such airframe is and remains free and clear of all Liens except the
rights of the parties to the lease or conditional sale or other security
agreement covering such airframe and Liens of the type permitted by
subparagraph (v) of this Section 7.02(a);
(vii) install or permit the installation of an Engine on an airframe
owned by the Lessee, leased to the Lessee or purchased by the Lessee
subject to a conditional sale or other security agreement under
circumstances where neither subparagraph (v) nor subparagraph (vi) of this
Section 7.02(a) is applicable, provided that such installation shall be
deemed an Event of Loss with respect to such Engine and the Lessee shall
comply with Section 11.04 hereof in respect of such Engine, the Lessor not
intending to waive any right, title or interest it may have to or in such
Engine under applicable law until compliance by the Lessee with such
Section 11.04; and
(viii) enter into a wet lease under which the Lessee has effective
control of the Aircraft in the ordinary course of the Lessee's business
which shall not be considered a transfer of possession hereunder, provided
that the Lessee's obligations under this Lease shall continue in full force
and effect notwithstanding any such wet lease.
(b) Rights of Transferee. Notwithstanding the provisions of Section
7.02(a) hereof, the rights of any transferee who takes possession of the
Aircraft, the Airframe or any Engine by reason of a transfer permitted by
Section 7.02(a) hereof shall be subject and subordinate to, and any sublease
or wet lease permitted by Section 7.02(a) hereof shall be made expressly
subject and subordinate to, all the terms of this Lease, including, without
limitation, the Lessor's right to repossession pursuant to Article 17 hereof
and to avoid such sublease upon such repossession, and the Lessee shall remain
primarily liable for the performance of all the terms of this Lease to the
same extent as if such sublease or transfer had not occurred. Any such
sublease shall include appropriate provisions for the maintenance, inspection
(as required by Section 14.01 hereof), operation, use and insurance of the
Aircraft, the Airframe and each Engine in accordance with the provisions of
this Lease and shall provide assurances reasonably satisfactory to the Lessor
that the sublessee may not further sublease any of such equipment. The Lessee
shall promptly provide the Lessor, the Owner Participant and the Indenture
Trustee a copy of any sublease (if so requested by the Lessor) and, prior to
execution and delivery of any sublease deliver to Lessor all other documents
required hereunder relating to such sublease or transfer of possession.
(c) No Release of Lessee/Costs of Subleasing. No sublease,
interchange or pooling agreement or other relinquishment of possession
permitted under this Article 7 of any of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of the Lessee's obligations
to the Lessor, the Indenture Trustee or the Owner Participant under this
Lease, the Participation Agreement or the Tax Indemnity Agreement or
constitute a waiver of any of the Lessor's rights and remedies hereunder or
thereunder or extend beyond the end of the Term (except as provided in Section
7.02(a)(iv) hereof). Subject to the terms and conditions of this Lease, the
Lessee will retain the right to cure any default by any sublessee permitted
pursuant to this Section 7.02 and to terminate such sublease upon such
default. The Lessee shall pay all costs of the Owner Participant, the
Indenture Trustee and the Lessor incurred in connection with any subleasing or
proposed subleasing.
Section 7.03.Insignia. (a) Nameplate. On or prior to the Delivery
Date or as soon thereafter as possible, the Lessee agrees to affix to and
maintain in the cockpit of the Airframe, in a clearly visible location, and on
each Engine, a clearly visible metal nameplate bearing the inscription "FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE, OWNER AND
LESSOR," and, so long as such Airframe or Engines shall be subject to the Lien
of the Indenture, the additional inscription "NATIONSBANK OF GEORGIA, NATIONAL
ASSOCIATION, AS INDENTURE TRUSTEE, MORTGAGEE" (such nameplate to be replaced,
if necessary, from time to time with a nameplate reflecting the name of any
successor Lessor or successor Indenture Trustee, in each case as permitted by
the Operative Agreements).
(b) Lessee's Marks. Except as provided in Section 7.03(a) hereof,
the Lessee will not allow the name of any Person to be placed on the Airframe
or any Engine as a designation that might be interpreted as a claim of
ownership; provided, that during the Term, the Lessee may cause the Aircraft
to be lettered "Federal Express Corporation" or may letter, paint or mark it
in some other appropriate manner for convenience of identification of the
Lessee's interest or the interest of any permitted sublessee (including but
not limited to the Lessee's or any permitted sublessee's customary colors and
insignia) and to bear insignia plates or other markings identifying the
supplier or manufacturer of the Airframe or the Engines or any Parts of either.
ARTICLE 8
REPLACEMENT AND POOLING OF PARTS
Section 8.01.Replacement of Parts. (a) Generally. The Lessee, at
its own cost and expense, will replace or cause to be replaced as promptly as
practicable all Parts which may from time to time be incorporated or installed
in or attached to the Airframe or any Engine and which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason, except as
otherwise provided in Section 9.01 or 9.02 hereof. In addition, the Lessee
may, at its own cost and expense, remove or cause to be removed in the
ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, provided that the
Lessee, except as otherwise provided in Sections 9.01 or 9.02 hereof, will, at
its own cost and expense, replace such Parts as promptly as practicable. All
replacement parts shall be free and clear of Liens (except for pooling
arrangements to the extent permitted by Section 8.02 hereof and Liens
permitted under Section 6.01 hereof) and shall be in at least as good
operating condition as, and shall have a value and utility at least equal to,
the Parts replaced, and in any event not less than the condition and repair
required to be maintained by the provisions of this Lease.
(b) Title. All Parts at any time removed from the Airframe or any
Engine shall remain the property of the Lessor until such Parts shall be
replaced by parts which have been incorporated or installed in or attached to
the Airframe or such Engine and which meet the requirements for replacement
parts specified in Section 8.01(a) hereof. Immediately upon any replacement
part (other than, to the extent permitted by Section 8.02 hereof, a
replacement part subject to a pooling arrangement) becoming incorporated or
installed in or attached to the Airframe or any Engine, and without further
act:
(i) title to the replaced part shall vest in the Lessee, free and
clear of all rights of the Lessor, and such replaced Part shall no longer
be deemed a Part under this Lease;
(ii) title to such replacement part shall vest in the Lessor free
and clear of all Liens (except for Liens permitted by Section 6.01 hereof)
and shall thereupon be and become a Part; and
(iii) such replacement Part shall become subject to this Lease and to
the Lien of the Indenture, and shall be deemed part of the Airframe or such
Engine for all purposes to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe or such Engine.
Section 8.02.Pooling of Parts. Any Part removed from the Airframe or
any Engine as permitted in Section 8.01(a) hereof may be subjected by the
Lessee to any normal pooling arrangement customary in the U.S. airline
industry and entered into with vendors and other Air Carriers in the ordinary
course of the Lessee's business, provided that the part replacing such removed
Part shall be incorporated or installed in or attached to the Airframe or such
Engine in accordance with Section 8 hereof, as promptly as practicable after
the removal of such removed Part. In addition, any replacement part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 8.01(a) hereof may be owned by another Air Carrier
subject to such normal pooling arrangement, provided that the Lessee, at its
own cost and expense and as promptly as possible, either:
(a) causes title to such replacement part to vest in the Lessor in
accordance with Section 8.01(b) hereof by the Lessee acquiring title to
such replacement part for the benefit of, and transferring such title to,
the Lessor free and clear of all Liens (other than Liens permitted under
Section 6.01 hereof); or
(b) replaces such replacement part by incorporating or installing in
or attaching to the Airframe or such Engine a further replacement part
owned by the Lessee free and clear of all Liens (other than Liens permitted
under Section 6.01 hereof) and by causing title to such further replacement
part to vest in the Lessor in accordance with Section 8.01(b) hereof.
All such replacement parts and further replacement parts shall meet
the standards set forth in the last sentence of Section 8.01(a) hereof.
ARTICLE 9
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 9.01.Required Alterations and Modifications. The Lessee, at
its own cost and expense, shall make or cause to be made such alterations and
modifications in and additions to the Airframe and each Engine as may be
required from time to time to meet the applicable requirements of the
Aeronautics Authority or any other governmental authority with jurisdiction
over the Lessee's operations and aircraft; provided, however, that the Lessee
or sublessee, as the case may be, may in good faith contest the validity or
application of any such requirements in any reasonable manner that does not
involve any material risk of civil liabilities (unless indemnified by the
Lessee) or any risk of criminal penalties being imposed on or against the
Indenture Trustee, the Owner Participant or the Lessor, that does not involve
any material risk or danger of loss, forfeiture or sale of the Aircraft or any
Engine and that does not adversely affect the Lessor, its title or interest in
the Aircraft or any Engine, the first and prior perfected Lien and security
interest of the Indenture, or the interests of the Indenture Trustee or the
Owner Participant in the Airframe or any Engine, or in any Operative Agreement
(excluding any interests indemnified for under the Tax Indemnity Agreement).
All such alterations, modifications or additions shall be made on or before
the date mandated therefor, taking into account authorized postponements
resulting from a contest or otherwise and shall be made at such time and in
such a manner so as not to discriminate against the Aircraft whether by reason
of its leased status or otherwise.
Section 9.02.Other Alterations and Modifications. (a) Generally.
The Lessee, at its own cost and expense, may from time to time make such
alterations and modifications in and additions to the Airframe or any Engine
as the Lessee may deem desirable in the proper conduct of its business,
including, without limitation, removal of Obsolete Parts in its usual course
of maintenance, provided that no such alteration, modification, addition or
removal, individually or in the aggregate, shall create any adverse tax
consequences for the Owner Participant not otherwise indemnified for, diminish
the value, remaining useful life, or utility of the Airframe or the value or
utility of any Engine or impair its condition or airworthiness below its
value, remaining useful life (in the case of the Airframe only), utility,
condition and state of airworthiness immediately prior to such alteration,
modification, addition or removal, assuming that the Airframe or such Engine
was then in the condition and airworthiness required to be maintained by the
terms of this Lease, or cause the Airframe or any Engine to become "limited
use property" within the meaning of Revenue Procedure 76-30, 1976-2 C.B. 647,
except that the value (but not the remaining useful life, utility, condition or
airworthiness) of the Aircraft may be reduced by the value, if any, of any such
Obsolete Parts which shall have been removed; provided that in no event shall
the aggregate value of all such Obsolete Parts which shall have been so
removed and not replaced exceed $500,000.
(b) Title to Installed Parts. Title to each part incorporated or
installed in or attached or added to the Airframe or any Engine as the result
of any alteration, modification, removal or addition made pursuant to Section
9.01 or 9.02(a) hereof shall without further act vest in the Lessor and become
subject to this Lease; provided, however, that the Lessee may remove any such
Part at any time during the Term if:
(i) such Part is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or
attached or added to the Airframe or such Engine on the Delivery Date or
any Part in replacement of, or substitution for, any such Part;
(ii) such Part is not required to be incorporated or installed in or
attached or added to the Airframe or such Engine pursuant to the terms of
Article 7 hereof or the first sentence of Section 9.01 hereof; and
(iii) such Part can be removed from the Airframe or such Engine
without (A) causing material damage to the Airframe or such Engine (it
being understood that the Lessee shall repair any damage caused by a
permitted removal) or diminishing or impairing the value, utility,
condition or airworthiness or remaining useful life of the Airframe
required to be maintained by the terms of this Lease or (B) diminishing the
value, utility or remaining useful life (in the case of the Airframe) or
the value and utility (in the case of such Engine) which the Airframe or
such Engine would have had at such time had such alteration, modification,
removal or addition not occurred, assuming the Airframe or such Engine was
then in the condition required to be maintained by the terms of this Lease.
(c) Title to Removed Parts. Upon the removal by the Lessee of any
such Part as provided in subsection (b) above, title thereto shall, without
further act, vest in the Lessee and such Part shall no longer be deemed a
Part. Any Part not removed by the Lessee as above provided prior to the
return of the Aircraft to the Lessor hereunder shall remain the property of
the Lessor and subject to this Lease.
ARTICLE 10
VOLUNTARY TERMINATION
Section 10.01. Right of Termination Upon Obsolescence or Surplus.
(a) Option to Terminate. So long as no Event of Default shall have occurred
and be continuing, the Lessee shall have the right, at its option, on any
Termination Date, on no more than 180 days' and at least 90 days' prior
written notice (which notice shall state the proposed Termination Date (the
"Proposed Termination Date") to the Lessor and the Owner Participant to
terminate this Lease as of a Termination Date if the Aircraft shall have
become obsolete or surplus to the operations of the Lessee; provided that the
Lessee shall have furnished to the Lessor, the Indenture Trustee and the Owner
Participant a certificate of the Lessee's President, Chief Executive Officer,
Chief Financial Officer, Chief Operating Officer, Treasurer or Assistant
Treasurer stating the determination of the Lessee that the Aircraft is
obsolete or surplus to its needs. Unless the Lessor has elected to retain the
Aircraft as herein provided, the Lessee shall have the right to revoke its
notice of termination not less than ten (10) Business Days prior to the
Proposed Termination Date whereupon this Lease shall continue in full force
and effect and the Lessee shall reimburse the Owner Participant for reasonable
costs and expenses incurred by the Owner Participant in connection with such
proposed termination.
(b) Sale Procedure. During the period from the giving of notice
pursuant to Section 10.01(a) hereof until the Proposed Termination Date, the
Lessee, as non-exclusive agent for the Lessor, shall use its reasonable
efforts to obtain bids for the cash purchase on the Proposed Termination Date
(or such earlier date as shall be consented to in writing by the Lessor) of
the Aircraft. On the Proposed Termination Date, the Engines shall be
installed on the Airframe (provided that the Airframe may be sold with engines
meeting the requirements set forth herein for Replacement Engines in lieu of
the Engines so long as the aggregate number of Engines and Replacement Engines
being sold with the Airframe equals two). The Lessor may, if it desires to do
so, seek to obtain such bids. The Owner Participant shall not inspect any bids
received by the Lessee with respect to the Aircraft, unless the Owner
Participant has given to the Lessee binding and irrevocable notice that
neither the Owner Participant nor any of its Affiliates nor any Person acting
for the Owner Participant or such Affiliate will submit a bid for the purchase
of the Aircraft and if such notice has been given, the Lessee will provide the
Lessor with copies of bids received by the Lessee. No bid may be submitted by
the Lessee or any Person affiliated with the Lessee (or with whom or which
there is any arrangement or understanding as to the subsequent use of the
Aircraft by the Lessee or any of its Affiliates) or any agent or Person acting
on behalf of the Lessee. The Lessee may reject any bid which is less than the
sum of the applicable Termination Value, the aggregate amount of any
Make-Whole Premium and all other expenses incurred by the Lessor, the Owner
Participant and the Indenture Trustee in connection with the sale. Subject to
the provisions of Section 10.02 hereof, on the Proposed Termination Date or
such earlier date of sale as shall be consented to in writing by the Lessor,
the Lessee shall deliver the Airframe which shall have the Engines installed
on it (provided that the Airframe may be delivered with installed engines
meeting the requirements set forth herein for Replacement Engines in lieu of
the Engines so long as the aggregate number of Engines and Replacement Engines
being delivered with the Airframe equals two and the Lessee shall comply with
the provisions of Section 11.04 hereof as if an Event of Loss occurred with
regard to the Engines) to the bidder which shall have submitted the highest
cash bid (whether certified to the Lessor by the Lessee or directly received
by the Lessor and certified to the Lessee) in the same manner as if delivery
were made to the Lessor pursuant to Article 12 hereof, at a location specified
by such bidder, and shall duly transfer to the Lessor title to any such
engines not owned by the Lessor, and the Lessor shall, upon payment in full of
the bid price and all amounts due and owing pursuant to Section 10.01(c)
hereof by wire transfer of immediately available funds and upon discharge of
the Lien of the Indenture in accordance with Article XIV thereof, sell the
Airframe and Engines or engines to such bidder without recourse or warranty
(except as to the absence of Lessor's Liens).
(c) Payments to the Lessor. The total selling price realized at a
sale pursuant to Section 10.01(b) hereof net of all expenses of the sale
(including commissions and any sales or transfer taxes) (the "Net Sales
Price") shall be retained by the Lessor (or the Indenture Trustee as long as
the Indenture is in force) and, in addition, on or before the Proposed
Termination Date, the Lessee shall pay to the Lessor (or the Indenture Trustee
as long as the Indenture is in force), by wire transfer of immediately
available funds, the sum of:
(i) the excess, if any, of the Termination Value for the Aircraft
computed as of the Proposed Termination Date over the Net Sales Price; plus
(ii)the installment of Basic Rent due with respect to the Aircraft on
the Proposed Termination Date to the extent payable in arrears but not to
the extent payable in advance; plus
(iii)all other amounts then due and payable by the Lessee (including,
without limitation, the aggregate amount of any Make-Whole Premium, if the
Proposed Termination Date occurs prior to the applicable Premium Termination
Date) under this Lease and any other Operative Agreement.
(d) Transfer of Uninstalled Engines. Upon payment of the amounts
described in Section 10.01(c) hereof and upon transfer to the Lessor of title
to engines which have been returned in lieu of Engines as provided in Section
10.01(b) hereof, and upon payment of all other amounts then due under this
Lease, the Lessor will transfer to the Lessee, without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to any Engines which were replaced with engines pursuant
to Section 10.01(b) hereof, and shall deliver to the Lessee such instrument as
the Lessor shall have received from the Indenture Trustee releasing such
Engines from the Lien of the Indenture.
(e) Limitation on the Lessor's Duties. The Lessor shall be under no
duty to solicit bids, to inquire into the efforts of the Lessee to obtain bids
or otherwise to take any action in connection with any such sale other than to
transfer to the purchaser named in the highest cash bid (determined as
described in Section 10.01(b) above) as referred to above (or to such
purchaser and to the Lessee, as the case may be), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest in and to the Aircraft, against receipt by the Lessor of the
payments provided for in Section 10.01(c) hereof.
(f) Termination of the Lessee's Obligations. Upon the sale of the
Aircraft pursuant to this Section 10.01 and upon compliance by the Lessee with
the further provisions of this Article 10, the obligation of the Lessee to pay
Basic Rent with respect to the Aircraft shall cease for any Rent Payment Date
occurring after the Proposed Termination Date and the Term shall end effective
as of the Proposed Termination Date. If no sale shall have occurred on or
before the Proposed Termination Date, this Lease shall continue in full force
and effect and, for purposes of Section 10.01(a) hereof, it shall be deemed
that the Lessee has rescinded its notice of termination, and the Lessee shall
pay the expenses incurred by the Lessor, the Indenture Trustee and the Owner
Participant in connection with the proposed sale.
Section 10.02.Retention of Aircraft by the Lessor. (a) Generally.
Notwithstanding Section 10.01 hereof, the Lessor may, subject to Section
10.02(b) hereof, elect to retain the Aircraft after receipt of the Lessee's
notice of termination given in accordance with Section 10.01(a) hereof, by
giving the Lessee and the Indenture Trustee written irrevocable notice of such
election not less than sixty (60) days prior to the Proposed Termination Date.
If the Lessor so elects, the Lessee shall pay to the Lessor on the Proposed
Termination Date, by wire transfer of immediately available funds the sum of:
(i) the installment of Basic Rent due with respect to the Aircraft on
the Proposed Termination Date to the extent payable in arrears but not to
the extent payable in advance; plus
(ii)all other amounts then due and payable by the Lessee under this
Lease and any other Operative Agreement, including the aggregate amount of
any Make-Whole Premium (if the Proposed Termination Date occurs prior to
the applicable Premium Termination Date), on or prior to the Payment Date.
(b) Payment of the Certificates. It shall be an absolute condition
precedent to the Lessor's right to retain the Aircraft and to the termination
of the Term pursuant to this Section 10.02 that the Lessor (or the Lessee to
the extent set forth in Section 10.02(a) hereof) shall have paid to the
Holders and such Holders shall have received the entire outstanding principal
amount of, the aggregate amount of any Make-Whole Premium and accrued interest
on the Certificates on the Termination Date and all other sums due and owing
to the Indenture Trustee and the Holders on or prior to the Termination Date
under this Lease, the Indenture or any other Operative Agreement.
(c) Delivery of Aircraft to Lessor; Title to Engines. If the Lessor
elects to retain the Aircraft pursuant to this Section 10.02, the Lessee shall
deliver the Airframe and the Engines (provided that the Airframe may be
delivered with engines meeting the requirements set forth herein for
Replacement Engines in lieu of the Engines so long as the aggregate number of
Engines and engines being delivered with the Airframe equals two and provided
that the other requirements of Section 11.04 hereof are met as if an Event of
Loss has occurred with regard to the Engines) to the Lessor in the same manner
as if delivery were made to the Lessor pursuant to Article 12 hereof, and shall
duly transfer to the Lessor right, title and interest to any such engines not
owned by the Lessor, all in accordance with Article 12 hereof. Upon such
delivery of the Airframe and Engines or engines to the Lessor and payment by
the Lessee of any amounts required to be paid by the Lessee pursuant to
Section 10.02(a) hereof, the Lessor will transfer to the Lessee, without
recourse or warranty (except as to the absence of Lessor's Liens), all of the
Lessor's right, title and interest in and to any Engines which were replaced
by engines pursuant to this Section 10.02(c), and shall deliver to the Lessee
such instrument as the Lessor shall have received from the Indenture Trustee
releasing such Engines from the Lien of the Indenture.
(d) Termination of the Lessee's Obligations. Upon compliance by the
Lessor and the Lessee with the provisions of this Section 10.02 and upon
compliance by the Lessee with the further provisions of this Article 10, the
obligation of the Lessee to pay Basic Rent with respect to the Aircraft shall
cease for any Rent Payment Date occurring after the Termination Date and the
Term shall end effective as of the Termination Date.
Section 10.03.Voluntary Termination as to Engines. The Lessee shall
have the right at its option and at any time, on at least thirty (30) days'
prior written notice to the Lessor, to terminate this Lease with respect to
any Engine not then installed or held for use on the Airframe, provided that
prior to the date of such termination, the Lessee shall comply with the terms
of Section 11.04 hereof to the same extent as if an Event of Loss had occurred
with respect to such Engine.
ARTICLE 11
LOSS, DESTRUCTION, REQUISITION
Section 11.01.Lessee's Election Rights. The Lessee shall notify the
Lessor, the Indenture Trustee and the Owner Participant as soon as practicable
but in no event more than 10 Business Days following the occurrence of an
event which constitutes, or would with the passage of time constitute, an
Event of Loss with respect to the Airframe or with respect to the Airframe and
the Engines or engines then installed on the Airframe. By written notice to
the Lessor, the Indenture Trustee and the Owner Participant delivered within
60 days of the occurrence of any Event of Loss, the Lessee shall have the
right to elect the alternative set forth in Section 11.02 hereof or the
alternative set forth in Section 11.03 hereof. The Lessee's failure to make
such election within said 60-day period shall be deemed to be an election of
the alternative set forth in Section 11.02 hereof.
Section 11.02.Payment of Stipulated Loss Value. (a) The Lessee
shall, if it has so elected or is deemed to have so elected under Section
11.01 hereof, pay to the Lessor, by wire transfer of immediately available
funds on the earlier of (i) the tenth Business Day following receipt in full
of insurance proceeds or requisition proceeds, described in Section 11.05
hereof, in connection with such Event of Loss and (ii) the 120th day after the
occurrence of such Event of Loss (the earlier of such dates being referred to
herein as the "Loss Payment Date"), the sum of (A) the Stipulated Loss Value
for the Aircraft, determined as of the Stipulated Loss Value Determination Date
next preceding the Loss Payment Date (or, if the Loss Payment Date occurs on a
Stipulated Loss Value Determination Date, determined as of such Stipulated
Loss Value Determination Date) together with interest on such amount at the
Debt Rate from such Stipulated Loss Value Determination Date to the Loss
Payment Date, plus (B) any and all Basic Rent due and payable on or prior to
the relevant Stipulated Loss Value Determination Date and unpaid, plus (C) any
and all Supplemental Rent due and payable on or prior to such Loss Payment
Date, plus (D) all other amounts owing by the Lessee or the Owner Trustee to
the Indenture Trustee or the Holders under the Indenture and the other
Operative Agreements, plus (E) any reasonable out-of-pocket expenses incurred
in connection with such Event of Loss and the related prepayment of the
Certificates by the Lessor, the Owner Participant and the Indenture Trustee,
minus (F) if the relevant Stipulated Loss Value Determination Date is a Rent
Payment Date, the portion, if any, of the Basic Rent installment due and paid
by the Lessee on such Stipulated Loss Value Determination Date pursuant to
Section 3.02 hereof to the extent such Basic Rent installment (or portion
thereof) is designated on Schedule II hereto as being payable in advance,
together with an imputed interest amount in respect of such advance payment of
Basic Rent (or portion thereof) at the Debt Rate from the date of payment of
such Basic Rent installment (or portion thereof) by the Lessee to the Loss
Payment Date; provided that in no event shall there be subtracted pursuant to
clause (F) an amount such that the Holders shall not be paid in full.
(b) Termination of Lease; Title Transfer. Upon payment in full of
the amounts due pursuant to Section 11.02(a) hereof, the obligation of the
Lessee to pay Basic Rent on any Rent Payment Date occurring subsequent to the
payment of such amounts shall terminate and the Term shall end. Further, upon
such payment, the Lessor will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens), all of the Lessor's
right, title and interest, if any, in and to the Airframe, Engines and engines
with respect to which such Event of Loss occurred, as well as all of the
Lessor's right, title and interest in and to any Engines constituting part of
the Aircraft but not installed on the Airframe when such Event of Loss
occurred, and will deliver to the Lessee such instrument as the Lessor shall
have received from the Indenture Trustee, releasing such Aircraft from the
Lien of the Indenture.
Section 11.03.Replacement of Airframe and Engines. (a) Generally.
So long as no Payment Default, Bankruptcy Default or Event of Default shall
have occurred and be continuing, and subject to Section 11.01 hereof, if the
Lessee has elected to replace the Airframe and Engines suffering an Event of
Loss pursuant to this Section 11.03, the Lessee shall cause to be duly
conveyed to the Lessor within one hundred twenty (120) days after the
occurrence of such Event of Loss, as replacement for the Airframe and Engines
with respect to which such Event of Loss has occurred, good and marketable
title to an Airbus A300F4-605R airframe manufactured after October 22, 1994
(the "Replacement Airframe") and good and marketable title to a number of
Replacement Engines equal to the number of Engines with respect to which an
Event of Loss has occurred, provided that following compliance with all other
terms of this Section 11.03 each Engine shall be of identical make and model
and manufactured after October 22, 1994 and, in the case of such Replacement
Airframe and each such Replacement Engine, owned by the Lessee free and clear
of all Liens not excepted in Section 6.01(a), (b), (c) and (e) hereof, duly
certified as an airworthy aircraft by the Aeronautics Authority, and having in
the case of the Replacement Airframe a value, remaining useful life and
utility, and in the case of the Replacement Engines a value and utility, at
least equal to, and being in as good operating condition as, the Airframe and
Engines with respect to which such Event of Loss occurred, assuming that the
Airframe and Engines were then in the condition and state of airworthiness
required to be maintained by the terms of this Lease immediately prior to the
occurrence of such Event of Loss. In such case and as a condition to such
substitution the Lessee, at its own cost and expense, will also promptly:
(i) furnish the Indenture Trustee with originals of, and the Lessor
with copies of, full warranty bills of sale, in form and substance
satisfactory to the Lessor and the Indenture Trustee, with respect to such
Replacement Airframe and Replacement Engines together with an assignment in
form and substance satisfactory to the Lessor and the Indenture Trustee of
any and all manufacturer's warranties applicable thereto and a consent
reasonably satisfactory to the Lessor and the Indenture Trustee from such
manufacturer or manufacturers to such assignment;
(ii)cause such Replacement Airframe and Replacement Engines to be duly
registered in the name of the Lessor pursuant to the Act or the applicable
laws of any other jurisdiction in which the Aircraft may then be registered
in accordance with Section 6.03(b) of the Participation Agreement;
(iii)cause a Lease Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessee and
recorded pursuant to the Act, or the applicable laws, rules and regulations
of any other jurisdiction in which the Aircraft may then be registered as
permitted by Section 6.03(b) of the Participation Agreement;
(iv)furnish the Lessor, the Indenture Trustee and the Owner
Participant with an appraisal or other report of a nationally recognized
aircraft appraiser based on an inspection of such Replacement Airframe and
Replacement Engines reasonably satisfactory to the Indenture Trustee and
the Owner Participant certifying that such Replacement Airframe has a
value, remaining useful life and utility, and such Replacement Engines have
a utility and, in the aggregate, value, at least equal to, and are in as
good operating condition as, the Airframe and Engines replaced, assuming
such Airframe and Engines were in the condition and repair required by the
terms of this Lease immediately prior to the occurrence of such Event of
Loss;
(v) furnish the Lessor, the Indenture Trustee and the Owner
Participant with such evidence as the Lessor or the Indenture Trustee may
reasonably request of compliance with the insurance provisions of Article
13 hereof with respect to such Replacement Airframe and Replacement Engines;
(vi)provide the Owner Participant and the Lessor with (A) an opinion
of counsel selected by the Owner Participant and reasonably acceptable to
the Lessee (which opinion shall be reasonably satisfactory in form and
substance to the Owner Participant and the Lessor) that it will suffer no
adverse tax consequence not otherwise indemnified for as of the Delivery
Date as a result of such substitution or (B) an indemnity reasonably
acceptable to the Lessor and the Owner Participant against such
consequences;
(vii)comply with the provisions of Section 9.08 of the Indenture;
(viii) cause an Indenture Supplement with respect to such Replacement
Airframe and Replacement Engines to be duly executed by the Lessor and the
Indenture Trustee and recorded pursuant to the Act, or the applicable laws,
rules and regulations of any other jurisdiction in which the Aircraft may
then be registered as permitted by Section 6.03(b) of the Participation
Agreement in order that the Lien of the Indenture shall constitute a first
and prior perfected Lien and security interest on and in respect of such
Replacement Airframe and Replacement Engines;
(ix)take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as a secured party with the
Secretary of State of Utah and the filing of a notice with the Secretary of
State of Tennessee, as the Lessor or the Indenture Trustee may reasonably
request in order that such Replacement Airframe and Replacement Engines
shall be duly and properly titled in the Lessor, leased under this Lease
and subjected to the Lien of the Indenture to the same extent as the
replaced Airframe and Engines;
(x) furnish the Indenture Trustee with an opinion (reasonably
satisfactory in form and substance to the Lessor, the Owner Participant and
the Indenture Trustee) of counsel to the Lessee (which may be the Lessee's
General Counsel) addressed to the Indenture Trustee and the Owner
Participant to the effect that (A) the Lessor has good title to such
Replacement Airframe and Replacement Engines, and (B) such Replacement
Airframe and Replacement Engines have been validly subjected to the Lien of
the Indenture (with the effect and result that the Indenture constitutes a
first priority duly perfected security interest and Lien on such
Replacement Airframe and Replacement Engines); and
(xi)cause to be delivered to the Lessor, the Owner Participant and the
Indenture Trustee (a) an opinion of counsel to the Lessee addressed to the
Lessor, the Owner Participant and the Indenture Trustee as to the due
registration of the Aircraft and the due recordation of the requisite
documents or instruments and the validity and perfection of the Lien in
such Replacement Airframe and Replacement Engines and (b) a certificate
signed by the Vice President and Treasurer or any other duly authorized
officer of the Lessee stating that no Payment Default, Bankruptcy Default
or Event of Default has occurred or is continuing.
(b) Title to Replaced Equipment. Upon compliance by the Lessee with
the terms of Section 11.03(a) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Airframe and Engines with respect to which
such Event of Loss occurred. In connection with such transfer, the Lessee
shall prepare and the Lessor shall execute or forward to the Indenture Trustee
for execution, as the case may be, all in recordable form, a bill of sale
evidencing such transfer, a release of the Airframe and Engines with respect to
which such Event of Loss occurred from the Indenture and such other documents
as the Lessee reasonably requests, all at the Lessee's sole cost and expense.
Any Engine constituting part of the Aircraft, but not installed on the
Airframe when such Event of Loss occurred, shall continue to be property of
the Lessor and leased under this Lease as part of the same equipment as the
Replacement Airframe and Replacement Engines.
(c) Definitions. Each Replacement Airframe and Replacement Engine
shall be deemed part of the property leased under this Lease, each such
Replacement Airframe shall be deemed an "Airframe," each such Replacement
Engine shall be deemed an "Engine" and each such Replacement Airframe and
Replacement Engine shall be deemed part of the same Aircraft as was the
Airframe or Engine replaced.
(d) Rent Adjustments. An Event of Loss covered by this Section
11.03 shall not result in any change in Basic Rent, Stipulated Loss Values or
Termination Values except as may be provided pursuant to the Tax Indemnity
Agreement and the Participation Agreement.
(e) Time Limitations. If the Lessee has elected to proceed under
this Section 11.03 but has not fully performed its obligations under this
Section 11.03 within 120 days of the occurrence of the applicable Event of
Loss, in the event that any amounts held by the Lessor (or, so long as the
Indenture shall be in effect, the Indenture Trustee) in respect of such Event
of Loss are less than the Stipulated Loss Value thereof, the Lessee will
deposit with the Lessor or the Indenture Trustee, as the case may be, the
amount of any deficiency as security on such 120th day. If the Lessee has
elected to proceed under this Section 11.03 but has not fully performed its
obligations under this Section 11.03 within 180 days of the occurrence of such
Event of Loss, the Lessee shall be deemed to have elected to proceed under
Section 11.02 hereof and shall immediately perform its obligations thereunder,
and the Indenture Trustee, or the Lessor if the Indenture shall have been
discharged, shall apply the amounts held by it pursuant to the preceding
sentence as a credit against such obligations.
Section 11.04.Event of Loss with Respect to an Engine. (a)
Generally. Upon the occurrence of an Event of Loss with respect to an Engine
under circumstances in which there has not occurred an Event of Loss with
respect to the Airframe, the Lessee shall give the Lessor and the Indenture
Trustee prompt written notice thereof and shall, as soon as practicable but in
any event within sixty (60) days after the occurrence of such Event of Loss,
duly convey or cause to be conveyed to the Lessor, a Replacement Engine for
the Engine with respect to which such Event of Loss occurred, good and
marketable title to a Replacement Engine, free and clear of all Liens not
excepted in Section 6.01(a), (b), (c) and (e) hereof and having a value and
utility at least equal to, and being in as good operating condition as, the
Engine with respect to which such Event of Loss occurred, assuming such Engine
was of the value and utility and in the condition and repair required by the
terms of this Lease immediately prior to the occurrence of such Event of Loss,
provided that after any replacement, each Engine shall be of identical make
and model. The standards set forth in this Section with respect to
Replacement Engines shall apply upon any replacement or substitution of an
Engine with a Replacement Engine pursuant to any other provision of this Lease.
(b) Conditions Precedent. Prior to or at the time of any conveyance
of an Engine pursuant to Section 11.04(a) hereof, the Lessee, at its own cost
and expense will:
(i) furnish the Lessor with an original of, and the Indenture Trustee
with a copy of, a full warranty bill of sale, in form and substance
satisfactory to the Lessor, with respect to such Replacement Engine
together with an assignment in form and substance satisfactory to the
Lessor and the Indenture Trustee of any and all manufacturer's warranties
applicable thereto and a consent reasonably satisfactory to the Lessor and
the Indenture Trustee from such manufacturer to such assignment;
(ii)cause a Lease Supplement covering such Replacement Engine to be
duly executed by the Lessee and filed for recordation pursuant to the Act,
or the applicable laws, rules and regulations of any other jurisdiction in
which the Aircraft may then be registered as permitted by Section 6.03(b)
of the Participation Agreement and, if the Engine being replaced was
registered under the applicable laws of the jurisdiction in which the
Aircraft is then registered, the Replacement Engine shall be registered in
the same fashion;
(iii)furnish the Lessor and the Indenture Trustee with a certificate
of a nationally recognized aircraft appraiser reasonably satisfactory to
the Lessor and the Indenture Trustee certifying that such Replacement
Engine has a value and utility at least equal to, and is in as good
operating condition as, the Engine replaced, assuming such Engine was in at
least the condition and repair required by the terms of this Lease
immediately prior to the occurrence of such Event of Loss;
(iv)furnish the Lessor with such evidence of compliance with the
insurance provisions of Article 13 hereof with respect to such Replacement
Engine as the Lessor or the Indenture Trustee may reasonably request;
(v) provide the Owner Participant and the Lessor with (A) an opinion
of counsel selected by the Owner Participant and reasonably acceptable to
the Lessee (which opinion shall be reasonably satisfactory in form and
substance to the Owner Participant and the Lessor) that it will suffer no
adverse tax consequences not otherwise indemnified for as of the effective
date of this Agreement as a result of such substitution or (B) an indemnity
reasonably acceptable to the Lessor and the Owner Participant against such
consequences;
(vi)comply with the provisions of Section 9.08 of the Indenture;
(vii)cause an Indenture Supplement with respect to such Replacement
Engine to be duly executed by the Lessor and the Indenture Trustee and
recorded pursuant to the Act, or the applicable laws, rules and regulations
of any other jurisdiction in which the Aircraft may be registered as
permitted by Section 6.03(b) of the Participation Agreement in order that
the Indenture shall constitute a first priority duly perfected Lien and
security interest on and in respect of such Replacement Engine;
(viii) take such other action, including the filing of UCC financing
statements naming the Indenture Trustee as Secured Party with the Secretary
of State of Utah and a notice filing with the Secretary of State of
Tennessee, as the Lessor or the Indenture Trustee may reasonably request in
order that such Replacement Engine be duly and properly titled in the
Lessor, leased under this Lease and subjected to the Lien of the Indenture
to the same extent as the replaced Engine;
(ix)furnish the Lessor, the Owner Participant and the Indenture
Trustee with an opinion (reasonably satisfactory in form and substance to
the Lessor, the Owner Participant and the Indenture Trustee) of counsel to
the Lessee (which may be the Lessee's General Counsel) addressed to the
Indenture Trustee and the Owner Participant to the effect that (A) the
Lessor has good title to such Replacement Engine, and (B) such Replacement
Engine has been validly subjected to the Lien of the Indenture (with the
effect and result that the Indenture constitutes a first priority duly
perfected security interest and Lien on such Replacement Engine); and
(x) take such other action as the Indenture Trustee may reasonably
request in order that such Replacement Engine be duly and properly
subjected to the Lien of the Indenture to the same extent as the replaced
Engine.
(c) Title Transfer. Upon compliance by the Lessee with the terms of
Sections 11.04(a) and (b) hereof, the Lessor will transfer to the Lessee
(subject to any insurer's salvage rights), without recourse or warranty
(except as to the absence of Lessor's Liens), all of the Lessor's right, title
and interest, if any, in and to the Engine with respect to which such Event of
Loss occurred. In connection with such transfer, the Lessee shall prepare and
the Lessor shall execute or forward to the Indenture Trustee for execution, as
the case may be, all in recordable form, a bill of sale evidencing such
transfer, a release of the Engine with respect to which such Event of Loss
occurred from the Indenture and such other documents as the Lessee reasonably
requests, all at the Lessee's sole cost and expense. Each Replacement Engine
shall, after such conveyance, be deemed part of the property leased under this
Lease. An Event of Loss covered by this Section 11.04 shall not result in any
change in Basic Rent, Stipulated Loss Values or Termination Values, but may
result in payments to be made pursuant to the Tax Indemnity Agreement and the
Participation Agreement.
Section 11.05.Application of Payments from the Government or Others.
(a) Generally. Any payments (other than insurance proceeds the application
of which is provided for in Section 13.03 hereof) received at any time by the
Lessor or by the Lessee from any governmental authority or any other party,
foreign or domestic, with respect to an Event of Loss resulting from the
condemnation, confiscation, theft or seizure of, or requisition of title to or
use of, the Airframe or any Engine will be applied, as appropriate, in
accordance with Section 11.05(b) or Section 11.05(c) hereof.
(b) Payments of Stipulated Loss Value. If the payments described in
Section 11.05(a) hereof are received with respect to the Airframe or with
respect to the Airframe and Engines or engines then installed on the Airframe
and the Lessee has elected the alternative set forth in Section 11.02 hereof,
so much of such payments as shall not exceed the payments required to be paid
by the Lessee pursuant to clauses (A) and (B) of Section 11.02(a) hereof shall
be paid to the Lessor (or, if the Lien of the Indenture has not been
discharged, the Indenture Trustee) in reduction of the Lessee's obligations
under clauses (A) and (B) of Section 11.02(a) hereof if not already paid by
the Lessee, or, if such obligations have already been discharged in full by
the Lessee, such payments shall be applied to reimburse the Lessee for its
payment of such Stipulated Loss Value and, if and to the extent specifically
included in such payment, to pay to the Lessee interest on such amount of
Stipulated Loss Value at the rate included in such payment if any, or
otherwise at the applicable Debt Rate, for the period from the date of payment
by the Lessee of the Stipulated Loss Value to the date of reimbursement of the
Lessee under this Section 11.05(b). The excess, if any, remaining after such
application shall be divided between the Lessor and the Lessee as their
respective interests may appear.
(c) Payment if the Lessee Elects Replacement. If the payments
described in Section 11.05(a) hereof are received with respect to the Airframe
or with respect to the Airframe and the Engines or engines then installed on
the Airframe and the Lessee has elected the alternative set forth in Section
11.03 hereof, or if such payments are received with respect to an Engine not
then installed on the Airframe under the circumstances contemplated by Section
11.04 hereof, all such payments shall, subject to Section 11.08 hereof, be
paid over to or retained by the Lessee, provided that the Lessee shall have
fully performed its obligations pursuant to Section 11.03 or Section 11.04
hereof, as the case may be, with respect to the Event of Loss for which such
payments are made.
Section 11.06.Requisition of an Airframe and the Installed Engines
for Use by Government. In the event of the requisition for use by the
Government or any other government of registry of the Aircraft, or any agency
or instrumentality of either (a "Requisitioning Government") of the Airframe
and the Engines or engines then installed on the Airframe during the Term,
which requisition does not constitute an Event of Loss, the Lessee shall
promptly notify the Lessor, the Indenture Trustee and the Owner Participant of
such requisition and all of the Lessee's obligations under this Lease with
respect to such Airframe and Engines or engines shall continue to the same
extent as if such requisition had not occurred except to the extent that any
failure or delay in the performance or observance of such obligations (other
than obligations for the payment of Rent and, subject to Section 7.01(f)
hereof, the maintenance of required insurance) by the Lessee shall have been
caused by such requisition. All payments received by the Lessor, the Lessee
or any permitted sublessee or transferee from the Requisitioning Government
for such use of the Airframe and Engines or engines during the Term (other
than any such requisition which constitutes an Event of Loss, as to which the
provisions of Section 11.05 hereof shall govern) shall, subject to Section
11.08 hereof, be paid over to, or retained by the Lessee or such permitted
sublessee or transferee unless a Payment Default, Bankruptcy Default or Event
of Default shall have occurred and be continuing (in which case such proceeds
shall be held (unless applied) pursuant to Section 23.01 hereof as security
for Lessee's obligations hereunder and under the Participation Agreement).
All payments received by the Lessor, the Lessee or any such permitted
sublessee or transferee from the Requisitioning Government for the use of the
Airframe and Engines or engines after the Term shall be paid over to, or
retained by, the Lessor (or the Lessee if it shall have purchased the Lessor's
interest therein in accordance with the provisions hereof).
Section 11.07.Requisition for Use by Government of an Engine Not
Installed on the Airframe. In the event of the requisition for use by a
Requisitioning Government of registry of the Aircraft or any agency or
instrumentality thereof of any Engine not then installed on the Airframe, the
Lessee shall replace such Engine by complying with the terms of Section 11.04
hereof to the same extent as if an Event of Loss had occurred with respect to
such Engine as of the date of such requisition, and any payments received by
the Lessor or the Lessee from the Requisitioning Government with respect to
such requisition shall, subject to Section 11.08 hereof, be paid over to or
retained by the Lessee, provided that the Lessee shall have fully performed
its obligations under Section 11.04 hereof.
Section 11.08.Application of Payments During Existence of Certain
Defaults. Any amount referred to in Section 11.05, 11.06 or 11.07 hereof
which is payable to the Lessee shall not be paid to the Lessee, or, if it has
been previously paid directly to the Lessee, shall not be retained by the
Lessee, if at the time of such payment a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing, but shall be paid
to and held by the Lessor (or the Indenture Trustee so long as the Lien of the
Indenture is in effect) as provided in Article 23 hereof as security for the
obligations of the Lessee under this Agreement, and at such time as there
shall not be continuing any such Payment Default, Bankruptcy Default or Event
of Default, such amount to the extent not theretofore applied as provided
herein, shall be paid to the Lessee.
ARTICLE 12
RETURN OF AIRCRAFT
Section 12.01.Return of Aircraft. Unless the Aircraft is purchased
by the Lessee as provided in Section 4.02 hereof, at the end of the Term, or
upon the termination of this Lease pursuant to Article 10 or Article 17 hereof
or otherwise, the Lessee, at its own cost and expense, will return the
Aircraft by delivering it to the Lessor on the last day of the Term or on the
Termination Date, as the case may be, at the Lessee's principal maintenance
facility in Memphis, Tennessee or such other location specified by the Lessee
(and reasonably acceptable to the Owner Participant (or the Lessor so long as
the Lien of the Indenture is in effect)), within or outside of the continental
United States (on the Lessee's route structure as in effect on the return date
and provided that the Lessee shall pay any incremental expenses incurred in
connection with a redelivery outside the United States) and the Airframe shall
be fully equipped with two Engines of the same or an improved make and model
as were delivered on the Delivery Date (or Replacement Engines), free and
clear of all Liens (other than Lessor's Liens), including any rights of third
parties under pooling, interchange, overhaul, repair or similar agreements or
arrangements, it being understood that all such Engines and Replacement
Engines so returned shall be of identical make and model and that any
Replacement Engine shall be in at least as good operating condition and have
at least the same value and utility as the Engines being replaced, assuming
such Engines were in the condition required hereunder. The Lessee will give
the Lessor at least 15 days' prior written notice of the place of such return;
provided, however, that if the Lessor shall have made the request for storage
pursuant to Section 12.06 hereof, the Lessee shall return the Aircraft to the
Lessor at the site of the storage.
Section 12.02.Return of Engines. If any engine not owned by the
Lessor shall be delivered with the Airframe as set forth in Section 12.01
hereof, the Lessee, concurrently with such delivery, will, at its own cost and
expense furnish the Lessor with (i) a full warranty bill of sale, in form and
substance reasonably satisfactory to the Lessor, with respect to such engine,
(ii) an opinion of the Lessee's counsel to the effect that, upon such return,
the Lessor will acquire full right, title and interest to such engine free and
clear of all Liens (other than Lessor's Liens) and (iii) a certificate as
described in Section 11.04(b)(iii) hereof. The Lessee shall take such other
action as the Lessor may reasonably request in order that such Replacement
Engine shall be duly and properly titled in the Lessor free and clear of all
Liens (other than Lessor's Liens), and the Lessor will then (i) transfer to
the Lessee, without recourse or warranty (except as to the absence of Lessor's
Liens), and subject to the disclaimers provided in Section 5.01 hereof, all
the Lessor's right, title and interest in and to any Engine in lieu of which a
Replacement Engine has been delivered pursuant to Section 12.01 hereof, "as
is, where is" and (ii) deliver to the Lessee such instrument as the Lessor
shall have received from the Indenture Trustee, releasing such Engine from the
Lien of the Indenture.
Section 12.03.Return of Manuals. Upon the return of the Aircraft, the
Lessee shall deliver to the Lessor all original (or photocopied or microfilmed
copies thereof, if then permitted to be maintained in such form under
applicable law) logs, manuals, certificates and technical data, and
inspection, modification and overhaul records pertaining to the Airframe,
Engines or engines, which are required to be maintained under applicable rules
and regulations of the Aeronautics Authority or pursuant to the Lessee's or
any permitted sublessee's Aeronautics Authority-approved maintenance program
and all original (or photocopied or microfilmed copies thereof, if then
permitted to be maintained in such form under applicable law) records required
to be maintained with respect to the Aircraft under the maintenance program
approved by the aeronautical authority of any other country of registry of the
Aircraft. All records shall be returned in the format necessary to allow the
Lessee or any sublessee to comply with Section 12.04(a)(i) hereof.
Section 12.04.Condition of Aircraft. (a) Required Condition. The
Aircraft when returned to the Lessor shall, at the Lessee's own cost and
expense, meet the following requirements:
(i) it shall, unless otherwise requested by the Lessor not less than
90 days prior to the end of the Term to retain the then-existing
registration of the Aircraft, be duly registered in the name of the Lessor
or its designee pursuant to the Act;
(ii)it shall be clean by airline and cargo handling operating
standards;
(iii)the Airframe shall be returned with the Engines, or any
replacements thereto as herein authorized, provided that the Airframe shall
have an aggregate of two Engines or engines (as herein authorized under
Section 12.02 hereof), both of the same make and model, installed thereon,
together with the equipment, accessories or parts installed thereon on the
Delivery Date or replacements therefor (as herein authorized) and
alterations, modifications and additions thereto made in accordance with
the provisions of this Lease;
(iv)it shall be in the condition required by Section 12.04(b) hereof
and in as good operating condition as when delivered to the Lessor on the
Delivery Date, ordinary wear and tear excepted;
(v) it shall have a currently effective airworthiness certificate
issued by the Aeronautics Authority;
(vi)it shall comply with any then applicable rules and regulations
imposed by the Aeronautics Authority and, without limitation of the
foregoing, terminate all airworthiness directives of, and mandatory
modifications required by, the Aeronautics Authority (or any government or
governmental authority, domestic or foreign, having jurisdiction over the
Aircraft) to be terminated during the Term of the Lease and each Engine
(including any Replacement Engine) shall be serviceable in accordance with
the Lessee's Aeronautics Authority approved maintenance program;
(vii)it shall be free and clear of all Liens and rights of others
(other than the Lessor's Liens) including, without limitation, rights of
third parties under pooling, interchange, overhaul, repair and other
similar agreements or arrangements referred to in Section 7.02(a) hereof;
and
(viii) it shall be in a standard cargo configuration.
(b) Remaining Time. If, at the time of return of the Aircraft, the
Airframe is not being maintained under a continuous maintenance program, then
the Airframe shall have remaining until the next scheduled "C" check at least
1,000 hours of operation. If, at the time of return of the Aircraft, the
Airframe is subject to a continuous maintenance program, there will be no
time-before-overhaul requirement. If, at the time of return of the Aircraft,
the Engines are not being maintained under an on-condition maintenance
program, then the average number of hours on such Engines remaining until the
next scheduled engine heavy maintenance visit shall be at least 25% of the
allowable hours between engine heavy maintenance visits permitted under the
Lessee's FAA-approved maintenance program. If, at the time of return of the
Aircraft, the Engines are subject to an on-condition maintenance program,
there will be no time-before-overhaul requirement. With respect to
maintenance under the Lessee's maintenance program approved by the Aeronautics
Authority, the Lessee shall have treated the Aircraft in a nondiscriminatory
manner with other Airbus A300F-600 series aircraft in the Lessee's fleet, and
the Aircraft shall be free and clear of all Liens and rights of others other
than the Lessor's Liens and shall be in compliance in every material respect
with the Lessee's maintenance program as if the Term were not ending.
Section 12.05.Delayed Return of Aircraft. (a) If the return of the
Aircraft to the Lessor in compliance with the terms of this Lease shall be
delayed beyond the scheduled end of the Term because of the occurrence of an
event described in clause (iii)(2)(B) of the definition of Event of Loss, this
Lease shall not terminate but shall continue in full force and effect until
the expiration of the six-month period (or, such shorter period referred to in
said clause (iii)(2)(B)) after the scheduled end of the Term, provided that
(i) Stipulated Loss Value and Termination Value during such extension shall be
an amount determined in accordance with Section 4.01(b) hereof, (ii) the
Lessee shall pay on demand, as Basic Rent for each day of such delay and this
Lease shall continue, an amount equal to the daily equivalent of the average
Basic Rent paid during the Basic Term and any then expiring Renewal Term, in
each case with such Basic Rent to include for this purpose the amounts
referred to in Section 3.01 hereof, or such higher compensation being paid by
the Government pursuant to the Civil Reserve Airfleet Program and (iii)
neither the Lessee nor any other Person shall use or operate the Aircraft in
any manner, except pursuant to the activation of such Civil Reserve Airfleet
Program.
(b) In any other situation in which the Aircraft is not returned to
the Lessor upon the expiration of the Term (other than due to a purchase of
the Aircraft by the Lessee pursuant to this Lease or by a purchaser under
Article 10 hereof), the Lessee shall pay on demand as Basic Rent for each day
of such delay an amount equal to the Rent per diem at a rate equal to the Fair
Market Rental and this Lease shall continue for up to six (6) months after the
end of the Term; provided, however, that nothing in this paragraph shall be
deemed (i) to relieve the Lessee in any respect from any Default or Event of
Default or claims with respect thereto arising from the failure to return the
Aircraft at the time or in the condition required by the Operative Agreements
or (ii) to permit the Lessee or any sublessee to operate or use the Aircraft
otherwise than in connection with effecting such return.
Section 12.06.Storage. Upon any expiration or termination of this
Lease, at the written request of the Lessor given at least 45 days prior to
such expiration or termination, the Lessee will arrange, or will cause to be
arranged, at no charge to the Lessor (subject, however, to the last sentence
of this Section 12.06), storage at a ramp storage facility for the Aircraft at
the Lessee's principal maintenance facilities in Memphis, Tennessee or one of
the Lessee's other maintenance facilities or at a location selected by the
Lessee used as a location for the parking or storage of aircraft for a period
of up to 30 days; provided that if storage is available at no additional cost
or expense to the Lessee at the location at which the Lessor has specified
pursuant to Section 12.01 hereof that return of the Aircraft shall take place,
the Lessee shall provide storage at such location. At the end of such 30 day
period, if the Lessor so requests within 10 days before the end of such
period, the Lessee will continue to provide such ramp storage facility at such
facility or location for an additional 30 days at the Lessor's expense. If
the Lessee is required to move the Aircraft from one storage facility to
another, such move shall be at the risk and expense of the Lessor. The
maintenance and risk of loss of, and responsibility for obtaining insurance
on, the Aircraft shall be the responsibility of the Lessor during any period
of storage; provided, however, the Lessee will, upon written request of the
Lessor and at the Lessor's expense, not to exceed the Lessee's incremental
cost of such service, obtain insurance for such property (including, if
possible, coverage through its fleet policy).
Section 12.07.Special Markings. If requested by the Lessor, the
Lessee shall, at the Lessee's cost, remove or paint over all insignias and
other distinctive markings of the Lessee or any sublessee on the Aircraft and
repaint the stripped down areas in a workmanlike manner to match exterior
colors.
Section 12.08.Lessor's Option to Purchase Parts. At any time after
the Lessee has advised the Lessor that it has determined not to renew this
Lease or purchase the Aircraft, or the Aircraft is otherwise to be returned to
the Lessor, the Lessee shall advise the Lessor of any Part which the Lessee
intends, and is permitted, to remove as provided in Section 9.02(b) above, and
the Lessor may, at its option, upon 30 days' notice to the Lessee, purchase
any or all of such Parts from the Lessee upon the expiration of the Term at
their then Fair Market Value (taking into account the provisions of this
Lease) determined in accordance with the provisions of Section 4.03 hereof.
Upon any return of the Aircraft pursuant to this Article 12, if the Lessor does
not elect to exercise its option under this Section 12.08, the Lessee will, at
its own cost and expense, remove such Parts described in subparagraph (i),
(ii) or (iii) of Section 9.02(b) hereof as the Lessor may request.
ARTICLE 13
INSURANCE
Section 13.01.Comprehensive Airline Liability and Property Damage
Liability Insurance. (a) Comprehensive Airline Liability and Property Damage
Liability Insurance. The Lessee, at its own cost and expense, will maintain
or cause to be maintained with respect to the Aircraft, comprehensive airline
liability insurance including, without limitation, passenger legal liability
and property damage liability insurance and cargo legal liability in such
amounts, against such risks (including, without limitation, contractual
liability and war risk and allied perils liability), with such retentions as
the Lessee customarily maintains with respect to similar aircraft and engines
which comprise the fleet of the Lessee (subject to the limitations set forth in
Section 13.06 hereof), and with such insurers (which shall be insurers of
recognized responsibility), and such insurance against such other risks, as is
usually carried by similar corporations engaged in the same or similar
business and similarly situated as the Lessee and owning or operating aircraft
and engines similar to the Aircraft and Engines; provided that in no event
shall the limits of liability for all comprehensive airline liability
insurance be less than the amount, per occurrence, as set forth on the
insurance certificate delivered on the Delivery Date unless and only so long
as the Aircraft is not operated and appropriate insurance for the Aircraft on
the ground is maintained. The Lessee will also be required to maintain war
risk insurance if the Aircraft is operated in a war zone or, in the Lessee's
reasonable judgment, area of recognized hostilities, if such insurance is
available on commercially reasonable terms and if it is the custom for major
international Air Carriers flying comparable routes to carry such insurance.
(b) Government Indemnification. Notwithstanding Section 13.01(a)
hereof, in the event of the requisition for use by the Government of the
Airframe or the Airframe and the Engines or engines then installed on the
Airframe, the Lessee shall maintain throughout the period of such requisition
such insurance as would otherwise be required under this Section 13.01;
provided that the Lessor shall accept, in lieu of such insurance coverage,
written indemnification or insurance from the Government which is
substantially the same as otherwise required under this Article 13.
(c) Policy Terms. Any policy of insurance carried and maintained in
accordance with this Section 13.01, and any policy taken out in substitution or
replacement for any such policy subject to the terms, conditions and
limitations thereof, shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft, the Indenture Trustee in its capacity as
such, the Owner Participant and each of their respective officers and
directors in their respective capacities as such as additional insureds
(hereinafter in this paragraph (c) sometimes referred to as "Additional
Insured");
(ii)provide that, in respect of the interest of any Additional
Insured in such policies, the insurance shall not be invalidated by any
action or inaction of the Lessee or any Additional Insured as defined under
the policy of insurance required under this Section 13.01 (other than any
action or inaction of such Additional Insured) and shall insure each
Additional Insured regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Lessee or any
other Additional Insured (other than any breach or violation of any
warranty, declaration or condition by such Additional Insured) as defined
under the policy of insurance required under this Section 13.01;
(iii)provide that if such insurance is cancelled for any reason, or
any substantial change is made in the policies which adversely affect the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to any Additional Insured for thirty (30) days (except
in the case of war risk coverage in which event the applicable period shall
be seven (7) days or such other period as may be customary) after receipt
by each such Additional Insured of written notice from such insurers or
such insurers' broker of such cancellation, change or lapse;
(iv)provide that the insurers shall waive any rights of subrogation
against each Additional Insured, to the extent that the Lessee has waived
its rights under this Lease and the Participation Agreement; provided that
the exercise by insurers of rights of subrogation derived from rights
retained by the Lessee shall not, in any way, delay payment of any claim
that would otherwise be payable by such insurers but for the existence of
rights of subrogation derived from rights retained by the Lessee;
(v) provide that all of the provisions of such policy shall operate
in the same manner as if there were a separate policy covering each
Additional Insured; provided, that such policies shall not operate to
increase any insurer's limit of liability;
(vi)be primary, without right of contribution from any other
insurance which is carried by any Additional Insured with respect to its
interest in the Aircraft;
(vii)provide that no Additional Insured shall have any obligation or
liability for premiums or other payments, if any, in connection with such
insurance; and
(viii) provide that such insurer shall waive the right of such
insurer to any set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any Additional
Insured.
Section 13.02.Insurance Against Loss or Damage to Aircraft and
Engines. (a) Hull Insurance. The Lessee, at its own cost and expense, shall
maintain or cause to be maintained in effect, with insurers of recognized
responsibility, all-risk ground and flight aircraft hull insurance covering
the Aircraft and all-risk coverage with respect to any Engines and Parts while
temporarily removed from the Aircraft and not replaced by similar Engines or
Parts, including in each case war-risk and allied perils, hijacking (air
piracy) and governmental confiscation and expropriation insurance (except in
the country of registry) with such retentions (subject to the limitations set
forth in Section 13.06 hereof) and in such form, upon such terms and
conditions (including coverage for cost of claims), and in amounts as the
Lessee customarily maintains with respect to the aircraft in the Lessee's
fleet of the same type and model and operated on the same routes as the
Aircraft (except that the Lessee shall be required to maintain war-risk,
hijacking (air piracy) and governmental confiscation and expropriation
insurance (except in the country of registry) if the Aircraft is operated on
routes where the custom is for major international Air Carriers flying
comparable routes to carry such insurance), provided that such insurance shall
at all times while the Aircraft is subject to this Lease and the Lien of the
Indenture be on an agreed-value basis for an amount not less than an amount
equal to the Stipulated Loss Value for the relevant period for the Aircraft as
set forth on Schedule III to this Lease.
(b) Policy Terms. Any policies carried and maintained in accordance
with this Section 13.02 and any policies taken out in substitution or
replacement for any such policies subject to the terms, conditions and
limitations thereof shall:
(i) name or be amended to name the Lessor in its individual capacity
and as owner of the Aircraft (or, so long as the Indenture shall not have
been discharged, the Indenture Trustee) as sole loss payee (hereinafter in
this paragraph (b) sometimes referred to as "Loss Payee");
(ii)provide with respect to coverage provided under this Section
13.02, that (i) in the event of a loss involving proceeds in the aggregate
in excess of $6,000,000, the proceeds in respect of such loss up to an
amount equal to the Stipulated Loss Value for the Aircraft shall be payable
to the Lessor (or, so long as the Indenture shall not have been discharged,
the Indenture Trustee), it being understood and agreed that in the case of
any payment to the Lessor (or the Indenture Trustee) otherwise than in
respect of an Event of Loss, the Lessor (or the Indenture Trustee) shall,
unless a Payment Default, a Bankruptcy Default or an Event of Default shall
have occurred and be continuing, upon receipt of evidence satisfactory to
it that the damage giving rise to such payment shall have been repaired or
that such payment shall then be required to pay for repairs then being
made, pay the amount of such payment to the Lessee or its order, and (ii)
the entire amount of any loss involving proceeds in the aggregate of
$6,000,000 or less or the amount of any proceeds of any loss in excess of
the Stipulated Loss Value for the Aircraft shall be paid to the Lessee or
its order unless a Payment Default, a Bankruptcy Default or an Event of
Default shall have occurred and be continuing and the insurers have been
notified thereof by the Lessor or the Indenture Trustee (and if the
insurers have notice of a Payment Default, a Bankruptcy Default or an Event
of Default, such payment shall be made to the Indenture Trustee);
(iii)provide that if such insurance is cancelled for any reason or any
substantial change is made in the policies which adversely affects the
scope of the coverage required herein, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to the Loss Payee for thirty days (except in the case
of war-risk coverage in which event the applicable period shall be seven
(7) days or such other period as may be customary) after receipt by the
Loss Payee of written notice from such insurer of such cancellation, change
or lapse;
(iv)provide that, in respect of the interest of the Lessor (in its
individual capacity and as the Owner Trustee), the Owner Participant or the
Indenture Trustee (in their respective capacities as such) in such
policies, the insurance shall not be invalidated by any action or inaction
of the Lessee or the Loss Payee (other than any action or inaction of such
Loss Payee) and shall insure the Lessor (in its individual capacity and as
Owner Trustee), the Owner Participant and the Indenture Trustee regardless
of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or the Loss Payee (other than any
breach or violation of any warranty, declaration or condition by the Loss
Payee) as defined under the policy of insurance required under this Section
13.02;
(v) provide that the insurers shall waive any rights of subrogation
against the Lessor (in its individual capacity and as Owner Trustee), the
Owner Participant and the Indenture Trustee to the extent that the Lessee
has waived its rights under this Lease or the Participation Agreement;
provided that the exercise by insurers of rights of subrogation derived
from rights retained by the Lessee shall not, in any way, delay payment of
any claim that would otherwise be payable by such insurers but for the
existence of rights of subrogation derived from rights retained by the
Lessee;
(vi)be primary and without rights of contribution from any other
insurance which is carried by the Loss Payee with respect to its interest
in the Aircraft;
(vii)provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines, or spare parts, as the case may be)
such insurer shall waive any right of such insurer to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of the Loss Payee;
(viii) provide that (except in the case of insurance with respect to
Engines and spare parts that have been removed from the Aircraft and
replaced with other Engines or engines or spare parts, as the case may be)
no Loss Payee shall have any obligation or liability for premiums or other
payments, if any, in connection with such insurance; and
(ix)in the event that separate policies are maintained to cover
all-risk ground and flight aircraft, hull and war risks and allied perils
insurance, include a 50/50 provisional claims settlement clause as
contained in the policies of insurance maintained by the Lessee with
respect to all other aircraft in the Lessee's fleet, and a copy of the
50/50 provisional claims settlement clause in effect on the Delivery Date
shall be attached to the insurance certificate issued on the Delivery Date.
Section 13.03.Application of Insurance Proceeds. (a) Generally. All
insurance proceeds (other than proceeds from policies carried by the Lessor,
the Indenture Trustee or the Owner Participant) received under policies
described in Section 13.02 hereof as the result of the occurrence of an Event
of Loss with respect to the Airframe or an Engine will be applied as follows:
(i) if such proceeds are received with respect to the Airframe or with
respect to the Airframe and the Engines or engines then installed on the
Airframe and the Lessee has elected or is deemed to have elected the
alternative set forth in Section 11.02 hereof, so much of such proceeds as
shall not exceed the amounts required to be paid by the Lessee pursuant to
said Section 11.02 hereof shall be applied in reduction of the Lessee's
obligation to pay such amounts if not already paid by the Lessee, or if
already paid by the Lessee, shall be applied to reimburse the Lessee for
its payment of such amounts, provided that no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing, and the
balance, if any, of such proceeds remaining will be paid to the order of the
Lessee; if and so long as the foregoing proviso is not satisfied, such
proceeds shall be held (unless applied) pursuant to Section 23.01 hereof as
security for the Lessee's obligations hereunder and under the Participation
Agreement; or
(ii)if such proceeds are received with respect to the Airframe or the
Airframe and the Engines or engines then installed on the Airframe and the
Lessee has elected the alternative set forth in Section 11.03 hereof, or if
such proceeds are received with respect to an Engine not then installed on
the Airframe and not replaced by an Engine or engine under the
circumstances contemplated by Section 11.04 hereof, all such proceeds shall
be paid to the Indenture Trustee (unless the Indenture has been discharged
in which case paid to the Lessor) for disbursement to the order of the
Lessee, after the Lessee shall have fully performed the terms of Sections
11.03 or 11.04 hereof, as applicable, with respect to the Event of Loss for
which such proceeds are paid, provided that no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing; if and
so long as the foregoing proviso is not satisfied, such proceeds shall be
held (unless applied) pursuant to Section 23.01 hereof as security for the
Lessee's obligations hereunder and under the Participation Agreement.
(b) Payment if no Event of Loss. The insurance proceeds of any
property damage loss not constituting an Event of Loss with respect to the
Airframe or an Engine will be applied in payment (or to reimburse the Lessee)
for repairs or for replacement property in accordance with Articles 7 and 8
hereof, if not already paid for by the Lessee, and any balance remaining after
compliance with said Articles 7 and 8 hereof with respect to such loss shall
be paid to the order of the Lessee, provided that no Payment Default,
Bankruptcy Default or Event of Default shall have occurred and be continuing;
if and so long as the foregoing proviso is not satisfied, such proceeds shall
be held (unless applied) pursuant to Section 23.01 hereof as security for the
Lessee's obligations hereunder and under the Participation Agreement.
(c) Information. If any Additional Insured becomes subject to any
claim covered by any insurance policy maintained pursuant to this Article 13,
the Lessee shall make available any information required by such Additional
Insured in connection with such claim.
Section 13.04.Reports. On or before the Delivery Date and thereafter
annually on or before the scheduled expiration date for such policy during the
Term, the Lessee shall cause an aviation insurance broker to furnish to the
Lessor and the Indenture Trustee a signed report, stating in reasonable detail
the types of coverage and limits carried and maintained on the Aircraft and
certifying that such insurance complies with the terms and conditions of this
Lease. The Lessee will cause its aviation insurance broker to advise the
Lessor and the Indenture Trustee in writing promptly of any default in the
payment of any premium and of any other act or omission on the part of the
Lessee of which it has knowledge and which might invalidate, cause
cancellation of or render unenforceable all or any part of any insurance
carried by the Lessee with respect to the Aircraft. The Lessee will cause
such insurance broker to agree to advise the Lessor, the Indenture Trustee and
the Owner Participant in writing if and when it becomes evident to such broker
that any insurance policy carried and maintained on the Aircraft pursuant to
this Article 13 will not be renewed at the expiration date. If the Lessee
shall fail to maintain insurance as required, the Lessor may, at its option,
provide such insurance, and in such event, the Lessee shall, upon demand,
reimburse the Lessor, as Supplemental Rent, for the cost of such insurance;
provided, however, that no exercise of said option shall affect the provisions
of this Lease, including the provisions that failure by the Lessee to maintain
the prescribed insurance shall constitute an Event of Default or otherwise
constitute a waiver of any other rights the Lessor may have against the Lessee.
Section 13.05.Lessor's Insurance. The Lessor, the Indenture Trustee
or the Owner Participant may insure the Airframe or any Engine at its own cost
and expense, including insuring the Aircraft for amounts in excess of the
Stipulated Loss Value of the Aircraft, provided that any insurance so
maintained by the Lessor, the Indenture Trustee or the Owner Participant shall
not result in a reduction of coverage or amounts payable under insurance
required to be maintained by the Lessee under this Article 13 or increase the
cost to the Lessee of maintaining such insurance; provided further, that any
insurance policies of the Lessor, the Indenture Trustee or the Owner
Participant insuring the Airframe or any Engine shall provide for a release to
the Lessee of any and all salvage rights in and to the Airframe or any Engine.
Section 13.06.Self-Insurance. The Lessee may self-insure the risks
required to be insured against by Sections 13.01 and 13.02 hereof in such
reasonable amounts as are then applicable to other aircraft or engines of the
Lessee of value comparable to the Aircraft, but in no case shall such
self-insurance with respect to all aircraft in the Lessee's fleet in aggregate
exceed for any 12-month policy year an amount equal to the lesser of (i) 50%
of the highest insured value of any single aircraft in the Lessee's fleet and
(ii) 1.5% of the aggregate insured value from time to time of the Lessee's
entire aircraft fleet provided that a standard deductible per occurrence per
aircraft not in excess of the amount customarily allowed as a deductible in
the industry shall be permitted in addition to the above-mentioned
self-insurance. The foregoing shall not permit the Lessee to discriminate as
between insurance coverage on the Aircraft and insurance which the Lessee
maintains with respect to similar aircraft owned or operated by the Lessee
operating on similar routes in similar locations.
ARTICLE 14
INSPECTION
Section 14.01.Right of Inspection. At reasonable times, and upon at
least five (5) Business Days' prior written notice to the Lessee, the Lessor,
the Indenture Trustee or the Owner Participant, or their respective authorized
representatives, may inspect the Aircraft and upon at least ten (10) Business
Days' prior written notice, all Aeronautics Authority required books and
records of the Lessee or any sublessee and all books and records required to
be maintained by the Lessee under its FAA-approved maintenance program (or
books and records required to be maintained by the aeronautical authority of
any other country of registry of the Aircraft) relating to the maintenance of
the Aircraft and such Persons shall keep any information obtained thereby
confidential and shall not disclose the same to any Person, except to a Person
described in Section 18.01 of the Participation Agreement. Any such
inspection of the Aircraft shall be a visual, walk-around inspection of the
interior and exterior of the Aircraft and shall not include opening any panel,
bays or the like without the express consent of the Lessee (except to the
extent any such inspection takes place when any such panel, bays or the like
are open). Notwithstanding the previous sentence, unless a Payment Default,
Bankruptcy Default, material Default relating to maintenance (without giving
effect to the provisos to Section 7.01(b) hereof) or an Event of Default shall
have occurred and be continuing, the Lessor, the Indenture Trustee, the Owner
Participant or their respective authorized representatives shall each be
entitled to inspect the Aircraft only one time during any consecutive
twelve-month period provided, however, that during the final year of the Basic
Term the Lessor shall be entitled to inspect on 2 occasions. The Lessee shall
make any permitted sublease or transfer permitted under Section 7.02 hereof
expressly subject to inspection rights consistent with this Article 14.
Section 14.02.No Obligation to Inspect. None of the Lessor, the
Indenture Trustee or the Owner Participant shall have any duty to make any
inspection pursuant to Section 14.01 hereof and no such party shall incur any
liability or obligation by reason of making or not making any such inspection.
ARTICLE 15
ASSIGNMENT
Section 15.01.Lessee's Right to Assign. The Lessee shall not, and
shall have no authority or power to assign, convey or sublease any of its
rights under this Lease without the prior written consent of the Lessor except
(i) as expressly provided in Section 7.02 hereof, or in the case of any
requisition by the Government referred to in Section 7.01 of this Lease, or
(ii) to a wholly-owned domestic subsidiary of the Lessee which shall be a
certificated U.S. Air Carrier. Any such assignment, conveyance or sublease
shall in no way relieve the Lessee from any obligation hereunder or under any
other Operative Agreement or any written agreement of the Lessee entered into
in connection with the transactions contemplated by the Operative Agreements,
which shall be and remain obligations of the Lessee. The Lessor agrees that
it will not assign or convey its right, title and interest in and to this
Lease or the Aircraft except as contemplated by or provided in this Lease, the
Trust Agreement, the Indenture or the Participation Agreement. The terms and
provisions of this Lease shall be binding upon and inure to the benefit of the
Lessor and the Lessee and their respective successors and permitted assigns,
and shall inure, to the extent expressly provided herein and therein, to the
direct benefit of, and in accordance with the provisions of the Indenture and
the Participation Agreement shall be enforceable by, the Indenture Trustee,
the Lessor and their respective successors and permitted assigns.
Section 15.02.Citizenship. The Lessee will at all times be a duly
certificated U.S. Air Carrier under the Act.
ARTICLE 16
EVENTS OF DEFAULT
Section 16.01.Events of Default. Each of the following events shall
constitute an Event of Default, whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body:
(a) the Lessee shall fail to make any payment of Basic Rent, Renewal
Rent, Stipulated Loss Value or Termination Value, as the case may be,
within ten Business Days after the date when due (except that with respect
to any failure to pay Excepted Payments, such failure shall constitute an
Event of Default at the discretion of the Owner Participant); or
(b) the Lessee shall fail to make any payment of Supplemental Rent
(other than amounts described in clause (a) above) within 30 days after the
Lessee has received written notice from the Person entitled to receive such
payment stating that such payment is due (except that with respect to any
failure to pay Excepted Payments for such period, such failure shall
constitute an Event of Default at the discretion of the Owner Participant);
or
(c) (i) the Lessee shall fail to procure, carry and maintain
insurance on or in respect of the Aircraft at any time in accordance with
the provisions of Article 13 or such insurance lapses or is cancelled,
provided that no such lapse or cancellation shall constitute an Event of
Default until the earlier of (A) 30 days (or seven days or such shorter
time as may be standard in the industry with respect to war risk coverage)
after receipt by any Additional Insured of written notice of such lapse or
cancellation and (B) the date that such lapse or cancellation is effective
as to any Additional Insured and provided further that such failure shall
not constitute an Event of Default as long as the Aircraft is insured as
required while on the ground and not operated, or (ii) the Aircraft shall
be operated at any time when comprehensive airline liability insurance
required under Section 13.01 hereof shall not be in effect (it being
understood that the Lessee is not required to maintain such insurance under
Section 13.01 hereof while the indemnification or insurance referred to in
the proviso to Section 13.01(b) hereof is in effect); or
(d) the Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it under any
Operative Agreement (excluding the Tax Indemnity Agreement) or any other
written agreement of the Lessee entered into in connection with the
transactions contemplated by the Operative Agreements and such failure
shall continue unremedied for a period of thirty (30) days after the Lessee
shall have received written notice from the Lessor or the Owner Participant
of such failure, provided, that in the event such failure is curable and so
long as (but for no longer than 150 days after such 30-day period) the
Lessee shall have promptly undertaken such cure after the Lessee receives
notice thereof which undertaking shall be diligently and continuously
pursued using the Lessee's reasonable best efforts, such failure shall not
constitute an Event of Default; provided, further, that failure of the
Lessee to maintain the registration of the Aircraft under the Act pursuant
to the Lessee's covenants and agreement in Section 6.03(b) of the
Participation Agreement and in Section 7.01(a) of this Lease, when the
lapse of such registration is solely because the Owner Participant or the
Lessor has ceased to be a Citizen of the United States, shall not
constitute a Default or an Event of Default; or
(e) an order for relief shall be entered in respect of the Lessee by
a court having jurisdiction in the premises in an involuntary case under
the federal bankruptcy laws as now or hereafter in effect; or the Lessee
shall consent to the appointment of a custodian, receiver, trustee or
liquidator of itself or of a substantial part of its property; or the
Lessee is not paying, or shall admit in writing its inability to pay, its
debts generally as they come due or shall make a general assignment for the
benefit of creditors; or the Lessee shall file, or the Board of Directors
of the Lessee shall authorize the filing of, or grant one or more persons
authority (at their discretion) to make a filing for, a voluntary petition
in bankruptcy or a voluntary petition or an answer seeking reorganization
in a proceeding under any bankruptcy laws (as now or hereafter in effect)
or an answer admitting the material allegations of a petition filed against
the Lessee in any such proceeding; or the Lessee shall file, or the Board
of Directors of the Lessee shall authorize the Lessee to, or grant one or
more persons authority (at their discretion) to, seek relief by voluntary
petition, answer or consent, under the provisions of any other or future
bankruptcy or other similar law providing for the reorganization or
winding-up of corporations, or providing for an agreement, composition,
extension or adjustment with its creditors; or
(f) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Lessee, a
custodian, receiver, trustee, or liquidator of the Lessee or of any
substantial part of its property, or sequestering any substantial part of
the property of the Lessee, or granting any other relief in respect of the
Lessee under the federal bankruptcy laws or other insolvency laws, and any
such order, judgment or decree of appointment or sequestration shall remain
in force undismissed or unvacated for a period of ninety (90) days after
the date of its entry; or
(g) a petition against the Lessee in a proceeding under the federal
bankruptcy law or other insolvency laws (as now or hereafter in effect)
shall be filed and shall not be withdrawn or dismissed within ninety (90)
days, or under the provisions of any law providing for reorganization or
winding-up of corporations which may apply to the Lessee, any court of
competent jurisdiction shall assume jurisdiction, custody or control of the
Lessee or of any substantial part of its property and such jurisdiction,
custody or control shall remain in force unrelinquished or unterminated for
a period of ninety (90) days; or
(h) any representation or warranty made by the Lessee in this Lease
or in the Participation Agreement or in any document or certificate
furnished by the Lessee in connection with or pursuant to this Lease or the
Participation Agreement (except for the Tax Indemnity Agreement) shall at
any time prove to have been incorrect at the time made in any respect
material to the transactions contemplated by this Lease and, if originally
made by the Lessee in good faith, shall remain material and unremedied for
a period of thirty (30) days after a Responsible Officer of the Lessee
shall have actual knowledge or the Lessee shall have received written
notice of such misstatement.
ARTICLE 17
REMEDIES
Section 17.01.Remedies Upon Lessee's Default. (a) Remedies
Generally. Upon the occurrence of any Event of Default and at any time after
such occurrence so long as the same shall be continuing, the Lessor may, at
its option, declare this Lease to be in default (except that no such
declaration shall be required in the case of an Event of Default pursuant to
paragraphs (e), (f) or (g) of Section 16.01 hereof and this Lease shall be
deemed declared in default without any further act or notice), and at any time
thereafter the Lessor may do, and the Lessee shall comply with, one or more
of the following with respect to all or any part of the Airframe and the
Engines, as the Lessor in its sole discretion shall elect, to the extent
permitted by, and subject to compliance with, any mandatory requirements of
applicable law then in effect:
(i) Demand in writing that the Lessee shall, and upon such written
demand the Lessee shall, at the Lessee's own cost and expense, return
promptly to the Lessor all or such part of the Airframe and the Engines as
the Lessor may demand in the manner and condition required by, and
otherwise in accordance with all of the provisions of this Lease (provided
that, unless the Lessor shall require otherwise, the Aircraft shall be
returned within the continental United States), or the Lessor, at its
option, may enter upon the premises where such Airframe or Engines are
located or believed to be located and take immediate possession of and
remove such Airframe and Engines (together with any engine which is not an
Engine but is installed on the Airframe, subject to all of the rights of
the owner, lessor, Lien holder or secured party of such engine) without the
necessity for first instituting proceedings, or by summary proceedings or
otherwise, all without liability of the Lessor to the Lessee for or by
reason of such entry or taking of possession, whether for the restoration
of damage to property caused by such action or otherwise;
(ii)With or without taking possession thereof, sell or otherwise
dispose of the Airframe or any Engine, at public or private sale and with
or without advertisement or notice to the Lessee, as the Lessor may
determine, and the Lessor may hold the Lessee liable for any installment of
Basic Rent and Renewal Rent due on or before the date of such sale (and, if
Basic Rent or Renewal Rent is payable in arrears, the pro rata portion of
the installment of Basic Rent or Renewal Rent due on the next succeeding
Rent Payment Date in respect of any period commencing on the immediately
preceding Rent Payment Date to the date of such sale), or hold, use,
operate, lease to others or keep idle all or any part of the Airframe or any
Engine as the Lessor, in its sole discretion, may determine, in any such
case free and clear of any rights of the Lessee except as otherwise set
forth in this Article 17, and without any duty to account to the Lessee
with respect to such action or inaction or for any proceeds except to the
extent required by Section 17.01(a)(iv) hereof; in the event the Lessor
elects to exercise its rights under said Section, and in connection with
any sale of the Aircraft or any part thereof pursuant to this Article 17,
the Lessor, the Indenture Trustee, the Owner Participant or any Holder may
bid for and purchase such property;
(iii)Whether or not the Lessor shall have exercised or shall later at
any time exercise any of its rights under Section 17.01(a)(i) or
17.01(a)(ii) hereof, the Lessor, by written notice to the Lessee specifying
a payment date not earlier than 10 days from the date of such notice, may
demand that the Lessee pay to the Lessor, and the Lessee shall pay to the
Lessor on the payment date specified in such notice, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Basic Rent or
Renewal Rent due on Rent Payment Dates occurring after the payment date
specified in such notice), any installment of Basic Rent, Renewal Rent and
any Supplemental Rent due on or before such payment date (and, to the
extent Basic Rent or Renewal Rent is payable in arrears, the pro rata
portion of the installment of Basic Rent or Renewal Rent due on the next
succeeding Rent Payment Date in respect of the period commencing on the
Stipulated Loss Value Determination Date referred to below and ending on
the date of such payment), plus an amount equal to the excess, if any, of
the Stipulated Loss Value for the Aircraft, computed as of the Stipulated
Loss Value Determination Date on or next preceding the payment date
specified in such notice over the Fair Market Value of the Aircraft,
computed as of such Stipulated Loss Value Determination Date, together with
(A), if Basic Rent is payable in advance, interest, to the extent permitted
by applicable law, at the Debt Rate on the amount of such Stipulated Loss
Value from such Stipulated Loss Value Determination Date to the date for
payment set forth in such notice from the Lessor and (B) in all cases,
interest, to the extent permitted by applicable law at the Past Due Rate on
the excess of such Stipulated Loss Value over such Fair Market Value, from
the date as of which such Stipulated Loss Value is payable to the date of
actual payment of such amount; provided, however, that if (and in any event
prior to the time for payment hereunder) the Lessor is unable within a
reasonable period of time to recover possession of the Aircraft, or any
portion thereof, pursuant to clause (i) above unencumbered by this Lease
and free and clear of all Liens (other than Lessor's Liens), the Fair
Market Value of the Aircraft or such portion shall, at the option of the
Lessor to the extent legally enforceable, be zero and, if the Fair Market
Value of the Aircraft is deemed to be zero, after payment in full by the
Lessee of the amount specified above and all other amounts due from the
Lessee under this Lease and the other Operative Agreements, the Lessor
shall promptly transfer (without recourse or warranty other than as to the
absence of the Lessor's Liens) all of its right, title and interest in the
Aircraft or such portion, to the Lessee;
(iv)In the event the Lessor, pursuant to Section 17.01(a)(ii) hereof,
shall have sold the Airframe and/or any Engine, the Lessor, in lieu of
exercising its rights under Section 17.01(a)(iii) hereof, may, if it shall
so elect, demand that the Lessee pay the Lessor, and the Lessee shall pay
to the Lessor, on the date of such sale, as liquidated damages for loss of
a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent
due after the date on which such sale occurs) any unpaid Basic Rent or
Renewal Rent due on or before the date on which such sale occurs (and, to
the extent Basic Rent or Renewal Rent is payable in arrears, the pro rata
portion of the installment of Basic Rent or Renewal Rent due on the next
succeeding Rent Payment Date in respect of any period commencing on the
Stipulated Loss Value Determination Date referred to below and ending on
the date of such sale), and any Supplemental Rent due on or before the date
on which such sale occurs, plus an amount equal to the excess, if any, of
(A) the Stipulated Loss Value for the Aircraft, computed as of the
Stipulated Loss Value Determination Date next preceding the sale date, over
(B) the net proceeds of such sale (after deduction of all of the Lessor's
costs and expenses of such sale, including, without limitation, sales or
transfer taxes, costs of storage, overhaul, maintenance, preparation and
transportation of the Aircraft and brokers' and attorneys' fees) together
with (x), if Basic Rent is payable in advance, interest, to the extent
permitted by applicable law, at the Debt Rate on such Stipulated Loss Value
from such Stipulated Loss Value Determination Date to the date of such sale
and (y) in all cases, interest to the extent permitted by applicable law at
the Past Due Rate, on the amount of such excess from the date of such sale
to the date of actual payment by the Lessee;
(v) Proceed by appropriate court action to enforce the terms of this
Lease or to recover damages for its breach;
(vi)Terminate or rescind this Lease as to the Airframe or any or all
of the Engines; or
(vii)Exercise any other right or remedy which may be available to the
Lessor under applicable law.
(b) Cost of Exercise of Remedies. In addition, the Lessee shall be
liable, except as otherwise provided above, for any and all unpaid Rent due
before, after or during the exercise of any of the Lessor's remedies, for all
amounts payable by the Lessee under the Participation Agreement before or
after any termination hereof, and for all reasonable legal fees and other
costs and expenses incurred by the Lessor, the Indenture Trustee or the Owner
Participant by reason of the occurrence of any Event of Default or the
exercise of the Lessor's remedies, including, without limitation, all costs
and expenses incurred in connection with the return of the Airframe or any
Engine in accordance with the terms of Article 12 hereof or in placing the
Airframe or Engines in the condition and airworthiness required by such
Article or in connection with any inspection, use, operation, maintenance,
insurance, storage, or leasing carried out as part of such exercise.
Section 17.02.Cumulative Remedies. Except as otherwise provided, no
remedy referred to in this Article 17 is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to the Lessor at law or in equity; and the exercise or
beginning of exercise by the Lessor of any one or more of such remedies shall
not preclude the simultaneous or later exercise by the Lessor of any or all of
such other remedies.
Section 17.03.Waiver. No express or implied waiver by the Lessor of
any Event of Default shall in any way be, or be construed to be, a waiver of
any future or subsequent Event of Default. To the extent permitted by
applicable law, the Lessee waives any rights now or in the future conferred by
statute or otherwise which may require the Lessor to sell, lease or otherwise
use the Airframe or any Engine in mitigation of the Lessor's damages or which
may otherwise limit or modify any of the Lessor's rights or remedies under
this Article 17. The Lessor's access to the Aircraft is of the essence and
shall not be impaired.
Section 17.04.Lessor's Right to Perform for Lessee. If the Lessee
fails to make any required payment of Rent or fails to perform or comply with
any of its agreements contained in this Lease, whether or not such failure
shall constitute an Event of Default hereunder, the Lessor may (but shall not
be obligated to) make such payments or perform or comply with such agreement,
and the amount of such payment and the amount of the reasonable costs and
expenses of the Lessor incurred in connection with such payment or the
performance of or compliance with such agreement, together with interest (to
the extent permitted by applicable law) at the Past Due Rate from the date of
the making of such payment or the incurring of such costs and expenses by the
Lessor to the date of payment of such Rent or other amount by the Lessee,
shall be deemed Supplemental Rent payable by the Lessee upon demand. No such
payment or performance by the Lessor shall be deemed to waive any Default or
Event of Default or relieve the Lessee of its obligations hereunder.
ARTICLE 18
COVENANT OF QUIET ENJOYMENT
Section 18.01.Quiet Enjoyment. So long as no Event of Default shall
have occurred and be continuing, the Lessor covenants that neither it nor any
other Person lawfully claiming through it (other than the holder of a Lien
which the Lessee is obligated to discharge pursuant to Article 6 hereof, and
it being understood that the Lessor shall not be liable for any act or
omission of the Indenture Trustee or any other Person claiming through the
Indenture Trustee) shall interfere with the Lessee's right to quietly enjoy
the Aircraft without hindrance or disturbance by it or any such other Person.
ARTICLE 19
FURTHER ASSURANCES
Section 19.01.Further Assurances. Promptly upon the execution and
delivery of this Lease, the Trust Agreement and the Indenture, the Lessee will
cause each of them to be duly filed for recordation in accordance with the Act
and will maintain the recordation of the Indenture until the Lien of the
Indenture shall have been discharged pursuant to the terms of the Indenture.
In addition, the Lessee will, at the Lessee's own cost and expense, promptly
and duly execute and deliver to the Lessor, the Owner Participant and the
Indenture Trustee such further documents and assurances to carry out the
intent and purpose of this Lease and the Indenture and to establish and
protect the rights and remedies created or intended to be created in favor of
the Lessor under this Lease, and of the Owner Participant under the Trust
Agreement, and of the Indenture Trustee under the Indenture, including, without
limitation, the execution and filing of Uniform Commercial Code financing and
continuation statements, the execution and delivery of supplements and
amendments to this Lease and the Indenture, in recordable form, subjecting to
this Lease and the Indenture any Replacement Airframe and/or Replacement
Engines delivered by the Lessee pursuant to Section 11.03 hereof and any
Replacement Engine delivered by the Lessee pursuant to Section 11.04 hereof
and the recording and filing of counterparts of this Lease and the Indenture
in accordance with the laws of such jurisdictions as the Lessor or the
Indenture Trustee may from time to time deem advisable. The foregoing does
not impose upon the Lessor any additional liabilities not otherwise
contemplated by this Lease.
ARTICLE 20
NET LEASE
Section 20.01.Nature of Lease. (a) This Lease is a net lease, it
being the intention of the parties hereto that the obligations of the Lessee
to pay all costs and expenses of every character, whether seen or unforeseen,
ordinary or extraordinary, or structural or nonstructural, in connection with
the use, operation, maintenance, repair and reconstruction of the Airframe and
each Engine by the Lessee, including, without limitation, the costs and
expenses particularly set forth in this Lease (unless expressly excluded from
the terms hereof, the costs and expenses of the Lessor and the Owner
Participant shall include the reasonable fees and expenses of their respective
outside counsel), shall be absolute and unconditional, shall be separate and
independent covenants and agreements, and shall continue unaffected unless and
until the covenants have been terminated pursuant to an express provision of
this Lease. The obligation to pay Rent and all amounts payable by the Lessee
under this Lease or the Participation Agreement shall be absolute and
unconditional and (except as otherwise expressly provided with respect to
Supplemental Rent) shall be paid without notice or demand and such obligation
shall not be affected by any circumstance, including, without limitation:
(i) any set-off (except to the extent set forth in Section 3.05
hereof), counterclaim, recoupment, defense or other right which the Lessee
may have against the Lessor, the Owner Participant, any Holder, the
Indenture Trustee or anyone else for any reason (including, without
limitation, any breach by the Lessor or the Owner Participant or the
Indenture Trustee or any Holder of their respective representations,
warranties, agreements or covenants contained in any of the Operative
Agreements);
(ii)any defect in the title, airworthiness, registration, eligibility
for registration under the Act (and the regulations thereunder) or under
any of the laws or regulations of any other country of registry of the
Aircraft, condition, design, operation, merchantability or fitness for use
of, suitability for a particular purpose of, or any damage to or loss or
destruction of, the Aircraft or any portion thereof, or any interruption or
cessation in the use or possession of the Aircraft by the Lessee or any
sublessee for any reason including, without limitation, by reason of
governmental action or any doctrine of force majeure or impossibility of
performance;
(iii)any insolvency, bankruptcy, reorganization or similar case or
proceedings by or against the Lessor, the Lessee, the Indenture Trustee or
the Owner Participant or any other Person;
(iv)any Liens, encumbrances or rights of any other Person with
respect to the Aircraft, the invalidity or unenforceability or lack of due
authorization or other infirmity of this Lease or any other Operative
Agreement or document or instrument executed pursuant hereto or thereto, or
any lack of right, power or authority of the Lessor or the Lessee or any
sublessee or any other party to any other Operative Agreement to enter into
this Lease or any other Operative Agreement or any such document or
instrument; or
(v) any other circumstance, happening or event whatsoever, whether or
not unforeseen, or similar to any of the foregoing.
(b) To the extent permitted by applicable law, the Lessee waives any
and all rights which it may now have or which at any time it may have
conferred upon it, by statute or otherwise, to suspend performance under,
terminate, cancel, quit, rescind or surrender this Lease, the Airframe, or any
Engine or part thereof, other than in accordance with the terms hereof.
(c) Each payment of Rent made by the Lessee shall be final as to the
Lessor and the Lessee, and the Lessee will not seek to return nor to recover,
abate, suspend, defer or reduce all or any part of any such payment of Rent
from the Lessor or from the Indenture Trustee for any reason, except the
Lessee has the right to the extent provided in Section 3.05 hereof to offset a
portion of payments due from the Lessee to the Lessor pursuant thereto.
ARTICLE 21
SUCCESSOR LESSOR
Section 21.01.Successor Lessor. The Lessee agrees that in the case
of the appointment of any successor trustee for the Lessor pursuant to the
terms of the Participation Agreement, such successor trustee shall, upon
written notice by such successor to the Lessee, succeed to all the rights,
powers and title of the Lessor under this Lease and shall be deemed to be the
Lessor and the owner of the Aircraft for all purposes of this Lease without
the necessity of any consent or approval by the Lessee and without in any way
altering the terms of this Lease or the Lessee's obligations. One such
appointment and designation of a successor trustee shall not exhaust the right
to appoint and designate a further successor trustee pursuant to the
Participation Agreement, but such right may be exercised repeatedly so long as
this Lease shall be in effect.
ARTICLE 22
SECURITY FOR LESSOR'S OBLIGATIONS
Section 22.01.Security for Lessor's Obligations to Holders. In order
to secure the indebtedness evidenced by the Certificates, the Indenture
provides among other things, for the assignment by the Lessor to the Indenture
Trustee of this Lease and the Lease Supplement and for the creation of a first
mortgage and security interest in favor of the Indenture Trustee on the
Aircraft. The Lessee consents to and acknowledges such assignment (subject to
the reservations and conditions therein set forth) and the receipt of a copy
of the Indenture.
Section 22.02.Intentionally Left Blank.
Section 22.03.Consent of Lessee to Assignment of Lease as Security.
The Lessee hereby acknowledges and consents to the Indenture Trustee's rights
pursuant to the terms of the Indenture to receive payments (other than
Excepted Payments) due under this Lease, to transfer or assign title to the
Aircraft subject to this Lease, to make all waivers and agreements except as
otherwise provided in the Indenture, to give all notices, consents and
releases and to take all action upon the happening of a Default or Event of
Default under this Lease (except as otherwise specifically provided in the
Indenture), or to do any and all other things whatsoever which the Lessor is or
may become entitled to do under this Lease (except as otherwise provided in the
Indenture); all or any of which rights, obligations, benefits and interests
may, pursuant to the terms of the Indenture, be reassigned or retransferred by
the Indenture Trustee at any time and from time to time (except as otherwise
provided in the Indenture); provided, however, that the Lessor, except to the
extent, and for such time as, it is unable to do so by virtue of the
Indenture, shall remain liable for the performance of all the terms,
conditions, covenants and provisions for which it is obligated under this
Lease notwithstanding such assignment.
ARTICLE 23
SECURITY FUNDS
Section 23.01.Investment of Security Funds. (a) Any amounts otherwise
payable to the Lessee shall be held by the Lessor as security for, and may be
applied by the Lessor against, the obligations of the Lessee under this Lease
during such time as there shall have occurred and be continuing a Payment
Default, Bankruptcy Default or Event of Default, and, at such times as there
shall not be continuing a Payment Default, Bankruptcy Default or Event of
Default, such amounts, net of any amounts which have been applied by the
Lessor against the Lessee's obligations hereunder, shall be paid to the
Lessee. Any amounts which are held by the Lessor pending payment to the
Lessee shall, until paid to the Lessee or applied against the Lessee's
obligations hereunder, be invested by the Lessor, as directed from time to
time, in writing (and in the absence of a written direction by the Lessee, the
Lessor shall invest such monies in direct obligations of the United States of
America), by the Lessee and at the expense and risk of the Lessee, in the
following securities (which in the case of securities referred to in
subparagraphs (i) through (iv) of this Section 23.01(a) hereof shall mature
within ninety (90) days of the date of purchase):
(i) direct obligations of the United States of America; or
(ii)obligations fully guaranteed by the United States of America; or
(iii)certificates of deposit issued by, or bankers' acceptances of,
or time deposits or a deposit account with, any bank, trust company or
national banking association incorporated or doing business under the laws
of the United States of America or one of its States (which may include the
Owner Trustee or the Indenture Trustee in their respective individual
capacities or any Affiliate thereof), having a combined capital and surplus
of at least $500,000,000 and having a rating of "A" or better from Moody's
or S&P; or
(iv)commercial paper rated A-1/P-1 by S&P and Moody's respectively
(or if neither such organization shall rate such commercial paper at any
time, by any nationally recognized statistical rating organization in the
United States of America) equal to the highest rating assigned by such
rating organization (which may include commercial paper issued by the Owner
Trustee or the Indenture Trustee in their respective individual capacities
or any Affiliate thereof).
(b) At any time any invested funds are distributed to the Lessee,
there shall be promptly remitted to the Lessee any gain (including interest
received) realized as the result of any investment pursuant to Section
23.01(a) hereof (net of any fees, commissions and other costs, Taxes and
expenses, if any, incurred by the Lessor or the Owner Participant in
connection with such investment), unless a Payment Default, Bankruptcy Default
or Event of Default shall have occurred and be continuing in which case such
funds shall be applied in the same manner as the principal so invested. The
Lessee shall be responsible for and will promptly pay to the Indenture Trustee
or the Lessor, as the case may be, on demand, the amount of any loss realized
as the result of any such investment (together with any fees, commissions and
other costs, Taxes and expenses, if any, incurred by the Indenture Trustee or
the Lessor or the Owner Participant in connection with such investment), such
amount to be disposed of in accordance with the terms of the Indenture or the
Lease, as the case may be.
ARTICLE 24
CONCERNING THE LESSOR
Section 24.01.Lessor's Entry Into Lease. Except as expressly provided
herein, the Lessor and the Lessee agree that this Lease is executed by First
Security Bank of Utah, National Association not individually but solely as
Owner Trustee under the Trust Agreement in the exercise of the power and
authority conferred and vested in it as such Owner Trustee, that each and all
of the representations, undertakings and agreements by the Lessor herein are
for the purpose and with the intention of binding only the Lessor's Estate,
and that in no case whatsoever shall First Security Bank of Utah, National
Association be personally liable for any loss in respect of such
representations, undertakings and agreements, that actions to be taken by the
Lessor pursuant to its obligation hereunder may, in certain instances, be
taken by the Lessor only upon specific authority of the Owner Participant,
that nothing herein contained shall be construed as creating any liability on
First Security Bank of Utah, National Association, individually or personally,
to perform any covenant, either express or implied, herein, all such
liability, if any, being expressly waived by the Lessee and by each and every
Person now or hereafter claiming by, through or under the Lessee except with
respect to the gross negligence or willful misconduct of First Security Bank
of Utah, National Association, and that so far as First Security Bank of Utah,
National Association, individually or personally is concerned, the Lessee and
any Person claiming by, through or under the Lessee shall look solely to the
Lessor's Estate for the performance by the Lessor of any of its obligations
under this Lease; provided, that nothing in this Section 24.01 shall be
construed to limit in scope or substance those representations and warranties
of First Security Bank of Utah, National Association in its individual
capacity set forth in the Participation Agreement or the Trust Agreement. The
term "Lessor" as used in this Lease shall include any trustee succeeding First
Security Bank of Utah, National Association as Owner Trustee under the Trust
Agreement. Any obligation of the Lessor hereunder may be performed by the
Owner Participant, and any such performance shall not be construed as
revocation of the trust created by the Trust Agreement. Nothing contained in
this Lease shall restrict the operation of the provisions of the Trust
Agreement with respect to its revocation of the resignation or removal of the
Owner Trustee hereunder.
ARTICLE 25
NOTICES
Section 25.01.Notices. All notices, demands, declarations and other
communications required by this Lease shall be in writing and shall be deemed
received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a Business Day and during
normal business hours of the recipient, and otherwise on the next Business Day
following transmission, (b) if given by certified mail, return receipt
requested, postage prepaid, five Business Days after being deposited in the
United States mails and (c) if given by FedEx (or, if a Default or Event of
Default shall have occurred and be continuing, by other comparable courier
service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2005 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Senior Vice President and Chief
Financial Officer with a copy to Senior Vice President and General Counsel;
telephone (901) 395-3388, facsimile (901) 395-4758; or at such other
address as the Lessee shall from time to time designate in writing to the
Lessor, Indenture Trustee and the Owner Participant;
(b) If to the Lessor or Owner Trustee, to its office at 79 South
Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department; telephone (801) 246-5826, facsimile (801) 246-5053; or to such
other address as the Lessor shall from time to time designate in writing to
the Lessee and the Indenture Trustee, with a copy to Owner Participant at
the Owner Participant's address as provided in subsection (c) below;
(c) If to the Owner Participant, in accordance with the Participation
Agreement; and
(d) If to the Indenture Trustee, to its office at 600 Peachtree
Street, N.E., Suite 900, Atlanta, Georgia 30308, Attention: Corporate
Trust Lease Administration; telephone (404) 607-4681, facsimile (404)
607-6362; or to such other address as the Indenture Trustee shall from time
to time designate in writing to the Lessor, the Lessee and the Owner
Participant.
ARTICLE 26
MISCELLANEOUS
Section 26.01.Section Headings and Captions. All article and section
headings and captions used in this Lease are purely for convenience and shall
not affect the interpretation of this Lease.
Section 26.02.References. Any reference to a specific article or
section number shall be interpreted as a reference to that article or section
of this Lease unless otherwise expressly provided.
Section 26.03.APPLICABLE LAW. THIS LEASE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING
DELIVERED IN NEW YORK.
Section 26.04.Severability. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 26.05.No Oral Modification. The terms and provisions of this
Lease may not be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any such change, waiver,
discharge or termination is also subject to the provisions of Section 8.01 and
Article XIII of the Indenture.
Section 26.06.Agreement as Chattel Paper. To the extent that this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease may be created through the transfer or possession of
any counterpart other than the original chattel-paper counterpart, which shall
be the counterpart containing the receipt executed by the Indenture Trustee on
its signature page.
Section 26.07.Counterparts. This Lease may be executed in any number
of counterparts, each of which shall be an original (except that only the
counterpart bearing the receipt executed by the Indenture Trustee shall be the
original for purposes of perfecting a security interest therein as chattel
paper under the Uniform Commercial Code), but all of which taken together
shall constitute one and the same instrument and any of the parties hereto may
execute this Lease by signing any such counterpart.
Section 26.08.Public Release of Information. Provided no Event of
Default shall have occurred and be continuing, each party shall in each
instance obtain the prior written approval of each party concerning the exact
text and timing of news releases, articles and other informational releases to
the public media concerning this Lease.
ARTICLE 27
TRUE LEASE
Section 27.01.Intent of the Parties. It is the intent of the parties
to this Lease that for all purposes (including, without limitation, U.S.
Federal income tax purposes) this Lease will be a true lease, and that this
Lease conveys to the Lessee no right, title or interest in the Aircraft except
as a lessee.
Section 27.02.Section 1110 Compliance. Notwithstanding any provision
herein or elsewhere contained to the contrary, it is understood and agreed
among the parties hereto that the transactions contemplated by this Lease and
the other Operative Agreements are expressly intended to be, shall be and
should be construed so as to be, entitled to the full benefits of Section 1110
of the Bankruptcy Code and any successor provision thereof.
Section 27.03.Finance Lease. This Lease is a "finance lease" within
the meaning of Section 2-A--103(g) of the Uniform Commercial Code.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease to be duly executed as of the date first above written.
LESSOR: FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: ______________________________________________
Name:
Title:
LESSEE: FEDERAL EXPRESS CORPORATION
By: _______________________________________________
Name:Robert D. Henning
Title:Assistant Treasurer and
Managing Director - Structured Finance
Receipt of this original counterpart of the Lease is hereby
acknowledged on this __ day of August 1995.
Indenture Trustee: NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Indenture Trustee
By: _____________________________________________
Name:
Title:
SCHEDULE I
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement
and the Series Supplements) referred to below, unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the
case of any conflict between the provisions of this Schedule and the
provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Act; Federal Aviation Act. Title 49 of the United States Code
(which, among other things, recodified the Federal Aviation Act of 1958, as
amended to the time of such recodification), as amended and in effect on the
date of the Lease or as subsequently amended, or any successor or substituted
legislation at the time in effect and applicable, and the regulations
promulgated pursuant thereto.
Additional Insureds. As defined in Article 13 of the Lease.
Aeronautics Authority or FAA. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment received or deemed to
have been received by a Person (the "Original Payment") shall be supplemented
by a further payment to such Person so that the sum of the two payments shall
be equal to the Original Payment, after taking into account (x) all Taxes that
would result from the receipt or accrual of such payments and (y) any
reduction in Taxes that would result from such increased Taxes. In the case
of amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is
at all times subject to Federal income tax at the maximum marginal rate
generally applicable to corporations from time to time and actual state, local
and foreign income taxes.
Agent. The Chase Manhattan Bank (National Association) and its
successors and permitted assigns as Agent for the Original Loan Participants
pursuant to Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Act) as to which there is in force a permit granted under
Section 41302 of the Act.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by the
Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe (or any permitted substitute airframe)
together with the two Engines (or any Replacement Engine or Engines) whether
or not any of such initial or Replacement Engines may from time to time be
installed on such Airframe or may be installed on any other airframe or on any
other aircraft, including any aircraft substituted pursuant to Section 11.03
of the Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) leased by the Lessor to the Lessee
pursuant to the Lease and the initial Lease Supplement and having the United
States FAA Registration Number and manufacturer's serial number specified in
the initial Lease Supplement, including (i) all Parts in respect thereof and
(ii) any replacement airframe which may be substituted pursuant to Section
11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement, dated as of August 1, 1995.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on the Delivery Date or the Refunding Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Owner Participant.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with a copy of such report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France, and its successors and assigns.
AVSA Consent and Agreement. The Consent and Agreement dated as of
July 1, 1995, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or with the giving of notice or lapse of
time or both would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft throughout
the Basic Term pursuant to Section 3.02 of the Lease, adjusted pursuant to
Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Commencement Date and ending at the end of the day on January 5, 2020, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York and Memphis, Tennessee, and so long as
the Lien of the Indenture is in effect, in Atlanta, Georgia, Columbia, South
Carolina and, thereafter, in Salt Lake City, Utah.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N659FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Act, or any analogous part of any
successor or substituted legislation or regulation at the time in effect.
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, references to the Code shall
mean the Internal Revenue Code of 1986, as amended from time to time.
Commencement Date. January 5, 1996.
Consent and Agreement. The Consent and Agreement dated as of July 1,
1995 executed by the Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase Agreement.
Corporate Trust Department. The principal office of the Owner Trustee
located at 79 South Main Street, Salt Lake City, Utah 84111 or such other
office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified to the Lessee, the
Indenture Trustee and the Owner Participant.
Corporate Trust Office. The principal office of the Indenture
Trustee located at 600 Peachtree Street, N.E., Suite 900, Atlanta, Georgia
30308, Attention: Corporate Trust Lease Administration or such other office at
which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to the
Lessee, the Owner Participant and the Owner Trustee.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. July 31, 1995.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by its manufacturer's serial number in the initial Lease Supplement and leased
pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease,
together with all Parts related thereto. Except as otherwise provided, at
such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of July 1, 1995,
executed by the Engine Manufacturer, as the same may be amended, modified or
supplemented from time to time.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment (Federal
Express Corporation Trust No. N659FE), dated as of July 1, 1995 between the
Lessor and the Lessee, as the same may be amended, modified or supplemented
from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. Has the meaning set forth in Section 7.06 of the
Participation Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term, provided that
no Event of Loss shall be deemed to have occurred, and the Term shall be
extended automatically for a period of six months (or the date of return of the
Aircraft, if shorter, so long as the Lessor receives at least six months
notice of such date of return) beyond the end of the Term in the event that
the Aircraft, the Airframe or any Engine as of the end of the Lease Term is
requisitioned by the Government pursuant to an activation as part of the Civil
Reserve Air Fleet Program described in Section 7.02(a)(iv) of the Lease; and
(iv) as a result of any law, rule, regulation, order or other action by the
Aeronautics Authority or other governmental body having jurisdiction, the use
of the Aircraft or Airframe in the normal course of air transportation of
cargo shall have been prohibited by virtue of a condition affecting all Airbus
A300F-600 series aircraft equipped with engines of the same make and model as
the Engines for a period of twelve (12) consecutive months, unless the Lessee,
prior to the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if earlier.
The date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of diligent
efforts to recover such property, if earlier); (t) the 61st day following the
date of any destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use; (u) the date of any insurance
settlement on the basis of a total loss or constructive or compromised total
loss; (v) the date of any condemnation, confiscation, seizure or requisition
of title of such property; (w) the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government referred to in clause (iii)(2)(A) above (or the end of the Term or
the date of any insurance settlement described therein, if earlier than such
181st day); (x) the last day of the Term in the case of requisition for use of
such property by the Government; (y) the last day of the 12 month or 24 month
period, referred to in clause (iv) above (or if earlier, the end of the Term
or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe. If an
Event of Loss described in any of clauses (i) (A), (iii) or (iv) above shall
occur, Lessor may elect, within 30 days following the date upon which such
Event of Loss is deemed to have occurred, to waive such Event of Loss and the
consequences thereof.
Excepted Payments. Collectively, (i) indemnity or other payments (and
interest thereon to the extent provided in the Operative Agreements) paid or
payable by the Lessee in respect of the Owner Participant, the Owner Trustee
in its individual capacity or any of their respective successors, permitted
assigns, directors, officers, employees, servants and agents or Affiliates,
pursuant to the Participation Agreement or any indemnity hereafter granted to
the Owner Participant or the Owner Trustee in its individual capacity pursuant
to the Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the
Aircraft payable as a result of insurance claims paid for the benefit of, or
losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Section 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) payments constituting increases
in Basic Rent attributable to payments arising pursuant to Section 5 of the
Tax Indemnity Agreement and (vi) any right to demand, collect or otherwise
receive and enforce the payment of any amount described in clauses (i) through
(v) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
the second paragraph of Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease the Aircraft. In such determination, it shall be assumed that the
Aircraft is in the condition required under the Lease in the case of return of
the Aircraft pursuant to Article 12 of the Lease. Fair Market Rental shall be
determined in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. Unless otherwise provided in the applicable
provisions of any Operative Agreement, in such determination it shall be
assumed that the Aircraft is in the condition required under the Lease in the
case of return of the Aircraft pursuant to Article 12 of the Lease; provided
that in connection with any determination pursuant to or for the purposes of
Article 17 of the Lease, the Aircraft shall be appraised on an "as is, where
is" basis. Fair Market Value shall be determined in accordance with the
provisions of Section 4.03 of the Lease.
Federal Aviation Administration; FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FSBU. First Security Bank of Utah, National Association, a national
banking association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and
credit of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991 between the
Engine Manufacturer and the Lessee related to the purchase by the Lessee of the
Engines as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the General Terms
Agreement relates to the Engines, to the extent assigned to the Owner Trustee
pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of FSBU, in its individual capacity and as Owner
Trustee and Lessor, the Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Owner Participant, the Original
Loan Participants (to the extent set forth in Articles 8 and 9 of the Original
Participation Agreement), the Indenture Trustee, in its individual capacity
and as trustee, any Owner Participant Guarantor, and any successor (including
any trustee which may succeed to the Lessor's interest under the Lease),
Affiliate, assign, officer, director, employee, agent and servant of any of
the foregoing, the Lessor's Estate and the Trust Indenture Estate.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N659FE), dated as of July 1, 1995, as amended
and restated as of August 1, 1995, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement,
and as said Indenture may from time to time be further supplemented or
amended, including any amendment or supplement thereto entered into from time
to time pursuant to the applicable provisions of the Indenture.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N659FE) dated July 31, 1995, as such Indenture and Security Agreement
Supplement shall be amended or supplemented from time to time and any other
supplement to the Indenture, substantially in the form of Exhibit A to the
Indenture.
Indenture Default. Any event or condition which with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. NationsBank of Georgia, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture and each other Person which may from
time to time be acting as successor trustee under the Indenture.
Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to
the Indenture or any document included in the Trust Indenture Estate, (ii) any
act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes or Expenses
imposed against the Indenture Trustee which are not required to be indemnified
against by the Lessee pursuant to the Participation Agreement by reason of
Section 8.01(b) or 9.01(b) thereof.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Interim Term. The period commencing on the Delivery Date and ending
at the end of the day immediately preceding the Commencement Date.
Invoice. The invoice for the Aircraft given by AVSA to the Lessor.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N659FE) dated as of July 1, 1995, as amended and restated as of August 1, 1995,
entered into by the Lessor and the Lessee concurrently with the execution and
delivery of the Indenture, as said Lease may from time to time be supplemented
or amended, or its terms waived or modified, to the extent permitted by, and
in accordance with, the terms of the Indenture, including, without limitation,
supplementation by one or more Lease Supplements entered into pursuant to the
applicable provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N659FE) dated July 31, 1995, as such Lease Supplement
shall be amended or supplemented from time to time and any other supplement to
the Lease, substantially in the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Lessor. First Security Bank of Utah, National Association, a
national banking association, not in its individual capacity but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), the GTA, the Engine Warranty Assignment, the Engine Consent, any
warranty with respect to the Airframe and the Engines, all amounts of Basic
Rent and Supplemental Rent, including without limitation, insurance proceeds
(other than insurance proceeds payable to or for the benefit of the Owner
Trustee in its individual capacity, the Owner Participant or the Indenture
Trustee) and requisition, indemnity or other payments of any kind for or with
respect to the Aircraft (except amounts owing to the Owner Participant, to the
Indenture Trustee, to the Owner Trustee in its individual capacity, or to any
of their respective directors, officers, employees and agents pursuant to
Articles 8 and 9 of the Participation Agreement). Notwithstanding the
foregoing, "Lessor's Estate" shall (i) not include any Excepted Payment and
(ii) include all property intended to be subjected to the Indenture by the
Granting Clause thereof.
Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture
Estate arising as a result of (i) claims against the Lessor, in its individual
capacity or as Owner Trustee, or the Owner Participant, in each case not
related to the transactions contemplated by the Operative Agreements, (ii)
acts or omissions of the Lessor in its individual capacity or as Owner
Trustee, and, in the case of the Lessor in its individual capacity, arising
from its gross negligence or willful misconduct or expressly prohibited under
the Operative Agreements and any act or omission of the Owner Participant
which is in violation of any of the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to the Participation Agreement by reason of Section 8.01(b) or
9.01(b) thereof and which are not required to be indemnified against by the
Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against the
Lessor or the Owner Participant arising from the voluntary transfer by the
Lessor or the Owner Participant of its interests in the Aircraft other than a
transfer of the Aircraft pursuant to Section 4.02(a) or Articles 10 or 11 of
the Lease and other than a transfer pursuant to the exercise of the remedies
set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. An amount determined as of the day before the
applicable Prepayment Date (or date of purchase, as the case may be) which an
Independent Investment Banker determines to be equal to an excess of (i) the
present values of all remaining scheduled payments of such principal amount or
portion thereof and interest thereon (excluding interest accrued from the
immediately preceding Payment Date to such Prepayment Date or date of
purchase, as the case may be) to the Maturity of such Certificate in
accordance with generally accepted financial practices assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield, all as determined by the Independent Investment Banker over (ii) the
unpaid principal amount of such Certificate.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate per semi-annual period equal to the Debt Rate.
Non-U.S. Person. Any Person other than (i) a citizen or resident of
the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee
Guaranty, if any, any Ancillary Agreement entered into by or with the written
consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), the Engine Consent and
the Tax Indemnity Agreement, each as amended from time to time.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the
Lessee may be (i) an attorney employed by the Lessee who is generally
empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a
successor firm or (iii) other counsel designated by the Lessee and reasonably
satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the
Indenture Trustee, an attorney selected by such Person and, in the case of the
Owner Trustee, reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on the
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N659FE) dated as of July 1,
1995 between the Owner Trustee and the Indenture Trustee, which together with
the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N659FE) dated July 31, 1995 attached thereto was
recorded as one instrument by the FAA on August 3, 1995 and assigned
Conveyance Number 2A267311.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N659FE) dated as of July 1, 1995 between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N659FE) dated July 31, 1995 attached thereto was
recorded as one instrument by the FAA on August 7, 1995 and assigned
Conveyance Number HH009756.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participants.
Original Loan Participants. The entities listed on Schedule I to the
Original Participation Agreement and their successors and assigns (other than
any assignees in connection with the first Refinancing after the Delivery
Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N659FE) among the Lessee, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Original Loan
Participants as it was originally executed as of June 1, 1995.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N659FE) between the Lessee and the
Owner Participant as it was originally executed as of July 1, 1995.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N659FE) between the Owner Participant and the Owner
Trustee as it was originally executed as of June 1, 1995 and filed with the
FAA on July 31, 1995.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Amount. The amount described in Section 2.03 of the
Participation Agreement and set forth on Schedule II to the Lease.
Owner Participant Guarantor. The provider of an Owner Participant
Guaranty.
Owner Participant Guaranty. Any guaranty delivered in compliance with
Section 7.03(d) of the Participation Agreement.
Owner Trustee. FSBU, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement, and its successors and permitted
assigns.
Owner Trustee Guarantor. The provider of an Owner Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Interim Term and
the Basic Term utilizing the multiple investment sinking fund method of
analysis, computed on the basis of the same methodology and assumptions as
were utilized by the Owner Participant in determining Basic Rent, Stipulated
Loss Value and Termination Value percentages and the EBO Price, as such
assumptions may be adjusted for events which have been the basis of
adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N659FE), dated as of June 1, 1995, as amended and
restated as of August 1, 1995, among the Lessee, the Original Loan
Participants, the Owner Trustee not in its individual capacity except as
otherwise expressly provided therein, but solely as trustee, the Owner
Participant, the Pass Through Trustee, not in its individual capacity except
as otherwise expressly provided therein, but solely as pass through trustee
and the Indenture Trustee, not in its individual capacity except as otherwise
expressly stated therein, but solely as indenture trustee, as amended,
modified or supplemented, or the terms thereof waived.
Parts. All appliances, parts, components, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
complete Engines or engines) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or, prior to
replacement thereof in accordance with the Lease, which may be removed
therefrom.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
August 1, 1995 between the Lessee and the Pass Through Trustee, as such Pass
Through Agreement may be modified, supplemented or amended from time to time in
accordance with the provisions thereof.
Pass Through Certificates. Any of the 1995 Pass Through Certificates,
Series A1 or 1995 Pass Through Certificates, Series A2, in each case as issued
by the related Pass Through Trust; and "Pass Through Certificates" means all
of the Pass Through Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Pass Through Trust, 1995-A1
or Federal Express Pass Through Trust, 1995-A2, in each case formed pursuant
to the related Series Supplement in accordance with the Pass Through
Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts.
Pass Through Trustee. NationsBank, National Association (Carolinas),
a national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust, and its successors and
permitted assigns as Pass Through Trustee thereunder.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 5 and July 5 commencing January 5, 1996.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Premium Termination Date. With respect to the Certificates having a
Maturity in 2014, February 22, 2007, and with respect to the Certificates
having a Maturity in 2015, May 4, 2015.
Prepayment Date. Has the meaning specified in Section 6.02(b) of the
Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b) of the
Indenture.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase Agreement,
dated as of July 3, 1991 between AVSA and the Lessee, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to the Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N659FE), dated as of July 1, 1995
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time.
Purchase Price. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 21 for January 5
Payment Dates and June 20 for July 5 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of the
Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant to
Section 15.01 of the Participation Agreement.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least ten Business Days prior
to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Remaining Weighted Average Life. For any Certificate, as of any
determination date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
mandatory sinking fund redemption payment of principal, including the payment
due on the Maturity of such Certificate, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
determination date, and the date on which such payment is scheduled to be
made, by (b) the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in accordance
with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee has
exercised its option to renew the Lease pursuant to Section 4.01(a) thereof.
Rent. All payments due from the Lessee under the Lease as Basic Rent,
Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 5 and July 5 commencing January 5,
1996.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) manufactured after October 22,
1994 of the same or of equal or greater value, remaining useful life and
utility as the Engine being replaced, together with all Parts relating to such
engine; provided, however, that if such replacement engine is not a General
Electric CF6-80C2-A5F engine, such replacement engine must then be commonly
used in the commercial aviation industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement, in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Department or Corporate
Trust Office (in the Corporate Trust Lease Administration Department), as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, with respect to the Owner Participant, the president or
any vice president with direct responsibility for the transactions
contemplated by the Operative Agreements, and with respect to any other party,
any corporate officer or (except in the case of the Owner Participant) other
employee of a party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Corporation.
Securities Act. The Securities Act of 1933, as amended.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
Series Supplement. The Series Supplement 1995-A1 to be executed and
delivered by the Lessee and the Pass Through Trustee or the Series Supplement
1995-A2 to be executed and delivered by the Lessee and the Pass Through
Trustee, in each case as such Series Supplement may be modified, supplemented
or amended from time to time in accordance with the provisions thereof and
"Series Supplements" means both of such Series Supplements.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value shall
be, under any circumstances and in any event, an amount, together with so much
of the arrears portion of Basic Rent due and owing through the date of payment
of Stipulated Loss Value as does not constitute an Excepted Payment, at least
sufficient to pay in full as of such date of payment the aggregate unpaid
principal amount of and accrued interest on the Certificates outstanding on
such date of payment. Subject to the immediately preceding sentence, it is
understood and agreed that the amounts set forth on Schedule III of the Lease,
for dates other than Rent Payment Dates on which arrears Basic Rent is due,
fully reflect appropriate Basic Rent accruals and credits of unearned Basic
Rent and, accordingly, no further accrual or credit shall be required whenever
Stipulated Loss Value is to be calculated with reference to any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease under the heading "Stipulated Loss Value Date."
Supplemental Rent. All amounts, liabilities and obligations which
the Lessee assumes or agrees to perform or pay under the Lease or under the
Participation Agreement or Tax Indemnity Agreement or any Ancillary Agreement
or any other Operative Agreement to the Lessor, the Owner Participant or
others, including, without limitation, payments of Stipulated Loss Value, EBO
Price and amounts calculated by reference to Termination Value and all amounts
required to be paid by Lessee under the agreements, covenants and indemnities
contained in the Lease or in the Participation Agreement or the Tax Indemnity
Agreement or any other Operative Agreement, but excluding Basic Rent.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement, as from
time to time modified, amended or supplemented pursuant to its applicable
provisions.
Term. The Interim Term and the Basic Term of the lease for the
Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the
Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or
such earlier date on which the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after November 2, 2000 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 5, 2010 or January 5, 2012, (ii) Section 4.02(a)(D) or (E) of the
Lease, a Rent Payment Date that is on or after the fifth anniversary of the
Commencement Date and (iii) Section 4.02(a)(F) of the Lease, July 5, 2014.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to
be calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Treasury Yield. (i) In the case of a Certificate having a Maturity
within one year after the Prepayment Date the average yield to maturity on a
government bond equivalent basis of the applicable United States Treasury Bill
due the week of Maturity of such Certificate and (ii) in the case of a
Certificate having a Maturity one year or more after the Prepayment Date, the
average yield of the most actively traded United States Treasury Note (as
reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems,
Inc., a financial news service, or if such report is not available, a source
deemed comparable by the Independent Investment Banker selected to determine
the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding
in maturity to the Remaining Weighted Average Life of such Certificate (or, if
there is no corresponding maturity, an interpolation of maturities by the
Independent Investment Banker), in each case determined by the Independent
Investment Banker selected to determine the Make-Whole Premium based on the
average of the yields to stated maturity determined from the bid prices as of
10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding
the Prepayment Date.
Trust Agreement. The Trust Agreement (Federal Express Corporation
Trust No. N659FE), dated as of June 1, 1995 as amended and restated as of
August 1, 1995, between the Owner Participant and the Owner Trustee in its
individual capacity, as from time to time modified, amended or supplemented
pursuant to its applicable provisions and in accordance with the Operative
Agreements.
Trust Indenture Act. The Trust Indenture Act of 1939, as amended.
Trust Indenture Estate. All estate, right, title and interest of the
Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of
the Owner Trustee or the Owner Participant expressly reserved to the Owner
Trustee or the Owner Participant pursuant to the Indenture.
Underwriters. The several Underwriters named in the Underwriting
Agreement.
Underwriting Agreement. The Underwriting Agreement dated August 16,
1995 among the Lessee, Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Chase Securities, Inc.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Federal Aviation Act, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Federal Aviation
Act and Part 121 of the regulations under such Act, for aircraft capable of
carrying ten (10) or more individuals or 6,000 pounds or more of cargo, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provision thereof or in absence thereof.
SCHEDULE II
OWNER PARTICIPANT AMOUNT
(As a Percentage of Purchase Price)
Date Amount
August 21, 1995 0.26574907%
January 6, 1996 2.12215656%
BASIC RENT
(As a Percentage of Purchase Price)
Rent
Payment
Date Advance Arrears
[On each Payment Date, Lessee will pay as Basic Rent an amount that
will be at least sufficient to pay in full, as of such Payment Date,
the aggregate unpaid principal amount of due and unpaid installments
on the Certificates outstanding on such Payment Date, together with
the accrued and unpaid interest thereon.]
SCHEDULE III
STIPULATED LOSS VALUES
Stipulated Loss
Date Value Factor
[Stipulated Loss Value will be an amount at least sufficient to pay
in full, as of the date of payment thereof, the aggregate unpaid
principal amount of the Certificates outstanding on such date of
payment, together with the accrued and unpaid interest thereon.]
SCHEDULE IV
TERMINATION VALUES
Termination Termination
Date Value Factor
[Termination Value will be an amount at least sufficient to pay in
full, as of the date of payment thereof, the aggregate unpaid
principal amount of the Certificates outstanding on such date of
payment, together with the accrued and unpaid interest thereon.]
SCHEDULE V
PURCHASE OPTION SCHEDULE
(D) Purchase Option Referred to in Section 4.02 (a)(D) of the Lease.
In the event of any Significant Expenditure (as defined below) with respect
to the Aircraft, which the Lessee has certified in a certificate of the
Lessee's President, Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer, Treasurer or Assistant Treasurer furnished to the
Lessor, the Indenture Trustee and the Owner Participant, is (as determined
in the Lessee's sole discretion) necessary, desirable or required to be
made at any time on or after the fifth anniversary of the Commencement
Date, the Lessee may elect to terminate the Lease and purchase the Aircraft
on the first Rent Payment Date occurring at least six months after the
Owner Participant has notified the Lessee that they will not permit such
Significant Expenditure to be financed as contemplated in clause (ii) of
the definition of "Significant Expenditure" below, for, at the Lessee's
option, either (1) the payment to the Lessor in immediately available funds
of an amount equal to the greater of the Fair Market Value of the Aircraft
and the Termination Value for the Aircraft, determined in each case as of
such Rent Payment Date, or (2) the assumption by the Lessee, pursuant to
Section 7.11 of the Participation Agreement and Section 2.12 of the
Indenture, of all of the Lessor's obligations under the Indenture, the
Certificates and Section 7.04 of the Participation Agreement, and the
payment to the Lessor in immediately available funds of an amount equal to
the excess of (A) the greater of (I) Termination Value for the Aircraft,
and (II) the Fair Market Value of the Aircraft, both computed as of such
Rent Payment Date, over (B) the unpaid principal of the Certificates
outstanding plus accrued interest as of such date; it being understood that
the Fair Market Value for this purpose shall be determined without regard
to any Significant Expenditure not yet made.
For purposes of this paragraph (D) the term "Significant Expenditure"
means a single expenditure or a series of related expenditures in respect
of non-severable improvements (i.e. improvements which cannot by the terms
of Section 9.02(b) of the Lease be removed from the Aircraft) which (i) in
the Lessee's reasonable judgment would exceed $5,000,000, (ii) the Owner
Participant will not permit to be financed on similar terms and conditions
then available for similar transactions through the issuance of additional
non-recourse notes of the Lessor or through additional equity investments
of the Owner Participant or both (it being understood that this Section
4.02(a)(D) shall not impose any obligation on the Owner Participant to
provide such financing) and (iii) are improvements which the Lessee has
performed or is in the process of performing in respect of at least 25% of
the A300-600 series aircraft (including the Aircraft) operated by the
Lessee. The Lessee, prior to notifying the Owner Participant and the
Indenture Trustee in accordance with Paragraph (F) of this Schedule V of
its election to purchase the Aircraft pursuant to Section 4.02(a)(D) of the
Lease, shall notify the Owner Participant of the non-severable improvements
which would satisfy the conditions described in clauses (i) and (iii) of
the preceding sentence, and provide the Owner Participant with a reasonable
opportunity to permit the financing thereof as contemplated in clause (ii)
of such sentence. The Owner Participant shall notify the Lessee of their
decision with respect to such financing within 60 days after the Lessee has
given the notice described in the preceding sentence.
(E) Purchase Option Referred to in Section 4.02(a)(E) of the Lease.
In the event that a Burdensome Indemnity Payment shall occur at any time on
or after the fifth anniversary of the Commencement Date, the Lessee may
elect to terminate the Lease and purchase the Aircraft on the first Rent
Payment Date (the "Burdensome Indemnity Payment Date") following the date
that the Owner Participant provides the Lessee with a written notice of any
Loss (as defined in Section 5 of the Tax Indemnity Agreement) that is a
Burdensome Indemnity Payment for, at the Lessee's option, either (1) the
payment to the Lessor in immediately available funds of an amount equal to
the greater of the Fair Market Value of the Aircraft and the Termination
Value for the Aircraft, determined in each case as of such Burdensome
Indemnity Payment Date, or (2) the assumption by the Lessee, pursuant to
Section 7.11 of the Participation Agreement and Section 2.12 of the
Indenture, of all of the obligations of the Lessor under the Indenture, the
Certificates and Section 7.04 of the Participation Agreement and the
payment to the Lessor in immediately available funds of an amount equal to
the excess of (A) the greater of (I) the Termination Value for the Aircraft
and (II) the Fair Market Value of the Aircraft, both computed as of the
Burdensome Indemnity Payment Date, over (B) the unpaid principal of the
Certificates outstanding as of such date.
For purposes of this paragraph (E), the term "Burdensome Indemnity
Payment" means a Loss as defined in the Tax Indemnity Agreement which under
the circumstances cannot be commercially reasonably avoided by the Lessee
which causes the aggregate net present value as of the determination date,
discounted semi-annually at the Debt Rate, of all such Losses (but
excluding any Losses for which the Owner Participant shall have waived its
right to payment under the Tax Indemnity Agreement) paid or payable by the
Lessee which can be avoided through a purchase by the Lessee of the
Aircraft, to exceed 2.5% of the Purchase Price.
(F) Notice from the Lessee. The Lessee shall give the Lessor, the
Owner Participant and the Indenture Trustee not more than 180 days nor less
than 90 days prior written notice of its election to purchase pursuant to
Section 4.02(a)(D) or 4.02(a)(E) of the Lease. Such notice shall either
direct the Lessor to prepay the Certificates in full on such Termination
Date pursuant to Section 6.02 of the Indenture or state that the Lessee
shall exercise its option to assume the Certificates pursuant to Section
7.11 of the Participation Agreement and Section 2.12 of the Indenture. The
Lessee's notice pursuant to Section 4.02(a)(D) or 4.02(a)(E) hereof shall
become irrevocable 10 days prior to the applicable purchase date designated
in such notice but if any such notice is revoked, the Lessee shall no
longer be entitled to purchase the Aircraft as a result of the facts and
circumstances originally giving rise to such right and will pay all
reasonable expenses of the Owner Participant, the Owner Trustee and the
Indenture Trustee in connection therewith.
