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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE FISCAL YEAR ENDED MAY 31, 1995 COMMISSION FILE NUMBER 1-7806
FEDERAL EXPRESS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 71-0427007
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2005 CORPORATE AVENUE, MEMPHIS, TENNESSEE 38132
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (901) 369-3600
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Stock, Par Value New York Stock Exchange
$.10 per share
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [ ]
As of July 31, 1995, 56,181,384 shares of the Registrant's Common
Stock were outstanding and the aggregate market value of the voting stock held
by non-affiliates of the Registrant (based on the closing price of such stock
on the New York Stock Exchange) was approximately $3,453,894,270
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended May
31, 1995 are incorporated by reference into Parts II and IV.
Portions of the Proxy Statement for the Annual Meeting of Stockholders to
be held September 25, 1995 are incorporated by reference into Part III.
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
PART I
ITEM 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ITEM 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ITEM 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ITEM 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . 12
Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . 12
PART II
ITEM 5. Market for the Registrant's Common Stock and Related Stockholder Matters . . . . . . . 14
ITEM 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ITEM 7. Management's Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . 14
ITEM 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . 15
ITEM 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . 15
PART III
ITEM 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . 15
ITEM 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ITEM 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . 15
ITEM 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . 15
PART IV
ITEM 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K . . . . . . . . . . . . 16
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
FINANCIAL STATEMENT SCHEDULE INDEX
Report of Independent Public Accountants on Financial Statement Schedule . . . . . . . . . . . . . . S-1
SCHEDULE II Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . S-2
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
</TABLE>
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PART I
ITEM 1. BUSINESS
INTRODUCTION AND RECENT DEVELOPMENTS
Federal Express Corporation (the "Company") was incorporated in
Delaware on June 24, 1971 and began operations in 1972. The Company offers a
wide range of express services for the time-definite transportation of
documents, packages and freight throughout the world using an extensive fleet
of aircraft and vehicles and leading-edge information technologies.
During fiscal year 1995, the Company continued to expand and improve
its global network of aviation, ground and information links between the major
trading centers of the Americas, Europe and Asia. The Company established a
new regional sorting facility in the Philippines, reached an agreement, pending
governmental approval, to acquire route authorities to serve the People's
Republic of China, broke ground on another regional sorting hub in Texas, and
unveiled a new international economy service which enhances the Company's
ability to serve Canadian customers. The Company also added new Airbus A300
aircraft and introduced new innovative technologies aimed at improving customer
satisfaction while reducing the resources required to serve customer needs.
FEDEX SERVICES
The Company offers three U.S. domestic overnight delivery services:
FedEx Priority Overnight, FedEx Standard Overnight and FedEx Overnight Freight.
Overnight document and package service extends to virtually the entire United
States population and overnight freight service covers all major and most
medium-size metropolitan areas. Packages and documents are either picked up
from shippers by Company couriers or are dropped off by shippers at Company
facilities, FedEx World Service Centers, FedEx Mini-Centers, FedEx Drop Boxes
and FedEx authorized shipping centers strategically located throughout the
country.
FedEx Priority Overnight, scheduled for delivery in most communities
no later than 10:30 a.m. local time the following business day, is designed for
packages weighing up to 150 pounds. Also available are Saturday delivery
service and Saturday pick-up for delivery the following Monday. FedEx Standard
Overnight is similar to, though more economical than, FedEx Priority Overnight
with delivery scheduled no later than 3:00 p.m. local time the following
business day in most communities. Company-provided packaging (FedEx Letter
Envelope, FedEx Pak, FedEx Box, FedEx Tube and FedEx Diagnostic Specimen
Envelope) is provided as part of these overnight services. FedEx Overnight
Freight is scheduled for delivery by noon or 4:30 p.m. the following business
day, depending on the recipient's location, and is designed for individual
shipments weighing 151 to 750 pounds. Shipments exceeding 750 pounds will be
accepted if advance approval is obtained.
Two U.S. domestic second-day services are available for less urgent
shipments: FedEx 2Day and FedEx 2Day Freight. FedEx 2Day is designed for
packages weighing up to 150 pounds. FedEx 2Day shipments are scheduled for
delivery in most communities no later than 4:30 p.m. (7:00 p.m. for shipments
destined for private residences) the second business day following pick-up.
FedEx 2Day Freight is a time-definite U.S. domestic freight service for
individual shipments weighing 151 to 1500 pounds. Shipments exceeding 1500
pounds will be accepted if advance approval is obtained. Shipments are
scheduled for delivery no later than 4:30 p.m. the second business day in all
major and most medium-size metropolitan areas.
U.S. domestic overnight and second-day services are primarily used by
customers for shipment of time-sensitive documents and goods, high-value
machines and machine parts, computer parts, software and consumer items from
manufacturers, distributors and retailers and to retailers, manufacturers and
consumers. Company employees handle virtually every shipment from origin to
destination.
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The Company's Collect On Delivery (C.O.D.) service provides the
fastest payment return in the express industry. C.O.D. payments are returned
to shippers within one or two business days compared to competitors' services
which can take as long as 45 days. Like the Company's other domestic services,
C.O.D. service offers money-back guarantees on timely delivery and on the
Company's ability to track and provide the status of any package in its system.
On June 1, 1995, the Company introduced FedEx SameDay for urgent
shipments to virtually any U.S. destination. This service is available seven
days a week, 24 hours a day, where available, and is designed for packages
weighing up to 70 pounds that cannot wait until the next day to be delivered.
In addition to the services discussed above, the Company offers
various international document and package delivery services and international
freight services. FedEx International Priority ("IP") is a time-definite
service for documents and packages weighing up to 150 pounds. Customs
clearance is included as part of this service. The broker selection option for
IP service permits customers to designate their own customs broker for
clearance. Pick-up and delivery are provided from any point in the Company's
global network. Delivery is generally scheduled within one to three business
days depending on the origin and destination of the shipment and commodity
limitations imposed by authorities in the destination country. Size, weight
and commodity limitations vary according to destination.
FedEx International Priority Freight is an expansion of IP service and
is a time-definite service for international shipments exceeding 150 pounds.
Customs clearance is included as part of this service and customers are
permitted to designate their own customs broker for clearance where not
prohibited by destination country laws. Pick-up and delivery are provided from
many points in the Company's domestic and international network around the
world. Delivery is generally scheduled within one to three business days
depending on the origin and destination of the shipment and commodity
limitations imposed by authorities in the destination country. Size, weight
and commodity limitations vary according to destination.
FedEx International Priority Plus is an overnight service for packages
(up to 70 pounds) and documents shipped from New York City to Amsterdam,
Brussels, Frankfurt (documents only), Geneva, London, Madrid (documents only),
Milan (documents only), Paris, Rio De Janeiro (documents only), Rome (documents
only), Sao Paulo (documents only) and Zurich and from Washington, D.C. to
London and Paris. IP Plus shipments must be picked up or dropped off in most
locations by 3:00 p.m. for delivery the next business day. EXPRESSfreighter
routing, discussed below, allows overnight service from major locations in
Europe and Asia to be scheduled for 10:30 a.m. delivery on the next business
day to many United States destinations and to major business centers in Canada
and Mexico.
More economical than IP service, FedEx International Priority
Distribution is a time-definite service for bulk shipments destined to several
different recipients in one country. Once the bulk shipment arrives in the
destination country, the individual packages are separated and delivered to the
recipients. Weight and size restrictions are the same as for IP service, with
transit time one to two days longer.
FedEx International MailService provides for the pick-up,
transportation and sorting of nondutiable, printed material and certain
low-value, dutiable items which are tendered for delivery to postal services
throughout the world. Generally, material sent by FedEx International
MailService for premium service is delivered to recipients within three to six
days, while receipt of material sent by FedEx International MailService for
standard service takes four to ten days.
FedEx International Economy, a deferred, customs-cleared service for
shipments of unlimited weight (except individual boxes within the shipment may
not exceed 150 pounds) was introduced in 1995. This service is available
Monday through Friday only between the United States and Canada with a delivery
commitment of two to three business days by 5:00 p.m. This service offers
customers cost-effective rates, customs clearance, package tracking and the
Company's money-back guarantee on service commitments.
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FedEx International Express Freight, a freight service for shipments
of nearly any weight, size or shape, is available between major markets in
North America, Asia, Australia, Europe and South America. This service,
providing scheduled delivery from one to three business days depending on
destination, is designed for shippers desiring time-definite, committed
delivery with the option of customs clearance provided by the Company.
Commodity limitations vary according to destination.
FedEx International Airport-to-Airport is an international airfreight
service designed for freight forwarders and agents who do not require a
time-definite, committed delivery. Space-available service is offered to and
from virtually any airport around the world for airfreight shipments of nearly
any weight, size or shape, with arrival at the destination airport from two to
four days after tender of the shipment. If the Company's aircraft do not serve
the destination airport, another carrier's services are used pursuant to an
"interline" agreement or other arrangement with such carrier. Commodity
limitations vary according to destination.
CHARTER SERVICES AND CRAF PARTICIPATION
The Company offers commercial and military charter services which
supplement the utilization of aircraft capacity when not needed in the
Company's scheduled operations. In addition to providing these charter
services the Company participates in the Civil Reserve Air Fleet ("CRAF")
program. Under this program, the Department of Defense may requisition for
military use certain of the Company's wide-bodied aircraft in the event of a
declared need, including a national emergency. The Company is compensated for
the operation of any aircraft requisitioned under the CRAF program at standard
contract rates established each year in the normal course of awarding
contracts. Through its participation in the CRAF program, the Company is
entitled to bid on peacetime military cargo charter business. The Company,
together with a consortium of other carriers, currently contracts with the U.S.
Government for charter flights. The Company, while continuing to participate
in the CRAF program and continuing to bid on military charters with respect to
the carriage of cargo, discontinued military passenger flights at the end of
September 1992.
During fiscal 1995, revenues from charter operations accounted for
approximately 1.2% of the Company's total revenues and approximately 1.3% and
1.4% of total revenues during fiscal 1994 and 1993, respectively.
FEDEX LOGISTICS SERVICES
FedEx Logistics Services ("FLS") is a division of the Company which
offers a full range of global and regional logistics, information and marketing
solutions as well as other innovative services. FLS focuses on markets where
delivering high-speed, time-definite, information-intensive solutions provide
significant customer value. FLS services include PartsBank, an inventory
management and warehouse service with access to the Company's global
transportation network. PartsBank customers warehouse their time-sensitive
goods in the Company's distribution facilities, and the Company in turn accepts
and fills customer orders and delivers the goods to the end user.
Other FLS services include EMerge and Integrated Repair and Return.
EMerge is designed for customers that source components in multiple locations.
EMerge consolidates shipments en route so that components from different U.S.
locations are delivered the same day. Integrated Repair and Return is a
domestic door-to-door, fast cycle repair service where the Company manages the
pickup, repair and return of defective computers and other electronics
products. FLS also offers an extensive array of services for catalogers and
direct marketers, including customized promotional strategies, telemarketing
training, operational support and international mailing services. FLS has
offices in Memphis and other key U.S. cities, the United Kingdom, Belgium,
France, the Netherlands, Singapore and Hong Kong to serve its more than 2,000
customers.
PRICING
The Company periodically publishes list prices in its Service Guides
for the majority of its services. In general, domestic shipping rates are
based on the service selected, weight, size, any ancillary service charge and
whether or not the shipment is picked up by a Company courier or dropped off by
the customer at a Company
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location. International rates are based on the type of service provided and
vary with size, weight and destination. The Company offers its customers
volume discounts based on actual or potential average daily revenue produced.
Discounts are determined by reference to several local and national revenue
bands developed by the Company. In general, the more revenue a particular
customer produces, the greater the discount. Of the more than two million
current customers of the Company, a significant portion participates in its
discount program.
SERVICE REVENUES
The following table shows the amount of revenues generated for each
class of service offered for the fiscal years ending May 31 (amounts in
thousands):
<TABLE>
<CAPTION>
1995 1994 1993
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<S> <C> <C> <C>
FedEx Priority Overnight $3,908,837 $3,737,022 $3,459,374
FedEx Standard Overnight 1,374,440 1,178,628 1,022,319
FedEx 2Day 1,284,297 1,110,543 985,068
Domestic freight services 132,672 115,365 88,693
International priority services 1,679,830 1,338,795 1,116,589
International freight services 580,315 504,738 570,154
Charter 115,062 113,446 112,416
FedEx Logistics Services and other* 316,620 380,919 453,430
---------- ---------- ----------
Total $9,392,073 $8,479,456 $7,808,043
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</TABLE>
*Includes revenues generated by the specialized services summarized
above under "FedEx Logistics Services." Also, includes revenues from non-U.S.
intra-country operations, Warren Transport, Inc. (sold September 1993) and
aircraft noise-reduction kit sales. Certain service fee revenues previously
included in this caption are now classified as package-related revenues, which
have been restated for prior years where applicable.
SEASONALITY OF BUSINESS
The Company's express package business and international airfreight
business are both seasonal in nature. Historically, the domestic package
business experiences an increase in late November and December. International
business, particularly in the Asia to U.S. markets, peaks in October and
November due to domestic holiday sales. The latter part of the Company's third
fiscal quarter and late summer, being post-winter holiday and summer vacation
seasons, have historically exhibited lower volumes relative to other periods.
OPERATIONS
The Company's global transportation and distribution services are
provided through an extensive worldwide network consisting of numerous aviation
and ground transportation operating rights and authorities, 501 aircraft,
approximately 35,900 vehicles, sorting facilities, FedEx World Service Centers,
FedEx Mini-Centers, FedEx Drop Boxes and sophisticated package tracking,
billing and communications systems.
The Company's primary U.S. domestic sorting facility, the SuperHub
located in Memphis, serves as the center of the Company's multiple
hub-and-spokes U.S. domestic system. A second national hub is located in
Indianapolis. In addition to these national hubs, the Company operates
regional hubs in Newark and Oakland and major metropolitan sorting facilities
in Los Angeles and Chicago. Facilities in Anchorage, Alaska and The
Philippines serve as sorting facilities for express package and freight traffic
moving to and from Asia, Europe and North America. Major sorting and freight
handling facilities are located at Narita Airport in Japan, Charles de Gaulle
Airport in Paris and Stansted Airport outside London.
The Company's EXPRESSfreighter flights provide faster international
service through direct flights between major markets in Asia, Europe and North
America. For example, EXPRESSfreighter flights from Hong
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Kong, Osaka, Singapore, Taipei and Tokyo to the Company's facility in Anchorage
and from there to the SuperHub in Memphis allow for next business day delivery
by 10:30 a.m. in the United States and to major business centers in Canada,
Mexico and the Caribbean. Cargo on EXPRESSfreighter flights bound for Europe
is flown for second-day delivery to sixteen European cities. Westbound from
Europe, EXPRESSfreighter service is available from Amsterdam, Antwerp, Basel,
Brussels, Frankfurt, London, Luxembourg, Milan, Paris and Zurich for 10:30 a.m.
next-day delivery in most of North America.
Throughout its worldwide network, the Company operates city stations
and employs a staff of customer service agents, cargo handlers and couriers who
pick up and deliver shipments in the station's service area. In some cities,
the Company operates FedEx World Service Centers which are staffed, store-front
facilities located in high-traffic, high-density areas. Manned or unmanned
FedEx Mini-Centers and unmanned FedEx Drop Boxes provide customers the
opportunity to drop off packages at locations in office buildings, shopping
centers and corporate or industrial parks. The Company has also formed
alliances with certain retailers to extend this customer convenience network to
over 5,000 new drop-off sites in retail stores. In international regions where
low package traffic makes our direct presence less economical, Global Service
Participants have been selected to complete deliveries.
The Company has an advanced package tracking and billing system, FedEx
Cosmos, that utilizes hand-held electronic scanning equipment and computer
terminals. This system provides proof of delivery information, an
electronically reproduced airbill for the customer and information regarding
the location of a package within the Company's system. For international
shipments, the Company has developed FedEx ExpressClear, a worldwide electronic
customs clearance system, which speeds up customs clearance by allowing customs
agents in destination countries to review information about shipments before
they arrive. The Company has 16 computerized telephone customer service
centers in the United States which handle thousands of customer calls daily.
In general, the Company's international locations handle customer calls
locally.
The Company provides many of its customers FedEx PowerShip 2, a
computer system, which provides package tracking, produces shipping labels,
calculates shipping charges, invoices the customer daily and produces
customized reports. For customers that ship 100 or more packages a day, the
Company offers FedEx PowerShip Plus software, which performs the same functions
as FedEx PowerShip 2 but can be integrated with the customer's own computer
systems for customer service, accounting, inventory control and financial
analysis purposes. FedEx PowerShip PassPort is an automated shipping system
which is automatically updated with the Company's system information, such as
routing codes and rates. FedEx PowerShip 3 enables customers who ship as few
as three packages per day to enjoy the advantage of automated shipping. In
1995, the Company began offering FedEx Ship software, free of charge, that can
be used on a personal computer. FedEx Ship allows customers to generate
plain-paper airbills on a laser printer, track shipments, order FedEx pickups
and maintain a database of shipping addresses and activity using modems and
their own personal computers.
FUEL SUPPLIES AND COSTS
During 1995 the Company purchased aviation fuel from various suppliers
under contracts which vary in length from three to twenty-four months and which
provide for specific amounts of fuel to be delivered. Certain of these
contracts extend through May 1997. Approximately 65% of the fuel represented
by these contracts is prepriced; i.e., preset or "price not to exceed." The
remainder is purchased at market price which may fluctuate daily. The Company
believes that, barring a substantial disruption in supplies of crude oil, these
agreements will ensure the availability of an adequate supply of fuel for the
Company's needs for the immediate future, as well as provide fuel-cost
stability for the term of the contracts. However, a substantial reduction of
oil supplies from oil producing regions or refining capacity, or other events
causing a substantial reduction in the supply of aviation fuel, could have a
significant adverse effect on the Company.
The Company has also entered into contracts which are designed to
limit its exposure to fluctuations in jet fuel prices. Under these contracts,
the Company makes (or receives) payments based on the difference between a
specified lower (or upper) limit and the market price of jet fuel, as
determined by an index of spot market prices representing various geographic
regions. The difference is recorded as an increase or decrease in fuel
expense. At
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May 31, 1995, the Company had contracts with various financial institutions
covering a total notional volume of 97.4 million gallons (approximately 16% of
the Company's annual jet fuel consumption), with some contracts extending
through August 1996. As of May 31, 1995, the Company had neither received nor
made any payments related to these contracts.
The following table sets forth the Company's costs for aviation fuel
and its percentage of total operating expense for the previous five fiscal
years:
<TABLE>
<CAPTION>
TOTAL COST PERCENTAGE OF TOTAL
FISCAL YEAR (IN THOUSANDS) OPERATING EXPENSE
----------- -------------- -------------------
<S> <C> <C>
1995 $394,225 4.5%
1994 374,561 4.7
1993 403,597 5.4
1992 414,481 5.5
1991 554,637 7.5
</TABLE>
Approximately 40% of the Company's requirement for vehicle fuel is
purchased in bulk under fixed-price agreements. The remainder of the Company's
requirement is satisfied by retail purchases, discounted from 1% to 3%. The
percentage of total operating expense for vehicle fuel purchases for each of
the last five fiscal years has not exceeded 1.5%.
COMPETITION
The overnight express market is highly competitive and sensitive to
both price and service. Competitors in this market include passenger airlines
offering package express services, regional express delivery concerns,
airfreight forwarders and other express package concerns, principally United
Parcel Service and Airborne Express.
The international express package and freight markets are also highly
competitive. Ability to compete effectively internationally depends
principally upon price, frequency and capacity of scheduled service, extent of
geographic coverage and reliability. The Company currently holds certificates
of authority to serve more foreign countries than any other United States
all-cargo air carrier and its extensive, scheduled international route system
allows it to offer single-carrier service to many points not offered by its
principal all-cargo competitors. This international route system, combined
with an integrated air and ground network, enables the Company to offer
international customers more extensive single-carrier service to a greater
number of domestic points than can be provided currently by competitors.
However, many of the Company's competitors in the international market are
government owned, controlled, or subsidized carriers which may have greater
resources, lower costs, less profit sensitivity and more favorable operating
conditions than the Company. The Company's principal competitors in the
international airfreight market are foreign national air carriers, United
States passenger airlines and all-cargo airlines and other express package
companies including United Parcel Service and DHL.
REGULATION
Air
Under the Federal Aviation Act of 1958, as amended, both the
Department of Transportation ("DOT") and the Federal Aviation Administration
("FAA") exercise regulatory authority over the Company. The DOT's authority
relates primarily to economic aspects of air transportation. The DOT's
jurisdiction extends to aviation route authority, pricing oversight and to
other regulatory matters, including the transfer of route authority between
carriers. The Company holds various certificates of public convenience and
necessity issued by the DOT, authorizing the Company to engage in domestic and
international air transportation of property and mail on a worldwide basis.
The Company's international authority permits it to carry cargo and mail from
several points in its domestic route system to numerous points throughout the
world. The DOT regulates international routes, fares, rates and practices and
is authorized to investigate and take action against discriminatory treatment
of United States
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air carriers abroad. The right of a United States carrier to serve foreign
points is subject to the DOT's approval and generally requires a bilateral
agreement between the United States and the foreign government. The carrier
must then be granted the permission of such foreign government to provide
specific flights and services. The regulatory environment for global aviation
rights may from time to time impair the ability of the Company to operate its
air network in the most efficient manner. The FAA's regulatory authority
relates primarily to safety aspects of air transportation, including aircraft
standards and maintenance, personnel and ground facilities. The Company holds
an operating certificate granted by the FAA pursuant to Part 121 of the Federal
Aviation Regulations. This certificate is of unlimited duration and remains in
effect so long as the Company maintains its standards of safety and meets the
operational requirements of the regulations.
Ground
The ground transportation performed by the Company is integral
to its air transportation services and is exempt from regulation by the
Interstate Commerce Commission ("ICC") under the Motor Carrier Act of 1980. In
addition, the Bureau of Motor Carrier Safety of the Federal Highway
Administration of the DOT regulates the safety aspects of the Company's motor
vehicle operations. The Company also holds nationwide motor carrier common and
contract carrier authorities issued by the ICC which authorize the express
carriage of general commodities in interstate commerce between points in the
United States. As a result of the enactment of the Federal Aviation
Administration Authorization Act in July 1994, which abrogated the authority of
states to regulate the rates, routes or prices of intermodal all-cargo air
carriers and most motor carriers, states may now exercise jurisdiction over
safety and insurance only. The Company has applied for registration for these
limited purposes in those states that require registration. Deregulation of
intrastate trucking will provide the Company the flexibility to maximize the
integration of its transportation system.
Communication
Because of the extensive use of radio and other communication
facilities in its aircraft and ground transportation operations, the Company is
subject to the Federal Communications Commission Act of 1934, as amended.
Additionally, the Federal Communications Commission regulates and licenses the
Company's activities pertaining to satellite communications.
Environmental
Pursuant to the Federal Aviation Act, the FAA, with the assistance of
the Environmental Protection Agency, is authorized to establish standards
governing aircraft noise. The Company's present aircraft fleet is in
compliance with current noise standards of the Federal Aviation Regulations.
The Company's aircraft are also subject to, and are in compliance with, the
regulations limiting the level of engine smoke emissions. In addition to
federal regulation of aircraft noise, certain airport operators have local
noise regulations which limit aircraft operations by type of aircraft and time
of day. These regulations have had a restrictive effect on the Company's
aircraft operations in some of the localities where they apply but do not have
a material effect on any of the Company's significant markets. Congress'
passage of the Airport Noise and Capacity Act of 1990 established a National
Noise Policy which enabled the Company to plan for noise reduction and better
respond to local noise constraints.
Certain regulations under the Clean Water Act, the Clean Air Act and
the Resource Conservation and Recovery Act impact the Company's operations.
The Company is most directly affected by regulations pertaining to underground
storage tanks, hazardous waste handling, vehicle and equipment emissions and
the discharge of effluents from properties and equipment owned or operated by
the Company. The costs of complying with these regulations cannot be
accurately determined because of the evolving nature of the regulations, but in
any case are not expected to be material.
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EMPLOYEES
At June 30, 1995, the Company employed approximately 69,000 permanent
full-time and 38,000 permanent part-time employees, of which approximately 21%
are employed in Memphis. Employees of the Company's international branches and
subsidiaries in the aggregate comprise approximately 10% of all employees. The
Company believes its relationship with its employees is excellent.
Following the Company's flight crewmembers' decision to form a
collective bargaining unit, the Company and the Air Line Pilots Association
("ALPA") began negotiations on certain interim issues on August 26, 1993 in
preparation for a comprehensive collective bargaining agreement. In March
1994, the Company and ALPA entered into two agreements, one creating a dispute
resolution system for certain disciplinary matters, the other permitting ALPA
crewmembers to be excused from flying to perform ALPA related duties in
exchange for ALPA's agreement to reimburse the Company for the loss of those
crewmembers. Negotiations toward a comprehensive collective bargaining
agreement began in May 1994. In October 1994, ALPA petitioned the National
Mediation Board (the "NMB") to provide mediation to assist in contract
negotiations, and the NMB appointed two mediators. While negotiations have
continued, the core financial issues remain unresolved.
In July 1995, a union representation election was held involving the
Company's Global Operations Control Specialists. The Transport Workers Union
received less than half of the votes needed for certification as the
representative of this group, and the NMB dismissed the union's application.
Attempts by other labor organizations to organize certain other groups
of employees have been initiated. Although the Company cannot predict the
outcome of these labor activities or their effect on the Company or its
employees, if any, the Company is responding to these organization attempts.
FINANCIAL INFORMATION ABOUT FOREIGN AND U.S. DOMESTIC OPERATIONS
For information concerning financial results for U.S. domestic and
international operations for the three years ended May 31, 1995, 1994 and 1993,
refer to Note 10 of Notes to Consolidated Financial Statements contained in the
Company's 1995 Annual Report to Stockholders, which Note is incorporated herein
by reference.
8
<PAGE> 11
ITEM 2. PROPERTIES
The Company's principal owned or leased properties include its
aircraft, vehicles, national, regional and metropolitan sorting facilities,
administration buildings, FedEx World Service Centers, FedEx Mini-Centers,
FedEx Drop Boxes and data processing and telecommunications equipment.
AIRCRAFT AND VEHICLES
The Company's aircraft fleet at June 30, 1995 consisted of the
following:
<TABLE>
<CAPTION>
MAXIMUM GROSS
STRUCTURAL PAYLOAD
DESCRIPTION NUMBER (POUNDS PER AIRCRAFT)**
----------- ------ ----------------------
<S> <C> <C>
Boeing B747-200 5* 250,000
McDonnell Douglas MD11 13* 198,500
McDonnell Douglas DC10-30 22* 172,000
McDonnell Douglas DC10-10 13* 142,000
Airbus A300-600 9* 117,700
Airbus A310-200 17* 74,200
Boeing B727-200 90* 59,500
Boeing B727-100 68* 38,000
Fokker F27-500 24 14,000
Fokker F27-600 8 12,500
Cessna 208B 222 3,500
Cessna 208A 10 3,000
---
Total 501
- -------------------------
</TABLE>
*Five B747-200, 13 MD11, 17 DC10-30, four DC10-10, nine A300, 11 A310, 13
B727-200 and five B727-100 aircraft are subject to operating leases.
**Maximum gross structural payload includes revenue payload and container
weight.
The A300s and A310s are two-engine, wide-bodied aircraft which have a
longer range and more capacity than B727s. The MD11s are three-engine,
wide-bodied aircraft which have a longer range and larger capacity than DC-10s.
The DC-10s are three-engine, wide-bodied aircraft which have been specially
modified to meet the Company's cargo requirements. The B747s are four-engine,
wide-bodied aircraft. The B727s are three-engine aircraft configured for cargo
service. The Company's Fokker F27 and Cessna 208 turbo-prop aircraft are
leased to unaffiliated operators to support Company operations in areas where
demand does not justify use of a larger aircraft. An inventory of spare
engines and parts is maintained for each aircraft type.
In addition, the Company "wet leases" approximately 30 smaller
piston-engine and turbo-prop aircraft which feed packages to and from airports
served by the Company's larger jet aircraft. The wet lease agreements call for
the owner-lessor to provide flight crews, insurance and maintenance, as well as
fuel and other supplies required to operate the aircraft. The Company's wet
lease agreements are for terms not exceeding one year and are generally
cancelable upon 30 days notice.
At June 30, 1995, the Company operated approximately 35,900 ground
transport vehicles, including pick-up and delivery vans, larger trucks called
container transport vehicles and over-the-road tractors and trailers.
AIRCRAFT PURCHASE COMMITMENTS
At June 30, 1995, the Company was committed under various contracts to
purchase 16 Airbus A300, two Airbus A310, 12 McDonnell Douglas MD11 and 32
Cessna 208B aircraft to be delivered through 2000. The Company also had
options to purchase up to 44 additional A300 aircraft for delivery beginning in
1999. In
9
<PAGE> 12
addition, the Company may be required to purchase seven MD11 aircraft for
delivery beginning no later than 2000 under a put option agreement.
SORTING AND HANDLING FACILITIES
At June 30, 1995, the Company operated the following sorting and
handling facilities:
<TABLE>
<CAPTION>
SORTING LEASE
SQUARE CAPACITY EXPIRATION
LOCATION ACRES FEET (PER HOUR)* LESSOR YEAR
-------- ----- ---- ----------- ------ ----------
<S> <C> <C> <C> <C> <C>
NATIONAL
--------
Memphis, Tennessee 395 2,742,196 491,000 Memphis-Shelby County 2014
Airport Authority
Indianapolis, Indiana 120 645,000 153,000 Indianapolis Airport 2016
Authority
REGIONAL
--------
Newark, New Jersey 56 554,000 108,000 Port Authority of New 2010
York and New Jersey
Oakland, California 21 191,000 50,000 City of Oakland 2011
METROPOLITAN
------------
Los Angeles, California 25 130,000 53,000 City of Los Angeles 2009
Chicago, Illinois 55 419,000 47,000 City of Chicago 2018
Anchorage, Alaska+ 42 208,000 3,600 Alaska Department of 2013
Transportation and
Public Facilities
Subic Bay, The 9 166,000 16,000 Subic Bay Metropolitan 2002
Philippines++ Authority
- ------------------------
</TABLE>
* Documents and packages
+ Handles international express package and freight shipments to and from
Asia, Europe and North America.
++ Handles intra-Asia express package and freight shipments.
The Company's facilities at the Memphis International Airport also
consist of aircraft hangars, flight training and fuel facilities,
administrative offices and warehouse space. The Company leases these
facilities from the Memphis-Shelby County Airport Authority under several
leases. The leases cover land, the administrative and sorting buildings, other
facilities, hangars and ramps and certain related equipment. The Company has
the option to purchase certain equipment (but not buildings or improvements to
real estate) leased under such leases at the end of the lease term for a
nominal sum. The leases obligate the Company to maintain and insure the leased
property and to pay all related taxes, assessments and other charges. The
leases are subordinate to, and the Company's rights thereunder could be
affected by, any future lease or agreement between the Authority and the United
States Government.
In addition to the facilities noted above, the Company has major
international sorting and freight handling facilities located at Narita Airport
in Japan, Charles de Gaulle Airport in Paris, France and Stansted Airport
outside London, England. The Company is also developing a regional sorting hub
in Fort Worth, Texas which is expected to become operational in 1997.
10
<PAGE> 13
ADMINISTRATIVE AND OTHER PROPERTIES AND FACILITIES
The Company has facilities housing administrative and technical
operations on approximately 200 acres adjacent to the Memphis International
Airport. Of the seven buildings located on this site, four are subject
to long-term leases and the other three are owned by the Company. The Company
also leases 65 facilities in the Memphis area for its corporate headquarters,
warehouse facilities and administrative offices.
The Company owns 14 and leases 795 facilities for city station
operations in the United States. In addition, 177 city stations are owned or
leased throughout the Company's international network. The majority of these
leases are for terms of five to ten years. The Company believes that suitable
alternative facilities are available in each locale on satisfactory terms, if
necessary. As of June 30, 1995, the Company leased space for 425 FedEx World
Service Centers in the United States and had placed approximately 31,900 Drop
Boxes. The Company also owns stand-alone FedEx Mini-Centers located on
leaseholds in parking lots adjacent to office buildings, shopping centers and
office parks of which 254 were operating at June 30, 1995. Internationally,
the Company leases space for 48 FedEx World Service Centers and has
approximately 777 FedEx Drop Boxes.
The Company leases central processing units and most of the disk
drives, printers and terminals used for data processing. Owned equipment
consists primarily of Digitally Assisted Dispatch Systems ("DADS") terminals
used in communications between dispatchers and couriers, computerized routing,
tracing and billing equipment used by customers and mobile radios used in the
Company's vehicles. The Company also leases space on C-Band and Ku-Band
satellite transponders for use in its telecommunications network.
ITEM 3. LEGAL PROCEEDINGS
The Internal Revenue Service ("IRS") issued an Examination Report on
October 31, 1991 asserting the Company underpaid federal excise taxes for the
calendar quarters ended December 31, 1983 through March 31, 1987. The
Examination Report contains a primary position and a mutually exclusive
alternative position asserting the Company underpaid federal excise taxes by
$54,000,000 and $26,000,000, respectively. Disagreeing with essentially all of
the proposed adjustments contained in the Examination Report, the Company filed
a Protest on March 16, 1992, which set forth the Company's defenses to both IRS
positions and a claim for refund of overpaid federal excise taxes of
$23,500,000. On March 19, 1993, the IRS issued another Examination Report to
the Company asserting the Company underpaid federal excise taxes by
$105,000,000 for the calendar quarters ended June 30, 1987 through March 31,
1991. On June 17, 1993, the Company filed a Protest contesting the March 19
Examination Report which set forth the Company's defenses to the IRS position
and a claim for refund of overpaid federal excise taxes of $46,500,000.
Interest would be payable on the amount of any refunds by the IRS to the
Company or underpaid federal excise taxes payable by the Company to the IRS at
statutorily determined rates. The interest rates payable by the Company for
underpaid taxes are higher than the rates payable by the IRS on refund amounts.
The Company is vigorously pursuing its Protests administratively with
the IRS Appeals Division. If it is unsuccessful with the IRS Appeals Division,
the Company intends to pursue its position in court. Pending resolution of
this matter, the IRS can be expected to take positions similar to those taken
in their Examination Reports for periods after March 31, 1991.
Given the inherent uncertainties in the excise tax matter, management
is currently unable to predict with certainty the outcome of this matter or the
ultimate effect, if any, its resolution would have on the Company's financial
condition or results of operations. No amounts have been reserved for this
contingency.
In November 1987, The Flying Tiger Line Inc. ("Flying Tigers"), a
company acquired by the Company in 1989, received a notice from the United
States Environmental Protection Agency ("EPA") identifying Flying Tigers as a
potentially responsible party ("PRP") in connection with a "Superfund" site
located in Monterey Park, California. The site is a 190-acre landfill which
operated from 1948 through 1984. In June 1985, the EPA began a remedial
investigation of the site to identify the extent of contamination. The EPA
estimates that approximately
11
<PAGE> 14
.1% of the waste disposed at the site is attributable to Flying Tigers. Flying
Tigers participated in a partial settlement relating to remedial actions for
management of contamination and site control. Partial consent decrees were
entered in the United States District Court for the Central District of
California in 1989 and 1992, which provided, in part, for payments of $109,000
and $230,000, respectively, by Flying Tigers and Federal Express to the
partial-settlement escrow account. However, the Company does not expect all
outstanding issues to be resolved for several years. Due to several variables
which are beyond the Company's control, it is impossible to accurately estimate
the Company's potential share of the remaining costs, but based on Flying
Tigers' relatively insignificant contribution of waste to the site, the Company
believes that its remaining liability will not be material.
The Company is subject to other legal proceedings and claims which
arise in the ordinary course of its business. In the opinion of management,
the aggregate liability, if any, with respect to these other actions will not
materially adversely affect the financial position or results of operations of
the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
the fourth quarter of the fiscal year ended May 31, 1995.
EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding executive officers of the Company is as follows
(included herein pursuant to Instruction 3 to Item 401(b) of Regulation S-K and
General Instruction G(3) of Form 10-K):
<TABLE>
<CAPTION>
OFFICER, YEAR FIRST
ELECTED AS OFFICER AGE POSITIONS HELD WITH COMPANY
------------------ --- ---------------------------
<S> <C> <C>
FREDERICK W. SMITH 50 Chairman, President and Chief Executive Officer since April 1983; Chief
1971 Executive Officer since April 1977; Chairman since February 1975; and
President from June 1971 to February 1975. Founder of the Company.
WILLIAM J. RAZZOUK 47 Executive Vice President - Worldwide Customer Operations since June
1983 1993; Senior Vice President - Sales and Customer Service from October
1991 to June 1993; Senior Vice President - Sales and Customer
Information from September 1990 to October 1991; Vice President - U.S.
Sales from 1988 to September 1990; Vice President - Field Sales from
October 1986 to 1988; and Vice President - Electronic Product Sales from
August 1983 to October 1986.
DAVID J. BRONCZEK 41 Senior Vice President - Europe, Middle East and Africa since June 1995;
1987 Senior Vice President - Europe, Africa and Mediterranean from June 1993
to June 1995; Vice President - Canadian Operations from February 1987 to
March 1993; and several sales and operations managerial positions from
1976 to 1987.
T. MICHAEL GLENN 39 Senior Vice President - Marketing, Customer Service and Corporate
1985 Communications since June 1994; Senior Vice President - Marketing and
Corporate Communications from December 1993 to June 1994; Senior Vice
President - Worldwide Marketing, Catalog Services and Corporate
Communications from June 1993 to December 1993; Senior Vice President -
Catalog and Remail Services from September 1992 to June 1993; Vice
President - Marketing from August 1985 to September 1992, various
management positions in sales and marketing and senior sales specialist
from 1981 to 1985.
</TABLE>
12
<PAGE> 15
<TABLE>
<S> <C> <C>
ALAN B. GRAF, JR. 41 Senior Vice President and Chief Financial Officer since December 1991;
1987 Vice President and Treasurer from August 1987 to December 1991; and
various management positions in finance and a senior financial analyst
from 1980 to 1987.
DENNIS H. JONES 43 Senior Vice President and Chief Information Officer since December 1991;
1986 Vice President - Customer Automation and Invoicing from December 1986 to
December 1991; and various management positions in finance and a
financial analyst from 1975 to 1986.
KENNETH R. MASTERSON 51 Senior Vice President and General Counsel since February 1981; Secretary
1980 since September 1993; and Vice President - Legal from January 1980 to
February 1981.
JOSEPH C. MCCARTY, III 50 Senior Vice President - Asia Pacific since June 1995; Senior Vice
1983 President - Asia, Pacific and Middle East from November 1991 to June
1995; Vice President - International Legal from March 1987 to November
1991; Vice President - Properties & Facilities from November 1984 to
March 1987; and Vice President - Legal from February 1983 to November
1984.
JAMES A. MCKINNEY 50 Senior Vice President, President FedEx Logistics Services since December
1989 1993; Vice President - Business Logistics Services - North America from
October 1992 to December 1993; Vice President - Information Systems from
July 1992 to October 1992; Vice President - Operations - FEDEX
Aeronautics Corporation from January 1992 to July 1992; Vice President -
Flight Operations from June 1989 to January 1992; and various managerial
positions from 1984 to 1989.
GILBERT D. MOOK 52 Senior Vice President - Central Support Services since November 1994;
1985 Vice President - Properties and Facilities from March 1988 to November
1994; Vice President - Satellite Systems from June 1985 to March 1988;
Director - Satellite Systems from 1983 to 1985.
JAMES A. PERKINS 51 Senior Vice President and Chief Personnel Officer since June 1979 and
1979 various personnel managerial positions from 1974 to 1979.
DAVID F. REBHOLZ 42 Senior Vice President - Global Sales and Trade Services since June 1993;
1988 Vice President of the Central Region for the Americas and Caribbean from
October 1991 to June 1993; Vice President of Customer Service from
December 1988 to October 1991; and Regional Sales Director-Western
Region and various operating management positions from 1976 to 1988.
TRACY G. SCHMIDT 38 Senior Vice President - Air Ground Terminals and Transportation since
1990 July 1994; Vice President - Corporate Financial Planning from January
1990 to July 1994; and various management positions in finance from 1980
to 1990.
</TABLE>
13
<PAGE> 16
<TABLE>
<S> <C> <C>
MARY ALICE TAYLOR 45 Senior Vice President - Americas and Caribbean since October 1994;
1985 Senior Vice President - Central Support Services from September 1991 to
October 1994; Regional Vice President - Ground Operations - Southern
Region from May 1988 to September 1991; Vice President - Logistics and
Publishing Services from November 1985 to May 1988. Various management
positions in finance and management information consultant from 1980 to
1985.
THEODORE L. WEISE 51 Senior Vice President - Air Operations since August 1991; Senior Vice
1977 President - United States and Canada from June 1990 to August 1991;
Senior Vice President - Domestic Ground Operations from March 1987 to
June 1990; Senior Vice President - Central Support Services from October
1986 to March 1987; Senior Vice President/General Manager - FedEx World
Service Centers from March 1983 to October 1986; Senior Vice President -
Operations Planning from March 1979 to March 1983; Vice President -
Operations Resource and Corporate Planning from September 1978 to March
1979; Vice President - Special Projects and Advanced Planning from April
1977 to September 1978; and Director of Special Projects from 1972 to
1977.
JAMES S. HUDSON 46 Vice President, Controller and Chief Accounting Officer since December
1992 1994; Vice President - Finance - Europe, Africa and Mediterranean from
July 1992 to December 1994; various management positions in finance from
1974 to 1992.
</TABLE>
Officers are elected by, and serve at the discretion of, the Board of
Directors. There is no arrangement or understanding between any officer and
any person, other than a director or executive officer of the Company acting in
his or her official capacity, pursuant to which any officer was selected.
There are no family relationships between any executive officer and any other
executive officer or director of the Company. There has been no event
involving any executive officer under any bankruptcy act, criminal proceeding,
judgment or injunction during the past five years.
PART II
Information for Items 5 through 8 of this Report appears in the
Company's 1995 Annual Report to Stockholders as indicated in the following
table and is incorporated herein by reference.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Information regarding market information, stockholders and dividends
is contained in the Corporate Information section of the Company's 1995 Annual
Report to Stockholders, on page 48 under the headings, "Stock Listing,"
"Stockholders" and "Market Information" and is incorporated herein by
reference.
No cash dividends have been declared.
<TABLE>
<CAPTION>
PAGE IN ANNUAL
REPORT TO STOCKHOLDERS
----------------------
<S> <C> <C>
ITEM 6. SELECTED FINANCIAL DATA
Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . . . . . . 44
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
14
<PAGE> 17
<TABLE>
<S> <C> <C>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . 25
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . 28
Consolidated Statements of Changes in
Common Stockholders' Investment . . . . . . . . . . . . . . . . . . . 29
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . 30
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding members of the Company's Board of Directors is
presented in sections "Voting Securities and Principal Holders Thereof -
Security Ownership of Management and Certain Beneficial Owners," "Election of
Directors," "Meetings and Committees," "Transactions with Management and
Others" and "Compensation of Directors" on pages 1 through 6 and 13
through 14 of the Definitive Proxy Statement for the Company's 1995 Annual
Meeting of Stockholders which will be held September 25, 1995 and is
incorporated herein by reference. Information regarding executive officers of
the Company is included above in Part I of this Form 10-K under the caption
"Executive Officers of the Registrant" pursuant to Instruction 3 to Item 401(b)
of Regulation S-K and General Instruction G(3) of Form 10-K. Information
required by Item 405 of Regulation S-K is presented in "Section 16 Filings" on
page 18 of the Definitive Proxy Statement and is incorporated herein by
reference.
Information for Items 11 through 13 of this Report appears in the
Definitive Proxy Statement for the Company's 1995 Annual Meeting of
Stockholders to be held on September 25, 1995, as indicated in the following
table and is incorporated herein by reference.
<TABLE>
<CAPTION>
PAGE IN PROXY
STATEMENT
-------------
<S> <C> <C>
ITEM 11. EXECUTIVE COMPENSATION
Compensation Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Voting Securities and Principal Holders Thereof . . . . . . . . . . . . . . . . 2
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others . . . . . . . . . . . . . . . . . . . . 13
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS
</TABLE>
15
<PAGE> 18
The consolidated financial statements of the Company, together with
the report thereon of Arthur Andersen LLP, dated June 29, 1995, are presented
on pages 25 through 43 of the Company's 1995 Annual Report to Stockholders and
are incorporated herein by reference. With the exception of the aforementioned
information and the information incorporated by reference in Items 5, 6, 7 and
8 hereof, the Company's 1995 Annual Report to Stockholders is not to be deemed
as filed as part of this Report.
<TABLE>
<CAPTION>
2. FINANCIAL STATEMENT SCHEDULE PAGE NUMBER IN
FORM 10-K
---------------
<S> <C>
Report of Independent Public Accountants on Financial Statement Schedule . . . . . . . . S-1
Schedule II - Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . S-2
</TABLE>
All other financial statement schedules have been omitted because they are not
applicable or the required information is included in the consolidated
financial statements, or the notes thereto, contained in the Company's 1995
Annual Report to Stockholders and incorporated herein by reference.
3. EXHIBITS
The documents attached hereto as Exhibits 3.1, 3.2, 4.1 through 4.24,
10.1 through 10.79, 11.1, 12.1, 13.1, 21.1, 23.1 and 24.1 are being filed in
connection with this Report and incorporated herein by reference.
The Exhibit Index on pages E-1 through E-10 is hereby incorporated
herein by reference.
(B) REPORTS ON FORM 8-K
During the last quarter of the period covered by this Report on Form
10-K, the Registrant filed no Current Reports on Form 8-K.
16
<PAGE> 19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
FEDERAL EXPRESS CORPORATION
(Registrant)
BY: /s/ JAMES S. HUDSON
-----------------------------------
James S. Hudson
Vice President and Controller
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, this Report has been signed below by the following persons on
behalf of the Registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ FREDERICK W. SMITH * Chairman, President
------------------------------ and Chief Executive Officer
Frederick W. Smith (Principal Executive Officer)
/s/ WILLIAM J. RAZZOUK * Executive Vice President
------------------------------ Worldwide Customer
William J. Razzouk Operations
/s/ ALAN B. GRAF, JR.* Senior Vice President and
------------------------------ Chief Financial Officer
Alan B. Graf, Jr. (Principal Financial Officer)
/s/ JAMES S. HUDSON Vice President and Controller August 4, 1995
------------------------------ (Principal Accounting Officer)
James S. Hudson
/s/ ROBERT H. ALLEN * Director
------------------------------
Robert H. Allen
/s/ HOWARD H. BAKER, JR. * Director
-----------------------------
Howard H. Baker, Jr.
/s/ ANTHONY J.A. BRYAN * Director
-----------------------------
Anthony J.A. Bryan
/s/ ROBERT L. COX * Director
-----------------------------
Robert L. Cox
/s/ RALPH D. DENUNZIO * Director
-----------------------------
Ralph D. DeNunzio
</TABLE>
17
<PAGE> 20
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ JUDITH L. ESTRIN * Director
-----------------------------
Judith L. Estrin
/s/ PHILIP GREER * Director
-----------------------------
Philip Greer
/s/ J. R. HYDE, III * Director
-----------------------------
J. R. Hyde, III
/s/ CHARLES T. MANATT * Director
-----------------------------
Charles T. Manatt
/s/ GEORGE J. MITCHELL* Director
-----------------------------
George J. Mitchell
/s/ JACKSON W. SMART, JR. * Director
-----------------------------
Jackson W. Smart, Jr.
/s/ JOSHUA I. SMITH * Director
-----------------------------
Joshua I. Smith
/s/ PETER S. WILLMOTT * Director
-----------------------------
Peter S. Willmott
*By: /s/ JAMES S. HUDSON August 4, 1995
-----------------------
James S. Hudson
Attorney-in-Fact
</TABLE>
18
<PAGE> 21
S-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To Federal Express Corporation:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in Federal Express Corporation's
1995 Annual Report to Stockholders incorporated by reference in this Form 10-K,
and have issued our report thereon dated June 29, 1995. Our audit was made for
the purpose of forming an opinion on those statements taken as a whole. The
financial statement schedule on page S-2 is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
The financial statement schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
-----------------------------
ARTHUR ANDERSEN LLP
Memphis, Tennessee,
June 29, 1995.
19
<PAGE> 22
S-2
SCHEDULE II
FEDERAL EXPRESS CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MAY 31, 1995, 1994 AND 1993
(In thousands)
<TABLE>
<CAPTION>
ADDITIONS
-----------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS(A) YEAR
----------- ---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Allowance for
Doubtful Accounts
-----------------
1995. . . . . . . . . . . . $33,933 $36,334 - $39,094 $31,173
======= ======= ========= ======= =======
1994. . . . . . . . . . . . $31,308 $45,763 - $43,138 $33,933
======= ======= ========= ======= =======
1993. . . . . . . . . . . . $32,074 $33,552 - $34,318 $31,308
======= ======= ========= ======= =======
</TABLE>
(A) Accounts written off net of recoveries.
20
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
3.1 Restated Certificate of Incorporation of Registrant as amended (Filed as Exhibit 3.1 to
Registrant's 1995 Third Quarter Report on Form 10-Q, Commission File No. 1-7806, and
incorporated herein by reference.)
3.2 By-laws of Registrant (Filed as Exhibit 3.2 to Registrant's 1993 Annual Report on Form 10-K,
Commission File No. 1-7806, and incorporated herein by reference.)
4.1 Indenture dated as of April 1, 1987 between Registrant and NationsBank of Tennessee, National
Association ("NationsBank"), as Trustee, relating to Registrant's 10% Senior Notes due April 15,
1999. (Filed as Exhibit 10.36 to Registrant's 1988 Annual Report on Form 10-K, Commission File
No. 1-7806, and incorporated herein by reference.)
4.2 Supplemental Indenture No. 2 dated as of April 18, 1989 between Registrant and NationsBank,
relating to Registrant's 10% Senior Notes due April 15, 1999. (Filed as Exhibit 4(a) to
Registrant's Current Report on Form 8-K dated April 25, 1989, Commission File No. 1-7806, and
incorporated herein by reference.)
4.3 Supplemental Indenture No. 3 dated as of April 21, 1989 between Registrant and NationsBank and
form of note relating to Registrant's 10% Senior Notes due April 15, 1999. (Filed as Exhibit
4(b) to Registrant's Current Report on Form 8-K dated April 25, 1989, Commission File No.
1-7806, and incorporated herein by reference.)
4.4 Indenture dated as of May 15, 1989 between Registrant and NationsBank, relating to Registrant's
9 3/4% Senior Notes due May 15, 1996. (Filed as an exhibit to Registrant's Registration
Statement No. 33-28796 on Form S-3 and incorporated herein by reference.)
4.5 Supplemental Indenture No. 1 dated as of May 22, 1989 between Registrant and NationsBank and
form of note relating to Registrant's 9 3/4% Senior Notes due May 15, 1996. (Filed as Exhibit 4
to Registrant's Current Report on Form 8-K dated May 24, 1989, Commission File No. 1-7806, and
incorporated herein by reference.)
4.6 Supplemental Indenture No. 2 dated as of August 11, 1989 between Registrant and NationsBank,
relating to Registrant's 9 5/8% Sinking Fund Debentures due October 15, 2019. (Filed as Exhibit
4.2 to Registrant's Registration Statement No. 33-30415 on Form S-3 and incorporated herein by
reference.)
4.7 Supplemental Indenture No. 3 dated as of October 15, 1989 between Registrant and NationsBank,
relating to Registrant's 9 5/8% Sinking Fund Debentures due October 15, 2019. (Filed as Exhibit
4.2 to Registrant's Current Report on Form 8-K dated October 16, 1989, Commission File No.
1-7806, and incorporated herein by reference.)
4.8 Supplemental Indenture No. 5 dated as of August 15, 1990 between Registrant and NationsBank,
relating to Registrant's Medium-Term Notes, Series A, the last of which is due November 20,
1995. (Filed as Exhibit 4(c) to Registrant's Current Report on Form 8-K dated August 28, 1990,
Commission File No. 1-7806, and incorporated herein by reference.)
4.9 Form of Fixed Rate Medium-Term Note, Series A, the last of which is due November 20, 1995.
(Filed as Exhibit 4(a) to Registrant's Current Report on Form 8-K dated August 28, 1990,
Commission File No. 1-7806, and incorporated herein by reference.)
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4.10 Form of Floating Rate Medium-Term Note, Series A, the last of which is due November 20, 1995.
(Filed as Exhibit 4(b) to Registrant's Current Report on Form 8-K dated August 28, 1990,
Commission File No. 1-7806, and incorporated herein by reference.)
4.11 Indenture dated May 15, 1989 including Supplemental Indenture Nos. 1, 2, 3 and 5 dated as
described above, between Registrant and NationsBank, relating to Registrant's Medium-Term Notes,
Series B, the last of which is due August 15, 2006, Registrant's 9 7/8% Notes due April 1, 2002,
Registrant's 9.65% Notes due June 15, 2012 and Registrant's 6 1/4% Notes due April 15, 1998.
(Filed as described above.)
4.12 Form of Fixed Rate Medium-Term Note, Series B, the last of which is due August 15, 2006. (Filed
as Exhibit 4.4 to Registrant's Registration Statement No. 33-40018 on Form S-3 and incorporated
herein by reference.)
4.13 Form of Floating Rate Medium-Term Note, Series B, the last of which is due August 15, 2006.
(Filed as Exhibit 4.5 to Registrant's Registration Statement No. 33-40018 on Form S-3 and
incorporated herein by reference.)
4.14 Form of 9 7/8% Note due April 1, 2002. (Filed as Exhibit 4.1 to Registrant's Current Report on
Form 8-K dated March 23, 1992, Commission File No. 1-7806, and incorporated herein by
reference.)
4.15 Form of 9.65% Note due June 15, 2012. (Filed as Exhibit 4.1 to Registrant's Current Report on
Form 8-K dated June 18, 1992, Commission File No. 1-7806, and incorporated herein by reference.)
4.16 Form of 6 1/4% Note due April 15, 1998. (Filed as Exhibit 4.1 to Registrant's Current Report on
Form 8-K dated April 21, 1993, Commission File No. 1-7806, and incorporated herein by
reference.)
4.17 Pass Through Trust Agreement dated as of February 1, 1993 between Registrant and NationsBank of
South Carolina, National Association, as Pass Through Trustee, relating to Registrant's 1993
Pass Through Certificates, Series A1 and A2, Series B1 and B2 and Series C1 and C2. (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.)
4.18 Form of 8.04% and 8.76% 1993 Pass Through Certificates, Series A1 and A2 due November 22, 2007
and May 22, 2015, respectively. (Filed as Exhibit 4(a)(2) to Registrant's Current Report on
Form 8-K dated February 4, 1993, Commission File No. 1-7806, and incorporated herein by
reference.)
4.19 Form of 6.68% and 7.63% 1993 Pass Through Certificates, Series B1 and B2 due January 1, 2008 and
January 1, 2015, respectively. (Filed as Exhibit 4.a.2 to Registrant's Current Report on Form
8-K dated September 23, 1993, Commission File No. 1-7806, and incorporated herein by reference.)
4.20 Form of 7.15% and 7.96% 1993 Pass Through Certificates, Series C1 and C2 due September 28, 2012
and March 28, 2017, respectively. (Filed as Exhibit 4.a.2 to Registrant's Current Report on
Form 8-K dated December 2, 1993, Commission File No. 1-7806, and incorporated herein by
reference.)
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4.21 Pass Through Trust Agreement dated as of March 1, 1994 between Registrant and NationsBank of
South Carolina, National Association, as Pass Through Trustee, relating to Registrant's 1994
Pass Through Certificates, Series A310-A1, A310-A2 and A310-A3. (Filed as Exhibit 4.a.1 to
Registrant's Current Report on Form 8-K dated March 16, 1994, Commission File No. 1-7806, and
incorporated herein by reference.)
4.22 Form of 7.53%, 7.89% and 8.40% 1994 Pass Through Certificates, Series A310-A1, A310-A2 and
A310-A3 due September 23, 2006, September 23, 2008 and March 23, 2010, respectively. (Filed as
Exhibit 4.a.2 to Registrant's Current Report on Form 8-K dated March 16, 1994, Commission File
No. 1-7806, and incorporated herein by reference.)
4.23 Loan Agreement dated March 27, 1995, between Registrant and certain lenders relating to the
financing of Airbus A310 aircraft. A copy of this loan agreement will be furnished to the
Commission upon request pursuant to Regulation S-K Item 601(4)(iii)(A).
4.24 Loan Agreement dated as of April 1, 1995 between Registrant and The Chase Manhattan Bank,
National Association, as agent. Confidential treatment has been requested for confidential
commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934.
10.2 Second Supplemental Indenture dated as of May 1, 1982 between the Authority and NationsBank
relating to 8.30% Special Facilities Revenue Bonds, Series 1982B due September 1, 2012.
(Refiled as Exhibit 10.2 to Registrant's 1993 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
10.3 Third Supplemental Indenture dated as of November 1, 1982 between the Authority and NationsBank.
(Refiled as Exhibit 10.3 to Registrant's 1993 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
10.4 Fourth Supplemental Indenture dated as of December 1, 1984 between the Authority and
NationsBank, relating to 7 7/8% Special Facilities Revenue Bonds, Series 1984 due September 1,
2009.
10.5 Fifth Supplemental Indenture dated as of July 1, 1992 between the Authority and NationsBank,
relating to 6 3/4% Special Facilities Revenue Bonds, Refunding Series 1992 due September 1,
2012. (Filed as Exhibit 10.5 to Registrant's 1992 Annual Report on Form 10-K, Commission File
No. 1-7806, and incorporated herein by reference.)
10.6 Guaranty dated as of August 1, 1979 between Registrant and NationsBank. (Refiled as Exhibit
10.5 to Registrant's 1990 Annual Report on Form 10-K, Commission File No. 1-7806, and
incorporated herein by reference.)
10.7 Reaffirmation of Guaranty dated as of May 1, 1982 between NationsBank and Registrant relating to
Special Facilities Revenue Bonds, Series 1982B. (Refiled as Exhibit 10.7 to Registrant's 1993
Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.)
</TABLE>
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NUMBER DESCRIPTION OF EXHIBIT
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10.8 Reaffirmation of Guaranty dated as of December 1, 1984 between NationsBank and Registrant
relating to Special Facilities Revenue Bonds, Series 1984. (Refiled as Exhibit 10.10 to
Registrant's 1993 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated
herein by reference.)
10.9 Reaffirmation of Guaranty dated as of July 30, 1992 between NationsBank and Registrant relating
to Special Facilities Revenue Bonds, Refunding Series 1992. (Filed as Exhibit 10.11 to
Registrant's 1992 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated
herein by reference.)
10.10 Consolidated and Restated Lease Agreement dated as of August 1, 1979 between the Authority and
Registrant. (Refiled as Exhibit 10.11 to Registrant's 1990 Annual Report on Form 10-K,
Commission File No. 1-7806, and incorporated herein by reference.)
10.11 First Supplemental Lease Agreement dated as of April 1, 1981 between the Authority and
Registrant. (Filed as Exhibit 10.13 to Registrant's 1992 Annual Report on Form 10-K, Commission
File No. 1-7806, and incorporated herein by reference.)
10.12 Second Supplemental Lease Agreement dated as of May 1, 1982 between the Authority and
Registrant. (Refiled as Exhibit 10.14 to Registrant's 1993 Annual Report on Form 10-K,
Commission File No. 1-7806, and incorporated herein by reference.)
10.13 Third Supplemental Lease Agreement dated November 1, 1982 between the Authority and Registrant.
(Filed as Exhibit 28.22 to Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File
No. 1-7806, and incorporated herein by reference.)
10.14 Fourth Supplemental Lease Agreement dated July 1, 1983 between the Authority and Registrant.
(Filed as Exhibit 28.23 to Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File
No. 1-7806, and incorporated herein by reference.)
10.15 Fifth Supplemental Lease Agreement dated February 1, 1984 between the Authority and Registrant.
(Filed as Exhibit 28.24 to Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File
No. 1-7806, and incorporated herein by reference.)
10.16 Sixth Supplemental Lease Agreement dated April 1, 1984 between the Authority and Registrant.
(Filed as Exhibit 28.25 to Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File
No. 1-7806, and incorporated herein by reference.)
10.17 Seventh Supplemental Lease Agreement dated June 1, 1984 between the Authority and the
Registrant. (Filed as Exhibit 28.26 to Registrant's 1993 Second Quarter Report on Form 10-Q,
Commission File No. 1-7806, and incorporated herein by reference.)
10.18 Eighth Supplemental Lease Agreement dated July 1, 1988 between the Authority and Registrant.
(Filed as Exhibit 28.27 to Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File
No. 1-7806, and incorporated herein by reference.)
10.19 Ninth Supplemental Lease Agreement dated July 12, 1989 between the Authority and Registrant.
(Filed as Exhibit 28.28 to Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File
No. 1-7806, and incorporated herein by reference.)
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10.20 Tenth Supplemental Lease Agreement dated October 1, 1991 between the Authority and Registrant.
(Filed as Exhibit 28.29 to Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File
No. 1-7806, and incorporated herein by reference.)
10.21 Twelfth Supplemental Lease Agreement dated July 1, 1993 between the Authority and Registrant.
(Filed as Exhibit 10.23 to Registrant's 1993 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
10.22 Special Facility Lease Agreement between the Authority and Registrant dated as of August 1,
1979. (Refiled as Exhibit 10.15 to Registrant's 1990 Annual Report on Form 10-K, Commission
File No. 1-7806, and incorporated herein by reference.)
10.23 First Special Facility Supplemental Lease Agreement dated as of May 1, 1982 between the
Authority and Registrant. (Filed as Exhibit 10.25 to Registrant's 1993 Annual Report on Form
10-K, Commission File No. 1-7806, and incorporated herein by reference.)
10.24 Second Special Facility Supplemental Lease Agreement dated as of November 1, 1982 between the
Authority and Registrant. (Filed as Exhibit 10.26 to Registrant's 1993 Annual Report on Form
10-K, Commission File No. 1-7806, and incorporated herein by reference.)
10.25 Third Special Facility Supplemental Lease Agreement dated as of December 1, 1984 between the
Authority and Registrant.
10.26 Fourth Special Facility Supplemental Lease Agreement dated as of July 1, 1992 between the
Authority and Registrant. (Filed as Exhibit 10.20 to Registrant's 1992 Annual Report on Form
10-K, Commission File No. 1-7806, and incorporated herein by reference.)
10.27 Special Facility Lease Agreement between the Authority and Registrant dated as of July 1, 1993.
(Filed as Exhibit 10.29 to Registrant's 1993 Annual Report on Form 10-K, Commission File No.
1-7806, and incorporated herein by reference.)
10.28 Special Facility Ground Lease Agreement between the Authority and Registrant dated as of July 1,
1993. (Filed as Exhibit 10.30 to Registrant's 1993 Annual Report on Form 10-K, Commission File
No. 1-7806, and incorporated herein by reference.)
10.29 Indenture between the Authority and NationsBank, as Trustee, dated as of July 1, 1993 relating
to 6.20% Special Facility Revenue Bonds, Series 1993, due July 1, 2014. (Filed as Exhibit 10.31
to Registrant's 1993 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated
herein by reference.)
10.30 Guaranty dated as of July 1, 1993 between Registrant and NationsBank, relating to 6.20% Special
Facility Revenue Bonds, Series 1993. (Filed as Exhibit 10.32 to Registrant's 1993 Annual Report
on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.)
10.31 Ground Lease dated as of February 27, 1979 between the City of Los Angeles and The Flying Tiger
Line Inc. ("FTL") covering acreage at the Los Angeles International Airport. (Filed as Exhibit
28.1 to Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and
incorporated herein by reference.)
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10.32 First Amendment dated September 18, 1979, to Ground Lease, dated February 27, 1979, between the City of Los
Angeles and FTL covering acreage at the Los Angeles International Airport. (Filed as Exhibit 28.2 to
Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by
reference.)
10.33 Second Amendment dated March 9, 1983 to Ground Lease, dated February 27, 1979, between the City of Los
Angeles and FTL covering acreage at the Los Angeles International Airport. (Filed as Exhibit 28.3 to
Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by
reference.)
10.34 Interim Exchange Agreement dated as of September 11, 1990 between the City of Los Angeles and Registrant
relating to the Los Angeles International Airport. (Filed as Exhibit 28.4 to Registrant's 1993 Second
Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.)
10.35 Lease Agreement dated as of May 7, 1985 between the City of Oakland and Registrant. (Filed as Exhibit 28.5
to Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein
by reference.)
10.36 Affirmative Action Agreement dated as of May 14, 1985, to Lease Agreement dated May 7, 1985, between the City
of Oakland and Registrant. (Filed as Exhibit 28.6 to Registrant's 1993 Second Quarter Report on Form 10-Q,
Commission File No. 1-7806, and incorporated herein by reference.)
10.37 First Supplemental Agreement dated August 5, 1986, to Lease Agreement dated May 7, 1985, between the City of
Oakland and Registrant. (Filed as Exhibit 28.7 to Registrant's 1993 Second Quarter Report on Form 10-Q,
Commission File No. 1-7806, and incorporated herein by reference.)
10.38 Second Supplemental Agreement dated February 17, 1987 to Lease Agreement dated May 7, 1985, between the City
of Oakland and Registrant. (Filed as Exhibit 28.8 to Registrant's 1993 Second Quarter Report on Form 10-Q,
Commission File No. 1-7806, and incorporated herein by reference.)
10.39 Third Supplemental Agreement dated February 1989 to Lease Agreement dated May 7, 1985, between the City of
Oakland and Registrant. (Filed as Exhibit 28.9 to Registrant's 1993 Second Quarter Report on Form 10-Q,
Commission File No. 1-7806, and incorporated herein by reference.)
10.40 Amendment dated August 1, 1989 to Lease Agreement dated May 7, 1985 between the City of Oakland and
Registrant.
10.41 Lease and First Right of Refusal Agreement dated July 22, 1988 between the State of Alaska, Department of
Transportation and Public Facilities and Registrant. (Filed as Exhibit 28.10 to Registrant's 1993 Second
Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.)
10.42 Development Agreement dated July 22, 1988 to Lease and First Right of Refusal Agreement, dated July 22, 1988,
between the State of Alaska, Department of Transportation and Public Facilities and Registrant. (Filed as
Exhibit 28.11 to Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and
incorporated herein by reference.)
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NUMBER DESCRIPTION OF EXHIBIT
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10.43 Supplement No. 1 dated May 19, 1989 to Development Agreement between the State of Alaska, Department of
Transportation and Public Facilities and Registrant. (Filed as Exhibit 28.12 to Registrant's 1993 Second
Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.)
10.44 Supplement No. 1 dated July 19, 1989 to Lease and First Right of Refusal Agreement, dated July 22, 1988,
between the State of Alaska, Department of Transportation and Public Facilities and Registrant. (Filed as
Exhibit 28.13 to Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and
incorporated herein by reference.)
10.45 Right-of-Way Agreement dated September 19, 1989 to Lease and First Right of Refusal Agreement, dated
July 22, 1988, between the State of Alaska, Department of Transportation and Public Facilities and Registrant.
(Filed as Exhibit 28.14 to Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File No. 1-7806,
and incorporated herein by reference.)
10.46 Supplement No. 2 dated April 23, 1991 to Lease and First Right of Refusal Agreement dated July 22, 1988,
between the State of Alaska, Department of Transportation and Public Facilities and the Registrant.
(Filed as Exhibit 28.15 to Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File No. 1-7806,
and incorporated herein by reference.)
10.47 Lease Agreement dated October 1, 1983 between The Port Authority of New York and New Jersey and Registrant.
(Filed as Exhibit 28.16 to Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File No. 1-7806,
and incorporated herein by reference.)
10.48 Supplement No. 1, dated October 1, 1983 to Lease Agreement dated October 1, 1983 between The Port Authority
of New York and New Jersey and Registrant. (Filed as Exhibit 28.17 to Registrant's 1993 Second Quarter
Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.)
10.49 Supplement No. 2 dated September 1, 1985 to Lease Agreement dated October 1, 1983 between The Port Authority
of New York and New Jersey and Registrant. (Filed as Exhibit 28.18 to Registrant's 1993 Second Quarter
Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.)
10.50 Supplement No. 3 dated June 1, 1992 to Lease Agreement dated October 1, 1983 between The Port Authority of
New York and New Jersey and Registrant. (Filed as Exhibit 28.19 to Registrant's 1993 Second Quarter Report
on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.)
10.51 Supplement No. 4 dated March 1, 1993 to Lease Agreement dated October 1, 1983 between The Port Authority of
New York and New Jersey and Registrant.
10.52 Supplement No. 5 dated February 1, 1994 to Lease Agreement dated October 1, 1983 between The Port Authority of
New York and New Jersey and Registrant.
10.53 Amended and Restated Airport Use Agreement and Terminal Facilities Lease dated as of January 1, 1985 between
the City of Chicago and FTL. (Filed as Exhibit 28.20 to Registrant's 1993 Second Quarter Report on Form 10-Q,
Commission File No. 1-7806, and incorporated herein by reference.)
10.54 Cargo Building Site Lease dated September 23, 1987 between the City of Chicago and FTL. (Filed as Exhibit 28.21
to Registrant's 1993 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein
by reference.)
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NUMBER DESCRIPTION OF EXHIBIT
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10.55 Amended and Restated Land Lease Agreement dated August 1993 between Registrant and the Indianapolis Airport
Authority. (Filed as Exhibit 10.52 to Registrant's 1994 Annual Report on Form 10-K, Commission File
No. 1-7806, and incorporated herein by reference.)
10.56 Indenture between the City of Indianapolis, Indiana and National Bank of Detroit, as Trustee, dated as of
September 1, 1993 relating to the City of Indianapolis Airport Facility Revenue Refunding Bonds, Series 1994,
due April 1, 2017. (Filed as Exhibit 10.1 to Registrant's 1994 First Quarter Report on Form 10-Q, Commission
File No. 1-7806, and incorporated herein by reference.)
10.57 Loan Agreement between the City of Indianapolis and Registrant. (Filed as Exhibit 10.2 to Registrant's 1994
First Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.)
10.58 Form of Promissory Note to the City of Indianapolis. (Filed as Exhibit 10.3 to Registrant's 1994 First Quarter
Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.)
10.59 Indenture dated as of October 1, 1994 between Indianapolis Airport Authority and NBD Bank, N. A., as Trustee,
relating to 7.10% Special Facilities Revenue Bonds, Series 1994 due January 15, 2017. (Filed as Exhibit 10.1
to Registrant's 1995 Second Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein
by reference.)
10.60 Guaranty dated as of October 1, 1994 from Registrant to NBD Bank, N.A. relating to 7.10% Special Facilities
Revenue Bonds, Series 1994 due January 15, 2017. (Filed as Exhibit 10.2 to Registrant's 1995 Second Quarter
Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.)
10.61 Land and Special Facilities Lease Agreement dated as of October 1, 1994 between Registrant and the Indianapolis
Airport Authority relating to 7.10% Special Facilities Revenue Bonds, Series 1994 due January 15, 2017.
(Filed as Exhibit 10.3 to Registrant's 1995 Second Quarter Report on Form 10-Q, Commission File No. 1-7806,
and incorporated herein by reference.)
10.62 Lease Agreement dated October 9, 1994 between the Registrant and Subic Bay Metropolitan Authority.
10.63 1980 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1980 Stock Incentive Plan, as amended.
(Filed as Exhibit 10.59 to Registrant's 1993 Annual Report on Form 10-K, Commission File No. 1-7806, and
incorporated herein by reference.)
10.64 1983 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1983 Stock Incentive Plan, as amended.
(Filed as an exhibit to Registrant's Registration Statement No. 2-95720 on Form S-8 and incorporated herein
by reference.)
10.65 1984 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1984 Stock Incentive Plan, as amended.
(Filed as an exhibit to Registrant's Registration Statement No. 2-95720 on Form S-8 and incorporated herein
by reference.)
10.66 1987 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1987 Stock Incentive Plan, as amended.
(Filed as an exhibit to Registrant's Registration Statement No. 33-20138 on Form S-8 and incorporated herein
by reference.)
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NUMBER DESCRIPTION OF EXHIBIT
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10.67 1989 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1989 Stock Incentive Plan, as amended.
(Filed as Exhibit 10.26 to Registrant's 1990 Annual Report on Form 10-K, Commission File No. 1-7806, and
incorporated herein by reference.)
10.68 1993 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1993 Stock Incentive Plan. (1993
Stock Incentive Plan was filed as Exhibit A to Registrant's 1993 Definitive Proxy Statement, Commission File
No. 1-7806, and incorporated herein by reference, and the form of stock option agreement was filed as
Exhibit 10.61 to Registrant's 1994 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated
herein by reference.)
10.69 Amendment to Registrant's 1980, 1983, 1984, 1987 and 1989 Stock Incentive Plans. (Filed as Exhibit 10.27 to
Registrant's 1990 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.)
10.70 Amendment to Registrant's 1983, 1984, 1987, 1989 and 1993 Stock Incentive Plans. (Filed as Exhibit 10.63 to
Registrant's 1994 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.)
10.71 1986 Restricted Stock Plan and Form of Restricted Stock Agreement pursuant to 1986 Restricted Stock Plan.
(Filed as Exhibit 10.28 to Registrant's 1990 Annual Report on Form 10-K, Commission File No. 1-7806, and
incorporated herein by reference.)
10.72 Registrant's Retirement Parity Pension Plan. (Filed as Exhibit 10.67 to Registrant's 1993 Annual Report on
Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.)
10.73 First Amendment to Registrant's Retirement Parity Pension Plan. (Filed as Exhibit 10.1 to Registrant's 1995
First Quarter Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.)
10.74 Management Performance Bonus Plan. (Description of the performance bonus plan contained in the Definitive
Proxy Statement for Registrant's 1995 Annual Meeting of Stockholders, under the heading "Report on
Executive Compensation of the Compensation Committee of the Board of Directors" is incorporated herein
by reference.)
10.75 Registrant's Retirement Plan for Outside Directors. (Filed as Exhibit 10.30 to Registrant's 1990 Annual
Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.)
10.76 Long-term Performance Bonus Plans. (Description of the long-term performance bonus plans contained in the
Definitive Proxy Statement for Registrant's 1995 Annual Meeting of Stockholders, under the heading
"Long-term Incentive Plans - Awards in Last Fiscal Year" is incorporated herein by reference.)
</TABLE>
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NUMBER DESCRIPTION OF EXHIBIT
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<S> <C>
10.77 Amended and Restated Credit Agreement dated May 12, 1995 among Registrant and The First National Bank of
Chicago, individually and as agent, and certain lenders.
10.78 Purchase Agreement between AVSA and Registrant for purchase of Airbus A300 aircraft. Confidential treatment has
been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934. (Filed as Exhibit 10.36 to Registrant's 1991 Annual Report on Form 10-K, Commission
File No. 1-7806, and incorporated herein by reference.)
10.79 Sales Agreement dated April 7, 1995 between Registrant and American Airlines, Inc. for the purchase of MD11
aircraft. Confidential treatment has been requested for confidential commercial and financial information,
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
11.1 Statement re Computation of Earnings Per Share.
12.1 Statement re Computation of Ratio of Earnings to Fixed Charges.
13.1 Registrant's Annual Report to Stockholders for the fiscal year ended May 31, 1995.
21.1 Subsidiaries of Registrant.
23.1 Consent of Independent Public Accountants.
24.1 Powers of Attorney.
27.1 Financial Data Schedule (for SEC use only).
</TABLE>
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<PAGE> 1
EXHIBIT 4.24
Confidential commercial and financial information has
been omitted from the exhibit and filed separately with
the Securities and Exchange Commission pursuant to Rule
24b-2 under the Securities Exchange Act of 1934.
************************************************************
FEDERAL EXPRESS CORPORATION
_____________________________
LOAN AGREEMENT
Dated as of April 1, 1995
______________________________
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
************************************************************
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience of reference only.
<TABLE>
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Page
<S> <C>
Section 1. Definitions . . . . . . . . . . . . . . . . . . . 1
Section 2. Commitments, Loans and Equipment Purchase
Certificates . . . . . . . . . . . . . . . . . 5
2.01 Loans and Equipment Purchase Certificates . . . . . 5
2.02 Borrowings . . . . . . . . . . . . . . . . . . . . 6
2.03 Changes of Commitments and Maximum Exposures . . . 6
2.04 Fees . . . . . . . . . . . . . . . . . . . . . . . 7
2.05 Lending Offices . . . . . . . . . . . . . . . . . . 8
2.06 Several Obligations; Remedies Independent . . . . . 8
2.07 Pro Rata Treatment . . . . . . . . . . . . . . . . 9
2.08 Certain Notices . . . . . . . . . . . . . . . . . . 9
2.09 Maximum Amounts . . . . . . . . . . . . . . . . . . 9
2.10 Delayed Delivery . . . . . . . . . . . . . . . . . 10
2.11 Sharing of Payments, Etc. . . . . . . . . . . . . . 12
2.12 Additional Costs . . . . . . . . . . . . . . . . . 13
2.13 Limitation on Types of Loans . . . . . . . . . . . 15
2.14 Illegality . . . . . . . . . . . . . . . . . . . . 16
2.15 Treatment of Affected Loans . . . . . . . . . . . . 16
Section 3. Conditions Precedent . . . . . . . . . . . . . . 17
Section 4. Representations and Warranties. . . . . . . . . . 24
4.01 Corporate Existence . . . . . . . . . . . . . . . . 24
4.02 Certification . . . . . . . . . . . . . . . . . . . 24
4.03 Permits . . . . . . . . . . . . . . . . . . . . . . 24
4.04 Recordings and Filings . . . . . . . . . . . . . . 24
4.05 Authorization . . . . . . . . . . . . . . . . . . . 25
4.06 Governmental Approvals . . . . . . . . . . . . . . 25
4.07 Enforceability . . . . . . . . . . . . . . . . . . 25
4.08 No Conflicts . . . . . . . . . . . . . . . . . . . 25
4.09 Litigation . . . . . . . . . . . . . . . . . . . . 25
4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . 26
4.11 Financial Statements . . . . . . . . . . . . . . . 26
4.12 Disclosure . . . . . . . . . . . . . . . . . . . . 27
4.13 No Defaults, Etc. . . . . . . . . . . . . . . . . . 27
</TABLE>
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<TABLE>
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4.14 Use of Proceeds . . . . . . . . . . . . . . . . . . . 27
4.15 ERISA . . . . . . . . . . . . . . . . . . . . . . . 27
[ * . . . . . . . . . . . . . . . . . . . . . . . . . . ]
[ * . . . . . . . . . . . . . . . . . . . . . . . . . . ]
Section 5. The Agent . . . . . . . . . . . . . . . . . . . . . 28
5.01 Appointment, Powers and Immunities . . . . . . . . . 28
5.02 Reliance by Agent . . . . . . . . . . . . . . . . . 29
5.03 Defaults, Etc. . . . . . . . . . . . . . . . . . . . 30
5.04 Rights as a Bank . . . . . . . . . . . . . . . . . . 30
5.05 Indemnification . . . . . . . . . . . . . . . . . . 30
5.06 Non-Reliance on Agent and Other Banks . . . . . . . 31
5.07 Failure to Act . . . . . . . . . . . . . . . . . . . 31
5.08 Resignation or Removal of Agent . . . . . . . . . . 31
Section 6. Certain Covenants . . . . . . . . . . . . . . . . . 32
6.01 Tax Indemnity . . . . . . . . . . . . . . . . . . . 32
6.02 General Indemnity . . . . . . . . . . . . . . . . . 36
6.03 Insurance . . . . . . . . . . . . . . . . . . . . . 39
6.04 Liens . . . . . . . . . . . . . . . . . . . . . . . 39
6.05 Certification . . . . . . . . . . . . . . . . . . . 39
Section 7. Miscellaneous . . . . . . . . . . . . . . . . . . . 39
7.01 Waiver . . . . . . . . . . . . . . . . . . . . . . . 39
7.02 Notices . . . . . . . . . . . . . . . . . . . . . . 40
7.03 Expenses, Etc. . . . . . . . . . . . . . . . . . . . 40
7.04 Amendments, Etc. . . . . . . . . . . . . . . . . . . 41
7.05 Successors and Assigns . . . . . . . . . . . . . . . 42
7.06 Assignments and Participations . . . . . . . . . . . 42
7.07 Survival . . . . . . . . . . . . . . . . . . . . . . 44
7.08 Captions . . . . . . . . . . . . . . . . . . . . . . 44
7.09 Counterparts . . . . . . . . . . . . . . . . . . . . 44
7.10 Governing Law; Submission to Jurisdiction . . . . . 44
7.11 Waiver of Jury Trial . . . . . . . . . . . . . . . . 45
7.12 No Oral Modifications . . . . . . . . . . . . . . . 45
7.13 Severability . . . . . . . . . . . . . . . . . . . . 45
7.14 Treatment of Certain Information; Confidentiality . . 45
7.15 Leveraged Lease Documentation; Conversion . . . . . 46
7.16 Allocation . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
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Schedule I - Definitions
Schedule 2.08 - Notice of Borrowing
Exhibit A - Form of Indenture
Exhibit B - Form of Opinion of Vice President, Law - Corporate
and Business Transactions of the Company
Exhibit C - Form of Opinion of Special Counsel for the Company
Exhibit D - Form of Opinion of Special Counsel for the
Indenture Trustee
Exhibit E - Form of Opinion of Counsel for the Engine
Manufacturer
Exhibit F - Form of Opinion of Counsel for AVSA and the
Manufacturer
Exhibit G - Form of French Pledge Agreement
Exhibit H - [* ]
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with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
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LOAN AGREEMENT dated as of April 1, 1995, among: FEDERAL EXPRESS
CORPORATION, a corporation duly organized and validly existing under the laws
of the State of Delaware (the "Company"); each of the financial institutions
that is a signatory hereto identified under the caption "BANKS" on the
signature pages hereto or which, pursuant to Section 7.06(b) hereof, shall
become a "Bank" hereunder (individually, a "Bank" and, collectively, the
"Banks"); and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a national
banking association, as agent for the Banks (in such capacity, together with
its successors in such capacity, the "Agent").
Each of Bank of America NT & SA, CIBC Inc. and The First National Bank
of Chicago has been named as co-agent (collectively, the "Co-Agents") hereunder
and shall have no obligations in its capacity as Co-Agent hereunder.
The Company has requested the Banks to make loans to the Company in an
aggregate principal amount not exceeding $350,625,000, of which the aggregate
principal amount outstanding at any one time shall not exceed $210,000,000 (as
such amounts may be reduced from time to time pursuant to Section 2.03 hereof),
to finance a portion of the purchase price by the Company of one or more of the
Aircraft.
To induce the Banks to make such loans, the Company, the Banks and the
Agent propose to enter into this Agreement pursuant to which the Banks will
make loans to the Company, and the Company will agree to issue and deliver to
the Banks Equipment Purchase Certificates evidencing such loans pursuant to one
or more Indentures to be entered into by the Company, and to execute and
deliver certain other Operative Agreements in connection therewith.
Accordingly, the parties hereto agree as follows:
Section 1. Definitions. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in
Schedule I hereto or, when used in respect of a particular Aircraft or any
Loans made to finance a portion of the purchase price thereof or the
transactions otherwise related thereto, in Schedule I to the Indenture entered
into in connection with the making of such Loans. In addition, as used herein,
the following terms shall have the following meanings (all terms defined in
this Section 1 or in other provisions of this Agreement in the singular to have
the same meanings when used in the plural and vice versa):
"Additional Costs" shall have the meaning assigned to such term in
Section 2.12 hereof.
"Aggregate Maximum Exposure" shall mean the sum of the Maximum
Exposure of each Bank (as such amounts may be reduced from time to time
pursuant to Section 2.03 hereof). Initially such sum is $210,000,000.
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<PAGE> 6
"Aircraft" shall mean, individually, each of the five Airbus Industrie
A300F4-605R aircraft referred to in the Facility, in each case as more fully
described in the Indenture and the Indenture Supplement relating to such
aircraft, and, collectively, all of such aircraft.
[ *
]
"Closing Date" shall mean April 26, 1995, or such later date occurring
on or before April 30, 1995 as the parties may agree on which this Agreement is
executed and delivered by the parties hereto.
"Commitment" shall mean, with respect to each Aircraft and for each
Bank, the obligation of such Bank to make a Loan to finance the purchase of
such Aircraft in an amount up to but not exceeding the amount set opposite the
name of such Bank on the signature pages hereof under the caption "Commitment
for each Aircraft", and, with respect to all of the Aircraft and for each Bank,
the obligation of such Bank to make Loans to finance the purchase of all of the
Aircraft in an aggregate amount up to but not exceeding the amount set opposite
the name of such Bank on the signature pages hereof under the caption
"Aggregate Commitment" (in each case as the same may be reduced from time to
time pursuant to Section 2.03 hereof); provided, however, that no Bank shall be
obligated to make any Loan that would result in the sum of the aggregate
principal amount of Loans made by such Bank then outstanding and the aggregate
outstanding principal amount of loan certificates issued to such Bank in
connection with leveraged lease transactions pursuant to the Facility exceeding
such Bank's Maximum Exposure. The aggregate principal amount of the
Commitments with respect to all of the Aircraft and for all of the Banks is
$350,625,000. The sum of (i) the aggregate principal amount of all Loans for
all of the Banks that may be outstanding at any one time and (ii) the aggregate
principal amount of all loan certificates issued to all of the Banks in
connection with leveraged lease transactions pursuant to the Facility that may
be outstanding at such time (i.e., the Banks' maximum exposure) is the
Aggregate Maximum Exposure. The aggregate principal amount of the Commitments
with respect to each Aircraft for all of the Banks is $70,125,000.
"Commitment Termination Date" shall mean the first to occur of (i)
April 26, 1996, and (ii) the termination of the Commitments of all of the Banks
with respect to all of the Aircraft pursuant hereto.
"Dollars" and "$" shall mean lawful money of the United States of
America.
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with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
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"ERISA Affiliate" shall mean any corporation or trade or business that
is a member of any group of organizations (i) described in Section 414(b) or
(c) of the Code of which the Company is a member and (ii) solely for purposes
of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11)
of the Code and the lien created under Section 302(f) of ERISA and Section
412(n) of the Code, described in Section 414(m) or (o) of the Code of which
the Company is a member.
"Facility" shall mean the facility agreement [ *
] as consented and agreed to by each of
the Banks by separate instruments dated on or before the Closing Date, and the
related letter agreement dated April 7, 1995 between the Company and the Agent.
"French Pledge Agreement" shall mean each French Pledge Agreement
between the Company and the Indenture Trustee, substantially in the form of
Exhibit G hereto, entered into in connection with the making of any Loans
hereunder, and any amendment or supplement thereto from time to time entered
into.
"GAAP" shall mean generally accepted accounting principles.
"Indenture" shall mean each Trust Indenture, Mortgage and Security
Agreement between the Company and the Indenture Trustee, substantially in the
form of Exhibit A hereto, entered into in connection with the making of any
Loans hereunder, and any amendment or supplement thereto from time to time
entered into.
"Indenture Trustee" shall mean NationsBank of Georgia, National
Association, a national banking association, not in its individual capacity,
but solely in its capacity as Indenture Trustee under an Indenture, and its
successors and permitted assigns as trustee thereunder.
"Loans" shall mean the loans provided for by Section 2.01 hereof.
"Majority Banks" shall mean, subject to the last paragraph of Section
7.04 hereof, Banks having at least 51% of the aggregate amount of the
Commitments or, if the Commitments shall have terminated, Banks holding at
least 51% of the aggregate unpaid principal amount of the Loans.
"Margin Stock" shall mean "margin stock" within the meaning of
Regulations U and X.
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Securities Exchange Act of 1934.
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"Maximum Exposure" shall mean, for any Bank, the amount set opposite
the name of such Bank on the signature pages hereof under the caption "Maximum
Exposure" (in each case as the same may be reduced from time to time pursuant
to Section 2.03 hereof).
"Multiemployer Plan" shall mean a multiemployer plan defined as such
in Section 3(37) of ERISA to which contributions have been made by the Company
or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Operative Agreements" shall mean, collectively, with respect to each
Aircraft, this Agreement, the Facility (as it relates to such Aircraft or other
matters related thereto), the Indenture and Indenture Supplement covering such
Aircraft [ *
] the Bills of Sale and the Purchase Agreement, the
Consent and Guaranty, the Airbus Guaranty, the Consent and Agreement, the
Engine Consent and Agreement, the French Pledge Agreement and the Equipment
Purchase Certificates in each case to the extent that the same relates to such
Aircraft.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Plan" shall mean an employee benefit or other plan established or
maintained by the Company or any ERISA Affiliate and that is covered by Title
IV of ERISA, other than a Multiemployer Plan.
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Quarterly Dates" shall mean the last day of March, June, September
and December in each year, the first of which shall be the first such day to
occur in 1996; provided that if any such day is not a Business Day, then such
Quarterly Date shall be the next succeeding Business Day (unless such Business
Day falls in a subsequent calendar month, in which event such Quarterly Date
shall be the next preceding Business Day).
"Regulatory Change" shall mean, with respect to any Bank, any change
after the date of this Agreement in Federal, state or foreign law or
regulations (including, without limitation, Regulation D) or the adoption or
making after such date of any interpretation, directive or request applying to
a class of banks including such Bank of or under any Federal, state or foreign
law or regulations (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
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"Reserve Requirement" shall mean, for any Interest Period for any
Floating Rate Loan, the average maximum rate at which reserves (including,
without limitation, any marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period under Regulation D by
member banks of the Federal Reserve System in New York City with deposits
exceeding one billion Dollars against "Eurocurrency liabilities" (as such term
is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall include any other reserves required to be maintained
by such member banks by reason of any Regulatory Change with respect to (i) any
category of liabilities that includes deposits by reference to which the LIBOR
Base Rate for Floating Rate Loans is to be determined as provided in the
definition of "LIBOR Base Rate" or (ii) any category of extensions of credit or
other assets that includes Floating Rate Loans.
"Subsidiary" shall mean, for any Person, any corporation, partnership
or other entity of which at least a majority of the securities or other
ownership interests having by the terms thereof ordinary voting power to elect
a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by such Person or one or
more Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person.
Section 2. Commitments, Loans and Equipment Purchase Certificates
2.01 Loans and Equipment Purchase Certificates Each Bank severally
agrees, on the terms and conditions of this Agreement, to make one or more
Loans to the Company in Dollars on or before the Commitment Termination Date in
an amount with respect to each Aircraft up to but not exceeding the amount of
the Commitment of such Bank for such Aircraft, and in an aggregate amount with
respect to all Aircraft up to but not exceeding the amount of the aggregate
Commitment of such Bank for all Aircraft; provided, however, that the sum of
the aggregate amount of such Loans made by such Bank outstanding at any one
time and the aggregate principal amount of loan certificates issued to such
Bank in leveraged lease transactions pursuant to the Facility outstanding at
such time shall not exceed such Bank's Maximum Exposure. The Company may elect
to borrow either Floating Rate Loans or Base Rate Loans, provided that all
Loans in respect of the same Aircraft shall at all times be of the same Type.
Each Loan to be made by a Bank hereunder shall be made on the Delivery Date of
the Aircraft to be purchased with the proceeds of such Loan and, concurrently
with the making of such Loan, the Company shall issue and deliver to such Bank,
consistent with the terms and provisions of Article 2 of the Indenture to be
executed and delivered on such Delivery Date as contemplated by Section 3
hereof, an Equipment Purchase Certificate, in the form prescribed in Exhibit B
to such Indenture, which Equipment Purchase Certificate shall be in principal
amount equal to the original principal amount of such Loan, duly authenticated
and registered in the name of such Bank by the Indenture Trustee, and
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designated as having been issued in connection with such Aircraft. Each such
Equipment Purchase Certificate shall be dated such Delivery Date and shall bear
interest therefrom and shall be otherwise payable in accordance with, and
governed by the terms of, such Indenture, including, without limitation, the
Events of Default specified in Section 6.01 thereof. The Company may convert
all Loans made in respect of the same Aircraft into Loans of another Type by
making the election specified in Section 2.02(b) of the related Indenture with
respect to the Equipment Purchase Certificates evidencing such Loans.
2.02 Borrowings The Company shall give the Agent (which shall
promptly notify the Banks) a Notice of Borrowing with respect to each borrowing
hereunder as provided in Section 2.08 hereof. Not later than 10:30 a.m. New
York time on the date specified for each borrowing hereunder, each Bank shall
make available to the Agent the amount of the Loan to be made by it on such
date, at account number [ * ] maintained by the Agent with Chase
at the Principal Office, in immediately available funds, for account of the
Company. The amount so received by the Agent shall, subject to the terms and
conditions of this Agreement, be made available to the Company by transferring
the same, in immediately available funds, to the Company at its account number
[ * ] maintained at The Chase Manhattan Bank, N.A., One
Chase Manhattan Plaza, New York, New York 10081, or, if so directed by the
Company in such Notice of Borrowing, at its account number [ * ]
maintained at Citibank, N.A., in New York, New York, in either case with the
instructions "CR Federal Express Corporation". The Company agrees that promptly
upon its receipt of such amount, it shall apply the same to the payment of the
remaining balance of the purchase price of the Aircraft, by transferring such
amount, in immediately available funds, to AVSA at its account number [ *
] maintained at Credit Lyonnais, New York Branch, 1301 Avenue
of the Americas, New York, New York 10019, Attention: Yanick Ergas.
2.03 Changes of Commitments and Maximum Exposures
(a) The aggregate unused amount of the Commitments of all of the
Banks with respect to all of the Aircraft shall be automatically reduced to
zero upon (i) the Commitment Termination Date, or (ii) the occurrence and
continuance of an Event of Default under any Indenture or an event of default
under any lease agreement entered into by the Company in connection with the
leveraged lease financing of an Aircraft under the Facility and, in the case of
clause (ii) above, the giving by any Bank to the Company of notice that such
Bank is terminating its Commitments, but without protest or other notice or
other action of any kind on the part of the Banks or the Agent or any of them,
all of which are hereby waived.
(b) The aggregate unused amount of the Commitments of all of the
Banks with respect to any particular Aircraft shall be automatically reduced to
zero immediately after
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giving effect to the making of any loans in respect of such Aircraft hereunder
or in connection with the leveraged lease financing of such Aircraft under the
Facility.
(c) The Company shall have the right at any time or from time to time
to terminate or reduce the aggregate unused amount of the Commitments in
respect of one or more Aircraft, provided that (x) the Company shall give
notice of each such termination or reduction as provided in Section 2.08 hereof
and each such termination or reduction shall be applied as provided in Section
2.07/ hereof, (y) each partial reduction shall be in an aggregate amount at
least equal to [ * ] or in multiples of [ * ]
in excess thereof, and (z) such right shall be exercisable only once with
respect to any Aircraft.
(d) The Commitments once terminated or reduced may not be reinstated.
(e) Concurrently with each termination or reduction of any Bank's
Commitments and each payment or prepayment of any principal of any of such
Bank's Loans or any of the loan certificates issued to such Bank in connection
with leveraged lease transactions pursuant to the Facility, such Bank's Maximum
Exposure shall be automatically reduced by the amount, if any, by which such
Bank's Maximum Exposure immediately prior thereto exceeds the sum of such
Bank's unused Commitments and the aggregate principal amount outstanding of
such Bank's Loans and loan certificates issued to such Bank in connection with
leveraged lease transactions pursuant to the Facility after giving effect to
such termination, reduction, payment or prepayment.
2.04 Fees
(a) Subject to subsection (c) of this Section 2.04, the Company shall
pay to the Agent for the account of each Bank with respect to each Aircraft a
fee equal to $[ *
] Such fees with respect to each
Aircraft shall be payable on the earlier of the Delivery Date of such Aircraft
or the date on which the Commitments with respect to such Aircraft terminate or
are terminated.
(b) Unless the Aggregate Maximum Exposure has been reduced to zero
prior to December 1, 1995, the Company shall pay to the Agent for the account
of each Bank a further facility fee on the daily amount of each of such Bank's
Maximum Exposure, whether or not utilized, in each case for the period from and
including December 1, 1995 to but not including the earlier of the date the
Aggregate Maximum Exposure is reduced to zero and the date 18 months after the
last Delivery Date to occur hereunder (the "Fee Termination Date"), at a rate
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per [ * ] All accrued facility fees shall be payable in
arrears on each Quarterly Date and on the Fee Termination Date.
(c) Notwithstanding the provisions of subsection (a) of this Section
2.04, in the event the Commitments with respect to any Aircraft terminate or
are terminated on a date other than the Delivery Date for such Aircraft, the
fee payable to each Bank with respect to such Aircraft pursuant to such
subsection (a) on such termination date shall in the case of each Bank be the
lesser of (i) such Bank's pro rata share of $30,625 and (ii) the amount, if
any, by which (A) the amount equal to 1/8 of 1% per annum of the daily amount
of such Bank's Maximum Exposure, whether or not utilized, for the period from
and including the Closing Date to but not including such termination date
exceeds (B) the aggregate fees theretofore paid to such Bank under this Section
2.04 and any fee to be paid to such Bank on such date under subsection (b) of
this Section 2.04.
(d) For purposes of this Section 2.04, computations shall be made on
the basis of a year of 360 days and actual days elapsed.
2.05 Lending Offices The Loans of each Type made by each Bank shall
be made and maintained at such Bank's Applicable Lending Office for Loans of
such Type.
2.06 Several Obligations; Remedies Independent The failure of any
Bank to make any Loan to be made by it on the date specified therefor shall not
relieve any other Bank of its obligation to make its Loan on such date, but
neither any Bank nor the Agent shall be responsible for the failure of any
other Bank to make a Loan to be made by such other Bank, and no Bank shall have
any obligation to the Agent or any other Bank for the failure by such Bank to
make any Loan required to be made by such Bank. The amounts payable by the
Company at any time hereunder and under the Equipment Purchase Certificates to
each Bank shall be a separate and independent debt and each Bank, subject
always to the terms and conditions of the applicable Indenture, shall be
entitled to protect and enforce its rights arising out of this Agreement and
the Equipment Purchase Certificates, and it shall not, except as otherwise
provided in the applicable Indenture, be necessary for any other Bank or the
Agent to consent to, or be joined as an additional party in, any proceedings
for such purposes.
2.07 Pro Rata Treatment Except to the extent otherwise provided
herein, each borrowing of Loans from the Banks under Section 2.01 hereof shall
be made from the Banks, each payment of fees under Section 2.04 hereof in
respect of Commitments or Loans, as the case may be, shall be made for the
account of the Banks, and each termination or reduction of the amount of the
Commitments under Section 2.03 hereof shall be applied to the respective
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Commitments of the Banks, in each case pro rata according to the amounts of
their respective Commitments or Loans at the time outstanding.
2.08 Certain Notices Notices by the Company to the Agent of
terminations or reductions of the Commitments and of borrowings shall be
irrevocable and shall be effective only if received by the Agent not later than
10:00 a.m. New York time (or, in the case of a borrowing of a Base Rate Loan,
not later than 2:00 p.m. New York time) on the date that is the number of days
or Business Days prior to the date of the relevant termination, reduction or
borrowing specified below:
<TABLE>
<CAPTION>
Number of Days or
Notice Business Days Prior
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<S> <C>
Termination or reduction
of Commitments 10 days
Borrowing of Floating 3 Business Days
Rate Loans
Borrowing of Base 1 Business Day
Rate Loans
</TABLE>
Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced and the Aircraft to which such
Commitments relate. Each such notice of borrowing (a "Notice of Borrowing")
shall be substantially in the form of Schedule 2.08 hereto and shall specify
the Aircraft with respect to which the relevant Loans are to be made, whether
such Loans shall be Floating Rate Loans or Base Rate Loans, the Interest Period
therefor (if Floating Rate Loans), the aggregate amount (subject to Section
2.09 hereof) of the Loans to be made and the date of borrowing (which shall be
a Business Day and the Delivery Date for such Aircraft).
2.09 Maximum Amounts Anything in this Agreement to the contrary
notwithstanding, in no event shall (a) the aggregate principal amount of the
Loans to be made hereunder with respect to any Aircraft exceed the lesser of
[ *
]
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*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 14
2.10 Delayed Delivery
(a) If, after any Bank shall have made available to the Agent the
amount of its Loan on any scheduled Delivery Date (hereinafter, a "Scheduled
Delivery Date") as contemplated by Section 2.02 hereof, the Agent and the Banks
determine (or the Agent is so advised in writing by the Company) before 2:00
p.m., New York time, on the Scheduled Delivery Date that the related Operative
Agreements will not be executed and delivered or that the other conditions
precedent set forth in Section 3 hereof will not be satisfied (or waived by the
Banks) on such Scheduled Delivery Date, the Agent shall, on such Scheduled
Delivery Date, use its best efforts to cause the amounts held by it for the
purpose of making such Loan to be invested pursuant to subsection (b) of this
Section 2.10.
(b) The Agent shall use its best efforts to cause the amount held by
it for the purpose of making such Loan to be invested and reinvested to the
extent practicable at the direction received by it from the Company, at the
risk of the Company, in Permitted Investments consisting of either commercial
paper or time deposits; provided, however, that in the absence of instructions
by 3:00 p.m., New York time, the Agent shall use its best efforts to cause such
amount or the proceeds thereof to be invested and reinvested to the extent
practicable in overnight Eurodollar time deposits. Earnings on any such
investments shall be applied to the Company's payment obligations, if any, to
such Bank under this Section 2.10 to the extent of such obligations, and the
balance, if any, of such earnings remaining after such application shall be
paid in accordance with the Company's written instructions. Unless the funding
arrangements contemplated hereby shall have been terminated as provided in
subsection (d) below, the Agent will apply the amounts held by it for the
purpose of making such Loan to the making of such Loan on the actual Delivery
Date (the "Delayed Delivery Date") for the related Aircraft, as provided in
Section 2.02. Notwithstanding any provision of this Agreement or any related
Operative Agreement to the contrary, any Loans made pursuant to this Section
2.10 on a Delayed Delivery Date shall be treated for all purposes of the
related Indenture and the other related Operative Agreements (other than
Section 3 hereof) as if such Loans had been made on, and the Equipment Purchase
Certificates evidencing the same had been issued on and dated the date of, the
Scheduled Delivery Date therefor, and without limiting the generality of the
foregoing, in the case of any Floating Rate Loans and the Equipment Purchase
Certificates evidencing the same, the initial Interest Period relating thereto
shall be deemed to have begun on such Scheduled Delivery Date and shall end on
the date that such Interest Period would otherwise have ended if such Loans had
been made on the Scheduled Delivery Date.
(c) The Company shall reimburse the Agent on demand for any loss
incurred by the Agent as a result of the investment of funds by the Agent in
accordance with the terms of this Section 2.10. Further, the Company shall
indemnify the Agent and hold it harmless from and against any cost or expense
the Agent may incur as a result of any investment of funds or transfer of funds
referred to herein in accordance with the terms hereof. The Agent shall not
14
<PAGE> 15
be liable for failure to invest such funds except as otherwise provided herein
or for any losses incurred on such investments except for any losses arising
out of its own gross negligence or willful misconduct.
(d) If for any reason (i) the related Operative Agreements shall not
be executed and delivered by the respective parties thereto and/or the Delayed
Delivery Date shall not occur (whether by reason of a failure to meet a
condition precedent thereto set forth in Section 3 hereof or otherwise) on or
before the tenth Business Day after the related Scheduled Delivery Date, or
(ii) the Company has notified the Agent prior to 3:00 p.m., New York time, on
any date after the Scheduled Delivery Date that it does not intend to go
forward to close the transactions contemplated hereby for such Delivery Date
(the earlier of such dates being herein referred to as the "Funding Termination
Date"), the Banks may cancel or terminate any funding arrangements they may
have made to fund the Loans on the Scheduled Delivery Date (or the unutilized
portion thereof) but the Banks' Commitments hereunder with respect to such
Aircraft shall not be reduced or terminated thereby. In the event that the
Funding Termination Date shall have occurred with respect to any proposed Loans
as provided above in this subsection (d), the Agent shall return the amounts
held by it hereunder to the Banks having furnished the same on the earliest
practicable Business Day, provided that the Agent shall have had a reasonable
time to liquidate any Permitted Investments it has been authorized to invest in
pursuant to subsection (b) of this Section 2.10 and to obtain the proceeds
therefrom in funds of the type originally received, and the Company shall pay
interest on such funds to the Banks having furnished [ *
]
such interest to be payable for the period from and including such Scheduled
Delivery Date to but excluding the date such funds are returned to such Bank in
accordance with the terms hereof; provided that if any such funds are returned
to a Bank after 2:00 p.m., New York time, on any such date, such funds shall be
deemed for purposes of this subsection (d) to have been returned on the next
succeeding Business Day. In addition, the Company shall indemnify the Banks
against and reimburse the Banks on demand for any cost or expense incurred by
the Banks as a result of such termination, including, in the case of funds
acquired by the Banks to fund any Base Rate Loans, any cost or expense incurred
by reason of the liquidation or redeployment of funds and, in the case of funds
acquired by the Banks to fund any Floating Rate Loans, Breakage Costs, if any
(determined as if such Floating Rate Loans had been made on the Scheduled
Delivery Date and were being prepaid on such Funding Termination Date), and
including, without limitation, reasonable legal costs and expenses) incurred by
or payable to the Banks or the Agent in connection with the transactions
contemplated hereby for such Delivery Date in accordance with the provisions of
the last sentence of Section 3 hereof.
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*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
15
<PAGE> 16
2.11 Sharing of Payments, Etc.
(a) The Company agrees that, in addition to (and without limitation
of) any right of set-off, banker's lien or counterclaim a Bank may otherwise
have, each Bank shall be entitled, at its option, to offset balances held by it
for account of the Company at any of its offices, in Dollars or in any other
currency, against any principal of or interest on any of such Bank's Loans or
the Equipment Purchase Certificates evidencing the same or any other amount
payable to such Bank hereunder or under any Indenture or other Operative
Agreement, that is not paid when due (after giving effect to any applicable
grace period and regardless of whether such balances are then due to the
Company), in which case it shall promptly notify the Company, the Agent and the
Indenture Trustee thereof, provided that such Bank's failure to give such
notice shall not affect the validity thereof.
(b) If any Bank shall obtain any payment of any principal of or
interest on any Loan or the Equipment Purchase Certificate evidencing the same
owing to it or payment of any other amount under this Agreement or any
Indenture or other Operative Agreement through the exercise of any right of
set-off, banker's lien or counterclaim or similar right or otherwise (other
than from the Agent as provided herein or the Indenture Trustee as provided in
the related Indenture), and, as a result of such payment, such Bank shall have
received a greater percentage of the principal of or interest on the Loans or
the Equipment Purchase Certificates evidencing the same or such other amounts
then due hereunder or thereunder by the Company to such Bank than the
percentage received by any other Bank, it shall promptly purchase from such
other Banks participations in (or, if and to the extent specified by such Bank,
direct interests in) the Loans and the Equipment Purchase Certificates
evidencing the same or such other amounts, respectively, owing to such other
Banks (or in interest due thereon, as the case may be) in such amounts, and
make such other adjustments from time to time as shall be equitable, to the end
that all the Banks shall share the benefit of such excess payment (net of any
expenses that may be incurred by such Bank in obtaining or preserving such
excess payment) pro rata in accordance with the unpaid principal of and/or
interest on the Loans and the Equipment Purchase Certificates evidencing the
same or such other amounts, respectively, owing to each of the Banks.
(c) The Company agrees that any Bank so purchasing such a
participation (or direct interest) may exercise all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as
fully as if such Bank were a direct holder of Loans and Equipment Purchase
Certificates or other amounts (as the case may be) owing to such Bank in the
amount of such participation.
(d) Nothing contained herein shall require any Bank to exercise any
such right or shall affect the right of any Bank to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness
or obligation of the Company. If, under any applicable bankruptcy, insolvency
or other similar law, any Bank receives a secured claim in lieu of a set-off to
which this Section 2.11 applies, such Bank shall, to the extent practicable,
16
<PAGE> 17
exercise its rights in respect of such secured claim in a manner consistent
with the rights of the Banks entitled under this Section 2.11 to share in the
benefits of any recovery on such secured claim.
2.12 Additional Costs
[ *
]
[ *
]
[ *
]
[ *
]
(b) Without limiting the effect of the provisions of subsection (a)
of this Section 2.12, in the event that, by reason of any Regulatory Change,
any Bank either (i) incurs Additional Costs based on or measured by the excess
above a specified level of the amount of a category
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*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 18
of deposits or other liabilities of such Bank that includes deposits by
reference to which the interest rate on Floating Rate Loans is determined as
provided in the related Indenture or a category of extensions of credit or
other assets of such Bank that includes Floating Rate
Loans, or (ii) becomes subject to restrictions on the amount of such a category
of liabilities or assets that it may hold, then, if such Bank so elects by
notice to the Company (with a copy to the Agent and the Indenture Trustee), the
obligation of such Bank to make or continue such Floating Rate Loans shall be
suspended until such Regulatory Change ceases to be in effect (in which case
the provisions of Section 2.15 hereof shall be applicable).
[ *
]
(d) Each Bank shall notify the Company of any event occurring after the
date hereof [* ] as promptly as practicable, but
in any event within 30 days, after such Bank obtains actual knowledge thereof;
provided that (i) if any Bank fails to give such notice within 30 days after it
obtains actual knowledge of such an event, such Bank shall, [ *
] (ii) each Bank will designate a
different Applicable Lending Office for holding the Loans or the Equipment
Purchase Certificates evidencing the same of such Bank affected by such event
if such designation will avoid the need for, [ *
]
be disadvantageous to such Bank, except that such Bank shall have no obligation
to designate an Applicable Lending Office located in the United States of
America. Each Bank will furnish to the Company and the Indenture
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*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
18
<PAGE> 19
Trustee a certificate setting forth the basis [ *
] on its costs or rate of return of
maintaining its Loans or the Equipment Purchase Certificates evidencing the
same or its Commitment, or on amounts receivable by it in respect of its Loans
or the Equipment Purchase Certificates evidencing the
same, [ * ] such Bank under this Section
2.12, shall be conclusive, provided that such determinations and allocations
are made on a reasonable basis.
2.13 Limitation on Types of Loans Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any LIBOR Base Rate
for any Interest Period:
(a) the Agent determines, which determination shall be conclusive,
that quotations of interest rates for the relevant deposits referred
to in the definition of "LIBOR Base Rate" in Schedule I hereto are
not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for any
Floating Rate Loan as provided herein or in the related Indenture; or
(b) if the Majority Banks determine, which determination shall be
conclusive, and notify (or notifies, as the case may be) the Agent and
the Indenture Trustee that the relevant rates of interest referred to
in the definition of "LIBOR Base Rate" in said Schedule I upon the
basis of which the rate of interest for Floating Rate Loans for such
Interest Period is to be determined are not likely adequately to cover
the cost to such Banks of making or maintaining such Floating Rate
Loans for such Interest Period;
then the Agent shall give the Company, the Indenture Trustee and each Bank
prompt notice thereof and, so long as such condition remains in effect, the
Banks' obligations to make or continue Floating Rate Loans shall be suspended,
and the Company shall, at its election, on the last day(s) of the then current
Interest Period(s) for the outstanding Floating Rate Loans, either prepay such
Loans or such Floating Rate Loans shall be automatically converted into Base
Rate Loans.
2.14 Illegality Notwithstanding any other provision of this Agreement
or any Indenture, in the event that it becomes unlawful for any Bank or its
Applicable Lending Office to honor its obligation to make or maintain Floating
Rate Loans hereunder or under any Indenture, then such Bank shall promptly
notify the Company thereof (with a copy to the Agent and the Indenture Trustee)
and such Bank's obligation to make or continue
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*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
19
<PAGE> 20
Floating Rate Loans shall be suspended until such time as such Bank may again
make and maintain Floating Rate Loans (in which case the provisions of Section
2.15 hereof shall be applicable).
2.15 Treatment of Affected Loans If the obligation of any Bank to
make or continue a particular Floating Rate Loan is suspended pursuant to
Section 2.12, 2.13 or 2.14 hereof (Loans of such Type being herein called
"Affected Loans" and such Type being herein called the "Affected Type", and any
Commitments to make such Loans being herein called the "Affected Commitments"),
or, in the case of clause (a) below, if the Company shall be [ *
] then, (a) at the request of the Company but subject
always to the provisions of Section 7.06 hereof, such Bank will assign its
Affected Loans and the Equipment Purchase Certificates evidencing the same, or
its Affected Commitment, as the case may be, without recourse or warranty, to
any financial institution designated by the Company, provided that concurrently
with such assignment, such Bank receives from such financial institution and/or
the Company an amount in immediately available funds equal to the unpaid
principal amount of such Equipment Purchase Certificates at the time
outstanding, plus all accrued and unpaid interest thereon, whether or not then
due, and all other sums then owing to such Bank in respect of such Equipment
Purchase Certificates or any of the Operative Agreements relating thereto,
including, without limitation, any amounts owing to such Bank pursuant to
Section 2.12 hereof and any Breakage Costs (determined for such purposes as if
such assignment were a prepayment in full of the principal amount of such
Equipment Purchase Certificates), and if such Bank shall fail to so assign such
Loans and the Equipment Purchase Certificates evidencing the same in accordance
with the foregoing provisions after such request by the Company, such Bank
shall not be entitled [ * ] hereof to the extent (but only
to the extent) such assignment would have avoided the need for, or reduced the
amount of, such compensation, and (b) if no such assignment shall be requested
and consummated, or if the Affected Loans are not prepaid in the case of any
such suspension pursuant to Section 2.13, or if the Affected Loans are
otherwise to be converted into Base Rate Loans pursuant to the provisions of
Section 2.12, 2.13 or 2.14 hereof, then such Bank's Affected Loans shall be
automatically converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for Affected Loans (or, in the case of a conversion
required by Section 2.12(b), 2.13 or 2.14 hereof, on such earlier date as such
Bank may specify to the Company with a copy to the Agent and the Indenture
Trustee) and, unless and until such Bank gives notice as provided below that
the circumstances specified in Section 2.12, 2.13 or 2.14 hereof that gave rise
to such conversion no longer exist, all Loans that would otherwise be made or
continued by such Bank as Loans of the Affected Type hereunder or under any
Indenture shall be made or continued instead as Base Rate Loans, and all Loans
of such Bank that would otherwise be converted into Loans of the Affected Type
shall be
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*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
20
<PAGE> 21
converted instead into (or shall remain as) Base Rate Loans. Each Bank shall
give notice to the Company with a copy to the Agent and the Indenture Trustee
that the circumstances specified in Section 2.12, 2.13 or 2.14 hereof that gave
rise to the conversion of such Bank's Affected Loans pursuant to this Section
2.15 no longer exist (which such Bank agrees to do promptly upon such
circumstances ceasing to exist). Five Business Days after the date of receipt
of such notice by the Agent, the Affected Loans shall automatically be
converted into Floating Rate Loans unless the Agent, at least three Business
Days prior to the date such conversion would otherwise have occurred, shall
have received notice from the Company that it has elected to continue such
Loans as Base Rate Loans; provided that the Company shall not be entitled to
make any such election after the first anniversary of the Closing Date.
Section 3. Conditions Precedent The obligation of any Bank to make
any Loan to be made by it hereunder is subject to the receipt by the Agent, on
or before the Delivery Date for the Aircraft to be purchased with the proceeds
of such Loan, of the following documents, each of which shall be satisfactory
to the Agent (and to the extent specified below, to each Bank) in form and
substance:
(a) Notice of Borrowing. Such Bank shall have received due notice
from the Agent with respect to such borrowing pursuant to Section 2.02
hereof.
(b) Equipment Purchase Certificates. Concurrently with making such
Loan to the Company, the Agent, on behalf of such Bank, shall have
received an Equipment Purchase Certificate in an original principal
amount equal to the original principal amount of such Loan, duly
executed and delivered by the Company, and duly authenticated by the
Indenture Trustee (acting at the written request and direction of the
Company).
(c) Legal Investment. No change shall have occurred after the date
of this Agreement in applicable laws or regulations, or
interpretations of any such laws or regulations by applicable
regulatory authorities, which, in the opinion of such Bank, would make
it illegal for such Bank, and no change in circumstances outside the
control of such Bank shall have occurred which would otherwise make it
illegal or otherwise in contravention of guidance issued by regulatory
authorities for such Bank, to participate in the transaction to be
consummated on such Delivery Date with respect to such Aircraft; 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 such Bank 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 such
Delivery 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.
(d) Approvals. All approvals and consents of any trustees or holders
of any
21
<PAGE> 22
indebtedness or obligations of the Company, which in the opinion of
such Bank are required in connection with any transaction contemplated
by this Agreement, shall have been duly obtained.
(e) Corporate Documents. The following documents, each certified as
indicated below:
(i) In the case of the Loans to be made on the first Delivery
Date,
(A) a certificate from such Secretary of State dated as
of a date reasonably near such Delivery Date as to
the good standing of and charter documents filed by
the Company;
(B) a certificate of the Secretary or an Assistant
Secretary of the Company, dated such Delivery Date
and certifying (1) that attached thereto are true and
complete copies of the Certificate of Incorporation
of the Company as in effect on such Delivery Date,
and of the by-laws of the Company as amended and in
effect at all times from the date on which the
resolutions referred to in clause (2) were adopted to
and including the date of such certificate, (2) that
attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors of
the Company authorizing the execution, delivery and
performance of the Operative Agreements to which the
Company is or is intended to be a party in connection
with each borrowing hereunder, and that such
resolutions have not been modified, rescinded or
amended and are in full force and effect, (3) that
the Certificate of Incorporation of the Company has
not been amended since the date of the certificate
furnished pursuant to clause (A) above, and (4) as to
the incumbency and specimen signature of each officer
of the Company executing such of the Operative
Agreements to which the Company is intended to be a
party in connection with each borrowing hereunder and
each other document to be delivered by the Company
from time to time in connection therewith (and the
Agent and each Bank may conclusively rely on such
certificate until it receives notice to the contrary
in writing from the Company);
(C) a certificate of an officer of the Company whose
incumbency and signature have been certified in the
certificate referred to in clause (i)(B) above, dated
such Delivery Date, as to the incumbency and specimen
signature of the Secretary or Assistant Secretary, as
the case may be, of the Company; and
(D) a copy of the charter and bylaws and other
instruments of NationsBank of Georgia, National
Association ("NationsBank") certified by a Secretary
22
<PAGE> 23
or an Assistant Secretary of NationsBank as of such
Closing Date (or other like instruments satisfactory
to the Agent), and a copy of the resolutions of the
board of directors of NationsBank, certified by such
Secretary or Assistant Secretary as of such Delivery
Date, authorizing the execution and delivery by
NationsBank (either individually or as Indenture
Trustee) of each of the Indenture and the other
Operative Agreements to which it is or is to be a
party, together with an incumbency certificate of
NationsBank as to the person or persons authorized to
execute and deliver said documents on behalf of
NationsBank (either individually or as Indenture
Trustee) and the signatures of such person or
persons.
(ii) In the case of each Loan (other than the Loans to be
made on the first Delivery Date) hereunder, a certificate of
the Secretary or Assistant Secretary of the Company whose
incumbency and specimen signature were certified pursuant to
clause (i)(C) above, dated such Delivery Date, and certifying
(A) that the bylaws, resolutions and Certificate of
Incorporation of the Company furnished pursuant to clause
(i)(B) above have not been modified, rescinded or amended (or,
if modified or amended, that attached thereto is a true and
complete copy of such modification or amendment), and are in
full force and effect, and (B) as to the continuing incumbency
of the officers referred to in clause (i)(B)(4) above, and a
certificate of one such officer, dated such Delivery Date, as
to the continuing incumbency of such Secretary or Assistant
Secretary.
(iii) In the case of each Loan hereunder, such other
documents, evidences, materials and information with respect
to the Company and the Indenture Trustee as the Agent or any
Bank may reasonably request in order to establish the
consummation of the transactions contemplated by this
Agreement.
(f) Operative and Other 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 Agent (acting directly or by authorization
to its special counsel) and shall each be in full force and effect;
and copies executed or certified as requested by the Agent of such
documents shall have been delivered to the Agent or its special
counsel, each Bank and the Indenture Trustee:
(i) the Indenture covering such Aircraft [ *
]
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with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 24
(ii) an Indenture Supplement covering such Aircraft, dated
such Delivery Date;
(iii) the French Pledge Agreement for such Aircraft;
(iv) the Bills of Sale for such Aircraft and the related
Airbus Guaranty, each dated such Delivery Date;
(v) in the case of the Loans to be made on the first Delivery
Date, a redacted copy of each of the Purchase Agreement, the
Consent and Guaranty and the Engine Agreement;
(vi) the Consent and Agreement and the AVSA Consent and
Agreement; and
(vii) the Engine Consent and Agreement.
(g) Insurance. The Agent 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 Agent, to
establish that the insurance required by Section 4.06 of the Indenture
is in effect.
(h) Financing Statements. Uniform Commercial Code financing
statements covering all the security interests (and other interests)
intended to be created by or pursuant to the relevant Indenture shall
have been executed and delivered by the Company, as debtor, and by the
Indenture Trustee, as secured party, for and on behalf of the Banks,
and such financing statements or other documents to the same purpose
shall have been duly filed in each relevant jurisdiction, if any,
other than the State of Tennessee, and all other action shall have
been taken which, in the opinion of the Agent, is necessary or
desirable to perfect and protect such security interests and other
interests.
(i) Title, Airworthiness and Registration. On such Delivery Date,
the following statements shall be true, and the Agent and each Bank
shall have received evidence from the Company reasonably satisfactory
to the Agent to the effect that:
(i) the Company has good title (subject to filing and
recording of the FAA Bill of Sale with the FAA) to such
Aircraft, free and clear of Liens (other than Liens of the
type described in Section 4.01(a) and (c) of the related
Indenture), which evidence shall include the FAA Bill of Sale
to the Company with respect to such Aircraft;
(ii) such Aircraft has been duly certified by the FAA as to
type and airworthiness in accordance with the terms of the
Operative Agreements;
24
<PAGE> 25
(iii) the FAA Bill of Sale, the relevant Indenture and an
Indenture Supplement covering such Aircraft shall have been
duly filed for recordation with the FAA pursuant to the Act;
and
(iv) application to the FAA for registration of such Aircraft
in the name of the Company shall have been duly made and the
Company shall have temporary or permanent authority to operate
such Aircraft.
(j) Officers' Certificate of the Company. On such Delivery Date, the
following statements shall be true, and the Agent and each Bank shall
have received a certificate signed by the Vice President and Treasurer
or any other duly authorized officer of the Company, dated such
Delivery Date, to the effect set forth below (provided that the
statement made in clause (ii) below shall apply for purposes of this
subsection (j) only in the case of the Loans to be made on the first
Delivery Date):
(i) the representations and warranties of the Company
contained in this Agreement and in any other Operative
Agreement, and in any certificate delivered pursuant hereto or
thereto, are true and correct on and as of such Delivery 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);
[ *
]
(iii) nothing has occurred which will, in the judgment of
such officer, materially adversely affect the ability of the
Company to carry on its business or to perform its obligations
under this Agreement, the Indenture, the Equipment Purchase
Certificates and each other Operative Agreement to which it is
a party; and
(iv) no event has occurred and is continuing, or would result
from the purchase of such Aircraft, which constitutes an Event
of Loss with respect to such Aircraft, a Default or an Event
of Default.
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*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 26
(k) Legal Opinions. The Agent (acting directly or by
authorization to its special counsel) and each Bank shall have received
from the following counsel their respective legal opinions, in each
case satisfactory to the Agent as to scope and substance (and
covering such other matters as the Agent may reasonably request) and
dated such Delivery Date:
(i) George W. Hearn, Esq., Vice President, Law-Corporate and
Business Transactions of the Company, substantially in the
form of Exhibit B hereto and addressed to the Agent, each Bank
and the Indenture Trustee;
(ii) Davis Polk & Wardwell, special counsel for the Company,
substantially in the form of Exhibit C hereto and addressed to
the Agent, each Bank and the Trustee;
(iii) Powell, Goldstein, Frazer & Murphy, special counsel for
the Indenture Trustee, substantially in the form of Exhibit D
hereto and addressed to the Agent and each Bank;
(iv) Daugherty, Fowler & Peregrin, special FAA counsel,
addressed to the Agent, each Bank and the Indenture Trustee
and covering such matters as the Banks (or any of them) may
reasonably request;
(v) counsel for the Engine Manufacturer, substantially in the
form set forth in Exhibit E hereto and addressed to the Agent,
each Bank and the Indenture Trustee; and
(vi) counsel for AVSA and the Manufacturer, substantially in
the form set forth in Exhibit F hereto and addressed to the
Agent, each Bank and the Indenture Trustee.
In addition, the Banks shall have received opinions, dated the
Delivery Date, of Milbank, Tweed, Hadley & McCloy, special New York
counsel for the Banks, and S.G. Archibald, special French counsel to
the Banks, each addressed to the Banks and covering such matters as
the Banks (or any of them) may reasonably request.
(l) Appraisal. The Agent and each Bank shall have received an
acceptable appraisal by an independent internationally recognized
appraiser acceptable to the Company and the Agent, setting forth the
Fair Market Value of such Aircraft on such Delivery Date.
(m) Payment of Taxes, Etc. All fees, charges, taxes, assessments,
costs and other expenses then due and payable in connection with the
execution, delivery, recording
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<PAGE> 27
and filing of all financing statements and the documents and
instruments referred to in subsections (h) and (i) of this Section 3,
or in connection with the purchase of such Aircraft by the Company and
the issuance of the Equipment Purchase Certificates, and all sales
taxes and duties related to the consummation of the transactions
contemplated by the Operative Agreements which are then due shall, in
each case, have been duly paid or caused to be paid in full by the
Company, other than any such taxes which, after notice to the Agent by
the Company, are being contested by the Company in good faith and by
appropriate proceedings, so long as any such proceeding or the failure
by the Company to pay such taxes does not involve any danger of the
sale, forfeiture or loss of the Aircraft or otherwise have any adverse
effect on any Bank or its rights or interests under or in respect of
any Loan or the Equipment Purchase Certificates evidencing the same or
this Agreement or any other related Operative Agreement.
(n) Opinion of Special FAA Counsel Upon Registration. Promptly upon
the registration of such Aircraft and the recording of the Indenture
and the Indenture Supplement covering such Aircraft pursuant to the
Act, special FAA counsel referred to in clause (iv) of subsection (k)
of this Section 3 shall deliver to the Agent, each Bank and the
Indenture Trustee an opinion as to (i) the due registration of such
Aircraft in the name of the Company, and (ii) the due recording
pursuant to the Act of the FAA Bill of Sale and the Indenture with
such Indenture Supplement attached as an exhibit.
The obligation of any Bank to make any Loan hereunder is also subject to the
payment by the Company of such fees and other costs and expenses as the Company
shall have agreed pursuant to the Facility to pay to any Bank or the Agent in
connection herewith, including, without limitation, any fees payable on or
prior to such Delivery Date pursuant to Section 2.04 hereof.
Section 4. Representations and Warranties. The Company represents and
warrants to the Agent and the Banks that:
4.01 Corporate Existence The Company: (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware with its principal place of business and chief executive office in
Memphis, Tennessee; (b) has full power, authority and legal right to conduct
its current 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 Equipment Purchase Certificates and the other Operative
Agreements to which it is a party; and (c) is duly qualified to do business as
a foreign corporation 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 Company require such qualification.
4.02 Certification The Company 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
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<PAGE> 28
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.
4.03 Permits The Company 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.
4.04 Recordings and Filings Except for (a) the filing for recording
pursuant to the Act of the documents referred to in Section 3(i), and (b) the
filings referred to in Section 3(h), no further action, including any filing or
recording of any document, is necessary or advisable in order to establish and
perfect the Company's title to and interest in the Aircraft as against any
third parties, or to perfect the first security interest in and mortgage lien
on the Indenture Estate in favor of the Indenture Trustee with respect to such
portion of the Aircraft as is covered by the recording system established by
the Act.
4.05 Authorization The execution, delivery and performance by the
Company of the Equipment Purchase Certificates and the other Operative
Agreements to which it is a party have been duly authorized by all necessary
corporate action of the Company.
4.06 Governmental Approvals No authorization, approval, consent 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 due
execution, delivery or, except as specified in Section 4.04 above, performance,
by the Company of the Equipment Purchase Certificates or the other Operative
Agreements to which it is a party.
4.07 Enforceability Each of the Equipment Purchase Certificates
issued or to be issued by the Company on a Delivery Date with respect to which
it has given a notice of borrowing pursuant to Section 2.02 hereof, and each of
the other Operative Agreements to which it is or will be a party on such
Delivery Date, has, or on such Delivery Date will have, been duly and validly
executed and delivered by the Company and constitutes, or on such Delivery Date
will constitute, the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except as such
enforcement may be limited by applicable bankruptcy, insolvency or other
similar laws affecting creditor's rights generally.
4.08 No Conflicts Neither the execution, delivery or performance by
the Company of this Agreement, the Equipment Purchase Certificates or any of
the other Operative Agreements to which it is a party, 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 (other than the Consent and
Agreement, the AVSA Consent and Agreement and the Engine Consent and Agreement)
28
<PAGE> 29
or approval under, any law, governmental rule or regulation or the charter
documents, as amended, or bylaws, as amended, of the Company or any order,
writ, injunction or decree of any court or governmental authority against the
Company 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 Company 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, except for the Liens of the Indenture.
4.09 Litigation [ *
]
4.10 Taxes The Company 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 Company (other than assessments the payment of which
is being contested in good faith by the Company), and the Company 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 Company's consolidated financial condition (other than, in any such case,
assessments, the payment of which is being contested in good faith by the
Company and other than the federal transportation excise tax assessments, the
protests against which are described in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1994 (as updated by Note 7 to the
financial statements included in the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended February 28, 1995) which assessments are being
contested in good faith by the Company).
4.11 Financial Statements The Company has heretofore delivered to the
Banks true and correct copies of the Company's Annual Report on Form 10-K for
the fiscal year ended May 31, 1994, and of the Company's Quarterly Report on
Form 10-Q referred to in Section 4.09 above, and of the audited consolidated
balance sheets of the Company for the fiscal year 1994 and the unaudited
consolidated balance sheets of the Company as of February 28, 1995, and the
related consolidated statements of income, changes in common
- --------------------
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 30
stockholders' investment and cash flows for the fiscal year and interim
reporting period ended on such dates, accompanied (except in the case of such
interim reporting period) by a report thereon containing opinions without
qualification by Arthur Andersen & Co.,
independent public accountants. Said financial statements have been prepared
in accordance with GAAP consistently applied and present fairly the financial
position of the Company as of such dates and the results of its operations and
cash flows for such periods.
4.12 Disclosure [ *
]
4.13 No Defaults, Etc. The Company is not in default under any
mortgage, deed of trust, indenture or other instrument or agreement to which
the Company 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 Company or its ability to perform any of its obligations under any of the
Operative Agreements to which it is or will be a party.
4.14 Use of Proceeds [ *
]
4.15 ERISA Except as otherwise disclosed in writing to the Agent and
each Bank:
(a) none of the Plans nor their related trusts have been terminated
in a distress termination pursuant to Section 4041(c) of ERISA or by
the PBGC pursuant to Section 4042 of ERISA, nor have any actions been
taken to so terminate any Plan or related trust and neither the
Company nor any ERISA Affiliate has incurred or could reasonably
expect to incur any material liability with respect to a Plan under
Section
- --------------------
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 31
4062, 4063, 4064 or 4069 of ERISA;
(b) there have been no "reportable events" (as such term is defined
in Section 4043(b) of ERISA) with respect to any Plan which have
resulted or could reasonably be expected to result in any material
liability of the Company;
(c) 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 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 Plans;
(d) neither the Company nor any ERISA Affiliate has failed to make
any contribution or payment to any 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;
(e) all Plans are in compliance in all material respects with all
applicable provisions of ERISA and the Code and have been so
administered and operated by the Company and/or ERISA Affiliates, as
applicable;
(f) neither the Company 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; and
(g) to the best of the Company's knowledge, neither the Company 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 Company to the tax or
penalties on prohibited transactions imposed by Section 4975 of the
Code or Section 502 of ERISA.
[ *
]
[ *
]
Section 5. The Agent
- ----------------------
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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5.01 Appointment, Powers and Immunities Each Bank hereby irrevocably
appoints and authorizes the Agent to act as its agent hereunder and under the
other Operative Agreements with such powers as are specifically delegated to
the Agent by the terms of this Agreement and of the other Operative Agreements,
together with such other powers as are reasonably incidental thereto. In
addition, each Bank hereby agrees that, notwithstanding any provision of this
Agreement or any other Operative Agreement to the contrary, the Agent, on
behalf of such Bank, shall retain possession of any Equipment Purchase
Certificate delivered to the Agent on behalf of such Bank pursuant to Section
3(b) hereof unless and until such Bank shall direct the Agent in writing to
deliver such Equipment Purchase Certificate to it or to such other Person as it
may specify in such direction, and that any references in this Agreement or in
any other Operative Agreement to the Company's delivering any such Equipment
Purchase Certificate to such Bank shall be satisfied by the Company's
delivering such Equipment Purchase Certificate to the Agent, on behalf of such
Bank. The Agent (which term as used in this sentence and in Section 5.05 and
the first sentence of Section 5.06 hereof shall include reference to its
affiliates and its own and its affiliates' officers, directors, employees and
agents): (a) shall have no duties or responsibilities except those expressly
set forth in this Agreement and in the other Operative Agreements, and shall
not by reason of this Agreement or any other be a trustee for any Bank; (b)
shall not be responsible to the Banks for any recitals, statements,
representations or warranties contained in this Agreement or in any other
Operative Agreement, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any other
Operative Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, any Equipment Purchase
Certificate or any other Operative Agreement or any other document referred to
or provided for herein or therein or for any failure by the Company or any
other Person to perform any of its obligations hereunder or thereunder; (c)
shall not be required to initiate or conduct any litigation or collection
proceedings hereunder or under any other Operative Agreement; and (d) shall not
be responsible for any action taken or omitted to be taken by it hereunder or
under any other Operative Agreement or under any other document or instrument
referred to or provided for herein or therein or in connection herewith or
therewith, except for its own gross negligence or willful misconduct. The
Agent may employ agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such agents or attorneys-in-fact selected
by it in good faith. The Agent may deem and treat the payee of any Equipment
Purchase Certificate as the holder thereof for all purposes hereof unless and
until a notice of the assignment or transfer thereof shall have been filed with
the Agent, together with the consent of the Company to such assignment or
transfer (to the extent provided in Section 7.06 hereof).
5.02 Reliance by Agent The Agent shall be entitled to rely upon any
certification, notice or other communication (including, without limitation,
any thereof by telephone, telecopy, telex, telegram or cable) believed by it to
be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the
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<PAGE> 33
Agent. As to any matters not expressly provided for by this Agreement or any
other Operative Agreement, the Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder or thereunder in accordance
with instructions given by the Majority Banks or, if provided herein, in
accordance with the instructions given by all of the Banks as is required in
such circumstance, and such instructions of such Banks and any action taken or
failure to act pursuant thereto shall be binding on all of the Banks.
5.03 Defaults, Etc. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or an Event of Default unless the Agent
has received notice from a Bank or the Company specifying such Default or Event
of Default and stating that such notice is a "Notice of Default" or "Notice of
Event of Default", as the case may be. In the event that the Agent receives
such a notice of the occurrence of a Default or an Event of Default, the Agent
shall give prompt notice thereof to the Banks. The Agent shall (subject always
to the provisions of the applicable Indenture and to Section 5.07 hereof) take
such action with respect to such Default or Event of Default as shall be
directed by the Majority Banks, provided that, unless and until the Agent shall
have received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interest of
the Banks except to the extent that this Agreement or the related Indenture
expressly requires that such action be taken, or not be taken, only with the
consent or upon the authorization of the Majority Banks or all of the Banks.
5.04 Rights as a Bank With respect to its Commitments and the Loans
made by it, Chase (and any successor acting as Agent) in its capacity as a Bank
hereunder shall have the same rights and powers hereunder as any other Bank and
may exercise the same as though it were not acting as the Agent, and the term
"Bank" or "Banks" shall, unless the context otherwise indicates, include the
Agent in its individual capacity. Chase (and any successor acting as Agent)
and its affiliates may (without having to account therefor to any Bank) accept
deposits from, lend money to, make investments in and generally engage in any
kind of banking, trust or other business with the Company (and any of its
Subsidiaries or Affiliates) as if it were not acting as the Agent, and Chase
and its affiliates may accept fees and other consideration from the Company for
services in connection with this Agreement or otherwise without having to
account for the same to the Banks.
5.05 Indemnification The Banks agree to indemnify the Agent (to the
extent not reimbursed under Section 7.03 hereof, but without limiting the
obligations of the Company under said Section 7.03) ratably in accordance with
their respective Commitments or Loans at the time outstanding, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever that
may be imposed on, incurred by or asserted against the Agent (including by any
Bank) arising out of or by reason of any investigation in or in any way
relating to or arising out of this Agreement or any other Operative Agreement
or any other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or
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<PAGE> 34
thereby (including, without limitation, the costs and expenses that the Company
is obligated to pay under Section 7.03 hereof, but excluding, unless a Default
or an Event of Default has occurred and is continuing, normal administrative
costs and expenses incident to the performance of its agency duties hereunder)
or the enforcement of any of the terms hereof or thereof or of any such other
documents, provided that no Bank shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
party to be indemnified.
5.06 Non-Reliance on Agent and Other Banks Each Bank agrees that it
has, independently and without reliance on the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Company and decision to enter into this Agreement
and that it will, independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement and the related Operative
Agreements. The Agent shall not be required to keep itself informed as to the
performance or observance by the Company of this Agreement or any of the other
Operative Agreements or any other document referred to or provided for herein
or therein or to inspect the Properties or books of the Company. Except for
notices, reports and other documents and information expressly required to be
furnished to the Banks by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Company or any
of its Subsidiaries (or any of their Affiliates) that may come into the
possession of the Agent or any of its affiliates.
5.07 Failure to Act Except for action expressly required of the Agent
hereunder and under the other Operative Agreements, the Agent shall in all
cases be fully justified in failing or refusing to act hereunder and thereunder
unless it shall receive further assurances to its satisfaction from the Banks
of their indemnification obligations under Section 5.05 hereof against any and
all liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
5.08 Resignation or Removal of Agent Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving notice thereof to the Banks, the Company and the Indenture
Trustee, and the Agent may be removed at any time with or without cause by the
Majority Banks. Upon any such resignation or removal, the Majority Banks shall
have the right to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Majority Banks and shall have accepted such
appointment within 30 days after the retiring Agent's giving of notice of
resignation or the Majority Banks' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent, that
shall be a bank which has an office in New York, New York. Upon the acceptance
of any appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with
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<PAGE> 35
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Section 5 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting
as the Agent.
Section 6. Certain Covenants
6.01 Tax Indemnity (a) Generally. The Company agrees promptly to
pay when due, and to indemnify and hold each Bank and the Agent (each an
"Indemnitee") harmless from the following taxes, fees, levies, imposts,
recording duties, charges or withholdings, together with any assessments,
penalties, fines, additions to tax or interest thereon (individually, a "Tax,"
and collectively, "Taxes"), however imposed, upon or with respect to, payments
by the Company hereunder or under the Equipment Purchase Certificates or an
Indenture:
(i) Taxes imposed on or measured by the net or gross income or
excess profits, receipts, minimum tax, capital, franchise, net worth
or conduct of business taxes of any Indemnitee, solely to the extent
that such Income Tax is imposed by an authority purporting to have
power to impose a Tax other than the United States federal government,
and only if (i) the operation, registration, location, presence,
basing or use of any Aircraft or Airframe or any part thereof, or (ii)
the place of incorporation, principal office or corporate domicile of
the Company in such state or foreign country is the sole connection
between such Indemnitee and such jurisdiction; and
(ii) any U.S. Federal withholding taxes with respect to an
Indemnitee which is not a United States Person (as described in
Section 7701(a)(30) of the Code) if such Indemnitee in a timely manner
(I) delivers (A) two duly completed Treasury Department Forms 4224
with respect to any and all payments under the Equipment Purchase
Certificates, (B) a Treasury Department Form 1001 claiming the benefit
of a Tax treaty with respect to interest, or (C) a Treasury Department
Form W8, in each case, evidencing such Indemnitee's complete exemption
from United States withholding taxes on interest, and (II) executes
and delivers additional Treasury Department Form 4224, 1001, or W8 (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 such Indemnitee is not legally entitled to do so as a
result of a change in law, treaty or regulation enacted, adopted or
promulgated after the date such Holder became a Holder other than the
amendment of a tax treaty or the adoption of a new treaty that
contains a limitation of benefits article similar to that contained in
article 28 of the German-U.S. tax treaty signed August 29, 1989);
provided, however, that the provision of this clause (ii) shall not
apply to any U.S. Federal withholding taxes for which the Company
would be required to indemnify a Holder so that any payment otherwise
required to be made on a After-Tax Basis under the Operative
Agreements is made on an After-Tax Basis.
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<PAGE> 36
The Company shall withhold (or cause to be withheld) any Taxes required to be
withheld on payments to any Bank (including the Agent) who is not a U.S. Person
except to the extent that such Bank (including the Agent) has furnished
evidence satisfactory to the Company of any exemption from withholding claimed
by such Bank (including the Agent).
(b) After-Tax Basis. The amount which the Company shall be required
to pay with respect to any Tax indemnified against under Section 6.01(a) 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 tax benefit by reason of the payment of
any Tax paid or indemnified against by the Company, such Indemnitee shall
promptly pay to the Company to the extent such tax benefit was not previously
taken into account in computing such payment, but not before the Company shall
have made all payments then due to such Indemnitee under this Agreement, and
any other Operative Agreement, an amount equal to the lesser of (x) such amount
as such Indemnitee reasonably estimates represents the sum of such tax benefit
plus any other tax benefit 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 Company, and (y) the amount of the payment, if any,
then required to be made under Sections 6.01(a) and this Section 6.01(b) by the
Company to such Indemnitee plus the amount of any other payments by the Company
to such Indemnitee theretofore required to be made under Section 6.01(a) and
this Section 6.01(b) (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
Company to make payments pursuant to Section 6.01(a)); provided, however, that
such Indemnitee shall not be obligated to make any payment to the Company
pursuant to this sentence as long as an Event of Default shall have occurred
and be continuing. The Company shall reimburse on an After-Tax Basis such
Indemnitee for any payment of a tax benefit pursuant to the preceding sentence
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).
(c) Time of Payment. Any amount payable to an Indemnitee pursuant to
this Section 6.01 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 Company in good faith or by the Indemnitee
pursuant to subsection (f) below, such amount shall be payable 30 days after
the time such contest is finally resolved.
(d) Contests. If a written claim is made against any Indemnitee for
Taxes with respect to which the Company is liable for a payment or indemnity
under Section 6.01(a)(i) hereof, such Indemnitee shall promptly give the
Company notice in writing of such claim and shall furnish the Company with
copies of any requests for information from any taxing authority
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<PAGE> 37
relating to such Taxes with respect to which the Company 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 Section 6.01, except to the extent that the Company
has been materially and adversely prejudiced by such failure. The Indemnitee
shall in good faith, with due diligence and at the Company's expense, if timely
requested in writing by the Company, contest (or, at the Indemnitee's option,
require the Company to contest in the name of the Company if permitted by law,
or the Indemnitee) 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 nonpayment will not result in a
material risk of the sale, forfeiture or loss of, or the creation of a
Lien other than a Lien permitted under Section 4.01(a) or (c) of the
related Indenture on any Aircraft, Airframe or any parts; or
(ii) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings.
If the Indemnitee elects to conduct the contest it shall determine in
consultation with the Company, the manner in which to contest such Taxes and
the Indemnitee shall advise the Company of actions to be taken in implementing
such contest and shall consider in good faith any suggestion made by the
Company as to the method of pursuing such contest. Notwithstanding the
preceding sentences of this subsection (d) such Indemnitee shall not be
required to take any action unless the Company shall have (i) agreed to
indemnify the Indemnitee for any liability or reasonable expense which such
Indemnitee incurred 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 Company's obligation to such Indemnitee pursuant to this
Agreement to the extent that the contest is not successful; provided, however,
that such acknowledgement shall not preclude the Company from raising defenses
to liability under this Agreement if a decision in such contest is rendered
which articulates the cause of such Tax and the cause, as so articulated, is
not one for which the Company is responsible to pay an indemnity hereunder;
(iii) furnished such Indemnitee with an opinion of counsel to the effect that
reasonable grounds exist for contesting such Tax; and (iv) 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 any Operative Agreements. In no event shall such Indemnitee be
required or the Company permitted to contest pursuant to this subsection (d)
the imposition of any Tax for which the Company is obligated to indemnify any
Indemnitee hereunder unless, if such contest shall be conducted in a manner
requiring payment of the claim in advance, the Company shall have advanced
sufficient funds, on an interest free basis to make the payment required, and
agreed to
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<PAGE> 38
indemnify the Indemnitee against any additional net after-tax cost to such
Indemnitee of such advance.
Nothing contained in this subsection (d) shall require any Indemnitee
to contest, or permit the Company to contest, a claim which such Indemnitee
would otherwise be required to contest pursuant to this subsection (f), if such
Indemnitee shall waive payment by the Company of any amount that might
otherwise be payable by the Company under this Section 6.01 in connection with
such claim.
(e) Refunds. Upon receipt by an Indemnitee of a refund of all or any
part of any Taxes which the Company shall have paid for such Indemnitee or for
which the Company shall have reimbursed or indemnified such Indemnitee, and
provided there shall not have occurred and be continuing any Payment Default,
Bankruptcy Default or Event of Default (in which case payment shall not be made
to the Company until such Payment Default, Bankruptcy Default or Event of
Default shall have been cured), such Indemnitee shall pay to the Company 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
Section 6.01 and (z) Taxes payable with respect to 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.
(f) Survival of Obligations. The representations, warranties,
indemnities, agreements and obligations under this Section 6.01 shall survive
the making available by the Banks of their respective Commitments and the
expiration or other termination of the 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 or existing prior to or incurred in the process of the termination of
the related Indenture or the return or disposition of the related Aircraft.
6.02 General Indemnity (a) For the purposes of this Section 6.02,
"Claims" shall mean any and all costs, liabilities (including strict or
absolute liability without fault in tort or otherwise), losses, damages,
penalties, actions or suits or claims which may be imposed on, incurred by,
suffered by, or asserted against an Indemnified Person, as defined herein, and,
except as otherwise expressly provided in this Section 6.02, shall include all
reasonable out-of-pocket costs, disbursements and expenses (including legal
fees and expenses, including, without limitation, the allocated reasonable
costs and expenses of in-house counsel to any Bank) paid or incurred by an
Indemnified Person in connection therewith.
(b) For the purposes of this Section 6.02, "Indemnified Person" means
the Agent, each Bank and each of the successors, permitted transferees or
assigns of each of the foregoing and their respective officers, directors,
employees and agents permitted under the terms hereof; provided, that any
Persons who are not signatories hereto that make a claim for
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<PAGE> 39
indemnification hereunder in respect of any Claim shall by the making of such
Claim be deemed to have agreed to be bound by all the terms of this Section
6.02.
(c) Subject to the exclusions stated in clause (d) below, the Company
agrees to indemnify, defend and hold harmless each Indemnified Person on an
After-Tax Basis against Claims resulting from or arising out of:
(i) the purchase, ownership, operation, possession, use, maintenance,
overhaul, testing, registration, reregistration, modification,
alteration or lease of any Aircraft, Airframe or any Engine, or any
engine used in connection with any Airframe, or any part thereof by
the Company, any Lessee or any other Person whatsoever, whether or not
such purchase, ownership, operation, possession, use, maintenance,
overhaul, testing, registration, reregistration, nonuse, modification,
alteration or lease is in compliance with the terms of the related
Indenture;
(ii) the manufacture, design, purchase, acceptance, rejection,
delivery, or condition of any Aircraft or any Engine, including,
without limitation, latent and other defects, whether or not
discoverable, and patent, trademark or copyright infringement; and
(iii) any breach of or failure to perform or observe, or any other
noncompliance with, any covenant or agreement to be performed or other
obligation of the Company under any of the Operative Agreements, or
the falsity of any representation or warranty of the Company in any of
the Operative Agreements.
(d) The following are excluded from the Company's agreement to
indemnify under this Section 6.02:
(i) Claims which are Taxes whether or not covered pursuant to the
indemnity set forth in Section 6.01 hereof;
(ii) with respect to any particular Indemnified Person, Claims to the
extent attributable to the gross negligence or willful misconduct of,
or to the breach of any contractual obligation by, or the falsity or
inaccuracy of any representation or warranty of, such Indemnified
Person;
(iii) Claims attributable to acts or events occurring in any period
subsequent to termination of this Loan Agreement and the repayment in
full of the Loans and all other amounts due to the Banks hereunder and
under the other Operative Agreements;
(iv) with respect to any particular Indemnified Person, Claims in
respect of any Liens described in Section 4.01(c) of any Indenture, to
the extent attributable to such Indemnified Person; and
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<PAGE> 40
(v) with respect to any particular Indemnified Person, Claims to the
extent resulting from or arising out of any transfer by such
Indemnified Person of any Equipment Purchase Certificate, unless such
transfer shall occur during a period when an Event of Default under
the related Indenture has occurred and is continuing or shall have
been made at the request of the Company as contemplated by Section
2.15 hereof (but in the case of a transfer so requested by the
Company, Claims shall not include Additional Costs to the extent such
Indemnified Person is pursuant to clause (a) of Section 2.15 hereof
denied the right to Additional Cost otherwise payable to it pursuant
to Section 2.12).
(e) In the case of any Claim indemnified by the Company hereunder
which is covered by a policy of insurance maintained by the Company pursuant to
Section 4.06 of the related Indenture or otherwise, the Company and its
insurers shall, unless an Event of Default shall have occurred and be
continuing, have the right (in each case at the Company's sole cost and
expense) to investigate such Claim and any Indemnified Person claiming
indemnification hereunder in respect of such Claim shall reasonably cooperate
(at the Company's sole cost and expense) with such insurers in connection
therewith.
(f) An Indemnified Person shall promptly notify the Company of any
Claim as to which indemnification is sought. Subject to the rights of insurers
under policies of insurance maintained by the Company, the Company shall,
unless an Event of Default shall have occurred and be continuing, have the
right to investigate, and the right in its sole discretion to defend or
compromise any Claim for which indemnification is sought under this Section
6.02, and the Indemnified Person shall cooperate with all reasonable requests
of the Company in connection therewith; provided, that the Company shall have
first acknowledged in writing to such Indemnified Person the Company's
obligation to indemnify such Person hereunder in respect of such Claim; and
provided, further, the Company shall not be entitled to assume and control the
defense of any such Claim if and to the extent such Indemnified Person
reasonably objects to such control on the ground that an actual or potential
material conflict of interest exists where it is advisable for such Indemnified
Person to be represented by separate counsel. Subject to the immediately
foregoing sentence, where the Company or the insurers under a policy of
insurance maintained by the Company undertake the defense of an Indemnified
Person with respect to a Claim, no additional legal fees or expenses of such
Indemnified Person 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 Company or such insurers. Subject to the requirement of any
policy of insurance applicable to a Claim, an Indemnified Person may
participate at its own expense in any judicial proceeding controlled by the
Company 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 Company 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 6.02.
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<PAGE> 41
(g) To the extent that a Claim indemnified by the Company under this
Section 6.02 is in fact paid by the Company and/or an insurer under a policy of
insurance maintained by the Company, the Company and/or such insurer as the
case may be shall be subrogated to the extent of such payment to the rights and
remedies of the Indemnified Person on whose behalf such Claim was paid with
respect to the transaction or event giving rise to such Claim. Should an
Indemnified Person receive any refund, in whole or in part, with respect to any
Claim paid by the Company hereunder, it shall promptly pay over the amount
refunded, together with any interest received with respect to such amount for
the period between the indemnification payment and the receipt of such refund,
to the Company, but in no event more than the amount theretofore received by
such Indemnified Person from the Company and its insurers in respect of such
Claim.
(h) The general indemnification provisions of this Section 6.02 are
not intended to waive or supersede any specific provisions of, or any rights or
remedies of the Company under, this Loan Agreement or any other Operative
Agreement to the extent such provisions apply to any Claim. The Company does
not guarantee and nothing in the general indemnification provisions of this
Section 6.02 shall be construed as a guarantee by the Company with respect to
the value of any Aircraft or any part thereof.
6.03 Insurance [ *
]
6.04 Liens Notwithstanding any provision of any Indenture or any
other Operative Agreement to the contrary, if the Company shall fail to perform
or observe the provisions of Section 4.01 of any Indenture, such failure shall
constitute a "Default" under such Indenture, and if such failure shall continue
unremedied for a period of 30 days, such failure shall, unless such failure
does not involve any material danger of the sale, forfeiture or loss of any of
the Indenture Estate or any interest therein, constitute an "Event of Default"
under such Indenture, in each case for all purposes thereof and of the related
Operative Agreements, and such Default or Event of Default, as the case may be,
shall be deemed to exist and continue so long as, but only so long as, it shall
not have been remedied, and, without limiting the generality of the foregoing,
the remedial provisions of Section 6.02 of such Indenture shall apply to such
Event of Default as if it were an Event of Default expressly referred to in
Section 6.01 thereof (other than an Event of Default referred to in Section
6.01(d), (e) or (f) thereof).
6.05 Certification The Company shall, as long as and to the extent
required under Section 1110 of the Bankruptcy Code in order that the Indenture
Trustee under such
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*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 42
Indenture shall be entitled to the benefits of said Section 1110 with respect
to the Aircraft subject to the Lien thereof, remain 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.
Section 7. Miscellaneous
7.01 Waiver No failure on the part of the Agent or any Bank to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under this Agreement or any Equipment Purchase
Certificate or any other Operative Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
this Agreement or any Equipment Purchase Certificate or any other Operative
Agreement preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
7.02 Notices Unless otherwise expressly specified or permitted by the
terms of this Agreement, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted by this
Agreement to be made, given, furnished or filed shall be in writing, mailed by
certified mail, postage prepaid, return receipt requested or delivered by hand
or by Federal Express or other delivery service of established reputation or by
confirmed telex or facsimile to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof; or, as to any
party, at such other address as shall be designated by such party in a notice
to each other party. Any notice given pursuant to this Section 7.02 shall be
deemed given, and such requirement shall be deemed satisfied, when such notice
is received, if such notice is mailed by certified mail, postage prepaid or is
delivered by hand or Federal Express or other delivery service of established
reputation, or is sent by confirmed telex, telecopy or facsimile (if, in the
case of a facsimile, transmitted on a Business Day and during normal business
hours of the recipient, and otherwise on the next Business Day following
transmission), in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.
7.03 Expenses, Etc. The Company agrees to pay or reimburse each of
the Banks and the Agent for paying: (a) all reasonable out-of-pocket costs and
expenses of the Banks and the Agent (including, without limitation, and within
30 days after receipt of any statement therefor or reasonably promptly after
the closing of any U.S. leveraged lease financing under the Facility, the
reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy, special New
York counsel for the Banks, and S.G. Archibald, special French counsel for the
Banks), in connection with (i) the negotiation, preparation, execution and
delivery of this Agreement and the other Operative Agreements and the making of
the Loans hereunder, and (ii) any modification, supplement or waiver of any of
the terms of this Agreement or any of the other
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<PAGE> 43
Operative Agreements; (b) all reasonable costs and expenses of the Banks and
the Agent (including, without limitation, reasonable counsels' fees and the
allocated reasonable costs and expenses of in-house counsel to any Bank) in
connection with (i) any Default or Event of Default and any enforcement or
collection proceedings resulting therefrom or in connection with the
negotiation of any restructuring or "work-out" (whether or not consummated), or
the obligations of the Company hereunder and (ii) the enforcement of this
Section 7.03; and (c) except in connection with such Bank's voluntary transfer,
or grant of a participation in, its Loans or Equipment Purchase Certificates
(other than if an Event of Default shall have occurred and be continuing), all
appraisal costs and all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any of the other Operative Agreements or any other
document referred to herein or therein and all costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest contemplated by
any Operative Agreement or any other document referred to therein, including,
without limitation, the Uniform Commercial Code financing statements referred
to in Section 3(h) and any continuation statements in respect thereof; provided
that, notwithstanding any provision of this Agreement or the Facility to the
contrary, in no event shall the Company be required to pay or reimburse any
Bank for any out-of-pocket costs or expenses incurred by such Bank in
connection with any Loan to be made by it hereunder if such Bank, after
satisfaction in full in accordance with the terms of this Agreement of the
conditions to its obligation to make such Loan, shall fail to make such Loan as
provided herein in breach of its obligations hereunder.
7.04 Amendments, Etc. Except as otherwise expressly provided in this
Agreement and subject always to the provisions of Section 10.01(b) of the
related Indenture, any provision of this Agreement may be amended, modified or
supplemented only by an instrument in writing signed by the Company, the Agent
and the Majority Banks, or by the Company and the Agent acting with the consent
of the Majority Banks, and any provision of this Agreement may be waived by the
Majority Banks or by the Agent acting with the consent of the Majority Banks;
provided that: (a) no amendment, modification, supplement or waiver shall,
unless by an instrument signed by all of the Banks or by the Agent acting with
the consent of all of the Banks: (i) increase, or extend the term of any of
the Commitments, or extend the time or waive any requirement for the reduction
or termination of any of the Commitments, (ii) extend the date fixed for the
payment of principal of or interest on any Loan or the Equipment Purchase
Certificate evidencing the same or fee hereunder, (iii) reduce the amount of
any such payment of principal, (iv) reduce the rate at which interest is
payable thereon or any fee is payable hereunder, (v) alter the rights or
obligations of the Company to prepay Loans or the Equipment Purchase
Certificates evidencing the same as provided in the related Indenture, (vi)
alter the terms of this Section 7.04, (vii) modify the definition of the term
"Majority Banks", or modify in any other manner the number or percentage of the
Banks required to make any determinations or waive any rights hereunder or to
modify any provision hereof, or (viii) waive any of the
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<PAGE> 44
conditions precedent set forth in Section 3 hereof; and (b) any modification or
supplement of Section 5 hereof shall require the consent of the Agent.
Anything in this Agreement to the contrary notwithstanding, if at a
time when the conditions precedent set forth in Section 3 hereof to the making
of any Loan hereunder are, in the opinion of the Majority Banks, satisfied, any
Bank shall fail to fulfill its obligations to make such Loan then, for so long
as such failure shall continue, such Bank shall (unless the Majority Banks, as
the case may be, determined as if such Bank were not a "Bank" hereunder, shall
otherwise consent in writing) be deemed for all purposes relating to
amendments, modifications, waivers or consents under this Agreement or any of
the other Operative Agreements (including, without limitation, under this
Section 7.04) to have no Loans, shall not be treated as a "Bank" hereunder when
performing the computation of Majority Banks and shall have no rights under the
preceding paragraph of this Section 7.04; provided that any action taken by the
other Banks with respect to the matters referred to in clause (a) of the
preceding paragraph shall not be effective as against such Bank.
7.05 Successors and Assigns This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
7.06 Assignments and Participations
(a) The Company may not assign any of its rights or obligations
hereunder or under the Equipment Purchase Certificates or the other Operative
Agreements without the prior consent of all of the Banks and the Agent.
(b) Subject to Section 2.08 of the related Indenture, each Bank may
assign any of its Loans and the Equipment Purchase Certificates evidencing the
same and its Commitments, but only with the consent of the Company, which
consent shall not be unreasonably withheld, and, in the case of any assignment
of a Commitment, the consent of the Agent; provided that (i) prior to January
1, 1996 no such assignment shall be made by any Bank other than to an Affiliate
of such Bank or to another Bank, (ii) no such consent by the Company or the
Agent shall be required in the case of any assignment to another Bank, (iii) no
such consent of the Company shall be required in the case of any assignment
made after the first anniversary of the Closing Date or at any time that an
Event of Default shall have occurred and be continuing (but the transferor or
the transferee shall give notice of such transfer to the Company), (iv) each
such assignment by a Bank of its Loans and the Equipment Purchase Certificates
evidencing the same or Commitment shall be made in such manner so that the same
portion of its Loans and the Equipment Purchase Certificates evidencing the
same and Commitments is assigned to the respective assignee, (v) whether or not
in connection with any assignment requiring the Company's consent hereunder,
unless an Event of Default shall have occurred and be continuing, the Company
shall not immediately after giving effect to such assignment have any increased
liabilities or additional costs in connection with or as a result of any such
assignment, and (vi) each such assignment
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<PAGE> 45
by a Bank of its Loans and the Equipment Purchase Certificates evidencing the
same and/or its Commitment shall be in an aggregate principal amount at least
equal to [ *
]. Upon execution and delivery by the
assignee to the Company and the Agent of an instrument in writing pursuant to
which such assignee agrees to become a "Bank" hereunder (if not already a Bank)
having the Commitment(s) and Loans, specified in such instrument, and upon
consent thereto by the Company and the Agent, to the extent required above, the
assignee shall have, to the extent of such assignment (unless otherwise
provided in such assignment with the consent of the Company and the Agent), the
obligations, rights and benefits of a Bank hereunder holding the Commitment(s)
and Loans (or portions thereof) assigned to it (in addition to the
Commitment(s) and Loans theretofore held by such assignee) and the assigning
Bank shall, to the extent of such assignment, be released from the
Commitment(s) (or portion(s) thereof) so assigned. Upon each such assignment
the assigning Bank shall pay the Agent an assignment fee of $2,500. The
Company shall not be required to pay any costs or expenses of any such
assignment.
(c) A Bank may sell or agree to sell to one or more other Persons a
participation in all or any part of any Loans and the Equipment Purchase
Certificates evidencing the same held by it, or in its Commitments, provided
that each purchaser of a participation (a "Participant") shall not have any
rights or benefits under this Agreement or any Equipment Purchase Certificate
or any other Operative Agreement (the Participant's rights against such Bank in
respect of such participation to be those set forth in the agreements executed
by such Bank in favor of the Participant), and in no event shall the Company
have any increased liabilities or additional costs in connection with or as a
result of any such participation. In no event shall a Bank that sells a
participation agree with the Participant to take or refrain from taking any
action hereunder or under any other Operative Agreement except that such Bank
may agree with the Participant that it will not, without the consent of the
Participant, agree to any modification, supplement or waiver of any provision
of this Agreement or any other related Operative Agreement that would have the
effect described in clause (a)(i), (ii), (iii), (iv) or (v) of the proviso to
Section 7.04 hereof, provided that in no event shall the Company have any
obligation by reason of any such agreement between a Bank and a Participant to
inquire into whether such Bank has complied with the provisions thereof in
connection with any action taken by such Bank under or pursuant to this
Agreement or any other Operative Agreement.
(d) In addition to the assignments and participations permitted under
the foregoing provisions of this Section 7.06, any Bank may assign and pledge
all or any portion of its Loans and its Equipment Purchase Certificates
evidencing the same to any Federal Reserve Bank as collateral security pursuant
to Regulation A and any Operating Circular issued by such Federal Reserve Bank.
No such assignment shall release the assigning Bank from its obligations
hereunder.
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*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 46
(e) A Bank may furnish any information concerning the Company or any
of its Subsidiaries in the possession of such Bank from time to time to
permitted assignees and participants (including prospective assignees and
participants), subject, however, to the provisions of Section 7.14(b) hereof.
(f) Anything in this Section 7.06 to the contrary notwithstanding, no
Bank may assign or participate any interest in any Loan and Equipment Purchase
Certificates evidencing the same held by it hereunder to the Company or any of
its Affiliates or Subsidiaries without the prior written consent of each Bank.
7.07 Survival The obligations of the Company under Sections 2.12 and
7.03 hereof and the obligations of the Banks under Sections 5.05 and 6 hereof
shall survive the repayment, disposition and/or payment in full of the Loans
and Equipment Purchase Certificates evidencing the same and the termination of
the Commitments. In addition, each representation and warranty made, or deemed
to be made hereunder or pursuant hereto shall survive the making of such
representation and warranty, and no Bank shall be deemed to have waived, by
reason of making any Loan hereunder, any Default or Event of Default which may
arise by reason of such representation or warranty proving to have been false
or misleading, notwithstanding that such Bank or the Agent may have had notice
or knowledge or reason to believe that such representation or warranty was
false or misleading at the time such extension of credit was made.
7.08 Captions The table of contents and captions and section headings
appearing herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Agreement.
7.09 Counterparts This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
7.10 Governing Law; Submission to Jurisdiction This Agreement shall
be governed by, and construed in accordance with, the law of the State of New
York. The Company hereby submits to the nonexclusive jurisdiction of the
United States District Court for the Southern District of New York and of any
New York state court sitting in New York, New York for the purposes of all
legal proceedings arising out of or relating to this Agreement or the other
Operative Agreements or the transactions contemplated hereby or thereby. The
Company irrevocably waives, to the fullest extent permitted by applicable law,
any objection which it may now or hereafter have to the laying of the venue of
any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
Nothing in this Section 7.10 shall affect the right of the Agent or any Bank to
serve legal process in any other manner permitted by law or affect the right of
the Agent or any Bank to bring any action or proceeding against the Company or
its Property in the courts of other jurisdictions.
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<PAGE> 47
7.11 Waiver of Jury Trial EACH OF THE COMPANY, THE AGENT AND THE
BANKS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
7.12 No Oral Modifications The terms and provisions of this Agreement
and the other Operative Agreements may not be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party or
parties against which enforcement of the change, waiver, discharge or
termination is sought and subject to Section 7.04 hereof.
7.13 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 of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
7.14 Treatment of Certain Information; Confidentiality
(a) The Company acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
the Company or one or more of its Subsidiaries (in connection with this
Agreement or otherwise) by any Bank or by one or more subsidiaries or
affiliates of such Bank and the Company hereby authorizes each Bank to share
any information delivered to such Bank by the Company and its Subsidiaries
pursuant to this Agreement, or in connection with the decision of such Bank to
enter into this Agreement, to any such subsidiary or affiliate, it being
understood that any such subsidiary or affiliate receiving such information
shall be bound by the provisions of clause (b) below as if it were a Bank
hereunder.
(b) Each Bank and the Agent agrees (on behalf of itself and each of
its affiliates, directors, officers, employees and representatives) to use
reasonable precautions to keep confidential, in accordance with their customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, any non-public information
supplied to it by the Company pursuant to this Agreement which is identified by
such Person as being confidential at the time the same is delivered to the
Banks or the Agent, 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 Banks or the Agent who have
been instructed and have agreed to hold such information confidential, (iii) to
bank examiners, auditors or accountants, (iv) to the Agent or any other Bank
(or to Chase Securities, Inc. in its role as syndicator of the Loans), (v) in
connection with any litigation to which any one or more of the Banks or the
Agent is a party
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<PAGE> 48
relating to the transactions contemplated hereby or by any of the other
Operative Agreements, (vi) to a subsidiary or affiliate of such Bank as
provided in clause (a) above or (vii) 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 Bank an agreement in writing to be bound by the provisions of this
clause (b).
7.15 Leveraged Lease Documentation; Conversion Each of the Banks
agrees that it will, at the Company's request, (i) provide loan participations
in a U.S. leveraged lease financing of the purchase of one or more of the
Aircraft, in lieu of the Loans contemplated hereby to be made in respect of
such Aircraft, and (ii) if the Agent consents thereto, convert the Loans made
hereunder in respect of one or more particular Aircraft into loan
participations in a U.S. leveraged lease of such Aircraft, in each case subject
to the terms and conditions of and as contemplated by the Facility, subject to
the preparation, negotiation, execution and delivery of definitive leveraged
lease documentation therefor incorporating the terms set forth for a leveraged
lease financing in the Facility and otherwise in form and substance reasonably
satisfactory to the Banks and the Agent.
7.16 Allocation Any amount payable hereunder by the Company to any
Bank or the Agent (whether pursuant to Section 6.01, 6.02 or 7.03 hereof or
otherwise) that does not relate only to a single, particular outstanding Loan
or Equipment Purchase Certificate may, for purposes of the Indentures
(including, in particular, the second paragraph of Section 1.01 of each
thereof), be allocated among the outstanding Loans or Equipment Purchase
Certificates by such Bank or the Agent, as the case may be, in such manner as
it may reasonably determine.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
FEDERAL EXPRESS CORPORATION
By /s/ ROBERT D. HENNING
-----------------------------
Name: Robert D. Henning
Title: Managing Director
Aircraft Financing
Address for Notices:
2007 Corporate Avenue
Memphis, TN 38132
Attention: Vice President and
Treasurer
Telecopier: 901-395-4758
Telex: 534684
(Answerback: FEDEX INT MFS)
with a copy to:
1980 Nonconnah Drive
Memphis, TN 38132
Attention: General Counsel
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<PAGE> 50
Commitment for each THE CHASE MANHATTAN BANK
- -------------------
Aircraft: (NATIONAL ASSOCIATION)
- --------
$17,531,250.00
Aggregate Commitment: By /s/ MATTHEW H. MORRIS
- -------------------- ---------------------
Title: Vice President
$87,656,250.00
Lending Office for all Loans:
Maximum Exposure: The Chase Manhattan Bank
- ----------------
(National Association)
$52,500,000.00 One Chase Manhattan Plaza
New York, New York 10081
Address for Notices:
The Chase Manhattan Bank
(National Association)
One Chase Manhattan Plaza
New York, New York 10081
Attention: Mr. Sherwood E. Exum, Jr.
Telex No.: 62910
(Answerback: CHAMBANK)
Telecopier No.: 212-552-5242
Telephone No.: 212-552-4655
212-552-5910
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<PAGE> 51
Commitment for each BANK OF AMERICA NT & SA
- -------------------
Aircraft:
- --------
$17,531,250.00
Aggregate Commitment: By /s/ TIMOTHY C. HINTZ
- -------------------- --------------------
Title: Vice President
$87,656,250.00
Lending Office for all Loans:
Maximum Exposure:
- ----------------
Bank of America NT & SA
$52,500,000.00 GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, CA 94520
Address for Notices:
Bank of America NT & SA
GPO Account Admin. #5693
1850 Gateway Blvd.
Concord, CA 94520
Attention: Mr. Milt Haverty
Telex No.: 67652
(Answerback: BANAMERSFO)
Telecopier No.: 510-675-7531
Telephone No.: 510-675-8254
51
<PAGE> 52
Commitment for each CIBC INC.
- -------------------
Aircraft:
- --------
$17,531,250.00
Aggregate Commitment: By /s/ JAVREN S.
- -------------------- -------------
Title: Managing Director
$87,656,250.00
Lending Office for all Loans:
Maximum Exposure:
- ----------------
CIBC Inc.
$52,500,000.00 Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, GA 30339
Address for Notices:
CIBC Inc.
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, GA 30339
Attention: Ms. Pluria Howell
Telex No.: 542413
(Answerback: CANBANKATL)
Telecopier No.: 404-319-4950
Telephone No.: 404-319-4814
52
<PAGE> 53
Commitment for each THE FIRST NATIONAL BANK OF CHICAGO
- -------------------
Aircraft:
- --------
$17,531,250.00
Aggregate Commitment: By /s/ DAVID DIXON
- -------------------- ---------------
Title: Authorized Agent
$87,656,250.00
Lending Office for all Loans:
Maximum Exposure:
- ----------------
The First National Bank of
$52,500,000.00 Chicago
One First National Plaza,
Suite 0362
Chicago, IL 60670
Address for Notices:
The First National Bank of
Chicago
Transportation Division
One First National Plaza,
Mail Suite 0362
Chicago, IL 60670
Attention: Mr. David G. Dixon
Telecopier No.: 312-732-3055
Telephone No.: 312-732-8142
53
<PAGE> 54
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By /s/ MATTEW H. MORRIS
--------------------
Title: Vice President
Address for Notices to
Chase as Agent:
The Chase Manhattan Bank
(National Association)
4 Chase Metrotech Center
13th Floor
Brooklyn, New York 11245
Attention: New York Agency
Telex No.: 6720516
(Answerback: CMBNYAUW)
Telecopier No.: (718) 242-6909
Telephone No.: (718) 242-7978
54
<PAGE> 55
Schedule I
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all purposes
of the Operative Agreements 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 or 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 Indenture and as subsequently amended, or any successor or
substituted legislation at the time in effect and applicable, and the
regulations promulgated pursuant thereto.
Additional Insureds. The Indenture Trustee, the Agent and the
Holders, and in the case of insurance obtained by any lessee of the Aircraft,
the Company in its capacity as lessor under any of the Aircraft.
Aeronautics Authority. 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 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.
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<PAGE> 56
After-Tax Basis. A basis such that any payment received or deemed to
have been received by a Person shall be supplemented by a further payment to
such Person so that the sum of the two payments, after deduction of all Taxes
resulting from the receipt or accrual of such payments, shall be equal to the
payment received or deemed to have been received.
Agent. The Chase Manhattan Bank, N.A. and its successors and
permitted assigns, as Agent for the Banks under the Loan Agreement.
Air Carrier. Any U.S. 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 to be sold by AVSA to the Company pursuant to
the Purchase Agreement (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 4.05(c) of the Indenture.
Airframe. The Airbus Industries A300F4-605R (excluding the Engines or
engines from time to time installed thereon) having the United States FAA
Registration Number and manufacturer's serial number specified in the Indenture
Supplement, including (i) all Parts, and (ii) any replacement airframe which
may be substituted pursuant to Section 4.05(c) of the Indenture, whether or not
the same shall at the time be incorporated in or attached to such aircraft.
Amortization Dates. The dates listed under the heading "Amortization
Date" in Section 2.02(a) of the Indenture.
Applicable Lending Office. For each Holder and for each Type of Loan,
the "Lending Office" of such Holder (or of an Affiliate of such Holder)
designated for such Type of Loan on the signature pages of the Loan Agreement
or such other office of such Holder (or of an Affiliate of such Holder) as such
Holder may from time to time specify to the Agent and the Company as the office
by which its Loans of such Type are to be made and maintained.
Appraisal. The report prepared by the BK Associates, Inc. and
delivered to the Indenture Trustee on the Delivery Date pursuant to Section
3(1) of the Loan 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.
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<PAGE> 57
AVSA Consent and Agreement. The Consent and Agreement dated as of the
Document Date, executed by AVSA, as the same may be amended, modified or
supplemented from time to time.
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 Company 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 6.01(e) and (f) of
the Indenture which either does or with the giving of notice or lapse of time
or both would constitute an Event of Default.
Banks. Has the meaning set forth in the Loan Agreement.
Base Rate. For any day, a rate per annum equal to the higher of (a)
the Federal Funds Rate for such day plus [ * ] and (b) the Prime Rate for such
day. Each change in any interest rate provided for herein based upon the Base
Rate resulting from a change in the Base Rate shall take effect at the time of
such change in the Base Rate. [ *
]
Base Rate Loan. Loans evidenced by an Equipment Purchase Certificate
that bears interest at rates based upon the Base Rate.
Bills of Sale. Collectively, the FAA Bill of Sale for the Aircraft
and AVSA's Warranty Bill of Sale.
Breakage Costs. An amount payable pursuant to Section 2.02(f) of the
Indenture.
Business Day. (a) Any day on which commercial banks are not
authorized or required to close in New York City or Georgia or (b) if such day
relates to the giving of notices or quotes in connection with a borrowing of, a
payment or prepayment of principal of or interest on, a conversion of or into,
or an Interest Period for, a Floating Rate Loan or a notice by the Company with
respect to any such borrowing, payment, prepayment conversion or Interest
Period, any date on which commercial banks are not authorized or required to
close in New York City and on which dealings in Dollar deposits are carried out
in the London interbank market.
- --------------------------
*Blank space contained confidential information which has been filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
under the Securities Exchange Act of 1934.
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<PAGE> 58
Chase. The Chase Manhattan Bank (National Association).
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 substituted legislation or regulation at the time in effect.
Code. Except as otherwise provided, references to the Code shall mean
the Internal Revenue Code of 1986, as amended from time to time.
Commitments. Has the meaning assigned to such term in the Loan
Agreement.
Company. Federal Express Corporation, a Delaware corporation, and its
successors and permitted assigns.
Consent and Agreement. The Consent and Agreement dated as of the
Document Date, 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
dated as of July 3, 1991 attached to the Purchase Agreement.
Corporate Trust Office. The corporate trust office of the Indenture
Trustee located at 600 Peachtree Street, N.E., Suite 900, Atlanta, Georgia
30308 or such other office at which the Indenture Trustee's corporate trust
business shall be administered that the Indenture Trustee shall have specified
by notice in writing to the Company and the Holders.
Debt Rate. The Floating Rate or the Base Rate, as the case may be.
Default. Any event of condition, which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which (i) the Aircraft is to be delivered
and sold by AVSA to the Company which date is also the date of the initial
Indenture Supplement and (ii) Loans have been made by the Banks to the Company
in respect of the Aircraft.
Document Date. The date of the Indenture.
Engine. Each of the two General Electric CF6-80C2-A5F engines listed
by its manufacturer's serial number in the initial Indenture Supplement,
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 by substituted for an Engine pursuant to Sections
4.02(c)(vii), 4.05(c) or 4.05(d) of the Indenture, together with all Parts.
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<PAGE> 59
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 Indenture. The term "Engines" means, as of any date of
determination, all Engines subject to the Lien of the Indenture.
Engine Agreement. The General Terms Agreement dated as of July 3,
1991 between the Company and the Engine Manufacturer (as heretofore amended,
modified and supplemented).
Engine Consent and Agreement. The Engine Consent and Agreement dated
as of the Document Date, executed by the Engine Manufacturer.
Engine Manufacturer. General Electric Company, a New York corporation.
Equipment Purchase Certificates. The Equipment Purchase Certificates
issued by the Company pursuant to the Indenture and any certificate issued in
exchange therefor or replacement thereof pursuant to the Indenture.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
Estate Documents. The Purchase Agreement, the Consent and Guaranty,
the Bills of Sale, the Airbus Guaranty, the Consent and Agreement, AVSA Consent
and Agreement, the Engine Agreement and the Engine Consent and Agreement, in
each case to the extent that the same related to the Aircraft.
Event of Default. Each of the events specified in Section 6.01 of
the Indenture.
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 180 days due to theft or disappearance, 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 the
Company 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) condemnation,
confiscation or seizure of, or requisition of title to such property, by the
Government, any foreign government or purported government or agency or
instrumentality thereof, (iv) requisition of use of such property by (A) a
foreign government or instrumentality or agency thereof, or any purported
government or instrumentality or agency thereof, for a period in excess of 180
days (or for such shorter period ending 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 Maturity of the Equipment Purchase
Certificates for the Aircraft; and (v) as a result of any law, rule,
regulation, order or
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<PAGE> 60
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 aircraft of the same type for a period of eighteen (18)
consecutive months, unless the Company, prior to the expiration of such
eighteen 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 shall have been prohibited for a period of two (2)
consecutive years, unless the Company, prior to the expiration of such two (2)
year period shall have conformed at least one Airbus Industrie A300F-600
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 Company. The date of such Event of Loss shall be
the date of (i) loss of such property or its use for a period in excess of 180
days due to theft or disappearance, or loss for a period in excess of 60 days
due to damage beyond economic repair or loss of use of the Airframe because of
requisition for use for a period in excess of 180 days (or shorter period due
to insurance settlement), (ii) an insurance settlement on the basis of total
loss with respect to such property, (iii) condemnation, confiscation, seizure
or requisition of title, or (iv) prohibition from usage for the periods
described in clause (v) 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.
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 Company and dated the Delivery Date.
Facility. Has the meaning specified in the Loan Agreement.
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. In such determination it shall be assumed that the
Aircraft is in the condition required under the Indenture.
Federal Aviation Administration and FAA. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
Federal Funds Rate. For any day, the rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve system arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (a) if the day for which such rate is to be determined is
not a Business Day, the Federal Funds Rate for such day shall be such rate on
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<PAGE> 61
such transactions on the next preceding Business Day as so published on the
next succeeding Business Day and (b) if such rate is not so published for any
Business Day, the Federal Funds Rate for such Business Day shall be the average
rate charged to Chase on such Business Day on such transactions as determined
by the Agent.
Floating Rate. (i) For the period commencing on the Delivery Date
and ending on the last day of the twelfth month following the Delivery Date,
the LIBOR Rate plus [ * ] (ii) for the period commencing on the first day of
the thirteenth month following the Delivery Date and ending on the last day of
the eighteenth month following the Delivery Date, the LIBOR Rate plus [ * ] and
(iii) thereafter, in respect of each Interest Period, the higher of the
Treasury Rate and the LIBOR Rate,[ *
]
Floating Rate Loan. Loans evidenced by an Equipment Purchase
Certificate that bears interest at rates based upon the Floating Rate.
French Pledge Agreement. The French Pledge Agreement dated the
Delivery Date between the Company and the Indenture Trustee, as the same may be
amended, modified or supplemented from time to time.
Government. The United States of America or any agency or
instrumentality thereof.
Holder. On any date of determination, a holder of an Equipment
Purchase Certificate on such date, provided that for the purposes of Section
2.02(f) of the Indenture, each holder from time to time of an Equipment
Purchase Certificate shall be deemed to be a "Holder" and the obligations of
the Company to each Holder under Section 2.02 of the Indenture shall survive
the disposition of any Equipment Purchase Certificate by such Holder and the
payment in full of the Equipment Purchase Certificate held by such Holder.
Indenture. The Trust Indenture, Mortgage and Security Agreement, dated
as of the Document Date, between the Company and the Indenture Trustee, as
amended, supplemented or modified by any amendment or supplement thereto from
time to time entered into.
Indenture Estate. Has the meaning set forth in the Granting Clauses
of the Indenture.
Indenture Supplement. A supplement to the Indenture, substantially in
the form of Exhibit A to the Indenture.
Indenture Trustee. NationsBank of Georgia, National Association, a
national banking
- ----------------------
*Blank space contained confidential information which has been filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
under the Securities Exchange Act of 1934.
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association, not in its individual capacity, but solely in its capacity as
Indenture Trustee under the Indenture, and its successors and permitted assigns
as trustee thereunder.
Interest Period. With respect to any Floating Rate Loan, each period
commencing on the date such Floating Rate Loan is made or converted from a Base
Rate Loan or the last day of the next preceding Interest Period for such Loan
and ending on the seventh calendar day thereafter or on the numerically
corresponding date in the first, third or sixth calendar month thereafter, as
the Company may select by notice to the Agent and the Indenture Trustee no
later than 11:00 a.m. on the date three Business Days prior to the first day of
such Interest Period, except that each Interest Period (other than a 7-day
Interest Period) that commences on the last Business Day of a calendar month
(or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of
the appropriate subsequent calendar month. Notwithstanding the foregoing: (i)
no Interest Period for any Loan may commence before and end after any
Amortization Date; (ii) each Interest Period that would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business Day (or,
if such next succeeding Business Day falls in the next succeeding calendar
month, on the next preceding Business Day); (iii) no more than three 7-day
Interest Periods may be selected with respect to the Loans for the Aircraft;
and (iv) subject to clause (i) above, if the Company does not select an
Interest Period as provided above, then the Company shall have deemed to have
selected a one-month Interest Period.
LIBOR Base Rate. With respect to any Floating Rate Loan for any
Interest Period therefor, the arithmetic mean (rounded upwards, if necessary,
to the nearest 1/16 of 1%) of the respective rates per annum quoted by each
Reference Bank at approximately 11:00 a.m. London time (or as soon thereafter
as practicable) on the date two Business Days prior to the first day of such
Interest Period for the offering by such Reference Bank to leading banks in the
London interbank market of Dollar deposits having a term comparable to such
Interest Period and in an amount comparable to the principal amount of the
Floating Rate Loan to be made by such Reference Bank for such Interest Period.
If any Reference Bank is not participating in any Floating Rate Loan during any
Interest Period therefor, the LIBOR Base Rate for such Loan for such Interest
Period shall be deemed by reference to the amount of the Loan that such
Reference Bank would have made or had outstanding had it been participating in
such Loan during such Interest Period. If any Reference Bank does not timely
furnish such information for determination of any LIBOR Base Rate, then such
LIBOR Base Rate shall be determined on the basis of the information timely
furnished by the remaining Reference Banks.
LIBOR Rate. For any Floating Rate Loan for any Interest Period
therefor, a rate per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) determined by the Agent to be equal to the sum of the LIBOR Base Rate
for such Loan for such Interest Period divided by 1 minus the Reserve
Requirement for such Loan for such Interest Period.
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Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest.
Loan. Has the meaning set forth in Section 1 of the Loan Agreement.
Loan Agreement. The Loan Agreement dated as of April 1, 1995 between
the Company, the Banks named therein and Chase, as agent for such Banks (as
amended, modified, supplemented and in effect from time to time).
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% in aggregate unpaid principal
amount of all Equipment Purchase Certificates outstanding as of such date
excluding for purposes of this definition any Equipment Purchase Certificates
held by the Company or any Affiliate thereof.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. The date which is 24.5 years after the Delivery Date.
Moody's. Moody's Investors Service, Inc.
Notice of Borrowing. Has the meaning set forth in Section 2.08 of the
Loan Agreement.
Obsolete Parts. Parts which the Company deems obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Operative Agreements. The Indenture, the Indenture Supplement, the
Loan Agreement (until the Banks shall have been paid in full), the Equipment
Purchase Certificates, the Bills of Sale, the Facility (as it relates to the
Aircraft or other matters related thereto and except to the extent that any
term thereof shall conflict with any express provision of any other Operative
Agreement, in which case, such provision of such other Operative Agreement
shall control), the Notice of Borrowing, the Estate Documents and the French
Pledge Agreement.
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
therefor in accordance with the Indenture, which may be removed therefrom.
Payment Date. Each of the dates specified in the last sentence of
Section 2.02(b) of the Indenture.
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Payment Default. Any event specified in Section 6.01(a) of the
Indenture which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Investment in (i) direct obligations of the
United States of America; (ii) obligations fully guaranteed by the United
States; (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 Indenture
Trustee, in its individual capacity, and any of its Affiliates), having a
combined capital and surplus of at least $500,000,000 and having a rating of
"B" or better from the Thomson Bank Watch; or (iv) commercial paper rated at
least 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
rating organization in the United States of America equal to the highest rating
assigned by such rating organization).
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).
PMSI Obligations. Principal of and interest on the Equipment Purchase
Certificates and all other amounts owing by the Company thereunder, under the
Indenture and the Loan Agreement in respect of the Equipment Purchase
Certificates and under the other Operative Agreements and the performance and
observance by the Company of all of the agreements, covenants and provisions
contained in the Indenture and in the Loan Agreement in respect of the
Equipment Purchase Certificates and in the other Operative Agreements.
Post-Default Rate. In respect of any principal of any Equipment
Purchase Certificate or any other amount under the Indenture, the Loan
Agreement, any Equipment Purchase Certificate or any other Operative Agreement
that is not paid when due (whether at stated maturity, by acceleration, by
optional or mandatory prepayment or otherwise), 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[ *
] (after giving effect to any adjustment thereto as provided in the
final sentence of the definition thereof (provided that, if the amount so in
default is principal of a Floating Rate Loan and the due date thereof is a day
other than the last day of the Interest Period therefor, the "Post-Default
Rate" for such principal shall be, for the period from and including such
- ----------------------
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 65
due date to but excluding the last day of the Interest Period, [ *
]
Prime Rate. The rate of interest from time to time announced by Chase
at the Principal Office as its prime commercial lending rate. Such rate is a
rate set by Chase based upon various factors including Chase's costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.
Principal Office. The principal office of Chase, located on the date
of the Indenture at 1 Chase Manhattan Plaza, New York, New York 10081.
Purchase Agreement. The Airbus A300-600R Freighter Purchase Agreement
dated July 3, 1991, between the AVSA and the Company (as heretofore amended,
modified and supplemented), providing, inter alia, for the manufacture by the
Manufacturer and sale by AVSA to the Company of certain Airbus Industries
A300F4-605R aircraft, as such Purchase Agreement may hereafter be amended,
modified or supplemented, but solely as such Purchase Agreement relates to the
Aircraft.
Quarterly Payment Dates. The last day of March, June, September and
December in each year, the first of which shall be the first such day to occur
after the Company selects a Base Rate Loan; provided that if such date is not a
Business Day, then such Quarterly Payment Date shall be the next succeeding
Business Day, unless such Business Day falls in a subsequent calendar month, in
which case such Quarterly Payment Date shall be the next preceding Business
Day.
Reference Banks. Chase, Bank of America NT&SA, Canadian Imperial Bank
of Commerce and The First National Bank of Chicago (or their respective
Applicable Lending Offices, as the case may be).
Register. Has the meaning specified in Section 2.08 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.
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, and utility), which shall have been substituted for an Engine pursuant
to Sections 4.02(c)(vii), 4.05(c) or 4.05(d) of
- -----------------------
*Blank space contained confidential information which has been filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
under the Securities Exchange Act of 1934.
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<PAGE> 66
the Indenture and leased pursuant to the Lease, together with all Parts
relating to such engine.
Reserve Requirement. Has the meaning specified in the Loan Agreement.
Responsible Officer. With respect to the Indenture Trustee, any
officer in its Corporate Trust Administration Department designated by such
person to perform obligations under the Operative Agreements, and with respect
to any other Person, any corporate officer or other employee of a Person 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.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Treasury Rate. For each Interest Period, the weighted average yield
to maturity of United States Treasury securities with maturities next above and
below the remaining term of the Equipment Purchase Certificates (calculated as
provided below), such yields to be specified by the Agent on the basis of the
bid price for such United States Treasury securities as displayed on Telerate
screen (Page 7677) or, if the Telerate screen is unavailable, by averaging (and
rounding upward to the nearest whole multiple of 1/100 of 1% per annum, if the
average is not such multiple), the yields of the relevant United States
Treasury securities (rounded, if necessary, to the nearest 1/100 of 1% with any
figure of 1/200 of 1% or above rounded upward) as quoted to the Agent by two
reputable dealers in United States Treasury securities selected by the Agent,
in either case, at approximately 11:00 a.m. (New York time) on the date two
Business Days prior to the first day of the relevant Interest Period and
notified to the Company, the Indenture Trustee and the Holders; any weighted
average yield of United States Treasury securities with two maturities is to be
calculated by the Agent in accordance with the following formula:
WAY = Y1 + (Y2 - Y1) (RT - X1)
---------------------
(X2 - X1)
Where:
WAY = Weighted Average Yield
66
<PAGE> 67
RT = relevant remaining term to maturity
X1 = whole integer in years closest to and less than
RT which equals the maturity of a United States
Treasury security then publicly traded.
X2 = whole integer in years closest to and greater
than RT which equals the maturity of a United
States Treasury security then publicly traded.
Y1 = yield, determined as provided above, of United
States Treasury securities then most recently
auctioned with maturities equal to X1.
Y2 = yield, determined as provided above, of United
States Treasury securities then most recently
auctioned with maturities equal to X2.
Type . The Type of Loan refers to whether such Loan is a Floating
Rate Loan or a Base Rate Loan.
United States 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.
67
<PAGE> 68
Schedule 2.08
NOTICE OF BORROWING
______________, 199_
The Chase Manhattan Bank
(National Association)
One Chase Manhattan Plaza
New York, New York 10081
Attention: Mr. Sherwood Exum, Jr.
Ladies and Gentlemen:
Reference is made to the Loan Agreement dated as of April 1, 1995 (the
"Loan Agreement") between Federal Express Corporation ("Federal"), The Chase
Manhattan Bank, N.A., as Agent, and the Banks named therein. Capitalized terms
used herein, unless otherwise defined herein, are used herein as used or
defined in the Loan Agreement.
Pursuant to Sections 2.02 and 2.08 of the Loan Agreement, Federal
hereby gives you irrevocable notice of its request to borrow [Floating/Base]
Rate Loans under the Loan Agreement in the aggregate amount of $[___________]
(the "Loan Amount") with respect to the Airbus Industrie A300F4-605R aircraft
identified in the Purchase Agreement as Firm Aircraft No. [__], bearing
manufacturer's serial number [_______], on _______ __, 199_, which date is a
Business Day and the scheduled Delivery Date for such Aircraft. [The initial
Interest Period in respect of such Floating Rate Loan shall be a ____ -month
period, commencing on such Delivery Date and ending __________ __, 199_.]+
Federal hereby represents and warrants to you and the Banks that the Loan
Amount does not exceed the maximum amount permitted with respect to such
Aircraft pursuant to Section 2.09.
Please make the proceeds of the Loan available to us in accordance
with Section 2.02 of the Loan Agreement, by transferring the same, in
immediately available funds, to Federal at its account number [* ]
maintained at The Chase Manhattan Bank, N.A., One Chase Manhattan Plaza, New
York, New York [* ] maintained at Citibank,
N.A. in New York, New York], with the instructions "CR Federal Express
Corporation".
Very truly yours,
FEDERAL EXPRESS CORPORATION
By_________________________
Title:
- ------------------------
+To be included in Notice of Borrowing for Floating Rate Loan only.
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
68
<PAGE> 69
Exhibit A to
Loan Agreement
===============================================================
TRUST INDENTURE, MORTGAGE AND SECURITY AGREEMENT
Dated as of [ , 199_]+
between
FEDERAL EXPRESS CORPORATION
and
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION,
Indenture Trustee
COVERING ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. [ ], REGISTRATION NO. [N6__FE]
===============================================================
- -----------------------
+Here insert Documentation Date.
<PAGE> 70
TABLE OF CONTENTS
<TABLE>
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GRANTING CLAUSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
HABENDUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2
THE EQUIPMENT PURCHASE CERTIFICATES
SECTION 2.01. Issuance of an Equipment Purchase
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.02. Terms of the Equipment Purchase
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.03. Intentionally left blank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.04. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.05. Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.06. Application of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.07. Termination of Interest in Indenture
Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.08. Transfer and Exchange of Certificates:
Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.09. Mutilated, Destroyed, Lost or Stolen
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.10. Costs and Expenses of Issuance of New
Equipment Purchase Certificates . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.11. No Liability of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.12. ERISA Plan Prohibition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 3
Intentionally Left Blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
70
<PAGE> 71
<TABLE>
ARTICLE 4
COVENANTS AND REPRESENTATIONS OF THE COMPANY
<S> <C> <C>
SECTION 4.01. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.02. Registration, Maintenance and Operation;
Possession and Lease; Insignia . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.03. Replacement and Pooling of Parts . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.04. Alterations, Modifications and
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.05. Loss, Destruction, Requisition . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.06. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.07. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.08. Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.09. Annual Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.10. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.11. Merger, Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.12. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.13. Representations and Warranties of the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.14. Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 5
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE
SECTION 5.01. Distribution of Principal and Interest . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.02. Intentionally Left Blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.03. Payments during Continuance of Event of
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.04. Funds Held by Indenture Trustee;
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 6
EVENTS OF DEFAULT;
REMEDIES OF THE INDENTURE TRUSTEE
UPON AN EVENT OF DEFAULT
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.02. Remedies with Respect to Indenture
Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
71
<PAGE> 72
<TABLE>
ARTICLE 7
DUTIES OF THE INDENTURE TRUSTEE
<S> <C> <C>
SECTION 7.01. Action Upon Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 7.02. No Duties Except as Specified . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.03. No Action Except Under Indenture or
Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.04. Action Upon Instructions Generally . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.05. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.06. Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 8
THE INDENTURE TRUSTEE
SECTION 8.01. Acceptance of Trusts and Duties . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.02. Absence of Certain Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.03. Representations, Warranties and
Agreements of Indenture Trustee . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.04. Reliance; Agents; Advice of Experts . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.06. Moneys Held by Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 8.07. Capacity in Which Acting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 9
SUCCESSOR INDENTURE TRUSTEE
SECTION 9.01. Resignation or Removal; Appointment of
Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 9.02. Appointment of Separate Trustees . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE 10
SUPPLEMENTS AND AMENDMENTS
TO THIS INDENTURE AND OTHER DOCUMENTS
SECTION 10.01. Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.02. Indenture Trustee Protected . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.03. Requirement of Substance, Not Form . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
72
<PAGE> 73
<TABLE>
<S> <C>
SECTION 10.04. Documents Mailed to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 11
Intentionally Left Blank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Termination of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.02. No Legal Title in Indenture Estate . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.03. Sale of Collateral by Indenture
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.04. Indenture for Benefit of Parties and
Holders Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 12.06. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 12.07. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.08. Headings; Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.09. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.10. Governing Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.11. No Oral Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.12. Normal Commercial Relations . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.13. Section 1110 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SCHEDULE I. Definitions
SCHEDULE II. Permitted Country List
EXHIBIT A. Form of Indenture Supplement
EXHIBIT B. Form of Equipment Purchase Certificate
</TABLE>
73
<PAGE> 74
TRUST INDENTURE, MORTGAGE AND SECURITY AGREEMENT
TRUST INDENTURE, MORTGAGE AND SECURITY AGREEMENT entered into as of
[_______, 199_] + between FEDERAL EXPRESS CORPORATION, a Delaware corporation
(together with its successors and assigns the "Company") and NATIONSBANK OF
GEORGIA, NATIONAL ASSOCIATION, a national banking corporation, as Indenture
Trustee hereunder (together with its successors hereunder, the "Indenture
Trustee");
W I T N E S S E T H:
WHEREAS, unless otherwise defined herein or the context otherwise
requires, capitalized terms herein are used as provided in Article 1 hereof;
WHEREAS, pursuant to the Purchase Agreement, AVSA has agreed to sell
to the Company and the Company has agreed to purchase from AVSA the Aircraft;
WHEREAS, the Holders have agreed pursuant to a Loan Agreement to make
the Loans to the Company to be used by the Company for payment of the purchase
price of certain aircraft, including the Aircraft;
WHEREAS, the Company desires by this Indenture, among other things,
(i) to provide for the issuance to the Holders by the Company of certain
Equipment Purchase Certificates evidencing the Loans made by the Holders under
the Loan Agreement and (ii) to provide for the assignment, mortgage, grant of a
first priority purchase money equipment security interest in and pledge by the
Company to the Indenture Trustee, of certain of the Company's right, title and
interest in and to the Aircraft as security for the PMSI Obligation;
WHEREAS, all things have been done to make the Equipment Purchase
Certificates, when executed by the Company, authenticated and delivered under
this Indenture and issued, the legal, valid and binding obligations of the
Company; and
WHEREAS, all things necessary to make this Indenture the legal, valid
and binding obligation of the Company, for the uses and purposes set forth in
this Indenture, in accordance with its terms, have been done and performed and
have happened.
____________________
+Here insert Documentation Date.
74
<PAGE> 75
-- GRANTING CLAUSES --
NOW, THEREFORE, THIS TRUST INDENTURE, MORTGAGE AND SECURITY AGREEMENT
WITNESSETH, that:
to secure the PMSI Obligations, and in consideration of the premises
and of the covenants herein contained, and of the acceptance of the Equipment
Purchase Certificates by the Holders, and of the sum of $1 paid to the Company
by the Indenture Trustee at or before the delivery hereof, the receipt whereof
is hereby acknowledged, the Company 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 and its successors and assigns, for the security and benefit
of the Holders, as aforesaid, a first priority purchase money equipment
security interest in and first mortgage lien upon, all right, title and
interest of the Company in, to and under the following described property,
rights and privileges (which collectively, including all property hereinafter
specifically subjected to the Lien of this Indenture by an Indenture Supplement
or any other mortgage supplemental hereto, shall constitute the "Indenture
Estate"), to wit:
a. all estate, right, title and interest of the Company in the
Aircraft (including the Airframe and the Engines and all warranties of
any manufacturer in respect thereof) and all replacements thereof and
substitutions therefor to which the Company shall from time to time
acquire title, all as more particularly described in the Indenture
Supplement executed and delivered with respect to the Aircraft or any
such replacements or substitutions therefor, as provided in this
Indenture, all Parts relating to the foregoing, and all records, logs
and other documents at any time maintained with respect to the
foregoing property;
b. all estate, right, title and interest of the Company in, to and
under the Estate Documents;
c. all tolls, rents, issues, profits, revenues and other income of
the property subjected or required to be subjected to the Lien of this
Indenture including all payments or proceeds payable to the Company
with respect to the Aircraft as the result of the sale, lease or other
disposition thereof, and all estate, right, title and interest of
every nature whatsoever of the Company in and to the same and every
part thereof;
d. all insurance and requisition proceeds and all other payments of
any kind with respect to the Aircraft or any part thereof, including
but not limited to the insurance required under Section 4.06 hereof;
e. all monies and securities deposited or required to be deposited
with the Indenture Trustee pursuant to any term of this Indenture or
required to be held by the Indenture Trustee hereunder; and
75
<PAGE> 76
f. all proceeds of the foregoing.
All property referred to in the Granting Clauses, whenever acquired by
the Company, shall secure all PMSI Obligations at any time outstanding. Any
and all properties referred to in the Granting Clauses which are hereafter
acquired by the Company shall, without further conveyance, assignment or act by
the Company or the Indenture Trustee thereby become and be subject to the
security interest hereby granted as fully and completely as though specifically
described herein.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the benefit and
security of the Holders, and for the uses and purposes and subject to the terms
and provisions set forth in this Indenture.
It is expressly agreed that anything herein contained to the contrary
notwithstanding, the Company shall remain liable under the Operative Agreements
to perform all of the obligations assumed by it thereunder, all in accordance
with and pursuant to the terms and provisions thereof, and the Indenture
Trustee and the Holders shall have no obligation or liability under any thereof
by reason of or arising out of the assignment hereunder, nor shall the Holders
be required or obligated in any manner to perform or fulfill any obligations of
the Company under or pursuant to any of the Operative Agreements, except as
therein or herein expressly provided, 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.
The Company does hereby constitute the Indenture Trustee the true and
lawful attorney of the Company, irrevocably, with full power (in the name of
the Company or otherwise) to ask, require, demand, receive, compound and give
acquittance for any and all monies and claims for monies (in each case
including insurance and requisition proceeds) due and to become due under or
arising out of the Operative Agreements and all other property which now or
hereafter constitutes part of the Indenture Estate, to endorse any checks or
other instruments or orders in connection therewith and to file any claims or
to take any action or to institute any proceedings which the Indenture Trustee
may deem to be necessary or advisable in the premises. The Company agrees that
promptly on receipt thereof, it will transfer to the Indenture Trustee any and
all monies from time to time received by it constituting part of the Indenture
Estate, for distribution by the Indenture Trustee pursuant to this Indenture.
The Company does hereby warrant and represent that (except as
permitted herein) it has not assigned or pledged any of its right, title, and
interest hereby assigned to anyone other than the Indenture Trustee.
76
<PAGE> 77
The Company does hereby ratify and confirm the Operative Agreements
and does hereby agree that (except as permitted herein) it will not take or
omit to take any action, the taking or omission of which would result in an
alteration or impairment of any of the Operative Agreements or of any of the
rights created by any thereof or the assignment hereunder.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. Unless the context otherwise requires,
all capitalized terms used herein and not otherwise defined shall have the
meanings set forth in Schedule I hereto.
All references in this Indenture to the Loan Agreement (except for
references thereto in Section 2.02(b) hereof) shall refer to the Loan Agreement
as it relates to Loans made, and Equipment Purchase Certificates issued, with
respect to the Aircraft covered by this Indenture.
ARTICLE 2
THE EQUIPMENT PURCHASE CERTIFICATES
SECTION 2.01. Issuance of an Equipment Purchase Certificate. There
shall be issued by the Company to each of the Holders in connection with their
respective participation in the payment of the purchase price, as provided in
and on and subject to the terms and conditions of the Loan Agreement, an
Equipment Purchase Certificate or Equipment Purchase Certificates dated the
Delivery Date of the Aircraft, designated as having been issued in connection
with the purchase of the Aircraft, and registered in the name of such Holder in
a principal amount equal to the principal amount of the Loan made by such
Holder to fund a portion of the purchase price.
The Equipment Purchase Certificates and the Indenture Trustee's
certificate of authentication shall be substantially in the form set forth in
Exhibit B hereto. The Equipment Purchase Certificates shall be issued in
registered form only and in denominations of not less than $500,000.
SECTION 2.02. Terms of the Equipment Purchase Certificates.
(a) Principal. The aggregate principal amount of the Equipment
Purchase Certificates shall be due and payable in installments, payable on
Amortization Dates, as follows (provided, however, that the final principal
payment on each Equipment Purchase Certificate shall in any and all events
equal the then outstanding principal balance thereof):
77
<PAGE> 78
Schedule of Principal Payments
<TABLE>
<CAPTION>
Percentage of
Amortization Date Original Principal
Payment Number Amount to be Repaid
----------------- -------------------
<S> <C>
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
</TABLE>
78
<PAGE> 79
38
39
40
41
42
43
44
45
46
47
48
(b) Interest. Each Equipment Purchase Certificate shall bear
interest on the unpaid principal amount thereof from time to time
outstanding from and including the date thereof until such principal
amount is paid in full, for each Interest Period relating thereto, at
the Floating Rate for such Interest Period or at the Base Rate. The
Company may convert the interest rate payable on the Equipment
Purchase Certificates from the Floating Rate to the Base Rate as of
the last day of any Interest Period provided (x) the Company provides
notice of such conversion to the Agent and the Indenture Trustee no
later than three Business Days prior to the last day of such Interest
Period, and (y) such conversion occurs no later than the Business Day
prior to the eighteenth-month anniversary of the first Loan (as
defined in the Loan Agreement) under the Loan Agreement. In addition,
the Debt Rate, if other than the Floating Rate, shall (except as
otherwise provided in Section 2.12, 2.13, 2.14 or 2.15 of the Loan
Agreement) automatically convert or revert, as the case may be, to the
Floating Rate on the eighteenth-month anniversary of such first Loan
under the Loan Agreement. The Company may, at any time, on not less
than three (3) Business Days' prior notice to the Agent and the
Indenture Trustee convert a Base Rate Loan into a Floating Rate Loan.
Accrued interest on each Equipment Purchase Certificate shall be
payable (i) in the case of a Floating Rate Loan, on the last day of
each Interest Period therefor and, if such Interest Period is longer
than three months, at the three-month intervals following the first
day of such Interest Period (or if such day is not a Business Day, on
the next succeeding Business Day, unless such Business Day falls in a
subsequent calendar month, in which case such payment shall be made on
the next preceding Business Day) and upon any conversion of the
interest rate to the Base Rate in accordance with the immediately
preceding sentence, (ii) in the case of any Base Rate Loan, quarterly
on the Quarterly Payment Dates or, if earlier, the date on which any
Base Rate Loan is converted into a Floating Rate Loan and (iii)
regardless of the applicable Debt Rate, upon the payment or prepayment
of any Equipment Purchase Certificate.
(c) Post-Default Interest. Notwithstanding Section 2.02(b), the
Company hereby promises to pay to the Indenture Trustee for the
account of each Holder interest at the
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applicable Post-Default Rate on any principal of any Equipment
Purchase Certificate of such Holder and on any other amount payable by
the Company hereunder or under the Loan Agreement or the Equipment
Purchase Certificates held by such Holder to or for the account of
such Holder, which shall not be paid in full when due (whether at
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 Agent.
(d) Computations. Interest on Floating Rate Loans shall be computed
on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day of the Interest Period)
occurring in the period for which payable and interest on Base Rate
Loans shall be computed on the basis of a year of 365 or 366 days, as
the case may be, and actual days elapsed (including the first day but
excluding the last day of the Interest Period) in the period for which
payable. Notwithstanding the foregoing, for each day that the Base
Rate is calculated by reference to the Federal Funds Rate, interest on
Base Rate Loans shall be computed on the basis of a year of 360 days
and actual days elapsed.
(e) Prepayments. The Equipment Purchase Certificates shall be
prepaid in whole but not in part by the Company as and when provided
in Section 4.05(b) hereof in connection with an Event of Loss with
respect to the Aircraft in an amount, in addition to any other amounts
payable to the Holders hereunder and under the Loan Agreement in
respect thereof, equal to the aggregate unpaid principal amount
thereof, together with accrued interest thereon and any amount payable
under Section 2.02(f) hereof; provided, however, that so long as no
Event of Default has occurred and is continuing and the Agent or the
Indenture Trustee holds any insurance proceeds resulting from such
Event of Loss, such prepayment may be postponed, at the Company's
election, until the end of any then current Interest Period. The
Equipment Purchase Certificates shall also be prepaid in whole but not
in part upon any sale of the Aircraft to an owner trust in connection
with a sale and leaseback transaction. The Indenture Trustee shall
give prompt notice of any prepayment of the Equipment Purchase
Certificates to the Holders as soon as a Responsible Officer of the
Indenture Trustee shall have actual knowledge that such prepayment is
to occur, which notice shall specify the date fixed for prepayment and
the principal amount of the Equipment Purchase Certificates to be
prepaid. In addition, the Equipment Purchase Certificates may be
prepaid as provided in and on the terms and conditions of Section 2.13
of the Loan Agreement and at any other time as may be selected by the
Company, upon not less than 3 Business Days' prior notice to the
Holders.
(f) Compensation. The Company shall pay to the Indenture Trustee for
account of each Holder, upon the request of such Holder through the
Indenture Trustee, such amount or amounts as shall be sufficient (in
the reasonable opinion of such Holder) to
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compensate it for any loss, cost or expense that such Holder
determines is attributable to:
(1) any payment, mandatory or optional prepayment or
conversion of a Floating Rate Loan made by such Holder for any
reason (including, without limitation, the acceleration of the
principal of the Equipment Purchase Certificates pursuant to
Section 6 hereof) on a date other than the last day of the
Interest Period for such Loan;
(2) any failure by the Company for any reason (including,
without limitation, the failure of any of the conditions
precedent specified in Section 3 of the Loan Agreement to be
satisfied) to borrow a Floating Rate Loan from such Holder on
the date for such borrowing specified in the relevant notice
of borrowing given pursuant to Section 2.02 of the Loan
Agreement.
Without limiting the effect of the preceding sentence, such
compensation shall include an amount equal to the excess, if any, of
(i) the amount of interest that otherwise would have accrued on the
principal amount so paid, prepaid or converted or not borrowed for the
period from the date for such payment, prepayment, conversion or
failure to borrow to the last day of the then current Interest Period
for such Floating Rate Loan (or, in the case of a failure to borrow,
the Interest Period for such Floating Rate Loan that would have
commenced on the date specified for such borrowing) at the applicable
rate of interest for such Floating Rate Loan provided for herein over
(ii) the amount of interest that otherwise would have accrued on such
principal amount at a rate per annum equal to the interest component
of the amount such Holder would have bid in the London interbank
market for Dollar deposits of leading banks in amounts comparable to
such principal amount and with maturities comparable to such period
(as reasonably determined by such Holder).
(g) Business Day. If the due date of any payment under this
Indenture or any Equipment Purchase Certificate would otherwise fall
on a day that is not a Business Day, such date shall be extended to
the next succeeding Business Day, and interest shall be payable for
any principal so extended for the period of such extension.
SECTION 2.03. Intentionally left blank.
SECTION 2.04. Execution and Authentication. The Equipment Purchase
Certificates shall be executed on behalf of the Company by an authorized
officer of the Company. No Equipment Purchase Certificate shall be secured or
entitled to any benefit under this Indenture or be valid or obligatory for any
purpose, unless there appears on such Equipment Purchase Certificate a
certificate of authentication in the form provided for in Exhibit B hereto
executed by the Indenture Trustee by the manual signature of one of its
authorized officers, and such certificate of authentication upon any Equipment
Purchase Certificate shall
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be conclusive evidence, and the only evidence, that such Equipment Purchase
Certificate has been duly authenticated and delivered under this Indenture.
SECTION 2.05. Method of Payment. The Company covenants and agrees
that it will duly and punctually pay or cause to be paid in immediately
available funds the principal of, any Breakage Costs and interest and all other
amounts due on each of the Equipment Purchase Certificates hereunder at the
Corporate Trust Office of the Indenture Trustee (or at such other account in
New York, New York or Atlanta, Georgia as the Indenture Trustee may designate
for the purpose) no later than noon (New York City time) on the date when due
and, upon receipt of such amounts, the Indenture Trustee agrees to pay such
amounts to the appropriate Holders no later than 2:00 p.m. (New York City time)
on such day. In the event the Indenture Trustee shall fail to make any such
payment as provided in the immediately preceding sentence after its receipt of
funds at the place and prior to the time specified above, the Indenture
Trustee, in its individual capacity and not as trustee, agrees to compensate
the Holders for loss of use of such funds at the Federal Funds Rate; provided,
however, notwithstanding the foregoing, the Indenture Trustee, in its
individual capacity, shall not be liable for such compensation to the extent
any failure to make any such payment is a result of any action, inaction, event
or other occurrence that in each case is outside the Indenture Trustee's
control. The principal of and any Breakage Costs and interest on each
Equipment Purchase Certificate and all other amounts due hereunder or under the
Equipment Purchase 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 this Section 2.05; provided, however, that notwithstanding the
foregoing, the Equipment Purchase Certificates shall not be deemed to have been
paid in full for purposes of Section 2.07 hereof (whether in connection with a
prepayment pursuant to Section 2.02(e) hereof or otherwise) unless and until
the Holders (or the Agent on their behalf) shall have received all amounts
payable with respect thereto as provided above. Notwithstanding the foregoing,
if requested by any Holder (or by the Agent on such Holder's behalf), any
amounts payable with respect to the Equipment Purchase Certificates held by
such Holder shall be sent by wire transfer of immediately available funds to an
account or accounts in the United States previously specified by such Holder or
the Agent to the Indenture Trustee.
Prior to the due presentment for registration of transfer of
any Equipment Purchase Certificate, the Company and the Indenture Trustee shall
deem and treat the Person in whose name any Equipment Purchase Certificate is
registered on the Register as the absolute owner and Holder of such Equipment
Purchase Certificate for the purpose of receiving payment of all amounts
payable with respect to such Equipment Purchase Certificate and for all other
purposes, and neither the Company nor the Indenture Trustee shall be affected
by any notice to the contrary.
So long as the Equipment Purchase Certificates remain
outstanding, the Indenture Trustee will maintain the following: (a) an office
or agency where the Equipment Purchase Certificates may be presented for
payment and (b) a facility or agency in New York,
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New York where the Equipment Purchase Certificates may be presented for
registration of transfer under this Indenture.
SECTION 2.06. Application of Payments. The Company shall, at
the time of making each payment under this Indenture or any Equipment Purchase
Certificate for account of any Holder, specify to the Indenture Trustee (which
shall so notify the intended recipient(s) thereof) the amounts payable by the
Company hereunder to which such payment is to be applied (and in the event that
the Company fails to so specify, or if an Event of Default has occurred and is
continuing, the Indenture Trustee may distribute such payment to the Holders
for application in such manner as the Agent or the Majority in Interest of
Certificate Holders, subject to Sections 5.01 and 5.03 hereof, may determine to
be appropriate).
SECTION 2.07. Termination of Interest in Indenture Estate. A
Holder of an Equipment Purchase Certificate shall have no further interest in,
or other right with respect to, the Indenture Estate when and if the principal
of and any Breakage Costs and interest on all Equipment Purchase Certificates
held by such Holder and all other sums payable to such Holder under this
Indenture and under such Equipment Purchase Certificates and the Loan Agreement
shall have been paid in full, and upon such payment in full such Holder shall
surrender such Equipment Purchase Certificates to the Indenture Trustee for
cancellation. Notwithstanding the foregoing or any other provision of this
Indenture to the contrary, the obligations of the Company under Section 2.02(f)
and Section 2.12 of the Loan Agreement to each Holder shall survive the
repayment of all amounts under the Equipment Purchase Certificates held by such
Holder or sold to the Pass Through Trustee.
SECTION 2.08. Transfer and Exchange of Certificates:
Participation. (a) The Indenture Trustee shall keep at its Corporate Trust
Office and at each other office or agency to be maintained for the purpose as
provided in Section 2.05 hereof a register (the "Register") of Equipment
Purchase Certificates issued from time to time and the Holders thereof. A
Holder of an Equipment Purchase Certificate intending to transfer such
Equipment Purchase Certificate to a new payee, or to exchange such Equipment
Purchase Certificate for new Equipment Purchase Certificates of authorized
denominations, shall endorse such outstanding Equipment Purchase Certificate
and surrender such outstanding Equipment Purchase Certificate at the Corporate
Trust Office or other office maintained for the purpose, or execute a written
instrument of transfer, duly executed by such Holder for the issuance of a new
Equipment Purchase Certificate or Equipment Purchase Certificates, specifying
the name and address of the new payee or payees. Promptly upon receipt of such
documents, subject to satisfaction of Section 2.10 hereof, the Company shall
execute and the Indenture Trustee will authenticate and deliver a new Equipment
Purchase Certificate or Equipment Purchase Certificates, in the same aggregate
original face amount and with the same Maturity and the same interest rate and
dated the same date as the Equipment Purchase Certificate surrendered, and in
such authorized denomination or denominations and, subject to Section 7.06 of
the Loan Agreement, registered in the name of such payee or payees as
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such Holder may specify by written request. The Indenture Trustee shall make a
notation on each new Equipment Purchase Certificate of the amount of all
payments of principal previously made on the surrendered Equipment Purchase
Certificate with respect to which such new Equipment Purchase Certificate is
issued and the date to which interest on such surrendered Equipment Purchase
Certificate has been paid. From time to time, the Indenture Trustee will
provide the Company with such information as it may request as to the
registered Holders of Equipment Purchase Certificates. All Holders shall be
deemed to be "Banks" with respect to such Equipment Trust Certificates for all
purposes under the Loan Agreement.
(b) A Holder may sell participations in its Equipment Purchase
Certificates in accordance with Section 2.10 hereof and Section 7.06 of the
Loan Agreement or as otherwise provided in the Loan Agreement.
SECTION 2.09. Mutilated, Destroyed, Lost or Stolen
Certificates. If any Equipment Purchase Certificate shall become mutilated,
destroyed, lost or stolen, upon the written request of the Holder thereof (a
copy of which request shall be sent by the Holder to the Indenture Trustee),
and subject to satisfaction of Section 2.10 hereof, the Company shall execute
and the Indenture Trustee shall authenticate and deliver as a replacement a new
Equipment Purchase Certificate, payable in the same original principal amount
and dated the same date as the Equipment Purchase Certificate so mutilated,
destroyed, lost or stolen.
If the Equipment Purchase Certificate being replaced has
become mutilated, such Equipment Purchase Certificate shall be surrendered to
the Indenture Trustee and a photocopy shall be furnished to the Company by the
Indenture Trustee. If the Equipment Purchase Certificate being replaced has
been destroyed, lost or stolen, the Holder shall furnish to the Company and the
Indenture Trustee such security or indemnity as may be required by them to save
the Company and the Indenture Trustee harmless and evidence satisfactory to the
Company and Indenture Trustee of the destruction, loss or theft of such
Equipment Purchase Certificate and of the ownership of such Equipment Purchase
Certificate; provided, however, that if the Holder of such Equipment Purchase
Certificate is one of the Banks (or an Affiliate thereof) the written
undertaking of such Holder delivered to the Company and the Indenture Trustee
shall be sufficient security and indemnity under this Section 2.09.
The Indenture Trustee will promptly cancel and destroy all
Equipment Purchase Certificates surrendered for transfer, exchange or
replacement pursuant to Section 2.08 hereof and this Section.
SECTION 2.10. Costs and Expenses of Issuance of New Equipment
Purchase Certificates. Upon the issuance of a new Equipment Purchase
Certificate pursuant to Section 2.08 or 2.09, the Company and/or the Indenture
Trustee may require from the party requesting such new Equipment Purchase
Certificate payment of a sum to reimburse the
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Company and the Indenture Trustee for, or to provide funds for the payment of,
any tax or other governmental charge in connection with the issuance of such
new Equipment Purchase Certificate. No service charge shall be levied for any
such transaction.
SECTION 2.11. No Liability of Indenture Trustee. All payments
to be made by the Indenture Trustee under this Indenture shall be made only to
the extent the Indenture Trustee shall have received sufficient funds from the
Company to enable the Indenture Trustee to make payments in accordance with the
terms hereof. Each Holder, by its acceptance of an Equipment Purchase
Certificate, agrees that the Indenture Trustee is not and shall not be
personally liable to the Holder for any amount payable under such Equipment
Purchase Certificate or this Indenture or, except as expressly provided in this
Indenture, for any liability under the Loan Agreement or this Indenture.
SECTION 2.12. ERISA Plan Prohibition. No employee benefit
plan subject to Title I of ERISA, or individual retirement account or employee
benefit 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 Equipment Purchase Certificates.
The purchase by any Person of any Equipment Purchase Certificate constitutes a
representation by such Person to the Company and the Indenture Trustee that
such Person is not an ERISA Plan and that such Person is not acquiring, and has
not acquired, such Equipment Purchase Certificate with assets of an ERISA Plan.
ARTICLE 3
Intentionally Left Blank.
ARTICLE 4
COVENANTS AND REPRESENTATIONS OF THE COMPANY
SECTION 4.01. Liens. The Company 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 any of the Indenture Estate or title thereto or any
interest therein except:
(a) the Lien of this Indenture and the rights of the parties
to the other Operative Agreements;
(b) the rights of any assignee, lessee or transferee under a
lease or an assignment expressly permitted by the terms of this
Indenture;
(c) Liens arising as a result of claims against or affecting
the Indenture Trustee, the Holders or any Affiliate thereof not
arising solely from participation in the
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transactions contemplated by the Operative Agreements or any act or
omission of the Indenture Trustee, the Holders or any Affiliate
thereof not required or expressly permitted by the Operative
Agreements;
(d) Liens for taxes imposed against the Company 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 any of the Indenture Estate or any
interest therein;
(e) materialmen's, mechanic's, workmen's, repairmen's,
employees' or other like Liens arising against the Company in the
ordinary course of the Company's business for amounts the payment of
which is either not yet overdue 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 any of
the Indenture Estate or any interest therein;
(f) Liens arising from judgment or awards against the Company
with respect to which 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
(g) the right of any Person (other than the Company) to claim
a portion of the insurance proceeds received or receivable as a result
of an Event of Loss with respect to the Airframe, which right arises
out of such Person's having a direct interest in an engine (other than
an Engine) installed on the Airframe as a lessor, conditional vendor,
owner or otherwise.
SECTION 4.02. Registration, Maintenance and Operation;
Possession and Lease; Insignia.
(a) Registration, Maintenance and Operation. The Company at
its own cost and expense, shall:
(i) on the Delivery Date cause the Aircraft to be duly
registered in its name, pursuant to the Act and, to remain, subject to
paragraph (b) below, 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;
(ii) maintain, inspect, service, repair 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 good operating condition, ordinary wear and tear
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excepted, and in any event (x) in accordance with the applicable
regulations of the applicable Aeronautics Authority or regulatory
agency or body of any other jurisdiction in which the Aircraft may
then be registered in accordance with Section 4.02(b) and the
Company's maintenance program approved by the applicable Aeronautics
Authority, (y) in the same manner and with the same care used by the
Company with respect to other Airbus Industrie A300-600 aircraft and
General Electric CF6-80C2-A5F engines owned or operated by the
Company, to the extent that the same regulations, and the Company's
FAA-approved maintenance program shall apply to any such aircraft and
related engines, owned or leased by the Company, and utilized in
similar circumstances and (z) 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, and, provided, however, the Company shall not be
in default of its obligation in this Section 4.02(a)(ii) to maintain
the Aircraft's airworthiness certification in good standing if the
Aircraft loses its airworthiness certification, such loss is curable
and the Company undertakes such cure promptly, diligently, and
continuously, using its best efforts; provided, further that if such
loss is not a loss of the character described in clause (v) of the
definition of Event of Loss and is not curable or if curable, is not
cured within two (2) years of the date the airworthiness certification
was lost, an Event of Loss shall be deemed to have occurred on the
date it is determined that such loss is not curable, or at the
expiration of such two (2) year period, as the case may be;
(iii) 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,
to be maintained;
(iv) 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 Company or the
Aircraft or any Engine or any service bulletin relating to the
Aircraft or any Engine or for any purpose for which the Aircraft or
any Engine is not designed; provided, however, that the Company or any
lessee 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 Indenture Trustee or any Holder; and if any
such law, license, rule, regulation or order requires alteration of
the Aircraft or any Engine, the Company will conform 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;
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(v) 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 in effect with
respect to the Airframe or any Engine required by the terms of Section
4.06 or (y) in any area that is a war zone or recognized or, in the
Company's reasonable judgment, threatened area of hostilities, unless
the Company 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, Section 4.06 covering such area
(and naming 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 Company is using its good faith efforts promptly
to remove the Aircraft from such area.
(b) Reregistration. At any time, the Company may at its sole
expense reregister the Aircraft under the laws of a country listed in Schedule
II hereto with which the United States then maintains normal and full (other
than in the case of Taiwan) diplomatic relations, subject to the following
conditions. The Indenture Trustee shall have received:
(i) assurances satisfactory to it:
(A) to the effect that the insurance provisions of
this Indenture have been and will be complied with upon such
change of registry;
(B) as to the continuation of the Lien of this
Indenture as a first priority, duly perfected lien on the
Aircraft;
(C) that such new country of registry (x) would
provide substantially equivalent protection for the rights of
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) imposes aircraft maintenance
standards not materially less stringent than those of the
Aeronautics Authority;
(D) that import and export certificates, if
required, shall have been procured at the Company's own cost
and expense by the Company;
(E) that duties and tariffs, if applicable, shall
have been paid for by the Company; and
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(F) that the Company shall have effected or caused
to be effected at the Company's own cost and expense all
recordings and filings that are required to perfect the Lien
of this Indenture; and
(ii) a favorable opinion of counsel (reasonably satisfactory
in form and substance to the Indenture Trustee) in the new
jurisdiction of registry to the effect:
(A) that the terms (including, without limitation,
the governing law, service-of-process and
jurisdictional-submission provisions thereof) of the Indenture
are legal, valid, binding and enforceable in such
jurisdiction;
(B) that it is not necessary for the Indenture
Trustee or Pass Through Trustee to register or qualify to do
business in such jurisdiction in connection with the
registration in the new jurisdiction (and the filing and/or
recordation therein of this Indenture) and the exercise of any
rights or remedies with respect to the Aircraft;
(C) that the courts of such jurisdiction would
provide substantially equivalent protection to the Indenture
Trustee as provided under United States law (with the
exception described in paragraph (b)(i)(C) of this Section
4.02) in respect of the transactions contemplated hereby,
including, without limitation, the remedies provided herein;
(D) that there is no tort liability of the 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 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 Indenture Trustee, such opinion shall be
waived, if insurance reasonably satisfactory to the Indenture
Trustee is provided, at the Company's expense, to cover such
risk and the Company undertakes to keep such insurance in full
force and effect); and
(E) (unless the Company shall have agreed to provide
insurance reasonably satisfactory to the Indenture Trustee
covering the risk of requisition of use of the Aircraft by the
government of registry of the Aircraft) that the laws of such
jurisdiction 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.
(c) Possession and Leases. The Company will not, without the
prior written consent of the Indenture Trustee, lease or otherwise in any
manner deliver, transfer or relinquish possession of the Aircraft, the Airframe
or any Engine or install any Engine, or
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permit any Engine to be installed, on any airframe other than the Airframe;
provided, that, so long as (i) no Event of Default shall have occurred and be
continuing, and (ii) the Company shall comply with the provisions of Section
4.06 hereof, the Company may without the prior written consent of the Indenture
Trustee:
(i) so long as the lessee 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 lease is entered into, (A) lease the Aircraft or
any Engine to a U.S. Air Carrier, (B) lease the Aircraft to an Air
Carrier which is principally based in and domiciled in one of the
countries listed on Schedule II hereto, (C) lease the Aircraft to any
Air Carrier principally based in and domiciled in a country which, at
the inception of such lease, is a signatory to the Convention on the
International Recognition of Rights in Aircraft, or (D) lease the
Aircraft to any other Air Carrier not described in this Section which
shall be reasonably acceptable to the Indenture Trustee; provided,
that, with respect to clause (C) above, at the time of any such lease
the United States maintains normal and full (other than in the case of
Taiwan) diplomatic relations with the country in which such Air
Carrier is principally based and domiciled. In the case of any lease
(x) such lessee shall operate and maintain the Aircraft in compliance
with this Indenture, (y) such lease shall provide that such lessee
will not transfer possession of, or any other rights to, the leased
Airframe or Aircraft to any other person without the prior written
consent of the Indenture Trustee (except as permitted by subparagraphs
(ii), (iii), (iv), (v), (vi), (vii) and (viii) below). Prior to any
lease to an Air Carrier permitted under clause (C) of this Section
4.02(c)(i): (I) the maintenance standards of the aeronautical
authority of the country of domicile or principal operation of the
lessee taken as a whole shall be not materially less stringent than
those of the FAA and the lease will provide that the maintenance
performed during such lease will meet in all material respects such
maintenance standards; (II) the Company will provide opinions of
counsel reasonably satisfactory to the Indenture Trustee with respect
to the validity and enforceability of the Indenture in such country,
that it is not necessary for the Indenture Trustee to register or
qualify to do business in such country in order for the Indenture
Trustee to enforce the terms and conditions of this Indenture and that
the laws of such country require fair compensation by the government
of such country payable in a currency freely convertible into US
Dollars for the loss of the use of the Aircraft in the event of a
requisition of use by such government; (III) import and export
certificates, if required, shall be procured at the Company's own cost
and expense by the Company; (IV) duties and tariffs, if applicable,
shall be paid for by the Company; and (V) the Company shall effect or
cause to be effected at the Company's own cost and expense all
recordings and filings that are required to perfect the Lien of this
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
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normal interchange or pooling agreements or arrangements, in each case
customary in the airline industry, entered into by the Company or any
permitted lessee in the ordinary course of its business with any Air
Carrier; 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 Indenture shall be
observed; and provided, further, that no such agreement or arrangement
contemplates or requires the transfer of title to the Airframe or any
Engine, and if the Company's title to any Engine shall 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
Company shall comply with Section 4.05(d) hereof 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, services, repair, maintenance or
overhaul work or for alterations or modifications in or additions to
the Airframe or Engine to the extent required or permitted by the
terms of Section 4.04 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. 20999, as amended, or any
similar or substitute programs, so long as the Company or any lessee
shall promptly notify the Indenture Trustee upon such transfer of
possession and provide 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;
(v) install or permit the installation of an Engine on an airframe
which is owned by the Company or any lessee free and clear of all
Liens, except (A) Liens of the type permitted under Section 4.01
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 Company or any lessee or purchased by the
Company 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 Indenture
Trustee 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
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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
4.02(c);
(vii) install or permit the installation of an Engine on an
airframe owned by the Company, leased to the Company or any permitted
lessee or purchased by the Company subject to a conditional sale or
other security agreement under circumstances where neither
subparagraph (v) nor subparagraph (vi) of this Section 4.02(c) is
applicable, provided that such installation shall be deemed an Event
of Loss with respect to such Engine and the Company shall comply with
Section 4.05(d) hereof in respect of such Engine, the Indenture
Trustee not intending to waive any right or interest it may have to or
in such Engine under applicable law until compliance by the Company
with such Section 4.05(d); and
(viii) enter into a wet lease under which the Company or any
permitted lessee has effective control of the Aircraft in the ordinary
course of the Company's business which shall not be considered a
transfer of possession hereunder, provided that the Company's
obligations under this Indenture shall continue in full force and
effect notwithstanding any such wet lease.
(d) Rights of Transferee. Notwithstanding the provisions of
Section 4.02(c) 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 4.02(c) hereof shall be subject and subordinate to, and any lease or
wet lease permitted by Section 4.02(c) hereof shall be made expressly subject
and subordinate to, all the terms of this Indenture, including, without
limitation, the Indenture Trustee's right to repossession pursuant to Article
6, and to avoid such lease upon such repossession, and the Company shall remain
primarily liable for the performance of all the terms of this Indenture to the
same extent as if such lease or transfer had not occurred. Any such lease
shall include appropriate provisions for the maintenance and insurance of the
Aircraft, the Airframe and each Engine in accordance with the provisions of
this Indenture and shall provide assurances reasonably satisfactory to the
Indenture Trustee that the lessee may not further lease any of such equipment.
The Company shall notify the Indenture Trustee within 60 days after any lease
and will promptly upon request from the Indenture Trustee furnish to the
Indenture Trustee a copy of any lease which has a term in excess of six (6)
months and deliver to the Indenture Trustee all other documents required
hereunder relating to such lease or transfer of possession.
(e) Insignia. The Company 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
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bearing the inscription "Mortgaged To: NationsBank of Georgia, National
Association, as Indenture Trustee".
SECTION 4.03. Replacement and Pooling of Parts.
(a) Replacement of Parts. The Company, 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 4.04 hereof. In addition, the Company 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 Company, except as otherwise provided
in Section 4.04 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
4.03(b) hereof and Liens of the type permitted under Section 4.01(e) hereof)
and shall be in as good operating condition as, and shall have a value and
utility at least equal to, the Parts replaced, assuming such replaced Parts
were in the condition and repair required to be maintained by the provisions of
this Indenture. Immediately upon any replacement Part becoming incorporated or
installed in or attached to the Airframe or any Engine, and without further act
(subject only to a pooling arrangement to the extent permitted by Section
4.03(b) hereof) such replacement Part shall become subject to the Lien of this
Indenture and shall be deemed part of the Airframe or any Engine, for all
purposes to the same extent as the Parts originally incorporated or installed
in or attached to the Airframe or such Engine.
(b) Pooling of Parts. Any Part removed from the Airframe or
any Engine as permitted in Section 4.03(a) hereof may be subjected by the
Company to any normal pooling arrangement customary in the airline industry and
entered into with other Air Carriers in the ordinary course of the Company's
business, provided that the Part replacing such removed Part shall be
incorporated or installed in or attached to the Airframe or such Engine, 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 4.03(a) hereof may be owned
by another Air Carrier subject to such normal pooling arrangement, provided
that the Company, at its own cost and expense and as promptly as possible,
either:
(A) causes title to such replacement Part to vest in the
Company free and clear of all Liens (other than Liens permitted under
Section 4.01(a), (b), (c) and (e) hereof) and become subject to the
Lien of this Indenture; or
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(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 Company free and clear of all Liens
(other than Liens permitted under Section 4.01(a), (b), (c) and (e)
hereof) and causes such replacement Part to become subject to the Lien
of this Indenture.
All replacement Parts shall meet the standards set forth in
Section 4.03(a) hereof.
SECTION 4.04. Alterations, Modifications and Additions. The
Company, at its own cost and expense, shall make or cause to be made such
alterations and modifications in and additions to the Aircraft 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 Aircraft and/or the Company's operations and aircraft; provided,
however, that the Company may in good faith contest the validity or application
of any such requirements in any reasonable manner that does not adversely
affect the first and prior perfected Lien and security interest of the
Indenture or the interests of the Indenture Trustee or the Holders in the
Indenture Estate or involve any risk of liability or civil or criminal
penalties imposed on or against the Indenture Trustee or any Holder or involve
any material danger of the sale, forfeiture or loss of any of the Indenture
Estate or any interest therein. All alterations, modifications and additions
made pursuant to this Section 4.04 shall without further act secure the PMSI
Obligations. In addition, the Company, 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 Company 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 shall
materially diminish the value or utility of the Airframe or any Engine or
impair its condition or airworthiness below its value, utility, condition and
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 Indenture,
except that the value (but not the utility, condition or airworthiness) of the
Airframe or any Engine may be reduced by the value of any such Obsolete Parts
which shall have been removed; provided that the aggregate value of all such
Obsolete Parts which shall have been so removed and not replaced shall not
exceed $1,000,000.
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 this Section 4.04 shall without further
act become subject to the Lien of this Agreement. Notwithstanding the
foregoing, the Company may remove any such Part 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
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the terms of Section 4.02 or the first sentence of this Section 4.04; and (iii)
such Part can be removed from the Airframe or such Engine without (A) causing
material damage to the Aircraft or diminishing or impairing the utility,
condition or airworthiness required to be maintained by the terms of this
Indenture or (B) diminishing the value or utility which the Airframe or such
Engine would have had at such time had such alteration, modification, removal
or addition not occurred assuming the Aircraft was then in the condition
required to be maintained by the terms of this Indenture. Upon the removal by
the Company of any such Part as provided in the preceding sentence such Part
shall no longer be subject to the Lien of this Indenture or deemed a Part.
SECTION 4.05. Loss, Destruction, Requisition.
(a) Company's Election Rights. The Company shall notify the
Indenture Trustee as soon as practicable but in no event more than 10 Business
Days following the occurrence of an event which constitutes or might 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 Indenture Trustee given within 60 days of the occurrence of any Event of
Loss, the Company shall elect the alternative set forth in Section 4.05(b)
hereof or the alternative set forth in Section 4.05(c) hereof. The Company'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 4.05(b) hereof.
(b) Prepayment of Equipment Purchase Certificates. The
Company shall, if it has so elected or is deemed to have so elected under
4.05(a), pay to the Indenture Trustee, by wire transfer of immediately
available funds on the earlier of (i) tenth Business Day following receipt in
full of insurance proceeds or requisition proceeds, described in Section
4.05(e), 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 outstanding principal amount of the
Equipment Purchase Certificates and all accrued and unpaid interest thereon
together with all other amounts due and owing under this Indenture or the Loan
Agreement including without limitation, any Breakage Costs in respect of such
prepayment (unless such prepayment has been postponed to the end of the then
current Interest Period pursuant to Section 2.02(e) hereof). Upon receipt by
the Indenture Trustee of such amounts, the Indenture Trustee shall apply such
amounts as provided in Section 5.01 hereof and thereupon the Lien of this
Indenture shall terminate.
(c) Replacement of Airframe and Engines. So long as no Event
of Default shall have occurred and be continuing, and subject to Section
4.05(a) hereof, if the Company has elected to replace the Airframe and Engines
pursuant to this Section 4.05(c), the Company shall, 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 an Event of loss has occurred,
substitute for the Aircraft subject to the Event of Loss, by causing to be
subjected to the Lien of this Indenture, a an Airbus A300F4-605R airframe and a
number of engines equal
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to the number of Engines with respect to which the Event of Loss has occurred
of the same or an improved make and model, owned by the Company free and clear
of all Liens not excepted in Sections 4.01(a), (b), (c) and (e) hereof, duly
certified as an airworthy aircraft by the Aeronautics Authority and having 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
airworthiness required to be maintained by the terms of this Indenture
immediately prior to the occurrence of such Event of Loss. In such case and as
a condition to such substitution the Company, at its own cost and expense, will
also promptly:
(i) furnish the Indenture Trustee with a certificate of a
nationally recognized aircraft appraiser reasonably satisfactory to
the Indenture Trustee certifying that such replacement airframe and
engines have a value and utility 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 Indenture immediately prior to the occurrence of
such Event of Loss;
(ii) furnish the Indenture Trustee with such evidence as the
Indenture Trustee may reasonably request of compliance with the
insurance provisions of Section 4.06 with respect to such replacement
airframe and engines;
(iii) cause an Indenture Supplement with respect to such
replacement airframe and engines to be duly executed by the Company
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
4.02(b) hereof, in order that the Lien of this Indenture shall
constitute a first and prior perfected Lien and security interest on
and in respect of such replacement airframe and engines;
(iv) furnish the Indenture Trustee with a copy of the
original bill of sale or other evidence of ownership reasonably
satisfactory to the Indenture Trustee respecting such replacement
airframe and engines, together with an assignment in form and
substance satisfactory to the Indenture Trustee of any and all
manufacturer's warranties applicable thereto and a consent reasonably
satisfactory to the Indenture Trustee from such manufacturer or
manufacturers to such assignment;
(v) furnish the Indenture Trustee with an opinion (reasonably
satisfactory to the Indenture Trustee) of counsel to the Company
(which may be the Company's General Counsel) addressed to the
Indenture Trustee and each Holder to the effect that (A) the Company
has good title to such replacement airframe and engines, (B) such
replacement airframe and engines have been validly subjected to the
Lien of this Indenture (with the effect and result that this Indenture
constitutes a first and prior perfected security interest and Lien on
such replacement airframe and engines), and
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(C) the Indenture Trustee would be entitled to the benefits of Section
1110 of the Bankruptcy Code with respect to such replacement airframe
and engines, provided, that such opinion need not be to the effect
specified in the foregoing clause (C) 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;
(vi) cause a financing statement or statements with respect
to such replacement airframe and engines to be filed in such place or
places as necessary in order that the Lien of this Indenture shall
constitute a first and prior perfected Lien and security interest on
and in respect of such replacement airframe and engines; and
(vii) take such other action as the Indenture Trustee may
reasonable request in order that such replacement airframe and engines
shall be due and properly subjected to the Lien of this Indenture to
the same extent as the replaced Airframe and Engines.
Promptly upon the registration of any such replacement
airframe and the recordation of the Indenture Supplement covering such
replacement airframe and engines 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 4.02(b) hereof, the Company will cause to
be delivered to the Indenture Trustee an opinion of counsel to the Company
addressed to the Indenture Trustee and the Holders as to the due registration
of the Aircraft and the due recordation of such Indenture Supplement or such
other requisite documents or instruments and the validity and perfection of the
Lien in such replacement airframe and engines granted to the Indenture Trustee
under this Indenture.
Each replacement airframe shall be deemed an "Airframe," each
such replacement engine shall be deemed an "Engine" and each such replacement
airframe and engine shall be deemed part of the same Aircraft as was the
Airframe or Engine replaced.
(d) Event of Loss with Respect to an Engine. 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
Company shall give the Indenture Trustee prompt written notice thereof and
shall, as soon as practicable but in any event within ninety (90) days after
the occurrence of such Event of Loss, substitute (by subjection to the Lien of
this Indenture) for the Engine with respect to which such Event of Loss
occurred, a Replacement Engine, free and clear of all Liens not excepted in
Sections 4.01(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
Indenture immediately prior to the occurrence of such Event of Loss. The
standards set forth in this Section with respect to Replacement Engines shall
apply upon any replacement
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or substitution of an Engine with a Replacement Engine pursuant to any other
provision of this Indenture.
Prior to or at the time of any substitution of an Engine
pursuant to this Section 4.05(d), the Company, at its own cost and expense
will:
(i) furnish the Indenture Trustee with such evidence of
compliance with the insurance provisions of Section 4.06 hereof with
respect to such Replacement Engine as the Indenture Trustee may
reasonably request;
(ii) furnish the Indenture Trustee with a certificate of an
aircraft advisor (who must be a nationally recognized aircraft
authority) 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 the condition and
repair required by the terms of this Indenture immediately prior to
the occurrence of such Event of Loss;
(iii) cause an Indenture Supplement with respect to such
Replacement Engine to be duly executed by the Company and the
Indenture Trustee and recorded pursuant to the Act, or the applicable
laws, rule and regulations of any other jurisdiction in which the
Aircraft may be registered as permitted by Section 4.02(b) hereof in
order that the Lien of this Indenture shall constitute a first and
prior and perfected Lien and security interest on and in respect of
such Replacement Engine;
(iv) furnish the Indenture Trustee with a copy of the
original bill of sale or other evidence of ownership reasonably
satisfactory to the Indenture Trustee respecting such Replacement
Engine, together with an assignment in form and substance satisfactory
to the Indenture Trustee of any and all manufacturer's warranties
applicable thereto and a consent reasonably satisfactory to the
Indenture Trustee from such manufacturer to such assignment;
(v) furnish the Indenture Trustee with an opinion (reasonably
satisfactory to the Indenture Trustee) of counsel to the Company
(which may be the Company's General Counsel) addressed to the
Indenture Trustee and each Holder to the effect that (A) the Company
has good title to such Replacement Engine, and (B) such Replacement
Engine has been validly subjected to the Lien of this Indenture (with
the effect and result that this Indenture constitutes a first and
prior perfected security interest and Lien on such Replacement
Engine);
(vi) cause a financing statement or statements with respect
to such Replacement Engine to be filed in such place or places as
necessary in order that the Lien of this Indenture shall constitute a
first and prior perfected Lien and security interest on and in respect
of such Replacement Engine; and
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(vii) 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 this Indenture to the same extent as
the replaced Engine.
Promptly upon the recordation of the Indenture Supplement
covering such Replacement Engine 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 4.02(b) hereof, the Company will cause to
be delivered to the Indenture Trustee an opinion of counsel to the Company
addressed to the Indenture Trustee and the Holders as to the due recordation of
such Indenture Supplement or such other requisite documents or instruments and
the validity and perfection of the Lien in such Replacement Engine granted to
the Indenture Trustee under this Indenture.
(e) 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 thereof of the Airframe and the Engines or engines then
installed on the Airframe, which requisition does not constitute an Event of
Loss, the Company shall promptly notify the Indenture Trustee of such
requisition and all of the Company's obligations under this Indenture with
respect to such Airframe and Engines or engines shall continue to the same
extent as if such requisition had not occurred. All payments received by the
Company, any lessee or the Indenture Trustee from the Government or other
government of registry of the Aircraft or any agency or instrumentality thereof
for such use of the Airframe and Engines or engines shall, so long as no
Payment Default, Bankruptcy Default or Event of Default shall have occurred and
be continuing, be paid over to, or retained by, the Company (or if directed by
the Company, any lessee). All payments received by the Company, any lessee or
the Indenture Trustee with respect to the Airframe or any Engine with respect
to any requisition constituting an Event of Loss or while a Payment Default,
Bankruptcy Default or Event of Default is continuing shall be paid over to, or
retained by, the Indenture Trustee for application in accordance with this
Indenture. At such time as there shall not be continuing any such Payment
Default, Bankruptcy Default or Event of Default such amounts shall be paid to
the Company.
(f) Requisition for Use by Government of an Engine not
Installed on the Airframe. 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 thereof of any Engine not then installed on the Airframe, the
Company shall replace such Engine by complying with the terms of Section
4.05(d) hereof to the same extent as if an Event of Loss had occurred with
respect to such Engine, and any payments received by the Company, any lessee or
the Indenture Trustee from the Government or other government of registry or
any instrumentality thereof with respect to such requisition shall, so long as
no Payment Default, Bankruptcy Default or Event of Default shall have occurred
and be continuing be paid over to or retained by the Company, provided that the
Company shall have fully performed its
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obligations under Section 4.05(d) hereof. If a Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing, all such
payments shall be paid over to, or retained by, the Indenture Trustee for
application in accordance with this Indenture.
(g) Other Payments. Any payments (other than insurance
proceeds, the application of which is provided in Section 4.06 hereof) received
at any time by the Company or the Indenture Trustee from any governmental
authority or any other Person in connection with an Event of Loss with respect
to the Airframe or the Airframe and the Engines or engines then installed on
the Airframe will be applied toward the Company's obligations under Section
4.05(b) hereof or if the Company has made the election under Section 4.05(c)
hereof or if the Event of Loss relates to an Engine not then installed on the
Airframe, such payments shall, so long as no Payment Default, Bankruptcy
Default or Event of Default shall have occurred and be continuing, be paid over
to the Company, provided that the Company shall have fully performed its
obligations pursuant to Section 4.05(c) or (d) hereof, as the case may be.
SECTION 4.06. Insurance.
(a) Public Liability and Property Damage Liability Insurance.
(i) The Company, at its own cost and expense, will
maintain or cause to be maintained with respect to the Aircraft, comprehensive
aircraft 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 Company customarily maintains with respect to similar aircraft and engines
which comprise the fleet of the Company (subject to the limitations set forth
in Section 4.06(f)), 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 Company and owning or operating aircraft and
engines similar to the Aircraft and Engines; provided that such insurance shall
not be in amounts less than the amount per occurrence specified in Section
6.03(b) of the Loan Agreement unless the Aircraft is not operated and
appropriate liability insurance for the Aircraft on the ground is maintained
provided further that in no event shall the limits of liability for all public
liability insurance be less than the amount, per occurrence as set forth on the
insurance certificate delivered on the Delivery Date unless the Aircraft is not
operated and appropriate insurance for the Aircraft on the ground is
maintained.
(ii) Notwithstanding Section 4.06(a)(i), 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 Company shall
maintain throughout the period of such requisition such insurance as would
otherwise be required under this Section 4.06, provided that the Indenture
Trustee shall accept, in lieu of such insurance coverage, indemnification or
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insurance from the Government which is substantially the same as otherwise
required under this Section 4.06.
(iii) Any policy of insurance carried and maintained in
accordance with this Section 4.06(a), and any policy taken out in substitution
or replacement for any such policy subject to the terms, conditions and
limitations thereof, shall:
(A) name or be amended to name the Indenture
Trustee, the Agent and the Holders as additional insureds;
(B) 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 Company or any Additional
Insured as defined under the policy of insurance required under this
Section 4.06 (other than 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
Company or any Additional Insured as defined under the policy of
insurance required under this Section 4.06 (other than such Additional
Insured);
(C) provide that if such insurance is cancelled for
any reason, or any substantial change is made in the policies which
adversely affect 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 of such cancellation,
change or lapse;
(D) provide that no Additional Insured shall have
any obligation or liability for premiums or other payments, if any, in
connection with such insurance;
(E) provide that the insurers shall waive any rights
of subrogation against each Additional Insured, to the extent that the
Company has waived its rights under this Indenture or the Loan
Agreement; provided that the exercise by insurers of rights of
subrogation derived from rights retained by the Company 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 Company;
(F) 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;
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(G) 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; and
(H) 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.
(b) Insurance Against Loss or Damage to Aircraft and Engines.
(i) The Company, 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 4.06(f)) and in such form and amounts as the Company
customarily maintains with respect to the aircraft in the Company's fleet of
the same type and model and operated on the same routes as the Aircraft (except
that the Company 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 the Lien of this Indenture be for an amount not less than an
amount equal to 125% of the aggregate outstanding principal amount of the
Equipment Purchase Certificates at the date of determination (the "Threshold
Value").
(ii) Any policies carried and maintained in accordance
with this Section 4.06(b) and any policies taken out in substitution or
replacement for any such policies subject to the terms, conditions and
limitations thereof shall:
(A) name or be amended to name the Indenture
Trustee, the Agent and the Holders as additional insureds and to name
the Indenture Trustee as loss payee (the "Loss Payee");
(B) provide with respect to coverage provided under
this Section 4.06(b), that (i) in the event of a loss involving
proceeds in excess of $6,000,000, the proceeds in respect of such loss
up to an amount equal to the Threshold Value shall be payable to the
Indenture Trustee, it being understood and agreed that in the case of
any payment to the Indenture Trustee otherwise than in respect of an
Event of Loss, the Indenture Trustee shall, unless a Payment 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
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pay for repairs then being made, pay the amount of such payment to the
Company 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 Threshold Value for the Aircraft
shall be paid to the Company or its order unless a Payment Default or
Event of Default shall have occurred and be continuing and the
insurers have been notified thereof by the Indenture Trustee (and if
the insurers have notice of a Payment Default or Event of Default such
payment shall be made to the Indenture Trustee);
(C) provide that if such insurance is cancelled for
any reason or any substantial change is made in the policies which
adversely affects 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 or
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 each such
Additional Insured or the Loss Payee of written notice from such
insurer of such cancellation, change or lapse;
(D) provide that, in respect of the interest of any
Additional Insured or the Loss Payee in such policies the insurance
shall not be invalidated by any action or inaction of the Company, the
Loss Payee or any Additional Insured (other than any action or
inaction of the Loss Payee or such Additional Insured, as the case may
be) and shall insure the Additional Insured and the Loss Payee
regardless of any breach or violation of any warranty, declaration or
condition in such policies by the Company or any other Additional
Insured as defined under the policy of insurance required under this
Section 4.06(b);
(E) provide that the insurers shall waive any rights
of subrogation against the Loss Payee and the Additional Insureds, to
the extent that the Company has waived its rights under this
Indenture; provided that the exercise by insurers of rights of
subrogation derived from right retained by the Company shall not, in
any way, delay payment of any claim that would otherwise be payable by
such insurers but for the existence of right of subrogation derived
from rights retained by the Company;
(F) 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 any
Additional Insured or Loss Payee;
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(G) be primary and without rights of contribution
from any other insurance which is carried by any Additional Insured or
the Loss Payee with respect to its interest in the Aircraft; and
(H) 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 as otherwise provided in that certain letter
dated July 2, 1993 (the delivery date of the first aircraft financed
pursuant to the Company's 1993 facility with certain of the Banks) a
copy of which was heretofore delivered to the Banks, but deeming for
such purpose the aircraft referred in such letter to be the Aircraft)
no Additional Insured or Loss Payee shall have any obligation or
liability for premiums or other payments, if any, in connection with
such insurance.
(c) Application of Insurance Proceeds.
(i) All insurance proceeds (other than proceeds from
policies carried by the Indenture Trustee, the Agent or any Holder) received
under policies described in Section 4.05(b) 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:
(A) 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 Company has elected or
is deemed to have elected the alternative set forth in Section 4.05(b)
hereof, so much of such proceeds as shall not exceed the amounts
required to be paid by the Company pursuant to said Section 4.05(b)
hereof shall be applied in reduction of the Company's obligation to
pay such amounts if not already paid by the Company, or if already
paid by the Company, shall be applied to reimburse the Company for its
payment of such amounts, provided that no Payment 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 Company;
if and so long as the foregoing proviso is not satisfied, such
proceeds shall be held pursuant to Section 5.04 hereof as security for
the Company's obligations hereunder; or
(B) 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 Company has elected the alternative set forth
in Section 4.05(c) 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 4.05(d) hereof, all such proceeds shall be paid to the
Indenture Trustee for disbursement to the order of the Company, after
the Company shall have fully performed the terms of Sections 4.05(c)
or 4.05(d), as applicable, hereof with respect to the Event of Loss
for which such proceeds are paid, provided that no Default or Event of
Default shall have
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occurred and be continuing; if and so long as the foregoing proviso is
not satisfied, such proceeds shall be held pursuant to Section 5.04
hereof as security for the Company's obligations hereunder.
(ii) 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 Company) for repairs or for
replacement property in accordance with Sections 4.02 and 4.03 hereof, if not
already paid for by the Company, and any balance remaining after compliance
with said Sections 4.02 and 4.03 hereof with respect to such loss shall be paid
to the order of the Company, provided that no Payment 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 pursuant to Section 5.04
hereof as security for the Company's obligations hereunder.
(iii) If the Indenture Trustee, the Agent or any Holder
becomes subject to any claim covered by any insurance policy maintained
pursuant to this Section 4.06, the Company shall make available any information
required by the Indenture Trustee, the Agent or such Holder, as the case may
be, in connection with such claim.
(d) Reports. On or before the Delivery Date and thereafter
annually on or before the scheduled expiration date for such policy while the
Equipment Purchase Certificates are outstanding, the Company's aviation
insurance broker will furnish to the Indenture Trustee a report, signed by the
Company's independent aviation insurance broker, stating 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 Indenture. The
Company will cause its aviation insurance broker to advise 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 Company of which it has knowledge
and which might cause cancellation of all or any part of any insurance carried
by the Company with respect to the Aircraft. The Company will cause such
insurance broker to agree to advise the Indenture Trustee in writing if and
when it becomes evident to such broker that any insurance policy carried and
maintained on the Aircraft pursuant to this Section 4.06 will not be renewed at
the expiration date. The Company will also cause such insurance broker to
deliver to the Indenture Trustee, on or prior to the date of expiration of any
insurance policy referenced in a previously delivered certificate of insurance,
a new certificate of insurance, confirming to such parties that such insurance
as certified on the Delivery Date continues in full force and effect. If the
Company shall fail to maintain insurance as required hereby the Indenture
Trustee, the Agent or any Holder may, at its option, provide such insurance,
and in such event, the Company shall, upon demand, reimburse the Indenture
Trustee, the Agent or such Holder, as the case may be, for the cost of such
insurance; provided, however, that no exercise of said option shall affect the
provisions of this Indenture, including the provisions that failure by the
Company to maintain the prescribed insurance shall constitute an Event of
Default, or otherwise constitute a waiver of any other rights the Indenture
Trustee may have against the Company.
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(e) Indenture Trustee's Insurance. The Indenture Trustee may
insure the Airframe or any Engine at its own cost and expense, including
insuring the Aircraft for amounts in excess of the Threshold Value, provided
that any insurance so maintained by the Indenture Trustee shall not result in a
reduction of coverage or amounts payable under insurance required or permitted
to be maintained by the Company under this Section 4.06 or increase the cost to
the Company of maintaining such insurance; provided further, that any insurance
policies of the Indenture Trustee insuring the Airframe or any Engine shall
provide for a release to the Company of any and all salvage rights in and to
the Airframe or any Engine.
(f) Self-Insurance. The Company may self-insure policies,
the risks required to be insured against by Section 4.06(a) and Section 4.06(b)
in such reasonable amounts as are then applicable to other aircraft or engines
of the Company of value comparable to the Aircraft, but in no case shall such
self-insurance with respect to all aircraft in the Company'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 Company's fleet and
(ii) 1.5% of the average aggregate insured value from time to time of the
Company'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 Company shall not discriminate as between
insurance coverage on the Aircraft and insurance which the Company maintains
with respect to similar aircraft owned or operated by the Company operating on
similar routes in similar locations.
SECTION 4.07. Inspection. At reasonable times, and (so long
as no Event of Default shall have occurred and be continuing) upon at least
five Business Days' prior written notice to the Company, the Indenture Trustee
or its authorized representative, may inspect the Aircraft and, (so long as no
Event of Default shall have occurred and be continuing) upon at least 10
Business Days' prior written notice, all Aeronautics Authority-required books
and records of the Company and any lessee 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 (a) to the
Indenture Trustee's counsel, independent insurance advisors or other agents,
the Holders and any prospective purchaser of the Aircraft in connection with
the exercise of remedies following an Event of Default, each of whom agree to
hold such information confidential, (b) as may be required by any statute,
court or administrative order or decree or governmental ruling, regulation or
demand or (c) as may be necessary for purposes of protecting the interests of
any such Person or for enforcement of this Indenture by the Indenture Trustee;
provided, however, that any and all disclosures permitted by (b) or (c) above
shall be made only to the extent necessary to meet the specific requirements or
needs of the Persons to whom such disclosures are hereby permitted; 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 Company. Notwithstanding
the previous sentence, the Indenture
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Trustee or its authorized representative shall (so long as no Event of Default
shall have occurred and be continuing) be entitled to inspect the Aircraft only
one time among themselves during any consecutive twelve month period. Neither
the Indenture Trustee, the Agent nor any Holder shall have any duty to make any
inspection of the Aircraft and none of them shall incur any liability or
obligation by reason of not making any such inspection.
SECTION 4.08. Filings. So long as the Equipment Purchase
Certificates remain unpaid, the Company will take, or cause to be taken, at the
Company's cost and expense, such action with respect to the recording, filing,
re-recording and re-filing of this Indenture, each Indenture Supplement and any
financing statements or other instruments as are necessary, or as requested by
the Indenture Trustee and appropriate, to maintain, so long as this Indenture
is in effect, the perfection of the purchase money equipment security interest
and the Lien created by this Indenture, or will furnish to the Indenture
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 it to take such action at the Company's cost and expense in a timely
manner.
SECTION 4.09. Annual Opinion. So long as the Equipment
Purchase Certificates remain unpaid, the Company shall furnish to the Indenture
Trustee annually after the execution hereof (but not later than March 15 of
each year) commencing with the year 1996, an opinion, reasonably satisfactory
to the Indenture Trustee, of Special Aviation Counsel or other counsel
reasonably satisfactory to the Indenture Trustee, with a copy to the Agent,
stating:
(i) that in the opinion of such counsel, except as otherwise
noted in the opinion, such action has been taken with respect to the
recording, filing, re-recording and re-filing of this Indenture, the
Indenture Supplement and any financing statement, continuation
statement or other instruments, and all other action has been taken,
as is necessary to maintain the perfection of the security interest
created by this Indenture and reciting the details of such recording
or other action or that in the opinion of such counsel no action is
necessary to maintain the Perfection of such security interest;
(ii) specifying all other action which needs to be taken
during the succeeding 14 months in order to maintain the perfection of
such security interest; and
(iii) stating that the Company is the owner of the legal
title to the Aircraft, and the Aircraft is free and clear of all
Liens, except the security interest created by this Indenture and such
as are permitted by this Indenture.
SECTION 4.10. Corporate Existence. So long as the Equipment
Purchase Certificates remain unpaid, the Company shall at all times maintain
its corporate existence except as permitted by Section 4.11 hereof and all of
its rights, privileges and franchises necessary in the normal conduct of its
business, except for any corporate right, privilege or
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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.
SECTION 4.11. Merger, Consolidation. So long as the
Equipment Purchase Certificates remain unpaid, the Company 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 Company 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 certificated Air Carrier, (iv) expressly assumes by an instrument in writing
in form and substance satisfactory to the Indenture Trustee all of the
Company's obligations hereunder and under the other Operative Agreements, and
the Company delivers such instrument to the Indenture Trustee, (v) provides an
opinion from counsel to the Company which counsel shall be reasonably
satisfactory to the Indenture Trustee and which opinion shall be reasonably
satisfactory to the Indenture Trustee that such merger, consolidation or
conveyance, transfer or lease and the instrument noted in clause (iv) above
comply with this Section 4.11, 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 Indenture and each
other Operative Agreement, 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 Company and the satisfaction of the
conditions specified in this Section 4.11, the successor corporation formed by
such consolidation or into which the Company 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 Company under this
Indenture and the other Operative Agreements to which the Company is a party
with the same effect as if such successor corporation had been named as the
Company herein and therein.
SECTION 4.12. Financial Information. So long as any of the
Equipment Purchase Certificates remain unpaid, the Company agrees to furnish to
the Indenture Trustee:
(i) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Company, a
consolidated balance sheet of the Company as of the end of such fiscal
year, and the related consolidated statements of income, retained
earnings and cash flows of the Company for the fiscal year then
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ended as prepared and certified by the Company's independent certified
public accountants, including their opinion;
(ii) within sixty (60) days after the end of the first,
second and third quarterly accounting periods in each fiscal year of
the Company, a consolidated balance sheet of the Company prepared by
the Company as of the close of the accounting period then ended,
together with the related consolidated statements of income, retained
earnings and cash flows of the Company for such accounting period
certified by the chief accounting officer or a financial vice
president of the Company;
(iii) promptly upon their general transmission, copies of all
regular and periodic reports furnished by the Company to its
stockholders;
(iv) promptly after filing with the SEC, copies of the
Company's annual reports on Form 10-K, quarterly reports on Form 10-Q
and, if requested, any registration statement or prospectus filed by
the Company with any securities exchange or with the SEC;
(v) promptly upon any officer of the Company 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 Company has taken or is taking
or proposes to take with respect thereto; and
(vi) from time to time, such other financial information as
the Indenture Trustee, the Agent or any Holder may reasonably request.
Concurrently with the delivery of the financial statements referred to in
clause (i) above, the Company shall deliver to the Indenture Trustee a
certificate of the Company, signed by any one of the President, the Chief
Financial Officer, the General Counsel, the Treasurer or the principal
accounting officer of the Company, stating that the signer, or an officer
reporting to same, is familiar with the relevant terms of this Indenture and
the signer has reviewed, or has caused to be made under such person's
supervision a review, of the activities of the Company and that, to the best of
his or her knowledge, there does not exist an Event of Default or if an Event
of Default exists or did exist, specifying the nature thereof, the period of
existence thereof and what action the Company has taken or proposes to take
with respect thereto.
SECTION 4.13. Representations and Warranties of the Company.
The Company represents and warrants that, on the date hereof:
(i) the Company is a corporation duly organized and validly
existing 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
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as a foreign corporation 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 Company require such
qualification;
(ii) the Company has full power, authority and legal right to
conduct its current business and operations as currently conducted and
to own or hold under lease its properties and to enter into and
perform its obligations under the Operative Agreements to which it is
a party (the "Company Documents");
(iii) the Company 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;
(iv) the Company 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;
(v) the Company Documents have each been duly authorized,
executed and delivered by the Company and constitute, or when executed
and delivered by the Company will constitute, the legal, valid and
binding obligations of the Company 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 of general application to or affecting the enforcement of
creditors' rights, or equitable principles;
(vi) no authorization, consent or approval of, notice to or
filing with any governmental authority is required for the execution,
delivery or performance by the Company of the Company Documents or for
the use and maintenance of the Aircraft except for those that have
been duly made, given or accomplished; and
(vii) neither the execution, delivery or performance by the
Company of the Company Documents, nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with 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 Company or any order, writ, injunction
or decree of any court or governmental authority against the Company
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
Company is a party or by which it or any of its properties is bound,
or constitutes or will constitute a default thereunder or will result
in the
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imposition of any Lien (other than the Lien of this Indenture) upon
any of its properties.
SECTION 4.14. Survival of Representations and Warranties.
The representations and warranties of the Company shall survive the Delivery
Date hereunder and the expiration or termination of this Indenture.
ARTICLE 5
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE
SECTION 5.01. Distribution of Principal and Interest. Except
as otherwise provided in Section 5.03 hereof, (a) each payment or prepayment
of principal of Equipment Purchase Certificates by the Company shall be made
for the account of the Holders pro rata in accordance with the respective
unpaid principal amounts of the Equipment Purchase Certificates held by them
and (b) each payment of interest on Equipment Purchase Certificates by the
Company shall be made for the account of the Holders pro rata in accordance
with the amounts of interest on the Equipment Purchase Certificates then due
and payable to the Holders.
SECTION 5.02. Intentionally Left Blank.
SECTION 5.03. Payments during Continuance of Event of
Default. All payments received and amounts held or realized by the Indenture
Trustee after an Event of Default shall have occurred and be continuing
(including any amounts realized by the Indenture Trustee from the exercise of
any remedies pursuant to Article 6), as well as all payments or amounts then
held or thereafter received by the Indenture Trustee as part of the Indenture
Estate while such Event of Default shall be continuing, shall be distributed by
the Indenture Trustee in the following order of priority:
first, so much of such payments or amounts as shall be
required to pay the Indenture Trustee all amounts then due it pursuant
to Sections 8.05 and 7.05(b) hereof shall be applied to pay the
Indenture Trustee such amounts;
second, so much of such payments or amounts remaining as shall
be required to pay the expenses incurred, or in the judgment of the
Indenture Trustee expected to be incurred, in using, operating,
storing, leasing, controlling or managing the Indenture Estate, and in
all maintenance, repairs, replacements, alterations, additions and
improvements and in making all payments which the Indenture Trustee
may be required or may elect to make, if any, for taxes, assessments,
insurance or other proper charges upon the Indenture Estate or any
part thereof (including the employment of
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engineers and accountants to examine and make reports upon the
properties, books and records of the Company), or for the satisfaction
of Liens, if any, prior to the Lien of this Indenture;
third, so much of such aggregate amount remaining as shall be
required to reimburse the Holders for payment made by them to the
Indenture Trustee pursuant to Section 7.05 hereof (to the extent not
previously reimbursed), to be distributed to the Holders ratably,
without priority of one over any other, in the proportion of the
amounts of such unreimbursed payment made pursuant to Section 7.05;
fourth, so much of such payments or amounts remaining as shall
be required to pay Breakage Costs, if any, and any other amounts owing
to the Holders under this Indenture, the Loan Agreement and the other
Operative Agreements, in respect of the Equipment Purchase
Certificates (other than principal of and interest on the Equipment
Purchase Certificates) shall be applied ratably to the payment of such
amounts;
fifth, so much of such payments or amounts remaining as shall
be required to pay the unpaid principal of and interest on the
Equipment Purchase Certificates, shall be applied to the payment of
such amounts; and
sixth, the balance, if any, of such payments or amounts
remaining thereafter shall be held by the Indenture Trustee as
collateral security for the obligations secured hereby until such time
as no Event of Default shall be continuing hereunder or the Equipment
Purchase Certificates have been accelerated and all amounts due
thereon have been paid, at which time such payments or amounts shall
be distributed to the Company.
SECTION 5.04. Funds Held by Indenture Trustee; Investments.
At any time and from time to time, so long as no Event of Default shall have
occurred and be continuing, the Indenture Trustee shall, upon the written
instructions of the Company, invest and reinvest in Permitted Investments as
specified in the written instructions of the Company, any monies on deposit
with the Indenture Trustee as part of the Indenture Estate, and sell any
Permitted Investments, in either case, at such prices, including accrued
interest, as are set forth in the written instructions of the Company, and such
Permitted Investments shall be held by the Indenture Trustee until so sold in
trust as part of the Indenture Estate; provided, that the Company shall upon
demand pay to the Indenture Trustee the amount of any loss realized upon
maturity, sale or other disposition of any Permitted Investments and, so long
as no Event of Default shall have occurred and be continuing, be entitled to
receive from the Indenture Trustee, and the Indenture Trustee shall promptly
pay to the Company, any profit, income interest, dividend or gain realized upon
maturity, sale or other disposition of any Permitted Investment. The Indenture
Trustee shall not be responsible for any losses on any investments or sales of
Permitted Investments made pursuant to the procedure specified in
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this Section 5.04. An account statement delivered by the Indenture Trustee to
the Company shall be deemed written confirmation by the Company that the
investment transactions identified therein accurately reflect the investment
directions given to the Indenture Trustee by the Company, unless the Company
notifies the Indenture Trustee in writing to the contrary within ten (10) days
of the date of receipt of such statement.
ARTICLE 6
EVENTS OF DEFAULT;
REMEDIES OF THE INDENTURE TRUSTEE
UPON AN EVENT OF DEFAULT
SECTION 6.01. Events of Default. The following events shall
constitute "Events of Default" and each such Event of Default shall be deemed
to exist and continue so long as, but only so long as, it shall not have been
remedied:
(a) the Company shall fail to make any payment of principal,
Breakage Costs or interest on any Equipment Purchase Certificates or
any fee payable pursuant to Section 2.04 of the Loan Agreement within
five (5) Business Days after the date when due; or the Company shall
fail to pay any other amount owing hereunder or under the Equipment
Purchase Certificates when due within 30 days after demand therefor by
the Indenture Trustee; or
(b)(i) the Company shall fail to procure, carry and maintain
insurance on the Aircraft at any time in accordance with the
provisions of Section 4.06 hereof or such insurance lapses or is
cancelled, provided that no such lapse or cancellation shall
constitute an Event of Default until the earlier of 30 days (seven
days or such shorter time as may be standard in the industry with
respect to war risk coverage) after receipt by the Indenture Trustee
of written notice of such lapse or cancellation and the date that such
lapse or cancellation is effective as to the Indenture Trustee and
provided further, that such failure for a period of not more than 30
days 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 public liability
insurance required under Section 4.06(a) shall not be in effect (it
being understood that the Company is not required to maintain such
insurance under Section 4.06(a) hereof while the indemnification or
insurance referred to in the proviso to Section 4.06(a)(ii) hereof is
in effect); or
(c) the Company shall fail to perform or observe any other
covenant, condition or agreement to be performed or observed by it
under this Indenture or any other Operative Agreement or any other
written agreement of the Company entered into in connection with the
transactions contemplated by the Operative Agreements and such
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failure shall continue unremedied for a period of thirty (30) days
from the date on which a Responsible Officer the Company has actual
knowledge of the failure or the Company shall have received written
notice, identified as a "Notice of Indenture Default," from the
Indenture Trustee (or from the Holders of not less than 25% of
aggregate principal amount of outstanding Equipment Purchase
Certificates) 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 Company shall have promptly undertaken
such cure after the earlier of such knowledge or notice thereof which
undertaking shall be diligently and continuously pursued using the
Company's reasonable best efforts, such failure shall not constitute
an Event of Default; or
(d) an order for relief shall be entered in respect of the
Company 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 Company shall consent to the appointment of a
custodian, receiver, trustee or liquidator of itself or of a
substantial part of its property; or the Company 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 Company shall file, or the Board of Directors of the
Company 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 Company in any such proceeding; or the
Company shall file, or the Board of Directors of the Company shall
authorize the Company 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
(e) an order, judgment or decree shall be entered by any
court of competent jurisdiction appointing, without the consent of the
Company, a custodian, receiver, trustee, or liquidator of the Company
or of any substantial part of its property, or sequestering any
substantial part of the property of the Company or granting any other
relief in respect of the Company 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 sixty (60) days after the date of its entry;
or
(f) a petition against the Company 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
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which may apply to the Company, any court of competent jurisdiction
shall assume jurisdiction, custody or control of the Company 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
(g) any representation or warranty made by the Company in
this Indenture or in any other Operative Document shall at any time
prove to have been incorrect at the time made in any respect material
to the transactions contemplated by this Indenture and, if originally
made by the Company in good faith, shall remain material and
unremedied for a period of thirty (30) days after the Company shall
have received written notice, identified as a "Notice of Indenture
Default," of such misstatement from the Indenture Trustee or from the
Holders of not less than 25% aggregate principal amount of outstanding
Equipment Purchase Certificates.
SECTION 6.02. Remedies with Respect to Indenture Estate.
(i) Upon the occurrence of any Event of Default referred to in Section
6.01(d), (e) or (f) then and in every such case the entire unpaid principal
amount of the Equipment Purchase Certificates together with all accrued
interest and any Breakage Costs and other sums then owing by the Company
hereunder shall immediately and without further act become due and payable
without presentment, demand, protest or notice, all of which are hereby waived.
Upon the occurrence of any other Event of Default and at any time thereafter so
long as the same shall be continuing, the Indenture Trustee may on its own
accord or at the direction of Holders of not less than a Majority in Interest
of Certificate Holders declare the entire unpaid principal amount of the
Equipment Purchase Certificates together with all accrued interest and any
Breakage Costs and other sums then owing by the Company hereunder to be
forthwith due and payable. Upon the occurrence of any Event of Default and at
any time thereafter so long as the same shall be continuing, the Indenture
Trustee may, and upon the written instructions of a Majority in Interest of
Certificate Holders, the Indenture Trustee shall, do one or more of the
following:
(a) cause the Company, upon the written demand of the
Indenture Trustee, at the Company's expense, to deliver promptly, and
the Company shall deliver promptly, all or such part of the Airframe
or any Engine (together with all records, logs, manuals, data, and
inspection, modification and overhaul records and other documents
maintained with respect thereto or pertaining thereto) as the
Indenture Trustee may so demand to the Indenture Trustee or its order,
or the Indenture Trustee, at its option, may enter upon the premises
where all or any part of the Airframe or any Engine (or any such
records, logs, manuals, data, or inspection, modification or overhaul
records or other documents) are located and take immediate possession
(to the exclusion of the Company and all Persons claiming under or
through the Company) of and remove the same together with any engine
which is not an Engine but which is installed on the Airframe, subject
to all of the rights of the owner, lessor, lienor or secured party of
such engine, provided, that any such engine shall be held for
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the account of any such owner, lessor, lienor or secured party or, if
owned by the Company, may at the option of the Indenture Trustee, be
exchanged with the Company for an Engine in accordance with the
provisions of Section 4.05(d) hereof by summary proceedings or
otherwise, all without liability accruing to the Indenture Trustee for
or by reason of such entry or taking of possession or removal, whether
for the restoration of damage to property caused by such taking or
otherwise;
(b) sell all or any part of the Airframe and any Engine and
any other part of the Indenture Estate at public or private sale,
whether or not the Indenture Trustee shall at the time have possession
thereof, as the Indenture Trustee may determine, or otherwise dispose
of, hold, use, operate, lease to others or keep idle all or any part
of the Airframe or such Engine or any other part of the Indenture
Estate as the Indenture Trustee, in its sole discretion, may
determine, all free and clear of any rights or claims of whatsoever
kind of the Company; or
(c) exercise any or all of the rights and powers and pursue
any and all remedies of a secured party under the Uniform Commercial
Code of the State of New York (whether or not in effect in the
jurisdiction in which enforcement is sought).
Upon every taking of possession of any part of the Indenture
Estate under this Section 6.02, the Indenture Trustee may, from time to time,
at the expense of the Company or the Indenture Estate, make all such
expenditures for maintenance, insurance, repairs, replacements, alterations,
additions and improvements to and of any of the Indenture Estate, as it may
deem proper. In each such case, the Indenture Trustee shall have the right to
maintain, use, operate, store, lease, control or manage all or any part of the
Indenture Estate and to exercise all rights and powers of the Company in
relation to any part of the Indenture Estate in connection therewith, as the
Indenture Trustee shall 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 any and all of the
Indenture Estate as the Indenture Trustee may determine; and the Indenture
Trustee shall be entitled to collect and receive directly all tolls, rents,
revenues, issues, income, products and profits of all or any part of the
Indenture Estate, 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 hereunder.
Such tolls, rents, revenues, issues, income, products and profits may be
applied to pay the expenses of use, operation, storage, leasing, control,
management or disposition of all or any part of the Indenture Estate, and of
all maintenance, repairs, replacements, alterations additions and improvements,
and to make all payments which the Indenture Trustee may be required or may
elect to make, if any, for taxes, assessments, insurance or other proper
charges upon any or all of the Indenture Estate (including the employment of
engineers and accountants to examine, inspect and make reports upon the
properties and books and records of the Company), 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
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compensation for the services of the Indenture Trustee, and of all Persons
properly engaged and employed by the Indenture Trustee.
In addition, the Company shall be liable for all legal fees
and other costs and expenses incurred by reason of the occurrence of any Event
of Default or the exercise of the Indenture Trustee's remedies with respect
thereto, including all costs and expenses incurred in connection with the
retaking or return of the Airframe or any Engine (or any records, logs,
manuals, data, or inspection, modification, or overhaul records or other
documents maintained with respect thereto or pertaining thereto) in accordance
with the terms hereof and under the Uniform Commercial Code of the State of New
York, which amounts shall, until paid, be secured by the Lien of this
Indenture.
If an Event of Default shall have occurred and be continuing
and the Equipment Purchase Certificates shall have been accelerated pursuant to
this Section 6.02(i), at the request of the Indenture Trustee, the Company
shall promptly execute and deliver to the Indenture Trustee such instruments of
title and other documents as the Indenture Trustee any 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 any or all of the
Indenture Estate to which the Indenture Trustee shall at the time be entitled
hereunder. If the Company shall for any reason fail to execute and deliver
such instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may obtain a judgment conferring on the Indenture Trustee the
right to immediate possession and requiring the Company to execute and deliver
such instruments and documents to the Indenture Trustee, to the entry of which
judgment the Company hereby specifically consents to the fullest extent it may
lawfully do so.
Nothing in the foregoing shall affect the right of each Holder
to receive all payments of principal of, and interest on, the Equipment
Purchase Certificate or Certificates held by such Holder and all other amounts
owing to such Holder as and when the same may be due.
(ii) The Indenture Trustee shall give the Company at least 30
days' prior notice of any public sale or of the date on or after which any
private sale will be held, which notice the Company hereby agrees is reasonable
notice.
(iii) At any time after the Indenture Trustee has declared
the unpaid principal amount of all Equipment Purchase Certificates then
outstanding to be due and payable and prior to the sale of any part of the
Indenture Estate pursuant to this Article 6, a Majority in Interest of
Certificate Holders, by written notice to the Company and the Indenture
Trustee, may rescind and annul such declaration and its consequences if: (i)
there has been paid to or deposited with the Indenture Trustee an amount
sufficient to pay all overdue installments of interest on the Equipment
Purchase Certificates, and the principal of and any Breakage Costs
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on any Equipment Purchase Certificates that have become due otherwise than by
such declaration of acceleration, and (ii) all other Events of Default, other
than nonpayment of principal or interest on the Equipment Purchase Certificates
that have become due solely because of such acceleration, have been cured or
waived.
(iv) A Majority in Interest of Certificate Holders may on
behalf of all Holders waive any past default hereunder and its consequences,
except a default: (i) in the payment of the principal of, any Breakage Costs
or interest on any Equipment Purchase Certificate, or (ii) in respect of a
covenant or provision hereof which under Section 10.01(b) hereof cannot be
modified or amended without the consent of each Holder affected thereby. Upon
any such waiver, such default shall cease to exist, and any 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 default
or impair any right consequent thereon.
(v) Each and every right, power and remedy herein
specifically given to the Indenture Trustee or otherwise in the Indentures
shall be cumulative and shall be in addition to every other right, power and
remedy herein specifically given or now or hereafter existing at law, in equity
or by statute, and each and every right, power and remedy whether specifically
herein given 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,
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
thereafter any other right, power or remedy. No delay or omission by the
Indenture Trustee 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 Company or to be an
acquiescence therein.
(vi) In case the Indenture Trustee shall have instituted any
proceeding to enforce any right, power or remedy under this Indenture by
foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely to the Indenture Trustee, then and in every such case the Company and
the Indenture Trustee shall, subject to any determination in such proceedings,
be restored to their former positions and rights hereunder with respect to the
Indenture Estate, and all rights, remedies and powers of the Indenture Trustee
shall continue, as if no such proceedings had been undertaken (but otherwise
without prejudice).
ARTICLE 7
DUTIES OF THE INDENTURE TRUSTEE
SECTION 7.01. Action Upon Event of Default. If any payments
of the principal of, or interest on, the Equipment Purchase Certificates due
and payable on any Payment
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Date, or when otherwise due and payable, shall not have been paid in full on
such Payment Date or such other date, the Indenture Trustee shall give
telephonic notice within one Business Day (followed by prompt written notice)
to the Company and each Holder specifying the amount and nature of such
deficiency in payment; provided that any failure to give such notice under this
Section 7.01 shall not relieve the Company of its obligation to make such
payment. If a Responsible Officer of the Indenture Trustee shall have actual
knowledge of an Event of Default or an event or condition which after notice or
lapse of time, or both, would become an Event of Default (other than as
provided in the preceding sentence), the Indenture Trustee shall give prompt
written notice within 5 Business Days of receiving such knowledge, to the
Company and each Holder; provided, however, that the failure of the Indenture
Trustee to give any such notice shall not in any way affect the validity of any
action taken by the Indenture Trustee or any Holder pursuant to the exercise of
any of the remedies provided in Article 6 hereof, except that the foregoing
proviso shall not reduce the time provided for any action or otherwise impair
any right granted the Company under this Indenture. Subject to the terms of
Sections 6.02 and 7.03, the Indenture Trustee shall take such action, or
refrain from taking such action, with respect to such Event of Default as the
Indenture Trustee shall be instructed in writing by a Majority in Interest of
Certificate Holders. If the Indenture Trustee shall not have received
instructions as above provided within twenty (20) Business Days after giving
notice of such Event of Default to the Holders, the Indenture Trustee may,
subject to instructions later received pursuant to the preceding sentence, take
such action, or refrain from taking such action, but shall be under no duty to
take or refrain from taking any action, with respect to such Event of Default
as it shall determine advisable in the best interests of the Holders, and shall
use the same degree of care and skill in connection therewith as a prudent
Person would use under the circumstances in the conduct of its own affairs;
provided, that the Indenture Trustee may not sell the Airframe or any Engine
without the consent of a Majority in Interest of Certificate Holders. The
Indenture Trustee shall promptly provide each Holder with a copy of any notice
it received from the Company to the extent such Holder has not otherwise
received such notice from the Company.
SECTION 7.02. No Duties Except as Specified. (a) Generally.
The Indenture Trustee shall not have any duty or obligation to manage, control,
use, sell, dispose of or otherwise deal with the Aircraft or any other part of
the Indenture Estate or otherwise to take or refrain from taking any action
under or in connection with this Indenture, except as expressly provided by the
terms of this Indenture or as expressly provided in written instructions
received pursuant to the terms of Section 7.01 or 7.04 hereof. No implied
duties or obligations shall be read into this Indenture against the Indenture
Trustee.
(b) Specific Duties. Notwithstanding the provisions of
paragraph (a) of this Section 7.02, the Indenture Trustee agrees that (i) it
will, in its individual capacity and at its own cost and expense, promptly take
such action as may be necessary to discharge duly any Liens on any part of the
Indenture Estate or on any properties of the Company assigned, pledged or
mortgaged as part of the Indenture Estate, which result from claims against the
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Indenture Trustee not related to the Lien and security interest created under
this Indenture on the Indenture Estate or to the administration of the
Indenture Estate or to any other transaction pursuant to this Indenture or any
document included in the Indenture Estate, (ii) so long as this Indenture is
in effect, it will, with respect to specific actions to be taken and subject to
Section 7.04 hereof, cooperate with the Company in connection with the
recording, filing, re-recording and refiling of the Indenture and any
supplements to any of them, and any financing statement or other documents as
is necessary to maintain the perfection hereof or otherwise to protect the
security interests created hereby and (iii) it will furnish the notices and
other instruments referred to in the last sentence of Section 8.02 hereof. The
Indenture Trustee shall not discriminate as between Holders.
SECTION 7.03. No Action Except Under Indenture or
Instructions. The Indenture Trustee agrees that it will not manage, control,
use, sell, dispose of or otherwise deal with the Aircraft or any other property
constituting part of the Indenture Estate except (i) in accordance with the
powers granted to, or the authority conferred upon, the Indenture Trustee
pursuant to this Indenture or (ii) in accordance with the express terms of this
Indenture or with written instructions pursuant to Section 6.02, 7.01 or 7.04.
SECTION 7.04. Action Upon Instructions Generally. Subject to
the terms of Sections 6.02, 7.01 and 7.05 and except as otherwise provided
herein, upon the written instructions at any time and from time to time of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall take
such of the following actions as may be specified in such instructions or this
Indenture: (i) give such notice or direction or consent or exercise such
right, remedy or power under this Indenture or in respect of any part or all of
the Indenture Estate as shall be specified in such instructions; and (ii) take
such other action as shall be specified in such instructions, it being
understood that without the written instructions of a Majority in Interest of
Certificate Holders, the Indenture Trustee will not approve any such matter as
satisfactory to the Indenture Trustee. The Indenture Trustee will execute and
the Company will file or cause to be filed such continuation statements with
respect to financing statements relating to the security interest created under
this Indenture in the Indenture Estate as may be specified from time to time in
written instructions of the Company or a Majority in Interest of Certificate
Holders (which instructions may, by their terms, be operative only at a future
date and which shall be accompanied by the form of such continuation statement
so to be filed). The Indenture Trustee shall forthwith notify all of the
Holders of any direction received pursuant to this Section 7.04 by a Majority
in Interest of Certificate Holders.
SECTION 7.05. Indemnification. (a) With Respect to Actions
Hereunder. The Indenture Trustee shall not be required to take any action or
refrain from taking any action requested by the Holders under Sections 7.01
(other than the first two sentences of Section 7.01), 7.04 or Article 6 hereof
if it shall have reasonable grounds for believing that repayment of any funds
expended by it or adequate indemnification against risks incurred in connection
therewith is not reasonably assured to it. The Indenture Trustee shall not be
required to take
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any action pursuant to Section 7.01 or 7.04 or Article 6 hereof, nor shall any
other provision of this Indenture be deemed to impose a duty on the Indenture
Trustee to take any action, if the Indenture Trustee shall have been advised by
counsel that such action is contrary to the terms hereof or is otherwise
contrary to law. Each Holder may, but shall not be required to, participate in
any indemnification of the Indenture Trustee given pursuant to this Section
7.05. Each Holder so participating shall be entitled to reimbursement from the
Company for such participation.
(b) With Respect to Claims. (i) For the purposes of this
Section 7.05(b), "Claims" shall mean any and all costs, liabilities (including
strict or absolute liability without fault in tort or otherwise), losses,
damages, penalties, actions or suits or claims which may be imposed on,
incurred by, suffered by, or asserted against an Indemnified Person, as defined
herein, and, except as otherwise expressly provided in this Section 7.05(b),
shall include all reasonable out-of-pocket costs, disbursements and expenses
(including legal fees and expenses) paid or incurred by an Indemnified Person
in connection therewith.
(ii) For the purposes of this Section 7.05(b), "Indemnified
Person" means the Indenture Estate, the Indenture Trustee both in its
individual capacity and as trustee and each of its successors, permitted
transferees or assigns permitted under the terms hereof, provided that as a
condition of any obligations of the Company to pay any indemnity or perform any
action under this Section 7.05(b) with respect to any Persons who are not
signatories hereto, such Persons shall expressly agree in writing to be bound
by all the terms of this Section 7.05(b).
(iii) Subject to the exclusions stated in Section 7.05(b)(iv)
hereof the Company agrees to indemnify, defend and hold harmless each
Indemnified Person on an After-Tax Basis against Claims resulting from or
arising out of:
(A) the purchase, ownership, operation, possession, use,
maintenance, overhaul, testing, registration, re-registration,
modification, alteration or lease of the Aircraft, Airframe or Engine,
or any engine used in connection with the Airframe, or any part
thereof by the Company, any lessee or any other Person whatsoever,
whether or not such purchase, ownership, operation, possession, use,
maintenance, overhaul, testing, registration, re-registration,
non-use, modification, alteration or lease is in compliance with the
terms of this Indenture;
(B) the manufacture, design, purchase, acceptance, rejection,
delivery, or condition of the Aircraft or any Engine, including,
without limitation, latent and other defects, whether or not
discoverable, and claims relating to patent, trademark or copyright
infringement; and
(C) any breach of or failure to perform or observe, or any
other non-compliance with, any covenant or agreement to be performed,
or other obligation of the Company
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under any of the Operative Agreements, or the falsity of any
representation or warranty of the Company in any of the Operative
Agreements.
(iv) The following are excluded from the Company's agreement to
indemnify under this Section 7.05(b):
(A) Claims which are taxes whether or not covered pursuant to
the indemnity set forth in Section 8.05 hereof;
(B) Claims which are covered pursuant to Section 8.05 hereof;
(C) With respect to any particular Indemnified Person, Claims
attributable to the gross negligence or willful misconduct of, or to
the breach of any contractual obligation by or the falsity or
inaccuracy of any representation or warranty of, such Indemnified
Person; and
(D) Claims attributable to acts or events occurring in any
period subsequent to termination of this Indenture.
(v) In the case of any Claim indemnified by the Company hereunder
which is covered by a policy of insurance maintained by the Company pursuant to
Section 4.06 hereof or otherwise, it shall be a condition of such indemnity
with respect to any particular Indemnified Person that such Indemnified Person
shall use reasonable efforts to cooperate with the insurers in the exercise of
their rights to investigate, defend or compromise such Claim as may reasonably
be required to retain the benefits of such insurance with respect to such
Claim.
(vi) An Indemnified Person shall promptly notify the Company of any
Claim as to which indemnification is sought. Subject to the rights of insurers
under policies of insurance maintained by the Company, the Company shall have
the right to investigate, and the right in its sole discretion to defend or
compromise any Claim for which indemnification is sought under this Section
7.05(b), and the Indemnified Person shall cooperate with all reasonable
requests of the Company in connection therewith. Where the Company or the
insurers under a policy of insurance maintained by the Company undertake the
defense of an Indemnified Person with respect to a Claim, no additional legal
fees or expenses of such Indemnified Person 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 Company or such insurers. Subject to
the requirement of any policy of insurance applicable to a Claim, an
Indemnified Person may participate at its own expense in any judicial
proceeding controlled by the Company 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 Company or its insurers to conduct
such proceedings, interfere with such control; and such
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participation shall not constitute a waiver of the indemnification provided in
this Section 7.05(b).
(vii) To the extent that a Claim indemnified by the Company under
this Section 7.05(b) is in fact paid by the Company and/or an insurer under a
policy of insurance maintained by the Company, the Company and/or such insurer
as the case may be shall be subrogated to the extent of such payment to the
rights and remedies of the Indemnified Person on whose behalf such Claim was
paid with respect to the transaction or event giving rise to such Claim.
Should an Indemnified Person receive any refund, in whole or in part, with
respect to any Claim paid by the Company hereunder, it shall, so long as no
Event of Default or Payment Default shall have occurred and be continuing,
promptly pay over the amount refunded, together with any interest received with
respect to such amount for the period between the indemnification payment and
the receipt of such refund, to the Company, but in no event more than the
amount theretofore received by such Indemnified Person from the Company and its
insurers in respect of such Claim.
(viii) The general indemnification provisions of this Section 7.05(b)
are not intended to waive or supersede any specific provisions of, or any
rights or remedies of the Company under, this Indenture or any other Operative
Agreement to the extent such provisions apply to any Claim. The Company does
not guarantee and nothing in the general indemnification provisions of this
Section 7.05(b) shall be construed as a guarantee by the Company with respect
to the value of the Aircraft or any part thereof.
(c) Survival of Indemnity. The indemnity contained in this
Section 7.05 shall survive the Delivery Date and the expiration or termination
of this Indenture but only with respect to Claims arising out of events
occurring prior to such expiration or termination.
SECTION 7.06. Withholding Taxes. The Indenture Trustee, as
agent for the Company, shall exclude and withhold from each payment of
principal, Breakage Costs, if any, and interest and other amounts due hereunder
or under the Equipment Purchase Certificates any and all withholding taxes
applicable thereto as required by law. The Indenture Trustee agrees to act as
such withholding agent and, in connection therewith, whenever any present or
future taxes or similar charges are required to be withheld with respect to any
amounts payable in respect of the Equipment Purchase Certificates, it will
withhold such amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Holders, it will file any necessary
withholding tax returns or statements when due, and that, as promptly as
possible after the payment thereof, it will deliver to each Holder, appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Holder may reasonably request from time to time.
The Indenture Trustee agrees to file any other information reports as it may be
required to file under United States law.
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ARTICLE 8
THE INDENTURE TRUSTEE
SECTION 8.01. Acceptance of Trusts and Duties. The Indenture
Trustee accepts the trusts and duties hereby created and applicable to it and
agrees to perform the same but only upon the terms of this Indenture, and
agrees to receive and disburse all monies constituting part of the Indenture
Estate in accordance with the terms hereof. The Indenture Trustee shall not be
answerable or accountable under any circumstances, except for (a) ordinary
negligence in the receipt or disbursement of money, (b) its obligations
specified in Section 7.02(b) hereof and the last sentence of Section 8.02
hereof and (c) its own willful misconduct or gross negligence (except as
otherwise provided with respect to liabilities that may result from the
inaccuracy of any of its representations or warranties in its individual
capacity or as Indenture Trustee, set forth in this Indenture). Unless
otherwise expressly provided in this Indenture, the Indenture Trustee shall
have no obligation to advance its individual funds for any purpose and shall
have no obligation to distribute to the Holders, the Company or any third party
any amounts to be paid to the Indenture Trustee until such amounts are
collected by the Indenture Trustee.
SECTION 8.02. Absence of Certain Duties. Except in
accordance with written instructions to the Indenture Trustee furnished
pursuant to Sections 6.02, 7.01 and 7.04 and except as provided in, and without
limiting the generality of, Section 7.02 hereof, the Indenture Trustee shall
have no duty (i) to see to any registration of the Aircraft or any recording or
filing of this Indenture or any other document, or to see to the maintenance of
any such registration, recording or filing, (ii) to see to any insurance on the
Aircraft or to effect or maintain any such insurance, whether or not the
Company shall be in default with respect to effecting or maintaining such
insurance, (iii) to see to the payment or discharge of any tax, assessment or
other governmental charge or any Lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of the Indenture Estate except
as expressly provided in Section 7.02(b)(i), (iv) to confirm, verify or inquire
into the failure to receive any financial statements of the Company, or (v) to
inspect the Aircraft at any time or ascertain or inquire as to the performance
or observance of any of the Company's covenants under this Indenture with
respect to the Aircraft. Notwithstanding the foregoing, 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 Company directly to such
Holder.
SECTION 8.03. Representations, Warranties and Agreements of
Indenture Trustee. The Indenture Trustee, in its individual capacity,
represents, warrants and agrees that:
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(a) Organization; Authority; Legal and Binding Obligations.
The Indenture Trustee in its individual capacity is a national banking
association duly organized, validly existing and in good standing under the
laws of the United States, is a "citizen of the United States" within the
meaning of Section 40102(a)(15) of the Federal Aviation Act, and will resign as
Indenture Trustee promptly after it obtains actual knowledge that it has ceased
to be such a citizen, has the full corporate power and authority and legal
right under the laws of the State of Georgia and the laws of the United States
pertaining to its banking, trust and fiduciary powers to execute, deliver and
perform this Indenture, that this Indenture has been duly authorized, executed
and delivered by the Indenture Trustee and assuming due authorization,
execution and delivery by the other party hereto, constitutes the Indenture
Trustee's legal, valid and binding obligation, enforceable against the
Indenture Trustee in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or other laws of
general application to or affecting the enforcement of creditors' rights
generally, and that the execution, delivery and performance by the Indenture
Trustee of this Indenture is not in violation of its articles of association or
by-laws or of any indenture, mortgage, contract or other agreement to which the
Indenture Trustee is a party or by which it is bound or of any order or
judgment applicable to the Indenture Trustee or any applicable law of the
United States or the laws of the State of Georgia governing the trust powers of
the Indenture Trustee and by which it or its assets or property are bound.
NOTWITHSTANDING THE FOREGOING, THE INDENTURE TRUSTEE DOES NOT
MAKE NOR SHALL BE DEEMED TO HAVE MADE AND HEREBY EXPRESSLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS,
VALUE, COMPLIANCE WITH SPECIFICATIONS, WORKMANSHIP, CONDITION, DESIGN, QUALITY,
DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR FOR A PARTICULAR
PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENTS OF
ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON
STRICT LIABILITY IN TORT OR ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, WITH RESPECT TO THE AIRCRAFT, AIRFRAME OR ANY ENGINE WHATSOEVER.
(b) Lien; Indemnity. The Indenture Trustee shall not
directly or indirectly create, incur, assume or suffer to exist any Liens
described in Section 7.02(b)(i) hereof with respect to the Aircraft, any
interest therein, or any other portion of the Indenture Estate, and that it
will promptly cause any such Lien to be discharged at its own expense. The
Indenture Trustee, in its individual capacity, shall indemnify, protect, save
and keep harmless the Company and each Holder from and against any reduction in
the amount payable out of the Indenture Estate to such Holder, or any other
loss, cost or expense (including legal fees and
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expenses) incurred by such Holder or the Company as a result of the imposition
or enforcement of such Lien.
SECTION 8.04. Reliance; Agents; Advice of Experts. The
Indenture Trustee shall incur no liability to anyone in acting upon any
signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper reasonably
believed by it to be genuine and reasonably believed by it to be signed by the
proper party or parties.
The Indenture Trustee may accept a copy of a resolution of the
Board of Directors of the Company or any Holder or any committee of said Board,
certified by the Secretary or an Assistant Secretary of said party as duly
adopted and in full force and effect, as conclusive evidence that such
resolution has been duly adopted by said Board or committee and that the same
is in full force and effect. As to any fact or matter relating to the Company
the manner of ascertainment of which is not specifically described in this
Indenture, the Indenture Trustee may for all purposes of this Indenture rely on
a certificate, signed by the President or by a Vice President signing with the
Treasurer or any Assistant Treasurer or the Secretary or an Assistant Secretary
of the Company as to such fact or matter, and such certificate shall constitute
full protection to the Indenture Trustee for any action taken or omitted to be
taken by it in good faith in reliance on such certificate.
The Indenture Trustee shall furnish to the Company upon
request such information and copies of such documents as the Indenture Trustee
may have and as are necessary for the Company to perform its duties under
Article 2 hereof. In the administration of the trust under this Indenture the
Indenture Trustee may execute any trust or power of this Indenture and perform
its powers and duties directly or through agents or attorneys and may, at the
expense of the Company, consult with counsel, accountants and other skilled
Persons to be selected and retained by it, and the Indenture Trustee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion of any such counsel, accountants or other
skilled Person (so long as the Indenture Trustee shall have exercised
reasonable care and judgment in selecting such Persons).
SECTION 8.05. Compensation and Expenses of Indenture Trustee.
The Company agrees, to the extent the Indenture Trustee was not reimbursed
under Section 7.05 hereof, to pay upon written demand the reasonable and
customary fees and reasonable out-of-pocket costs and expenses (including legal
fees and expenses) of the Indenture Trustee in the performance of its
responsibilities hereunder and agrees to indemnify the Indenture Trustee
against any taxes imposed upon it relating thereto (other than taxes, fees or
charges based on or measured by any fees or compensation received by the
Indenture Trustee for services rendered in connection with the transactions
contemplated hereby). The Indenture Trustee agrees that it shall have no right
against the Holders or the Indenture Estate for any fee as compensation for its
services hereunder. The provisions of this Section 8.05 with respect to costs
and expenses shall survive the termination of this Indenture.
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SECTION 8.06. Moneys Held by Indenture Trustee. Subject to
Section 5.04 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. Subject to Section 5.04,
neither the Indenture Trustee nor any agent of the Indenture Trustee shall be
under any liability for interest on any moneys received by it hereunder
SECTION 8.07. Capacity in Which Acting. The Indenture
Trustee acts hereunder not in its individual capacity but solely as trustee
except as otherwise expressly provided herein and in the other Operative
Agreements.
ARTICLE 9
SUCCESSOR INDENTURE TRUSTEE
SECTION 9.01. Resignation or Removal; Appointment of
Successor. (a) Resignation and Removal. The Indenture Trustee or any
successor to it must resign if at any time it ceases to be a Citizen of the
United States and may resign at any time without cause by giving at least 30
days' prior written notice to the Company, and each Holder, such resignation to
be effective upon the acceptance of the trusteeship by a successor Indenture
Trustee. In addition, a Majority in Interest of Certificate Holders may at any
time remove the Indenture Trustee without cause by an instrument in writing
delivered to the Indenture Trustee and the Company and the Company shall
promptly notify each Holder of such action in writing, such removal to be
effective upon the acceptance of the trusteeship by a successor Indenture
Trustee. In addition, the Company may with the prior written consent of a
Majority in Interest of Certificate Holders, unless an Event of Default shall
have occurred and be continuing, remove the Indenture Trustee (i) if the
Indenture Trustee fails to comply with Section 9.01(c) hereof, (ii) if 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.
In the case of the resignation or removal of the Indenture
Trustee, the Company shall promptly appoint a successor Indenture Trustee;
provided that, a Majority in Interest of Certificate Holders may appoint after
such resignation or removal, a successor Indenture Trustee which may be other
than the successor Indenture Trustee appointed by the Company and such
successor Indenture Trustee appointed by the Company shall be superseded by the
successor Indenture Trustee appointed by a Majority in Interest of Certificate
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
Company or any Holder may apply to any
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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 above
provided. The successor Indenture Trustee so appointed by such court shall
immediately and without further act be superseded by any successor Indenture
Trustee appointed from the date of the appointment by such court.
(b) Acceptance of Appointment. Any successor Indenture
Trustee, however appointed, shall execute and deliver to the Company and to the
predecessor Indenture Trustee an instrument accepting such appointment, and,
without further act, such successor Indenture Trustee shall become vested with
all the estates, properties, rights, powers and duties of the predecessor
Indenture Trustee under this Indenture in the trusts applicable to it with like
effect as if originally named Indenture Trustee; but, nevertheless, upon the
written request of such successor Indenture Trustee, such predecessor Indenture
Trustee shall execute and deliver an instrument transferring to such successor
Indenture Trustee all the estates, properties, rights and powers of such
predecessor Indenture Trustee, and such predecessor Indenture Trustee shall
duly assign, transfer, deliver and pay over to such successor Indenture Trustee
all moneys or other property then held by such predecessor Indenture Trustee
under this Indenture.
(c) Qualification of Successor. Any successor Indenture
Trustee, however appointed, shall be a Citizen of the United States and shall
be a bank or trust company having its principal place of business in the United
States of America and having a combined capital and surplus of at least
$100,000,000 if there be such an institution willing, able and legally
qualified to perform the duties of Indenture Trustee under this Indenture upon
reasonable or customary terms.
(d) Merger. 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 to which substantially
all the business of the Indenture Trustee may be transferred, shall, subject to
the terms of Section 9.01(c), be the Indenture Trustee under this Indenture
without further act.
(e) Notice Period. The notice period specified in Section
9.01(a) shall be reduced as necessary so that any resignation of the Indenture
Trustee or any successor Indenture Trustee shall be effective prior to the date
such Indenture Trustee no longer qualifies, or is expected no longer to
qualify, as a Citizen of the United States.
SECTION 9.02. 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 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
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trustee or separate trustees or co-trustee, acting jointly with the Indenture
Trustee, of all or any part of the 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 Company, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any 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 Indenture Estate or any
part of it and with such rights and duties, as shall be specified in the
instrument of appointment, jointly with the Indenture Trustee (except insofar
as local law makes it necessary for any such separate trustee or separate
trustees to act alone) subject to all the terms of this Indenture. 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 Indenture Estate
and all rights 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.
(c) Every separate trustee and co-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, payment of
moneys or the investment of moneys, shall be exercised solely by the
Indenture Trustee;
(ii) to the extent specified in the instrument of
appointment, all other rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be conferred or
imposed upon and exercised or performed by the Indenture Trustee and
such separate trustee or co-trustee 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
Indenture Estate in any such jurisdiction) shall be exercised and
performed by such additional trustee or separate trustee;
(iii) no power hereby given to, or exercisable as provided
herein by, any such additional trustee or separate trustee shall be
exercised hereunder by such additional
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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.
Any separate trustee or co-trustee may be removed by the
Indenture Trustee at any time without cause.
(d) All provisions of this Indenture which are for the
benefit of the Indenture Trustee shall extend to and apply to each separate
trustee or co-trustee appointed pursuant to this Section 9.02.
ARTICLE 10
SUPPLEMENTS AND AMENDMENTS
TO THIS INDENTURE AND OTHER DOCUMENTS
SECTION 10.01. Supplemental Indentures. (a) Supplemental
Indentures Without Consent of Holders. The Company and the Indenture Trustee,
at any time and from time to time, without notice to or the consent of the
Holders, may enter into one or more indentures supplemental hereto for any of
the following purposes:
(i) 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 to
the Lien of this Indenture any Airframe or Engine or any airframe or
engine substituted for any Airframe or Engine in accordance with the
terms hereof; provided, however, that indenture supplements entered
into for the purpose of subjecting to the Lien of this Indenture any
Airframe or Engine or airframe or engine substituted for any Airframe
or Engine in accordance with the terms hereof need only be executed
by the Company; or
(ii) to add to the covenants of the Company, for the benefit
of the Holders, or to surrender any right or power herein conferred
upon the Company; or
(iii) to comply with any applicable requirements of the Trust
Indenture Act of 1939, as from time to time amended or any other
requirements of applicable law; or
(iv) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make
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any other provisions with respect to matters or questions arising
hereunder so long as any such action does not adversely affect the
interests of the Holders.
(b) Supplemental Indentures With Consent of Majority. With
the written consent of a Majority in Interest of Certificate Holders, the
Company may, and the Indenture Trustee, subject to Section 10.02 hereof, shall,
at any time and from time to 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
modifying in any manner the rights and obligations of the Holders and of the
Company under this Indenture; provided, however, without the consent of each
Holder affected thereby, no such supplemental indenture shall:
(i) change the final maturity of the principal of any
Equipment Purchase Certificate, or change the dates or amounts of
payment of any installment of the principal of or any Breakage Costs
or interest on any Equipment Purchase Certificate, or reduce the
principal amount thereof or any Breakage Costs or interest thereon, or
change to a location outside the United States the place of payment
where, or the coin or currency in which, any Equipment Purchase
Certificate or any Breakage Costs or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such
payment of principal or any Breakage Costs or interest becomes due and
payable; or
(ii) create any Lien with respect to the Indenture Estate
ranking prior to, or on a parity with, the security interest created
by this Indenture, except Liens permitted under Section 4.01 hereof,
or deprive any Holder of the benefit of the Lien on the Indenture
Estate created by this Indenture; or
(iii) reduce the percentage in principal amount of the
Equipment Purchase Certificates, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver (of compliance with certain
provisions of this Indenture, or of certain defaults hereunder and
their consequences) provided for in this Indenture; or change the
definition of the "Majority in Interest of Certificate Holders"; or
(iv) modify any provisions of this Section 10.01(b), except
to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Equipment
Purchase Certificate affected thereby.
SECTION 10.02. Indenture Trustee Protected. If in the
opinion of the Indenture Trustee any document required to be executed pursuant
to the terms of Section 10.01 hereof adversely affects any right, duty,
immunity or indemnity in favor of the Indenture Trustee under this Indenture or
the Loan Agreement, the Indenture Trustee may in its discretion decline to
execute such document.
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SECTION 10.03. Requirement of Substance, Not Form. It shall
not be necessary for any consent of the Holders under Section 10.01(b) hereof
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such consent shall approve the substance thereof.
SECTION 10.04. Documents Mailed to Holders. Promptly after
the execution by the Indenture Trustee of any document entered into pursuant to
this Article 10, the Indenture Trustee shall mail, by first-class mail, postage
prepaid, a conformed copy thereof to each Holder at its address last known to
the Indenture Trustee, but the failure of the Indenture Trustee to mail such
conformed copies shall not impair or affect the validity of such document.
ARTICLE 11
Intentionally Left Blank.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Termination of Indenture. This Indenture and
the trust created hereby shall terminate and this Indenture shall be of no
further force or effect upon the payment in full of the principal amount of,
any Breakage Costs and interest on all Equipment Purchase Certificates
outstanding hereunder and all other sums payable to the Indenture Trustee and
the Holders hereunder and under such Equipment Purchase Certificates and the
other Operative Agreements.
SECTION 12.02. No Legal Title in Indenture Estate. No Holder
shall have legal title to any part of the Indenture Estate. No transfer, by
operation of law or otherwise, of any Equipment Purchase Certificate or other
right, title and interest of any Holder in and to the Indenture Estate or under
this Indenture shall operate to terminate this Indenture or entitle any
successor or transferee of such Holder to an accounting or to the transfer to
it of legal title to any part of the Indenture Estate.
SECTION 12.03. Sale of Collateral by Indenture Trustee. Any
sale or other conveyance of the Aircraft by the Indenture Trustee made pursuant
to the terms of this Indenture shall bind the Holders and shall be effective to
transfer or convey all right, title and interest of the Indenture Trustee, the
Company, and such Holders in and to the Aircraft. No purchaser or other
grantee shall be required to inquire as to the authorization, necessity,
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expediency or regularity of such sale or conveyance or as to the application of
any sale or other proceeds by the Indenture Trustee.
SECTION 12.04. Indenture for Benefit of Parties and Holders
Only. Nothing in this Indenture shall be construed to give to any Person other
than the Company, the Indenture Trustee and the Holders and former Holders any
legal or equitable right, remedy or claim under or in respect of this Indenture
or any Equipment Purchase Certificate. Upon termination of this Indenture
pursuant to Section 12.01, the Indenture Trustee in connection with
satisfaction of the Indenture shall return to the Company all property (and
related documents and instruments) constituting or evidencing the Indenture
Estate.
SECTION 12.05. Notices. (a) Unless otherwise expressly
specified or permitted by the terms of this Indenture, all notices, requests,
demands, authorizations, directions, consents, waivers or documents provided or
permitted by the Indenture to be made, given, furnished or filed shall be in
writing, mailed by certified mail, postage prepaid, return receipt requested or
delivered by hand or by Federal Express or other delivery service of
established reputation or by confirmed telex or facsimile addressed as follows:
(i) if to the Indenture Trustee, sent to it at its office at
Suite 900, 600 Peachtree Street, N.E., Atlanta, Georgia 30308,
Attention: Corporate Trust Lease Administration (Facsimile: (404)
607-6534);
(ii) if to the Company, sent to it at its office at 2007
Corporate Avenue, Memphis, Tennessee, 38132, Attention: Vice
President and Treasurer (Facsimile: (901) 395-3910) with a copy to the
General Counsel at 1980 Nonconnah Drive, Memphis, Tennessee 38132; and
(iii) if to any Holder, at the address set forth for such
Holder in the Register;
or to such other address as any such party shall advise the others of in
writing for such purpose. Any notice given pursuant to this Section shall be
deemed given, and such requirement shall be deemed satisfied, when such notice
is received, if such notice is mailed by certified mail, postage prepaid or is
delivered by hand or Federal Express or other delivery service of established
reputation, or is sent by confirmed telex, telecopy or facsimile (if, in the
case of a facsimile, transmitted on a Business Day and during normal business
hours of the recipient, and otherwise on the next Business Day following
transmission), addressed as provided above.
(b) Any party 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.
SECTION 12.06. Severability. Any provision under this
Indenture which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to
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the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Indenture, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 12.07. Binding Effect. All covenants and agreements
contained in this Indenture shall be binding upon the Indenture Trustee and its
successors and assigns, the Company and its successors and assigns, and each
Holder. Any request, notice, direction, consent, waiver or other instrument or
action by any Holder shall bind the successors and assigns of such Holder.
SECTION 12.08. Headings; Reference. The headings of the
various articles and sections and in the Table of Contents are for convenience
of reference only and shall not define or limit any of the terms or provisions
of this Indenture.
SECTION 12.09. Counterparts. This Indenture may be executed
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 12.10. Governing Laws. THIS INDENTURE IS BEING
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 12.11. No Oral Modifications. The terms and
provisions of this Indenture 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 and subject to Article 10 hereof.
SECTION 12.12. Normal Commercial Relations. Notwithstanding
anything contained in this Indenture to the contrary, the Company, the
Indenture Trustee or any affiliate of either may enter into commercial banking
or other financial transactions and conduct banking or other commercial
relationships 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 for any purpose whatsoever.
SECTION 12.13. 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
Agreement 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.
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IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed by their respective authorized officers, as of the day and
year first above written.
COMPANY: FEDERAL EXPRESS CORPORATION,
By
----------------------------
Title:
INDENTURE TRUSTEE: NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION, not in
its individual capacity,
but solely as Indenture
Trustee,
By
----------------------------
Title:
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Schedule I
DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements 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 or 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 Indenture and as subsequently amended, or any successor or
substituted legislation at the time in effect and applicable, and the
regulations promulgated pursuant thereto.
Additional Insureds. The Indenture Trustee, the Agent and the
Holders, and in the case of insurance obtained by any lessee of the Aircraft,
the Company in its capacity as lessor under any of the Aircraft.
Aeronautics Authority. 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 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
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<PAGE> 137
and policies of such Person whether through the ownership of voting securities
or by contract or otherwise.
After-Tax Basis. A basis such that any payment received or
deemed to have been received by a Person shall be supplemented by a further
payment to such Person so that the sum of the two payments, after deduction of
all Taxes resulting from the receipt or accrual of such payments, shall be
equal to the payment received or deemed to have been received.
Agent. The Chase Manhattan Bank, N.A. and its successors and
permitted assigns, as Agent for the Banks under the Loan Agreement.
Air Carrier. Any U.S. 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 to be sold by AVSA to the Company
pursuant to the Purchase Agreement (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 4.05(c) of the
Indenture.
Airframe. The Airbus Industries A300F4-605R (excluding the
Engines or engines from time to time installed thereon) having the United
States FAA Registration Number and manufacturer's serial number specified in
the Indenture Supplement, including (i) all Parts, and (ii) any replacement
airframe which may be substituted pursuant to Section 4.05(c) of the Indenture,
whether or not the same shall at the time be incorporated in or attached to
such aircraft.
Amortization Dates. The dates listed under the heading
"Amortization Date" in Section 2.02(a) of the Indenture.
Applicable Lending Office. For each Holder and for each Type
of Loan, the "Lending Office" of such Holder (or of an Affiliate of such
Holder) designated for such Type of Loan on the signature pages of the Loan
Agreement or such other office of such Holder (or of an Affiliate of such
Holder) as such Holder may from time to time specify to the Agent and the
Company as the office by which its Loans of such Type are to be made and
maintained.
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<PAGE> 138
Appraisal. The report prepared by the BK Associates, Inc. and
delivered to the Indenture Trustee on the Delivery Date pursuant to Section
3(1) of the Loan 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 the Document Date, executed by AVSA, as the same may be amended, modified
or supplemented from time to time.
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 Company 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 6.01(e) and
(f) of the Indenture which either does or with the giving of notice or lapse of
time or both would constitute an Event of Default.
Banks. Has the meaning set forth in the Loan Agreement.
Base Rate. For any day, a rate per annum equal to the higher
of (a) the Federal Funds Rate for such day plus [ * ] and (b) the Prime
Rate for such day. Each change in any interest rate provided for herein based
upon the Base Rate resulting from a change in the Base Rate shall take effect
at the time of such change in the Base Rate. [ *
]
Base Rate Loan. Loans evidenced by an Equipment Purchase
Certificate that bears interest at rates based upon the Base Rate.
Bills of Sale. Collectively, the FAA Bill of Sale for the
Aircraft and AVSA's Warranty Bill of Sale.
Breakage Costs. An amount payable pursuant to Section 2.02(f)
of the Indenture.
Business Day. (a) Any day on which commercial banks are not
authorized or required to close in New York City or Georgia or (b) if such day
relates to the giving of notices or quotes in connection with a borrowing of, a
payment or prepayment of principal of or interest on, a conversion of or into,
or an Interest Period for, a Floating Rate Loan or a
- ----------------------
*Blank space contained confidential information which has been filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
under the Securities Exchange Act of 1934.
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<PAGE> 139
notice by the Company with respect to any such borrowing, payment, prepayment
conversion or Interest Period, any date on which commercial banks are not
authorized or required to close in New York City and on which dealings in
Dollar deposits are carried out in the London interbank market.
Chase. The Chase Manhattan Bank (National Association).
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 substituted legislation or regulation at the time in effect.
Code. Except as otherwise provided, references to the Code
shall mean the Internal Revenue Code of 1986, as amended from time to time.
Commitments. Has the meaning assigned to such term in the
Loan Agreement.
Company. Federal Express Corporation, a Delaware corporation,
and its successors and permitted assigns.
Consent and Agreement. The Consent and Agreement dated as of
the Document Date, 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 dated as of July 3, 1991 attached to the Purchase Agreement.
Corporate Trust Office. The corporate trust office of the
Indenture Trustee located at 600 Peachtree Street, N.E., Suite 900, Atlanta,
Georgia 30308 or such other office at which the Indenture Trustee's corporate
trust business shall be administered that the Indenture Trustee shall have
specified by notice in writing to the Company and the Holders.
Debt Rate. The Floating Rate or the Base Rate, as the case
may be.
Default. Any event of condition, which, with the lapse of
time or the giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which (i) the Aircraft is to be
delivered and sold by AVSA to the Company which date is also the date of the
initial Indenture Supplement and (ii) Loans have been made by the Banks to the
Company in respect of the Aircraft.
Document Date. The date of the Indenture.
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<PAGE> 140
Engine. Each of the two General Electric CF6-80C2-A5F engines
listed by its manufacturer's serial number in the initial Indenture Supplement,
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 by substituted for an Engine pursuant to Sections
4.02(c)(vii), 4.05(c) or 4.05(d) of the Indenture, together with all Parts.
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 Indenture. The term "Engines" means, as of any date of
determination, all Engines subject to the Lien of the Indenture.
Engine Agreement. The General Terms Agreement dated as of
July 3, 1991 between the Company and the Engine Manufacturer (as heretofore
amended, modified and supplemented).
Engine Consent and Agreement. The Engine Consent and
Agreement dated as of the Document Date, executed by the Engine Manufacturer.
Engine Manufacturer. General Electric Company, a New York
corporation.
Equipment Purchase Certificates. The Equipment Purchase
Certificates issued by the Company pursuant to the Indenture and any
certificate issued in exchange therefor or replacement thereof pursuant to the
Indenture.
ERISA. The Employee Retirement Income Security Act of 1974,
as amended.
Estate Documents. The Purchase Agreement, the Consent and
Guaranty, the Bills of Sale, the Airbus Guaranty, the Consent and Agreement,
AVSA Consent and Agreement, the Engine Agreement and the Engine Consent and
Agreement, in each case to the extent that the same related to the Aircraft.
Event of Default. Each of the events specified in Section
6.01 of the Indenture.
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 180 days due to theft or disappearance, 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 the Company 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)
condemnation, confiscation or seizure of, or requisition of title to such
property, by the Government, any foreign government or purported government or
agency or instrumentality thereof, (iv) requisition of use of such property by
(A) a foreign government or instrumentality or agency thereof, or
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<PAGE> 141
any purported government or instrumentality or agency thereof, for a period in
excess of 180 days (or for such shorter period ending 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 Maturity of the Equipment Purchase
Certificates for the Aircraft; and (v) 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 aircraft of the same type for a period of
eighteen (18) consecutive months, unless the Company, prior to the expiration
of such eighteen 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 shall have been prohibited for a period
of two (2) consecutive years, unless the Company, prior to the expiration of
such two (2) year period shall have conformed at least one Airbus Industrie
A300F-600 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 Company. The date of such Event
of Loss shall be the date of (i) loss of such property or its use for a period
in excess of 180 days due to theft or disappearance, or loss for a period in
excess of 60 days due to damage beyond economic repair or loss of use of the
Airframe because of requisition for use for a period in excess of 180 days (or
shorter period due to insurance settlement), (ii) an insurance settlement on
the basis of total loss with respect to such property, (iii) condemnation,
confiscation, seizure or requisition of title, or (iv) prohibition from usage
for the periods described in clause (v) 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.
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 Company and dated the Delivery
Date.
Facility. Has the meaning specified in the Loan Agreement.
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. In such determination it shall be assumed that
the Aircraft is in the condition required under the Indenture.
Federal Aviation Administration and FAA. The United States
Federal Aviation Administration and any successor agency or agencies thereto.
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<PAGE> 142
Federal Funds Rate. For any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve system arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (a) if the day for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day and (b) if such rate is not so
published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged to Chase on such Business Day on such
transactions as determined by the Agent.
Floating Rate. (i) For the period commencing on the Delivery
Date and ending on the last day of the twelfth month following the Delivery
Date, the LIBOR Rate plus [ * ]; (ii) for the period commencing
on the first day of the thirteenth month following the Delivery Date and ending
on the last day of the eighteenth month following the Delivery Date, the LIBOR
Rate plus [ * ]; and (iii) thereafter, in respect of each
Interest Period, the higher of the Treasury Rate and the LIBOR Rate, [
* ]
Floating Rate Loan. Loans evidenced by an Equipment Purchase
Certificate that bears interest at rates based upon the Floating Rate.
French Pledge Agreement. The French Pledge Agreement dated
the Delivery Date between the Company and the Indenture Trustee, as the same
may be amended, modified or supplemented from time to time.
Government. The United States of America or any agency or
instrumentality thereof.
Holder. On any date of determination, a holder of an
Equipment Purchase Certificate on such date, provided that for the purposes of
Section 2.02(f) of the Indenture, each holder from time to time of an Equipment
Purchase Certificate shall be deemed to be a "Holder" and the obligations of
the Company to each Holder under Section 2.02 of the Indenture shall survive
the disposition of any Equipment Purchase Certificate by such Holder and the
payment in full of the Equipment Purchase Certificate held by such Holder.
Indenture. The Trust Indenture, Mortgage and Security
Agreement, dated as of the Document Date, between the Company and the Indenture
Trustee, as amended, supplemented or modified by any amendment or supplement
thereto from time to time entered into.
Indenture Estate. Has the meaning set forth in the Granting
Clauses of the Indenture.
- ----------------------------
*Blank space contained confidential information which has been filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
under the Securities Exchange Act of 1934.
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<PAGE> 143
Indenture Supplement. A supplement to the Indenture,
substantially in the form of Exhibit A to the Indenture.
Indenture Trustee. NationsBank of Georgia, National
Association, a national banking association, not in its individual capacity,
but solely in its capacity as Indenture Trustee under the Indenture, and its
successors and permitted assigns as trustee thereunder.
Interest Period. With respect to any Floating Rate Loan, each
period commencing on the date such Floating Rate Loan is made or converted from
a Base Rate Loan or the last day of the next preceding Interest Period for such
Loan and ending on the seventh calendar day thereafter or on the numerically
corresponding date in the first, third or sixth calendar month thereafter, as
the Company may select by notice to the Agent and the Indenture Trustee no
later than 11:00 a.m. on the date three Business Days prior to the first day of
such Interest Period, except that each Interest Period (other than a 7-day
Interest Period) that commences on the last Business Day of a calendar month
(or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of
the appropriate subsequent calendar month. Notwithstanding the foregoing: (i)
no Interest Period for any Loan may commence before and end after any
Amortization Date; (ii) each Interest Period that would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business Day (or,
if such next succeeding Business Day falls in the next succeeding calendar
month, on the next preceding Business Day); (iii) no more than three 7-day
Interest Periods may be selected with respect to the Loans for the Aircraft;
and (iv) subject to clause (i) above, if the Company does not select an
Interest Period as provided above, then the Company shall have deemed to have
selected a one-month Interest Period.
LIBOR Base Rate. With respect to any Floating Rate Loan for
any Interest Period therefor, the arithmetic mean (rounded upwards, if
necessary, to the nearest 1/16 of 1%) of the respective rates per annum quoted
by each Reference Bank at approximately 11:00 a.m. London time (or as soon
thereafter as practicable) on the date two Business Days prior to the first day
of such Interest Period for the offering by such Reference Bank to leading
banks in the London interbank market of Dollar deposits having a term
comparable to such Interest Period and in an amount comparable to the principal
amount of the Floating Rate Loan to be made by such Reference Bank for such
Interest Period. If any Reference Bank is not participating in any Floating
Rate Loan during any Interest Period therefor, the LIBOR Base Rate for such
Loan for such Interest Period shall be deemed by reference to the amount of the
Loan that such Reference Bank would have made or had outstanding had it been
participating in such Loan during such Interest Period. If any Reference Bank
does not timely furnish such information for determination of any LIBOR Base
Rate, then such LIBOR Base Rate shall be determined on the basis of the
information timely furnished by the remaining Reference Banks.
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<PAGE> 144
LIBOR Rate. For any Floating Rate Loan for any Interest
Period therefor, a rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by the Agent to be equal to the sum of the
LIBOR Base Rate for such Loan for such Interest Period divided by 1 minus the
Reserve Requirement for such Loan for such Interest Period.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease
or security interest.
Loan. Has the meaning set forth in Section 1 of the Loan
Agreement.
Loan Agreement. The Loan Agreement dated as of April 1, 1995
between the Company, the Banks named therein and Chase, as agent for such Banks
(as amended, modified, supplemented and in effect from time to time).
Majority in Interest of Certificate Holders. As of a
particular date of determination, the Holders of more than 50% in aggregate
unpaid principal amount of all Equipment Purchase Certificates outstanding as
of such date excluding for purposes of this definition any Equipment Purchase
Certificates held by the Company or any Affiliate thereof.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France, and its successors and assigns.
Maturity. The date which is 24.5 years after the Delivery
Date.
Moody's. Moody's Investors Service, Inc.
Notice of Borrowing. Has the meaning set forth in Section
2.08 of the Loan Agreement.
Obsolete Parts. Parts which the Company deems obsolete or no
longer suitable or appropriate for use on the Airframe or any Engine.
Operative Agreements. The Indenture, the Indenture
Supplement, the Loan Agreement (until the Banks shall have been paid in full),
the Equipment Purchase Certificates, the Bills of Sale, the Facility (as it
relates to the Aircraft or other matters related thereto and except to the
extent that any term thereof shall conflict with any express provision of any
other Operative Agreement, in which case, such provision of such other
Operative Agreement shall control), the Notice of Borrowing, the Estate
Documents and the French Pledge Agreement.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete
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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 therefor in
accordance with the Indenture, which may be removed therefrom.
Payment Date. Each of the dates specified in the last
sentence of Section 2.02(b) of the Indenture.
Payment Default. Any event specified in Section 6.01(a) of
the Indenture which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Investment in (i) direct obligations
of the United States of America; (ii) obligations fully guaranteed by the
United States; (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
Indenture Trustee, in its individual capacity, and any of its Affiliates),
having a combined capital and surplus of at least $500,000,000 and having a
rating of "B" or better from the Thomson Bank Watch; or (iv) commercial paper
rated at least 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 rating organization in the United States of America equal to the
highest rating assigned by such rating organization).
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).
PMSI Obligations. Principal of and interest on the Equipment
Purchase Certificates and all other amounts owing by the Company thereunder,
under the Indenture and the Loan Agreement in respect of the Equipment Purchase
Certificates and under the other Operative Agreements and the performance and
observance by the Company of all of the agreements, covenants and provisions
contained in the Indenture and in the Loan Agreement in respect of the
Equipment Purchase Certificates and in the other Operative Agreements.
Post-Default Rate. In respect of any principal of any
Equipment Purchase Certificate or any other amount under the Indenture, the
Loan Agreement, any Equipment Purchase Certificate or any other Operative
Agreement that is not paid when due (whether at stated maturity, by
acceleration, by optional or mandatory prepayment or otherwise), 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 [ * ]
(after giving effect to any adjustment thereto as provided in the final
sentence of the definition thereof (provided that, if the amount so in default
is principal of a Floating Rate
- -------------------------------
*Blank space contained confidential information which has been filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
under the Securities Exchange Act of 1934.
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Loan and the due date thereof is a day other than the last day of the Interest
Period therefor, the "Post-Default Rate" for such principal shall be, for the
period from and including such due date to but excluding the last day of the
Interest Period, [ *
]
Prime Rate. The rate of interest from time to time announced
by Chase at the Principal Office as its prime commercial lending rate. Such
rate is a rate set by Chase based upon various factors including Chase's costs
and desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above, or
below such announced rate.
Principal Office. The principal office of Chase, located on
the date of the Indenture at 1 Chase Manhattan Plaza, New York, New York
10081.
Purchase Agreement. The Airbus A300-600R Freighter Purchase
Agreement dated July 3, 1991, between the AVSA and the Company (as heretofore
amended, modified and supplemented), providing, inter alia, for the manufacture
by the Manufacturer and sale by AVSA to the Company of certain Airbus
Industries A300F4-605R aircraft, as such Purchase Agreement may hereafter be
amended, modified or supplemented, but solely as such Purchase Agreement
relates to the Aircraft.
Quarterly Payment Dates. The last day of March, June,
September and December in each year, the first of which shall be the first such
day to occur after the Company selects a Base Rate Loan; provided that if such
date is not a Business Day, then such Quarterly Payment Date shall be the next
succeeding Business Day, unless such Business Day falls in a subsequent
calendar month, in which case such Quarterly Payment Date shall be the next
preceding Business Day.
Reference Banks. Chase, Bank of America NT&SA, Canadian
Imperial Bank of Commerce and The First National Bank of Chicago (or their
respective Applicable Lending Offices, as the case may be).
Register. Has the meaning specified in Section 2.08 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.
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, and utility), which shall have been substituted for an Engine
pursuant to Sections 4.02(c)(vii), 4.05(c) or
- -------------------------------
*Blank space contained confidential information which has been filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2
under the Securities Exchange Act of 1934.
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<PAGE> 147
4.05(d) of the Indenture and leased pursuant to the Lease, together with all
Parts relating to such engine.
Reserve Requirement. Has the meaning specified in the Loan
Agreement.
Responsible Officer. With respect to the Indenture Trustee,
any officer in its Corporate Trust Administration Department designated by such
person to perform obligations under the Operative Agreements, and with respect
to any other Person, any corporate officer or other employee of a Person 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.
SEC. The Securities and Exchange Commission of the United
States and any successor agencies or authorities.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Treasury Rate. For each Interest Period, the weighted average
yield to maturity of United States Treasury securities with maturities next
above and below the remaining term of the Equipment Purchase Certificates
(calculated as provided below), such yields to be specified by the Agent on the
basis of the bid price for such United States Treasury securities as displayed
on Telerate screen (Page 7677) or, if the Telerate screen is unavailable, by
averaging (and rounding upward to the nearest whole multiple of 1/100 of 1% per
annum, if the average is not such multiple), the yields of the relevant United
States Treasury securities (rounded, if necessary, to the nearest 1/100 of 1%
with any figure of 1/200 of 1% or above rounded upward) as quoted to the Agent
by two reputable dealers in United States Treasury securities selected by the
Agent, in either case, at approximately 11:00 a.m. (New York time) on the date
two Business Days prior to the first day of the relevant Interest Period and
notified to the Company, the Indenture Trustee and the Holders; any weighted
average yield of United States Treasury securities with two maturities is to be
calculated by the Agent in accordance with the following formula:
WAY = Y1 + (Y2 - Y1) (RT - X1)
---------------------
(X2 - X1)
Where:
WAY = Weighted Average Yield
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RT = relevant remaining term to maturity
X1 = whole integer in years closest to and less
than RT which equals the maturity of a United
States Treasury security then publicly
traded.
X2 = whole integer in years closest to and greater
than RT which equals the maturity of a United
States Treasury security then publicly
traded.
Y1 = yield, determined as provided above, of
United States Treasury securities then most
recently auctioned with maturities equal to
X1.
Y2 = yield, determined as provided above, of
United States Treasury securities then most
recently auctioned with maturities equal to
X2.
Type. The Type of Loan refers to whether such Loan is a
Floating Rate Loan or a Base Rate Loan.
United States 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.
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Schedule II
PERMITTED COUNTRY LIST
<TABLE>
<S> <C>
Argentina Ireland
Australia Italy
Austria Jamaica
Bahamas Japan
Barbados Luxembourg
Belgium Malaysia
Brazil Malta
British Virgin Islands Mexico
Canada Netherlands
Cayman Islands New Zealand
Denmark Norway
Egypt Portugal
Finland Republic of China (Taiwan)
France Singapore
Germany South Korea
Greece Spain
Grenada Sweden
Hong Kong Switzerland
Iceland Thailand
Indonesia Trinidad & Tabago
United Kingdom
</TABLE>
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EXHIBIT A
to INDENTURE
INDENTURE SUPPLEMENT
THIS INDENTURE SUPPLEMENT, dated _________________, ____
between FEDERAL EXPRESS CORPORATION (the "Company"), a Delaware corporation,
and NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, a national banking
corporation, not in its individual capacity but solely as trustee (the
"Indenture Trustee") under Trust Indenture, Mortgage and Security Agreement
dated as of [_______________, 199_]+ (the "Indenture") between the Company
and the Indenture Trustee. All capitalized terms used herein and not defined
herein shall have the respective meanings set forth in the Indenture.
W I T N E S S E T H:
WHEREAS, the Indenture provides for the execution and delivery
of a Supplement substantially in the form of this Supplement, which Supplement
shall particularly describe the Aircraft included in the Indenture Estate, and
shall specifically mortgage such Aircraft to the Indenture Trustee; and
WHEREAS, ++ the Indenture relates to the Aircraft and the
Engines described in the following paragraph and a counterpart of the Indenture
is attached to and made a part of this Supplement, and this Supplement,
together with such attachment, is being filed for recordation on or promptly
after the date of this Supplement with the Federal Aviation Administration as
one document.
WHEREAS, +++ the Indenture and Supplement dated
_________________, _____ (the Indenture being attached to and made a part of
such Supplement and filed therewith) have been duly recorded pursuant to the
Federal Aviation Act, on ___________, _____, as one document and have been
assigned Conveyance No. _____________________;
NOW, THEREFORE, to secure (i) the prompt payment of the
principal of and Breakage Costs, if any, and interest on, and all other amounts
due with respect to, all the Equipment Purchase Certificates from time to time
outstanding under the Indenture and (ii) the performance and observance by the
Company of all the agreements, covenants and provisions in this Indenture
contained for the benefit of the Holders of the Equipment
- --------------------------
+Here insert the Documentation Date.
++This recital is to be included only in the first Supplement.
+++This recital is not to be included in the first Supplement.
150
<PAGE> 151
Purchase Certificates, and for the uses and purposes and subject to the terms
and conditions of the Indenture, and in consideration of the premises and of
the covenants contained in the Indenture and in the Equipment Purchase
Certificates and of the purchase of the Equipment Purchase Certificates by the
Holders, and of the sum of $1.00 paid to the Company by the Indenture Trustee
at or before the delivery of this Supplement, the receipt of which is hereby
acknowledged, the Company has granted, bargained, sold, assigned, transferred,
conveyed, mortgaged, pledged, granted a purchase money equipment security
interest in and confirmed, and does hereby grant, bargain, sell, assign,
transfer, convey, mortgage, pledge, grant a purchase money equipment security
interest in and confirm to the Indenture Trustee, its successors and assigns in
the trust created by the Indenture for the security and benefit of the Holders
from time to time of the Equipment Purchase Certificates, the following
described Equipment (the "Delivered Equipment"):
(i) one (1) Airbus Industrie A300F4-605R airframe; U.S.
Registration Number _________; Manufacturer's Serial No.
______________;
(ii) two (2) General Electric CF6-80C2-A5F engines bearing,
respectively, Manufacturer's Serial Nos. _________, and __________
(each of which engines has 750 or more rated takeoff horsepower or the
equivalent of such horsepower); and
whether or not such engines shall be installed in or attached to such airframe
or any other airframe.
Together with all substitutions, replacements and renewals, by
whomsoever manufactured, of the property above described, and all property
which shall hereafter become physically attached to or incorporated in the
property above described, by whomsoever manufactured, whether the same are now
owned by the Company or shall hereafter be acquired by it and all Parts in
respect thereof.
TO HAVE AND TO HOLD the aforesaid property to the Indenture
Trustee, its successors and assigns, for the benefit and security of the
Holders from time to time of the Equipment Purchase Certificates and for the
uses and purposes and subject to the terms and conditions set forth in the
Indenture.
AND, FURTHER, the Company, hereby acknowledges that the
Delivered Equipment referred to in the aforesaid Indenture attached to and made
a part of this Supplement has been delivered to the Company and is included in
the property of the Company, subject to the pledge or mortgage under 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 in this Supplement and is hereby ratified, approved
and confirmed.
151
<PAGE> 152
This Supplement may be executed by the Company and the
Indenture Trustee in separate counterparts, each of which when so executed and
delivered is an original, but all such counterparts shall together constitute
but one and the same Supplement.
IN WITNESS WHEREOF, the Company and the Indenture Trustee have
each caused this Supplement to be duly executed by their respective, duly
authorized officers as of the day and year first above written.
COMPANY: FEDERAL EXPRESS CORPORATION,
By
----------------------------
Title:
INDENTURE TRUSTEE: NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION, not in
its individual capacity, but solely as
Indenture Trustee,
By
---------------------------
Title:
152
<PAGE> 153
EXHIBIT B
to INDENTURE
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OFFERED FOR SALE
UNLESS REGISTERED UNDER SAID ACT OR LAWS OR UNLESS AN EXEMPTION IS AVAILABLE
UNDER SAID ACT OR LAWS.
153
<PAGE> 154
FEDERAL EXPRESS CORPORATION
EQUIPMENT PURCHASE CERTIFICATE DUE __________
FEDERAL EXPRESS CORPORATION [SERIES NAME]
ISSUED IN CONNECTION WITH ONE AIRBUS INDUSTRIE A300F4-605R AIRCRAFT WITH
MANUFACTURER'S SERIAL NO. ____________, AND INITIALLY BEARING UNITED STATES
FEDERAL AVIATION ADMINISTRATION REGISTRATION NO. ______ AND INCLUDING TWO
GENERAL ELECTRIC CF6-80C2-A5F ENGINES
No. _____________, 199_
$
154
<PAGE> 155
FEDERAL EXPRESS CORPORATION hereby promises to pay to
________________________, or its registered assigns, the principal sum of
___________________ in ___ installments, one such installment to be due and
payable on each Amortization Date, each such installment to be in an amount
equal to the amount set forth in Annex A hereto, together with interest on each
Payment Date on the amount of said principal sum remaining unpaid from time to
time from and including the date of this Equipment Purchase Certificate until
paid at the rates per annum provided in the Trust Indenture, Mortgage and
Security Agreement, dated as of [_______________, 199_]+ between the Company
and NationsBank of Georgia, National Association, not in its individual
capacity except as otherwise expressly provided therein, but solely as
Indenture Trustee (the "Indenture"), all as more fully provided therein.
Capitalized terms used herein and not otherwise defined have
the meanings specified in Schedule I to the Indenture.
All principal, interest and other amounts payable on, under or
in respect of this Equipment Purchase Certificate shall be payable in U.S.
dollars in immediately available funds at the Corporate Trust Office of the
Indenture Trustee or at any office or agency maintained for such purpose
pursuant to the Indenture and otherwise in accordance with the terms of the
Indenture. Notwithstanding the foregoing, if requested by the Holder hereof
(or by the Agent on such Holder's behalf), any amount payable with respect to
this Equipment Purchase Certificate shall be sent by wire transfer of
immediately available funds to an account or accounts in the United States
previously specified by such Holder or the Agent to the Indenture Trustee.
The Holder hereof, by its acceptance of this Equipment
Purchase Certificate, agrees that, except as expressly provided in the
Indenture, the Indenture Trustee is not and shall not be personally liable to
the Holder for any amount payable under this Equipment Purchase Certificate or
the Indenture or for any liability under the Loan Agreement or the Indenture.
This Equipment Purchase Certificate is one of the Equipment
Purchase Certificates referred to in the Indenture which has been or is to be
issued by the Company pursuant to the terms of the Indenture. The Indenture
Estate is held by the Indenture Trustee as security for the Equipment Purchase
Certificates. Reference is hereby made to the Indenture for a statement of the
rights and obligations of the Holder of, and the nature and extent of the
security for, this Equipment Purchase Certificate and of the rights and
obligations of the Holders of, and the nature and extent of the security for,
the other Equipment Purchase Certificates under the Indenture, as well as for a
statement of the terms
- --------------------------
+Here insert the Documentation Date.
155
<PAGE> 156
and conditions of the trusts created by the Indenture, to all of which terms
and conditions in the Indenture each Holder of this Equipment Purchase
Certificate agrees by its acceptance of this Equipment Purchase Certificate.
As provided in the Indenture and subject to certain
limitations set forth in the Indenture, the Equipment Purchase Certificates are
exchangeable for a like aggregate principal amount of Equipment Purchase
Certificates of a different denomination, as requested by the Holder
surrendering the same.
This Equipment Purchase Certificate is a registered Equipment
Purchase Certificate and is transferable, as provided in the Indenture, only
upon surrender of this Equipment Purchase Certificate for registration of
transfer duly endorsed by, or accompanied by a written statement of transfer
duly executed by, the registered Holder hereof or his attorney duly authorized
in writing. Prior to due presentment for registration of transfer of this
Equipment Purchase Certificate, the Company and the Indenture Trustee shall
deem and treat the Person in whose name this Equipment Purchase Certificate is
registered as the owner of this Equipment Purchase Certificate for all purposes
whether or not this Equipment Purchase Certificate shall be overdue, and
neither the Company nor the Indenture Trustee shall be affected by notice to
the contrary.
This Equipment Purchase Certificate is not subject to
prepayment except as specifically provided in the Indenture.
Until the certificate of authentication below shall have been
duly executed by or on behalf of the Indenture Trustee by manual signature,
this Equipment Purchase Certificate shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.
This Equipment Purchase Certificate may become or be declared
due and payable prior to its Maturity as provided in the Indenture.
No employee benefit plan subject to Title I of ERISA or
individual retirement account or employee benefit 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 Equipment Purchase Certificates. The acquiring by any Person of any
Equipment Purchase Certificates shall be deemed to constitute a representation
by such Person to the Company and the Indenture Trustee that such Person is not
an ERISA Plan and that such Person is not acquiring, and has not acquired, such
Equipment Purchase Certificate with assets of an ERISA Plan.
THIS EQUIPMENT PURCHASE CERTIFICATE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
156
<PAGE> 157
IN WITNESS WHEREOF, the Company has caused this Equipment
Purchase Certificate to be executed by its duly authorized officer as of the
date hereof.
FEDERAL EXPRESS CORPORATION
By
-----------------------------
Title:
157
<PAGE> 158
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is the Equipment Purchase Certificate referred to in the within
mentioned Indenture.
NATIONSBANK OF GEORGIA
NATIONAL ASSOCIATION,
not in its individual
capacity, but solely as
Indenture Trustee
By
-----------------------------------
Title: Authorized Officer
158
<PAGE> 159
ANNEX A
TO
EQUIPMENT PURCHASE CERTIFICATE
SCHEDULE OF PRINCIPAL PAYMENTS
<TABLE>
<S> <C>
Percentage of Original
Amortization Date Principal Amount to be Repaid
- ----------------- -----------------------------
</TABLE>
159
<PAGE> 160
EXHIBIT B
to
Loan Agreement
[FORM OF OPINION OF VICE PRESIDENT, LAW-CORPORATE
AND BUSINESS TRANSACTIONS OF THE COMPANY]
160
<PAGE> 161
EXHIBIT C
to
Loan Agreement
[FORM OF OPINION OF SPECIAL COUNSEL
FOR THE COMPANY]
161
<PAGE> 162
EXHIBIT D
to
Loan Agreement
[FORM OF OPINION OF SPECIAL COUNSEL
FOR THE INDENTURE TRUSTEE]
162
<PAGE> 163
EXHIBIT E
to
Loan Agreement
[FORM OF OPINION OF COUNSEL FOR
THE ENGINE MANUFACTURER]
<PAGE> 164
EXHIBIT F
to
Loan Agreement
[FORM OF OPINION OF COUNSEL FOR AVSA AND THE MANUFACTURER]
164
<PAGE> 165
EXHIBIT G
to
Loan Agreement
FRENCH PLEDGE AGREEMENT
Between the Undersigned
FEDERAL EXPRESS CORPORATION, a Delaware corporation (together
with its successors and permitted assigns, the "Company"),
On the one hand,
And:
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, a national
banking corporation, not in its individual capacity, but solely as indenture
trustee (herein called, together with its permitted successors and assigns, the
"Indenture Trustee"), under the Trust Indenture, Mortgage and Security
Agreement (the "Indenture"), dated as of [_________ __, 199_],+between the
Company and the Indenture Trustee,
On the other hand
PREAMBLE:
1. Pursuant to the terms of the Indenture written in the
English language and governed by the laws of the State of New York (capitalized
terms used herein without definition having the meanings assigned thereto in
the Indenture), the Company has, inter alia, assigned by way of collateral
security certain of its right, interest, claims and demands in and to the
Purchase Agreement; and
2. The Company and the Indenture Trustee wish to create
a pledge under French law in the right, interest, claims and demands in and to
the Purchase Agreement referred to in paragraph 1 above;
NOW, THEREFORE, the parties hereto agree as follows:
- --------------------------
+Here insert the Documentation Date.
165
<PAGE> 166
ARTICLE 1
As security for the obligations of the Company under the
Indenture and each of the other Operative Agreements, the Company hereby
pledges to the Indenture Trustee in accordance with the terms and conditions of
the Indenture, all of the Company's rights, interests and privileges in and to:
(a) All right, title and interest of the Company in, to
and under Clauses 12, 13 and, to the extent relating to acts to be performed
following the date of enforcement of this Pledge Agreement or the Indenture, 17
of the Purchase Agreement (other than any of the Company's right, title and
interest in or arising out of any advance payments made by the Company in
respect of the Airbus Industrie A300F4-605R aircraft bearing Manufacturer's
Serial No. [ ] (the "Aircraft") under the Purchase Agreement and any other
payments made or to be made by the Company under the Purchase Agreement or
amounts credited or to be credited by the Manufacturer to the Company in
respect of the Aircraft or otherwise, unless such amounts credited or to be
credited by the Manufacturer to the Company result from a default under the
Purchase Agreement with respect to the Aircraft), the Bills of Sale and the
Consent and Guaranty of the Manufacturer attached to the Purchase Agreement to
the extent the Purchase Agreement, Bills of Sale and Consent and Guaranty
relate to continuing rights of the Company in respect of any warranty, express
or implied, as to title, materials, workmanship, design or patent infringement
with respect to the Airframe or the Engines (reserving to the Company, however,
all of the Company's other rights and interest in and to the Purchase Agreement
and such Consent and Guaranty) together with all rights, powers, privileges,
options and other benefits of the Company under said Clauses with respect to
the Airframe or the Engines, including, without limitation, the right to make
all waivers and agreements, to give and receive all notices and other
instruments or communications, to take such action upon the occurrence of a
default thereunder, including the commencement, conduct and consummation of
legal, administrative or other proceedings, as shall be permitted thereby or by
law, and to do any and all other things which the Company is or may be entitled
to do thereunder, and in furtherance of the foregoing to the extent permitted
by applicable law and upon the occurrence of an Event of Default the Company
hereby directs AVSA and the Manufacturer to pay all amounts, if any, payable to
the Company pursuant to such Clauses of the Purchase Agreement (other than any
such amounts in respect of such advance payments or other payments by the
Company or credited or to be credited, unless as a result of a default by the
Manufacturer as aforesaid) and such Consent and Guaranty in respect of the
Airframe or the Engines directly to the Indenture Trustee; and
(b) All proceeds of the foregoing;
PROVIDED, HOWEVER, that notwithstanding any of the foregoing
provisions of this Article 1, so long as no Event of Default shall have
occurred and be continuing, the Company shall have the right, to the exclusion
of the Indenture Trustee, (a) to quiet enjoyment of the Airframe
166
<PAGE> 167
and Engines, and to possess, use, retain and control the Airframe and Engines
and all revenues, income and profits derived therefrom, and (b) with respect to
the Purchase Agreement and the Consent and Guaranty attached thereto, to
exercise in the Company's name all rights and powers of the buyer under the
Purchase Agreement and such Consent and Guaranty (other than to amend, modify
or waive any of the warranties contained therein) and to retain any recovery or
benefit resulting from the enforcement of any warranty or indemnity under the
Purchase Agreement and such Consent and Guaranty; provided, further, that
notwithstanding the occurrence and continuation of an Event of Default, the
Indenture Trustee shall not enter into any amendment of the Purchase Agreement
or such Consent and Guaranty which would increase the obligations of the
Company thereunder.
The Indenture Trustee hereby accepts such pledge.
ARTICLE 2
The obligations, the performance of which is secured by this
pledge, are amounts payable in respect of principal of the Equipment Purchase
Certificates and interest thereon, and Breakage Costs, and all other amounts
due pursuant to the Indenture and the Equipment Purchase Certificates, and
other sums secured by the Indenture.
To the extent necessary to comply with French law, it is
understood that the principal amount of the debt in question may amount to a
maximum of the principal amount of the Equipment Purchase Certificates relating
to the Aircraft (on the date hereof being U.S.$52,500,000) to which may be
added interest and other amounts due under the Indenture and the Equipment
Purchase Certificates, and other sums secured by the Indenture.
ARTICLE 3
This Pledge Agreement shall be registered and notified by
"huissier" to each of AVSA, S.A.R.L. and Airbus Industrie G.I.E. This Pledge
Agreement may be executed in any number of counterparts, all of which shall
constitute one and the same instrument.
ARTICLE 4
This Pledge Agreement is of a commercial nature and shall be
governed by French law.
167
<PAGE> 168
Done at New York, New York, U.S.A.
on [__________, 199_].+
FEDERAL EXPRESS CORPORATION
By
-----------------------------
Title
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION,
not in its individual
capacity, but solely as
Indenture Trustee
By
-----------------------------
Title
- --------------------
+Here insert the Delivery Date.
168
<PAGE> 169
Exhibit H to
Loan Agreement
*
- --------------------
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
169
<PAGE> 170
*
- --------------------
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
170
<PAGE> 171
*
- --------------------
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
171
<PAGE> 172
*
- --------------------
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
172
<PAGE> 173
*
- --------------------
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
173
<PAGE> 174
*
- --------------------
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
174
<PAGE> 175
*
- --------------------
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
175
<PAGE> 1
EXHIBIT 10.4
EXECUTION COPY
================================================================================
FOURTH SUPPLEMENTAL INDENTURE
BETWEEN
MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY
AND
COMMERCE UNION BANK, TRUSTEE
DATED AS OF DECEMBER 1, 1984
SUPPLEMENTING INDENTURE DATED AS OF
AUGUST 1, 1979 BETWEEN THE
MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND
COMMERCE UNION BANK, TRUSTEE
================================================================================
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
ARTICLE I
DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 General Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
SERIES 1984 BONDS
2.1 Authorization of the 1984 Federal Express
Acquisition Project . . . . . . . . . . . . . . . . . . . . . 5
2.2 Series 1984 Bonds; Details Thereof . . . . . . . . . . . . . . . . 5
2.3 Conversion to Fixed Interest Bonds . . . . . . . . . . . . . . . . 7
2.4 Purchase of Series 1984 Bonds . . . . . . . . . . . . . . . . . . 10
2.5 Provisions for Redemption of Series
1984 Bonds . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.6 Place of Payment for Series 1984 Bonds;
Credits to the Reserve Account . . . . . . . . . . . . . . . 15
2.7 Execution and Forms of Series 1984
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.8 Series 1984 Bonds to Constitute Bonds . . . . . . . . . . . . . . 29
ARTICLE III
DISPOSITION OF PROCEEDS OF SERIES 1984 BONDS; SALE
3.1 Application of Series 1984 Bond
Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.2 Application of Certain Moneys in
Construction Fund . . . . . . . . . . . . . . . . . . . . . . 29
3.3 Sale of Series 1984 Bonds . . . . . . . . . . . . . . . . . . . . 30
ARTICLE IV
AUTHORITY; FINDINGS AND DETERMINATIONS;
ARBITRAGE AND INDUSTRIAL DEVELOPMENT BOND PROVISIONS
4.1 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.2 Findings and Determinations . . . . . . . . . . . . . . . . . . . 30
4.3 Additional Findings and
Determinations . . . . . . . . . . . . . . . . . . . . . . . 32
4.4 Additional Findings as to the
Initial Lease . . . . . . . . . . . . . . . . . . . . . . . . 32
4.5 Arbitrage and Industrial Development
Bond Provisions . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
Section Page
- ------- ----
ARTICLE V
MISCELLANEOUS
5.1 Headings, Table of Contents . . . . . . . . . . . . . . . . . . . 33
5.2 Law and Place of Enforcement . . . . . . . . . . . . . . . . . . . 33
5.3 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.4 Reference to Fourth Supplemental
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
-ii-
<PAGE> 4
FOURTH SUPPLEMENTAL INDENTURE
FOURTH SUPPLEMENTAL INDENTURE, made this 13th day of December,
1984, but dated for convenience of reference as of the first day of December,
1984, between MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY (the "Authority") and
COMMERCE UNION BANK, Trustee (the "Trustee").
WHEREAS, the Authority has heretofore executed and delivered
to the Trustee an Indenture dated as of August 1, 1979 (said Indenture, as
originally adopted and, unless the context shall clearly indicate otherwise, as
heretofore or hereafter supplemented, modified or amended from time to time by
any Supplemental Indenture permitted thereby, being defined in said Indenture
and referred to herein as the "Indenture") to secure, as provided therein,
Special Facilities Revenue Bonds (Federal Express Corporation) of the Authority
(in the Indenture and herein called the "Bonds") to be issued in one or more
series as provided in the Indenture; and
WHEREAS, pursuant to the Indenture there have been executed,
authenticated and delivered four series of Bonds known as the Authority's
Special Facilities Revenue Bonds, Series 1979, Series 1982A, Series 1982B and
Series 1982C (Federal Express Corporation), in the original principal amounts
of $34,970,000, $48,000,000, $22,000,000 and $47,770,000, respectively; and
WHEREAS, the Authority has heretofore executed and delivered
to the Trustee a First Supplemental Indenture dated as of March 13, 1980
amending the Indenture in certain respects, a Second Supplemental Indenture
dated as of May 1, 1982 amending and supplementing the Indenture in certain
respects and a Third Supplemental Indenture dated as of November 1, 1982
supplementing the Indenture in certain respects; and
WHEREAS, Federal Express Corporation ("Federal Express"), as
lessee under the Special Facility Lease Agreement between the Authority and
Federal Express, dated as of August 1, 1979 (the "Initial Lease") has, pursuant
to Section 5.8 of the Initial Lease, requested that the Authority issue a
series of Additional Bonds in the principal amount of $94,550,000 in accordance
with Sections 2.06 and 2.08 of the Indenture in order to fund the acquisition
and construction of the 1984 Federal Express Acquisition Project (as
hereinafter defined); and
WHEREAS, it is provided in the Indenture that without the
consent or concurrence of the holder of any Bond, the Authority and the Trustee
may enter into a Supplemental Indenture for the purpose of providing for the
issuance of Additional Bonds pursuant to the provisions of Article II of the
Indenture; and
WHEREAS, the Board of Commissioners of the Authority at a
meeting held on November 29, 1984 duly adopted a resolution approving, among
other things, this Fourth Supplemental Indenture, and the Third Special
Facility Supplemental Lease Agreement dated as of December 1, 1984
supplementing the Initial Lease, and authorizing the issuance, sale and
delivery of a series of Bonds to be known as the Memphis-Shelby County Airport
Authority, Special Facilities Revenue Bonds, Series 1984 (Federal Express
Corporation) in the principal amount of $94,550,000 (the "Series 1984 Bonds")
which resolution has not been amended, modified or rescinded since the adoption
thereof and remains in full force and effect as of the date hereof; and
WHEREAS, the Authority desires to provide for the issuance of
the Series 1984 Bonds; and
WHEREAS, all things necessary to make the Series 1984 Bonds to
be issued under the Indenture when executed by the Authority and authenticated
and delivered under the Indenture, the valid special obligations of the
Authority payable solely from Revenues, as defined in the Indenture, have been
done and performed;
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
That in order to provide for the issuance of the Series 1984
Bonds, and in consideration of the premises and of the purchase and acceptance
of the Series 1984 Bonds by the holders thereof, the Authority
<PAGE> 5
covenants and agrees with the Trustee, for the equal and proportionate benefit
of the respective bondholders from time to time, as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context shall clearly
indicate some other meaning, all words and terms used in this Fourth
Supplemental Indenture (including, without limitation, in the next paragraph
hereof) which are defined in the Indenture shall have the meanings given to
them in the Indenture.
Unless the context shall clearly indicate some other meaning,
the following terms shall, for all purposes of the Indenture as originally
executed and of any indentures supplemental thereto (including for all purposes
this Fourth Supplemental Indenture) and for all purposes of any opinion or
instrument or other document therein or herein mentioned, have the following
meanings:
(a) "Adjusted Interest Rate" means the rate of interest
borne by the Series 1984 Bonds for each Bond Year.
(b) "Adjusted Interest Rate Effective Date" means the
September 1 immediately following each Tender Period.
(c) "Adjusted Interest Rate Notice" means the notice,
mailed by the Trustee to the holders of each Series 1984 Bond, stating (i) that
in accordance with the Tender Agreement each holder of a Series 1984 Bond shall
have the right to tender such Series 1984 Bond (endorsed in blank together with
any appropriate instruments of transfer as the Tender Agent may request) to the
Tender Agent during the then current Tender Period; (ii) the Anticipated
Adjusted Interest Rate; (iii) that the actual Adjusted Interest Rate will be
set on the Adjusted Interest Rate Setting Date; (iv) that the Adjusted Interest
Rate will apply to all Series 1984 Bonds for the Bond Year commencing on the
next Adjusted Interest Rate Effective Date; and (v) that the holders of the
Series 1984 Bonds may telephone a member of the Interest Rate Committee at a
number or numbers identified therein on or after 12:00 Noon on the Adjusted
Interest Rate Setting Date to ascertain the new Adjusted Interest Rate.
(d) "Adjusted Interest Rate Setting Date" means a date no
later than August 13 of each year.
(e) "Anticipated Adjusted Interest Rate" means the
anticipated interest rate for the Series 1984 Bonds as determined by the
Interest Rate Committee and as set forth in an Adjusted Interest Rate Notice.
(f) "Bond Year" means the period from September 1 in any
year to and including August 31 in the following year.
(g) "Business Day" means a day on which banks located in
the city in which the principal office of the Trustee is located are not
authorized or required by law to be closed and on which the New York Stock
Exchange is not closed.
(h) "Conversion Date" means the Adjusted Interest Rate
Effective Date on which the Fixed Interest Rate becomes effective.
(i) "Federal Express" means Federal Express Corporation,
a corporation duly organized and existing under the laws of the State of
Delaware, its successors and assigns.
(j) "Fixed Interest Rate" means the interest rate on the
Series 1984 Bonds determined in accordance with Section 2.3 hereof.
(k) "Fourth Supplemental Indenture" means this fourth
supplemental indenture.
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(l) "Holder" or "holder" means the person in whose name
any Series 1984 Bond is registered upon the registration books maintained by
the Trustee under the Indenture.
(m) "Interest Rate Committee" means Kidder, Peabody & Co.
Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan,
Keegan & Company, Inc., or as the Committee may be constituted from time to
time.
(n) "1984 Federal Express Acquisition Project" means the
project described in Article II hereof.
(o) "Series 1984 Bonds" means the bonds of the series
authorized in Section 2.2 hereof in the aggregate principal amount of
$94,550,000 and designated "Memphis-Shelby County Airport Authority, Special
Facilities Revenue Bonds, Series 1984 (Federal Express Corporation)", with such
definition to be equally applicable to the singular and plural form of such
term.
(p) "Tender Agent" means Commerce Union Bank in the City
of Nashville, Tennessee and any successor thereto.
(q) "Tender Agreement" means the Tender and Option
Agreement dated as of December 1, 1984 by and between the Tender Agent, Kidder,
Peabody & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Morgan Keegan & Company, Inc. and Federal Express, as the same may be
supplemented and amended from time to time in accordance with the provisions
thereof.
(r) "Tender Period" means the period from the opening of
business on August 1 (or, if not a Business Day, the succeeding Business Day)
of each year to and including 4:00 P.M., New York time, on August 15 (or, if
not a Business Day, the succeeding Business Day) of each year, commencing in
1985.
(s) "Third Supplemental Lease" means that certain Third
Special Facility Supplemental Lease Agreement dated as of December 1, 1984, by
and between the Authority and Federal Express, supplementing the Special
Facility Lease Agreement dated as of August 1, 1979, by and between the
Authority and Federal Express (said Lease Agreement as heretofore amended and
supplemented being herein and in the Indenture referred to as the "Initial
Lease"), and as the same may hereafter be duly supplemented, modified or
amended from time to time.
Section 1.2. General Terms. Unless or except as the context
shall indicate otherwise or may otherwise require, in this Fourth Supplemental
Indenture: (i) all references to a particular section or subdivision of the
Indenture, the First Supplemental Indenture, the Second Supplemental Indenture,
the Third Supplemental Indenture or this Fourth Supplemental Indenture as the
case may be, are to the corresponding section or subdivision of the Indenture
as originally executed or the First Supplemental Indenture, the Second
Supplemental Indenture, the Third Supplemental Indenture or this Fourth
Supplemental Indenture only, as the case may be; (ii) the terms "herein",
"hereunder", "hereby", "hereto", "hereof", and any similar terms, refer to this
Fourth Supplemental Indenture only, and as to this Fourth Supplemental
Indenture as a whole and not to any particular section or subdivision hereof;
(iii) the terms "therein", "thereunder", "thereby", "thereto", "thereof", and
any similar terms, refer to the Indenture only, and to the Indenture as a whole
and not to any particular section or subdivision thereof; and (iv) the term
"heretofore" means before the time of effectiveness of this Fourth Supplemental
Indenture and the term "hereafter" means after the time of such effectiveness.
ARTICLE II
SERIES 1984 BONDS
Section 2.1. Authorization of the 1984 Federal Express
Acquisition Project. There is hereby authorized and approved the acquisition
and construction of certain facilities and equipment including buildings, ramp
and sorting equipment and miscellaneous related equipment, as described in the
Third Supplemental Lease (the "1984 Federal Express Acquisition Project").
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Section 2.2. Series 1984 Bonds; Details Thereof. For the
purpose of providing funds to finance the acquisition of the 1984 Federal
Express Acquisition Project, which Project will constitute a part of the
Special Facility, there are hereby authorized to be issued and shall be issued
under the Indenture and secured thereby a series of Bonds in the aggregate
principal amount of ninety-four million five hundred fifty thousand dollars
($94,550,000), to be entitled and designated "Memphis-Shelby County Airport
Authority, Special Facilities Revenue Bonds, Series 1984 (Federal Express
Corporation)" (herein defined and referred to as the "Series 1984 Bonds"). The
Series 1984 Bonds shall be issuable in fully registered form; shall be dated as
of the date of their original issuance; shall be in the denomination of $5,000
or any integral multiple thereof; shall be numbered or lettered, or both, as
shall be determined by the Trustee, which numbers or letters shall have the
letter "R" prefixed thereto. The Series 1984 Bonds shall bear interest at the
rates per annum determined in the manner as hereinafter set forth, payable in
accordance with Section 4.01 of the Indenture, on March 1, 1985 and
semi-annually on the first day of each March and September thereafter. The
Series 1984 Bonds shall mature and become payable on September 1, 2009.
Interest on the Series 1984 Bonds shall be computed on the basis of a year of
360 days.
The Series 1984 Bonds shall bear interest from the date of
their original issuance to and including August 31, 1985 at the rate of seven
and one-quarter per centum (7.25%) per annum. Thereafter, and prior to the
Conversion Date, the Series 1984 Bonds shall bear interest for each subsequent
Bond Year at a rate of interest per annum determined as set forth below and
based upon a determination by the Interest Rate Committee as of the Adjusted
Interest Rate Setting Date in each year, which rate shall be the lowest rate
which in the judgment of the Interest Rate Committee on the basis of prevailing
financial market conditions would permit the resale on the Adjusted Interest
Rate Setting Date of the Series 1984 Bonds at par. On and after the Conversion
Date the Series 1984 Bonds shall bear interest at the rate of interest per
annum determined as set forth in Section 2.3 hereof.
On each July 31 (or, if not a Business Day, the next preceding
Business Day), beginning July 31, 1985, the Interest Rate Committee shall
determine the Anticipated Adjusted Interest Rate, which shall be the lowest
rate which in the Interest Rate Committee's judgment, on the basis of
prevailing financial market conditions, would permit the sale of the Series
1984 Bonds at par on the date of such determination. Immediately upon
determining the Anticipated Adjusted Interest Rate, the Interest Rate Committee
shall notify the Trustee of such rate, and not later than the Business Day
following such determination, the Trustee shall mail, by first class mail, to
the registered owner of each Series 1984 Bond as shown on the books of registry
maintained by the Trustee the Adjusted Interest Rate Notice.
The Interest Rate Committee shall determine the Adjusted
Interest Rate before 12:00 noon, New York time, on the applicable Adjusted
Interest Rate Setting Date, which rate shall be the lowest rate which in its
judgment on the basis of prevailing financial market conditions, would permit
on such Adjusted Interest Rate Setting Date the resale of all the Series 1984
Bonds at par. If the Interest Rate Committee does not determine an Adjusted
Interest Rate for any reason or if the Adjusted Interest Rate that is
determined by the Interest Rate Committee is held invalid or unenforceable by a
court of law, the rate of interest on the Series 1984 Bonds in effect on the
day immediately preceding the Adjusted Interest Rate Setting Date shall remain
in effect throughout the next following Bond Year. The Interest Rate Committee
shall provide telephonic notice, confirmed in writing, to the Trustee of the
Adjusted Interest Rate on or before 12:00 noon on the Adjusted Interest Rate
Setting Date. After 12:00 noon, New York time, on the Adjusted Interest Rate
Setting Date, any Interest Rate Committee member may release the new Adjusted
Interest Rate and any holder of a Series 1984 Bond may call any Interest Rate
Committee member to ascertain the new Adjusted Interest Rate.
The first Business Day after each determination of the
Adjusted Interest Rate, the Trustee shall mail, by first class mail, to the
registered owner of each Series 1984 Bond as shown in the books of registry
maintained by the Trustee notice of the Adjusted Interest Rate.
The determination of the Adjusted Interest Rate shall be final
and conclusive and each owner of a Series 1984 Bond, by his acceptance of such
bond, agrees to accept the rate of interest if determined as aforesaid. The
Adjusted Interest Rate shall take effect the following September 1,
notwithstanding any defect in (1) the determination of the Anticipated Adjusted
Interest Rate or the Adjusted Interest Rate (2) the mailing of Adjusted
Interest Rate Notice or (3) the communication to any bondowner of the
Anticipated Adjusted Interest Rate or the
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<PAGE> 8
Adjusted Interest Rate. The Tender Agreement provides that no such defect
shall extend the period for tendering Series 1984 Bonds or otherwise change the
rights of bondowners to tender Series 1984 Bonds to the Tender Agent for
purchase.
Any provision in this Fourth Supplemental Indenture to the
contrary notwithstanding, in the event the Adjusted Interest Rate determined as
aforesaid shall exceed fifteen per centum (15%) per annum, then the Series 1984
Bonds shall bear interest at the rate of fifteen per centum (15%) per annum.
The Authority and members of the Interest Rate Committee shall
enter into an agreement setting forth the terms and conditions under which the
Interest Rate Committee shall serve in carrying out its obligations under this
Section 2.2 and Section 2.3 hereof.
Section 2.3. Conversion to Fixed Interest Rate. The
Authority at the direction of Federal Express hereby reserves the right to
permanently establish the rate of interest on the Series 1984 Bonds for the
balance of the term thereof in the manner hereinafter set forth in this Section
2.3 (such rate as so established herein defined as the "Fixed Interest Rate").
Pursuant to the Third Supplemental Lease the Authority has
granted to Federal Express, as lessee under such Agreement, the right to direct
the Authority to exercise the right to establish the Fixed Interest Rate on
September 1 of any year (herein defined as the "Conversion Date"). Such
direction must be made by notice in writing to the Authority, the Trustee and
the Tender Agent not later than the forty-fifth (45th) day (or, if not a
Business Day, the next preceding Business Day) preceding the Conversion Date
specifying the Conversion Date, which notice shall be accompanied by an opinion
of nationally recognized bond counsel acceptable to the Authority stating that
such establishment of the Fixed Interest Rate is authorized or permitted by the
Indenture, as amended and supplemented, and will not adversely affect the
exemption of the interest on the Series 1984 Bonds from federal income
taxation.
Immediately after receiving notice from Federal Express of
direction to establish the Fixed Interest Rate and not later than the fortieth
(40th) day (or, if not a Business Day, the next preceding Business Day) prior
to the Conversion Date, the Trustee shall mail by first class mail, to each
owner of a Series 1984 Bond at his address as it appears on the books of
registry kept by the Trustee notice (i) that the Authority has exercised its
right to establish a Fixed Interest Rate on the next ensuing September 1, (ii)
specifying the Conversion Date, (iii) that a notice will be sent on or about
the following August 1 of the anticipated Fixed Interest Rate, (iv) that the
Fixed Interest Rate will be determined no later than the following August 13,
(v) that in accordance with the Tender Agreement the holders of the Series 1984
Bonds have the option of tendering Series 1984 Bonds for purchase during the
Tender Period preceding the Conversion Date, (vi) that in accordance with the
Tender Agreement if Series 1984 Bonds are to be tendered for purchase, holders
of Series 1984 Bonds must tender the Series 1984 Bonds to the Tender Agent, or
the Tender Agent's designee in New York, New York for purchase during the
Tender Period, (vii) specifying the terms and conditions pursuant to which the
Series 1984 Bonds are to be delivered for purchase and the places where such
Bonds must be so delivered, (viii) that on the Conversion Date the Tender Agent
shall hold moneys equal to the purchase price of all tendered Series 1984 Bonds
in trust for the holders thereof, (ix) that Series 1984 Bonds not tendered
during the Tender Period prior to the Conversion Date will bear interest from
and after the Conversion Date at the Fixed Interest Rate, and (x) setting forth
such other information as the Trustee upon request of the Interest Rate
Committee or Federal Express may determine.
The Trustee shall, immediately upon receipt of notice from
Federal Express specifying the Conversion Date, without further authorization
or direction, notify the Interest Rate Committee, and the Interest Rate
Committee on July 31 (or, if not a Business Day, the next preceding Business
Day) preceding the Conversion Date shall determine the anticipated Fixed
Interest Rate on the Series 1984 Bonds which rate shall be the lowest rate
which in the judgment of the Interest Rate Committee on the basis of prevailing
financial market conditions would permit the resale of the Series 1984 Bonds at
par on the date of such determination. The Interest Rate Committee shall
immediately certify to the Trustee, the Tender Agent, the Authority and Federal
Express in writing as to the rate of interest per annum determined by it, as
aforesaid.
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<PAGE> 9
The Trustee shall, not later than the Business Day following
receipt of notice of the anticipated Fixed Interest Rate without further
authorization or direction of the Authority, mail, by first class mail, notice
to each owner of a Series 1984 Bond at his address as it appears on the books
of registry kept by the Trustee pursuant to the Indenture advising the owners
and holders of Series 1984 Bonds (i) that the Authority has exercised its right
to establish a Fixed Interest Rate on the Series 1984 Bonds to maturity, (ii)
of the Conversion Date, (iii) of the anticipated Fixed Interest Rate, (iv) that
such rate shall be determined by the Interest Rate Committee no later than
August 13 prior to the Conversion Date and such rate shall be the lowest rate
which in the judgment of the Interest Rate Committee, on the basis of
prevailing financial market conditions, would permit the Series 1984 Bonds to
be sold at par on the date of such determination; (v) that the holders of the
Series 1984 bonds may telephone a member of the Interest Rate Committee at a
number or numbers identified therein on or after 12:00 noon on the date of the
determination of the Fixed Interest Rate to ascertain the Fixed Interest Rate;
(vi) that the Series 1984 Bonds shall be subject to redemption prior to their
maturity in accordance with their terms and a description of such terms, and
(vii) that the Series 1984 Bonds shall bear interest at the Fixed Interest Rate
from the Conversion Date until payment of the principal or redemption price
thereof shall have been made or provided for whether at maturity, upon
redemption or otherwise.
The Interest Rate Committee shall determine the Fixed Interest
Rate before 12:00 noon, New York time, on a date no later than August 13
preceding the Conversion Date which rate shall be the lowest rate which in its
judgment on the basis of prevailing financial market conditions, would permit
on such determination date the resale of all the Series 1984 Bonds at par. The
Interest Rate Committee shall provide telephonic notice, confirmed in writing,
to the Trustee of the Fixed Interest Rate on or before 12:00 noon on the
determination date. After 12:00 noon, New York time, on such determination
date prior to the Conversion Date, any Interest Rate Committee member may
release the Fixed Interest Rate and any bondholder may call any Interest Rate
Committee member to ascertain the Fixed Interest Rate.
On the first Business Day after determination of the Fixed
Interest Rate, the Trustee shall mail, by first class mail, to the registered
owner of each Series 1984 Bond as shown on the books of registry maintained by
the Trustee notice of the Fixed Interest Rate.
The determination of the Fixed Interest Rate on the Series
1984 Bonds if computed and determined as aforesaid shall be final and
conclusive, and each owner of a Series 1984 Bond, by his acceptance of the
Series 1984 Bond, agrees to accept such rate of interest if computed and
determined as aforesaid.
Any provision in this Fourth Supplemental Indenture to the
contrary notwithstanding, in the event the Fixed Interest Rate determined as
aforesaid shall exceed fifteen per annum (15%) per annum, then the Series 1984
Bond shall bear interest at the rate of fifteen per centum (15%) per annum.
Section 2.4. Purchase of Series 1984 Bonds. Federal Express
and Commerce Union Bank in Nashville, Tennessee, in its separate corporate
capacity as Tender Agent under the Tender Agreement and not as the Trustee
hereunder, and Kidder, Peabody & Co. Incorporated, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Morgan Keegan & Company, Inc. (herein called
the "Remarketing Agents"), have entered into the Tender Agreement for the
benefit of the owners and holders of the Series 1984 Bonds. Under and subject
to the terms and conditions contained in the Tender Agreement, Federal Express
has directed the Tender Agent to purchase any Series 1984 Bonds tendered under
the Tender Agreement and to pay the purchase price therefor from moneys
available therefor as more fully set forth in the Tender Agreement.
Under the terms and conditions of the Tender Agreement,
Federal Express has granted the owners and holders of the Series 1984 Bonds
options to tender Series 1984 Bonds for purchase on September 1 of any year
prior to and including the Conversion Date at a purchase price equal to the
principal amount tendered to the Tender Agent or its designee in New York, New
York as hereinafter provided, and delivered during the Tender Period of the
Series 1984 Bonds to be purchased. The tender of a Series 1984 Bond for
purchase shall be revocable as set forth in the Tender Agreement until the end
of the Tender Period.
The Tender Agreement provides, generally, that:
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<PAGE> 10
(a) the purchase of Series 1984 Bonds shall be made only
upon delivery to the Tender Agent or its designee in New York, New
York of such Series 1984 Bond or Bonds during the Tender Period
(together with necessary assignments and endorsements), at Commerce
Union Bank, One Commerce Place, Nashville, Tennessee 37219, Attention:
Corporate Trust Operation M-B or at the office of the designee of the
Tender Agent in New York, New York.
(b) the Tender Agent shall give notice to the Remarketing
Agents by telephone promptly confirmed in writing of the principal
amount of Series 1984 Bonds delivered to it for purchase as soon as
practicable after the receipt thereof but in no event later than the
first Business Day after the Tender Period.
The Tender Agreement also provides, generally, that the Tender
Agent shall purchase all tendered Series 1984 Bonds on the Conversion Date from
moneys made available to the Tender Agent by Federal Express, less the sum of
the proceeds received by the Remarketing Agents in remarketing the Series 1984
Bonds.
With respect to any Series 1984 Bond which is tendered for
purchase, delivery of such Series 1984 Bond shall be accompanied by an
appointment of the Tender Agent as attorney-in-fact for such owner or holder
for the purpose of transferring and exchanging such Series 1984 Bond on the
books of registry kept pursuant to the Indenture.
Any Series 1984 Bonds purchased in whole or in part pursuant
to the Tender Agreement shall continue to be deemed to be outstanding for all
purposes of the Indenture.
Under the terms of the Tender Agreement the Remarketing Agents
are required to offer for sale and use their best efforts to sell Series 1984
Bonds delivered for purchase (unless otherwise directed by Federal Express).
The proceeds received by the Tender Agent from the sale of any Series 1984
Bonds, or portions thereof, on behalf of Federal Express in excess of the
amount applied to the purchase price of Series 1984 Bonds tendered shall be
paid over to the Trustee under the Indenture and deposited in the Bond
Retirement Account in the Bond Fund and applied as are other moneys in said
Account. If the Remarketing Agents sell any tendered Series 1984 Bonds at less
than the principal amount thereof Federal Express shall pay to the Tender Agent
on the Adjusted Interest Rate Effective Date or the Conversion Date, as the
case may be, an amount equal to the difference between the sale price of such
Series 1984 Bonds and the principal amount thereof in order to provide moneys
under the Tender Agreement to pay the purchase price of the Series 1984 Bonds
tendered and remarketed at less than the principal amount thereof. The Tender
Agent shall notify Federal Express by telephone, confirmed in writing, on the
third Business Day preceding the Adjusted Interest Rate Effective Date or the
Conversion Date, as the case may be, of the amount required to be deposited
with the Tender Agent on such date.
The Authority is not a party to the Tender Agreement and is
not responsible for the performances thereunder of the parties thereto. The
rights granted the owners and holders of the Series 1984 Bonds under the Tender
Agreement do not constitute, and shall not be deemed to constitute, a part of
the contract between the owners or holders of the Series 1984 Bonds and the
Authority evidenced by the Indenture or the Series 1984 Bonds. Nevertheless,
the Tender Agreement has been executed by Federal Express for the benefit of,
and to induce the purchase of the Series 1984 Bonds by, all who shall at any
time and from time to time become owners or holders of the Series 1984 Bonds,
and such owners and holders are entitled to the benefits of the Tender
Agreement as third party beneficiaries. The initial Tender Agent as trustee
for the holders of the Series 1984 Bonds under the Tender Agreement has
accepted the obligation to protect certain rights of the owners and holders of
the Series 1984 Bonds, and in pursuance thereof it shall institute any action
or proceeding at law or in equity for the collection of all sums due and unpaid
under the Tender Agreement or performance of such act or compliance with the
terms thereof and may prosecute any such action or proceedings to judgment or
final decree against Federal Express under the Tender Agreement, and, in the
manner provided by law, collect out of the property of Federal Express, any
moneys adjudged or decreed to be payable for the benefit of the owners or
holders of the Series 1984 Bonds.
No holder of a Series 1984 Bond shall be entitled to institute
any suit, action or proceeding, in law or in equity, against the Authority or
the Trustee to enforce the terms and provisions of the Tender Agreement
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or for payment of a tendered Series 1984 Bond from any moneys held under the
Indenture. Under the Third Supplemental Lease the Authority has agreed to set
forth this summary of the provisions of the rights of holders of Series 1984
Bonds provided in the Tender Agreement, in the Series 1984 Bonds and herein.
Reference is made to the Tender Agreement for a more complete statement of the
terms thereof.
Section 2.5. Provisions for Redemption of Series 1984 Bonds.
The Series 1984 Bonds may be called for redemption in whole at any time from
any source of moneys at a redemption price equal to the principal amount
redeemed, together with accrued interest on such principal amount to the date
fixed for redemption: (i) if the Special Facility is destroyed in whole or is
damaged by fire or other casualty to the extent that (A) such damage is not
capable, in the reasonable estimation of the lessee under the Initial Lease, of
being repaired within 180 days from the date on which such fire or other
casualty occurs or (B) the cost of such repair is reasonably estimated by such
lessee to be equal to or greater than one-half of the principal amount of the
Bonds Outstanding on the date on which such fire or other casualty occurs, or
(ii) in the event of the taking of the whole or substantially the whole of the
Special Facility as a result, or in anticipation, of the exercise of the right
of condemnation or eminent domain or the taking of less than the whole or less
than substantially the whole of the Special Facility as a result, or in
anticipation, of the exercise of the right of condemnation or eminent domain if
in either event, (A) the remaining portion of the Special Facility is not
capable in such lessee's reasonable estimation of being reconstructed and
reequipped so that the same will constitute a complete and functional unit
suitable for the purposes for which it is intended within 180 days from the
date upon which such taking occurs or (B) the cost of such reconstruction and
reequipping is reasonably estimated by such lessee to be equal to or greater
than one-half of the principal amount of the Bonds outstanding on the date on
which such taking occurs.
The Series 1984 Bonds shall also be subject to redemption and
shall be redeemed at any time in whole on the next practicable interest payment
date at a redemption price equal to the principal amount redeemed plus accrued
interest thereon to the date fixed for redemption, either upon a judgment or
order of a court of competent jurisdiction which is final (either because the
time for appeal thereof has expired or because the judgment or order is issued
by that Court having final appellate jurisdiction over the matter and is not
subject to collateral attack), or upon a determination of the Internal Revenue
Service which is final (because the tax has been paid pursuant thereto and the
time for filing a claim for refund for such tax has expired) to the effect that
the interest paid or payable on any Series 1984 Bond, in the case of the
issuance of such judgment, order or determination, to other than a substantial
user of the Special Facility or a related person is or was includable in the
gross income of the holder thereof for Federal income tax purposes as a result
of a failure by Federal Express to observe or perform any covenant or agreement
to be observed or performed by it under the Initial Lease or as a result of
facts within its control which are contradictory to any representation or
warranty made by it under the Initial Lease. Each holder of a Series 1984 Bond
by acceptance of his Series 1984 Bond, shall be deemed to agree, if requested
by Federal Express, to have an attorney-in-fact, qualified to practice before
the Internal Revenue Service, appointed by Federal Express for the purpose of
appealing any judgment, order to determination provided Federal Express
provides indemnity reasonably satisfactory to the bondholder against any
additional tax liability, penalties or interest that may result from any such
appeal. All legal fees and costs incurred in prosecuting such appeal shall be
paid by Federal Express.
At the option of the Authority, at the direction of Federal
Express, the Series 1984 Bonds (or portions of the principal amount thereof in
installments of $5,000 or any integral multiple thereof) shall be subject to
redemption prior to and on the Conversion Date as a whole or in part on any
interest payment date by lot (a) at the principal amount of the Series 1984
Bond or Bonds to be redeemed if redeemed on September 1 in any year and (b) at
the principal amount of the Series 1984 Bond or Bonds to be redeemed plus
one-eighth (1/8) of one percent (1%) of the principal amount of the Series 1984
Bonds to be redeemed, if redeemed on March 1 in any year.
Subsequent to the Conversion Date, the Series 1984 Bonds (or
portions of the principal amount thereof in installments of $5,000 or any
integral multiple thereof) shall be subject to redemption at the option of the
Authority, at the direction of Federal Express, as a whole at any time or in
part on any interest payment date by lot at the times and at the redemption
prices (expressed as a percentage of the principal amount, or portion thereof,
of
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<PAGE> 12
Series 1984 Bonds to be redeemed) set forth below together with the interest
accrued thereon to the date fixed for redemption:
(a) if the Conversion Date is on or before September 1,
1991, then the Series 1984 Bond will be noncallable for redemption
until September 1, 2001, and thereafter shall be subject to redemption
at a redemption price of 103%, which price shall decline by 1/2 of 1%
per annum, until reaching a price of 100%, over the remaining term of
the Series 1984 Bonds;
(b) if the Conversion Date is after September 1, 1991,
and on or before September 1, 1997, then the Series 1984 Bonds shall
be noncallable for redemption until September 1, 2005, and thereafter
shall be subject to redemption at a redemption price of 102% per
annum, which price shall decline by 1/2 of 1% per annum, until
reaching a price of 100%, over the remaining term of the Series 1984
Bonds;
(c) if the Conversion Date is after September 1, 1997,
and on or before September 1, 2000, then the Series 1984 Bonds shall
be noncallable for redemption until September 1, 2006, and thereafter
shall be subject to redemption at a redemption price of 101%, which
price shall decline by one-half of 1% per annum, until reaching a
price of 100%, over the remaining term of the Series 1984 Bonds;
(d) if the Conversion Date is after September 1, 2000,
and on or before September 1, 2003, then the Series 1984 Bonds shall
be noncallable for redemption until September 1, 2007, and thereafter
shall be subject to redemption at a redemption price of 101%, which
price shall decline by one-half of 1% per annum, until reaching a
price of 100%, over the remaining term of the Series 1984 Bonds;
(e) if the Conversion Date is after September 1, 2003,
and before September 1, 2007, then the Series 1984 Bonds shall be
callable for redemption on March 1, 2009 at a redemption price of 100%
and on March 1, 2008 and September 1, 2008, at a price of 100-1/2%,
and prior thereto shall be noncallable for redemption; and
(f) if the Conversion Date is September 1, 2007, the
Series 1984 Bonds shall be callable for redemption on March 1, 2009,
at a redemption price of 100%.
In the event of the redemption of Series 1984 Bonds: (i) if
less than all of the Series 1984 Bonds of a maturity are to be redeemed, the
Series 1984 Bonds of such maturity to be redeemed shall be selected as provided
in Section 2.09 of the Indenture, and (ii) notice of such redemption shall be
given, and such redemption shall have the effect as is provided in said Section
2.09.
Section 2.6. Place of Payment for Series 1984 Bonds; Credits
to the Reserve Account. Interest on each Series 1984 Bond shall be paid either
by check or draft mailed, by first class mail, by the Trustee as Paying Agent
for the Series 1984 Bonds to each holder thereof in whose name the Series 1984
Bond is registered upon the books of registry at the close of business on the
fifteenth day of the month next preceding each interest payment date (whether
or not a Business Day) at his address as it appears on such books of registry.
The Trustee is hereby appointed as Paying Agent and registrar for the Series
1984 Bonds.
A registered holder of One Million Dollars ($1,000,000) or
more in principal amount of Series 1984 Bonds may elect, in lieu of payment by
check or draft as described above, to receive payment of interest by wire
transfer to a bank designated on or prior to the fifth Business Day next
preceding an interest payment date by such owner for such payment. The Trustee
may establish reasonable procedures governing the exercise of such options.
Upon delivery of and payment for the Series 1984 Bonds there
shall be deposited in the Bond Fund for credit to the Reserve Account therein
an amount equal to the annual payment which would be required to pay the
principal and interest on the Series 1984 Bonds on a level debt service basis
from the date thereof to the final maturity, using that interest rate
determined by the underwriters of the Series 1984 Bonds as the rate at which
the Series 1984 Bonds would have been issued if they had been sold at a fixed
rate computed on the basis of the maturity of the Series 1984 Bonds, which
amount is hereby determined to be $11,022,516.08, and which amount
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<PAGE> 13
shall be sufficient to make the moneys on deposit to the Bond Fund on credit to
the Reserve Account equal to the Reserve Account Requirement for all Bonds to
be Outstanding upon the issuance of the Series 1984 Bonds.
The amount on deposit in the Bond Fund for credit to the
Reserve Account shall be recalculated for the Series 1984 Bonds on September 1
of each year on the same basis set forth in this paragraph using prior to the
Conversion Date the interest rate which the Series 1984 Bonds shall bear for
the Bond Year commencing such September 1 and after the Conversion Date the
Fixed Interest Rate. In the event the amount on credit to the Reserve Account
upon such recalculation is less than the amount required to be maintained
therein under the Indenture, the Trustee shall make the additional credits to
the Reserve Account in the same manner as provided in the Indenture to make up
a deficiency in the Reserve Account.
Upon the effectiveness of the amendments to the Indenture set
forth in Sections 5.1 and 5.2 of the Second Supplemental Indenture, the Trustee
shall establish a subaccount in the Reserve Account to be known as the "Series
1984 Bond Reserve Subaccount." The Reserve Account Requirement with respect to
the Series 1984 Bonds is hereby determined to be the amounts credited from time
to time to the Reserve Account pursuant to the preceding paragraphs of this
section and upon the effectiveness of the amendments to the Indenture set forth
in Sections 5.1 and 5.2 of the Second Supplemental Indenture there shall be
credited to the Series 1984 Bond Reserve Subaccount an amount equal to the
Reserve Account Requirement for the Series 1984 Bonds from moneys on deposit in
the Bond Fund on credit to the Reserve Account; provided, however, that the
amount credited from time to time to the Series 1984 Bond Reserve Subaccount
shall be recalculated in accordance with the provisions of the preceding
paragraph hereof. The moneys on deposit in the Bond Fund for credit to the
Reserve Account therein and credited to the Series 1984 Bond Reserve Subaccount
shall constitute and be a reserve for the payment of the principal of and
interest and premium (if any) on the Series 1984 Bonds and shall always be
maintained at an amount at least equal to the Reserve Account Requirement for
such series of Bonds at the time outstanding.
Section 2.7. Execution and Forms of Series 1984 Bonds. The
Series 1984 Bonds shall be executed, sealed and countersigned as is provided in
Section 10.02 of the Indenture except that the signatures of the President and
Secretary of the Authority on the Series 1984 Bonds may be facsimile
signatures.
The Series 1984 Bonds and the form of assignment thereof shall
be in substantially the forms set forth in Section 10.01 of the Indenture and
as more particularly set forth below:
[Form of Series 1984 Bond]
MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY
SPECIAL FACILITIES REVENUE BOND
SERIES 1984
(Federal Express Corporation)
<TABLE>
<S> <C>
No. R-_____ $_______
ORIGINAL ISSUE DATE CUSIP
------------------- -----
REGISTERED HOLDER:
-----------------
PRINCIPAL AMOUNT: DOLLARS
----------------
</TABLE>
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<PAGE> 14
The Memphis-Shelby County Airport Authority, a public and
governmental body politic and corporate of the State of Tennessee (hereinafter
called the "Authority"), for value received hereby promises to pay, but solely
from the revenues hereinafter specified and not otherwise, to the Registered
Holder (named above), or registered assigns, on the first day of September 2009
(unless this Bond shall have theretofore been duly called for redemption and
payment of the redemption price duly made or provided for), the Principal
Amount (specified above), upon presentation and surrender hereof, and to pay
interest on such Principal Amount, but solely from said revenues and not
otherwise, from the Original Issue Date (specified above) until the payment of
said Principal Amount at the rate per annum determined from time to time as
hereinafter provided, payable on March 1 and September 1 in each year
commencing March 1, 1985. This Bond as to principal, interest and premium will
be payable in any coin or currency of the United States of America that at the
time of payment is legal tender for public and private debts. Except as
otherwise provided herein, interest shall be payable by the Trustee hereinafter
mentioned by check or draft mailed to the holder hereof in whose name this Bond
is registered upon the books of registry as of the close of business on the
fifteenth day (whether or not a business day) of the month next preceding such
interest payment date at his address as it appears on the books of registry
kept at the principal office of the Trustee as Registrar. The principal of,
and premium, if any, on this Bond are payable at the principal office of
Commerce Union Bank in the City of Nashville, Tennessee or its successor as
Trustee under the Indenture hereinafter referred to.
A registered holder of $1,000,000 or more in principal amount
of Bonds may elect, in lieu of payment by check or draft as described above, to
receive payment of interest by wire transfer to a bank designated by such
registered holder on or prior to the fifth business day next preceding an
interest payment date for such payment. The Trustee may establish reasonable
procedures governing the exercise of such option.
This Bond and the Bonds of the series of which it is one
(herein sometimes referred to as the "Series 1984 Bonds") shall bear interest
from the Original Issue Date to and including August 31, 1985 at the rate per
annum specified in the Fourth Supplemental Indenture hereinafter referred to.
Thereafter, and prior to the Conversion Date, the Series 1984 Bonds shall bear
interest for each subsequent Bond Year (September 1 to August 31) at a rate of
interest per annum determined as set forth below as of a date no later than
August 13 in each year (the "Adjusted Interest Rate Setting Date"). On and
after the Conversion Date the Series 1984 Bonds shall bear interest at the rate
of interest per annum determined as hereinafter set forth. The Conversion Date
is that September 1 upon which the Authority permanently fixes the rate of
interest on the Series 1984 Bonds until their final payment.
The Authority has appointed a committee of institutions having
expertise in evaluating municipal securities of the character of this Bond (the
"Interest Rate Committee") for the purpose of determining the rate of interest
on the Series 1984 Bonds from time to time all in accordance with the Fourth
Supplemental Indenture hereinafter referred to.
On each July 31 prior to the Conversion Date (or, if not a
Business Day, the next preceding Business Day), beginning July 31, 1985, the
Interest Rate Committee shall determine the anticipated interest rate for the
succeeding Bond Year, which shall be the lowest rate which in the Interest Rate
Committee's judgment, on the basis of prevailing financial market conditions,
would permit the resale of the Series 1984 Bonds at par on the date of such
determination. Immediately upon determining the anticipated interest rate, the
Interest Rate Committee shall notify the Trustee of such rate, and not later
than the first Business Day following such determination, the Trustee shall
mail, by first class mail, to the registered owner of each Bond at his address
as shown on the books of registry maintained by the Trustee a notice with
respect thereto.
The Interest Rate Committee shall determine the interest rate
for the succeeding Bond Year before 12:00 noon, New York time, on the
applicable Adjusted Interest Rate Setting Date, which rate shall be the lowest
rate which in its judgment on the basis of prevailing financial market
conditions, would permit on such Adjusted Interest Rate Setting Date the resale
at par of all the Series 1984 Bonds. If the Interest Rate Committee does not
determine an interest rate for any reason or if the interest rate that is
determined by the Interest Rate Committee is held invalid or unenforceable by a
court of law, the rate of interest on the Series 1984 Bonds in effect on the
day immediately preceding the Adjusted Interest Rate Setting Date shall remain
in effect throughout the next following Bond Year. The Interest Rate Committee
shall provide a telephonic notice, confirmed in writing, to
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<PAGE> 15
the Trustee of the interest rate for the succeeding Bond Year on or before
12:00 noon on the Adjusted Interest Rate Setting Date. After 12:00 noon, New
York time, on the Adjusted Interest Rate Setting Date, any Interest rate
Committee member may release the new interest rate for the succeeding Bond Year
and any holder of a Bond may call any Interest Rate Committee member to
ascertain such new interest rate.
On the first Business Day after each determination of the
interest rate for the succeeding Bond Year, the Trustee shall mail, by first
class mail, to the registered owner of each Bond at his address as shown on the
books of registry maintained by the Trustee notice of the interest rate for the
succeeding Bond Year.
The Authority, at the direction of Federal Express
Corporation, has reserved the right to fix the rate of interest per annum on
the Series 1984 Bonds for the balance of the term thereof by declaring any
September 1 prior to the stated maturity of the Series 1984 Bonds as the
Conversion Date. The Trustee shall serve notice to the holders of the Series
1984 Bonds with respect thereto as provided in the Fourth Supplemental
Indenture.
On July 31 (or, if not a Business Day, the next preceding
Business Day) preceding the Conversion Date the Interest Rate Committee shall
determine the anticipated interest rate on the Series 1984 Bonds for the period
after the Conversion Date which rate shall be the lowest rate which in the
judgment of the Interest Rate Committee on the basis of prevailing financial
market conditions would permit the resale of the Series 1984 Bonds at par on
the date of such determination. The Interest Rate Committee shall immediately
notify the Trustee of such rate and the Trustee shall mail, by first class
mail, to the registered owner of each Bond at his address as shown on the books
of registry maintained by the Trustee notice with respect thereto.
The Interest Rate Committee shall determine the interest rate
for the period after the Conversion Date before 12:00 noon, New York time, on a
date no later than August 13 preceding the Conversion Date which rate shall be
the lowest rate which in its judgment on the basis of prevailing financial
market conditions would permit on such determination date the resale at par of
all the Series 1984 Bonds. The Interest Rate Committee shall provide
telephonic notice, confirmed in writing, to the Trustee of the interest rate
for the period after the Conversion Date on or before 12:00 noon on the
determination date. After 12:00 noon, New York time, on such determination
date prior to the Conversion Date, any Interest Rate Committee member may
release the interest rate for the period after the Conversion Date and any
holder of a Bond may call any Interest Rate Committee member to ascertain
interest rate.
On the first Business Day after determination of the interest
rate for the period after the Conversion Date, the Trustee shall mail, by first
class mail, to the registered owner of each Bond at his address as shown on the
books of registry maintained by the Trustee notice of such interest rate.
The determination of any interest rate shall be final and
conclusive and each owner of a Bond, by his acceptance hereof, agrees to accept
the rate of interest if determined as aforesaid.
In no event shall the interest rate on this Bond exceed
fifteen per centum (15%) per annum.
Pursuant to a Tender and Option Agreement dated as of December
1, 1984 between, among others, Federal Express Corporation and Commerce Union
Bank, in Nashville, Tennessee, in its separate corporate capacity and not as
Trustee under the Indenture, Federal Express Corporation has granted the
registered owner of this Bond options to tender this Bond or any portion
thereof in $5,000 increments, to Commerce Union Bank, in Nashville, Tennessee,
as agent for Federal Express Corporation, for purchase by Commerce Union Bank
at a purchase price equal to the principal amount tendered on September 1 in
any year prior to and including the Conversion Date. Interest on this Bond
payable on any such September 1 purchase date shall be paid to the registered
owner hereof by the Trustee in the normal course. The exercise of an option by
the registered owner of this Bond is subject to the terms and conditions of the
aforesaid Tender and Option Agreement and this Bond, if tendered, must be
tendered in accordance with such terms and conditions. A copy of the aforesaid
Tender and Option Agreement is on file at the principal corporate trust office
of the Trustee and provides, generally, that the exercise of an option to
tender as provided therein, shall become effective only upon the actual
delivery of this Bond (together with necessary assignments and endorsements) to
Commerce Union Bank at its principal corporate trust office in Nashville,
Tennessee, or its designee in New York, New York, during the period from the
opening of
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<PAGE> 16
business on August 1 (or, if not a Business Day, the succeeding Business Day)
to and including 4:00 P.M., New York time on August 15 (or, if not a Business
Day, the succeeding Business Day) preceding the September 1 purchase date for
which such tender is made, together with a written notice in the form furnished
by said bank upon request. The options granted to the registered owner of this
Bond do not constitute, and shall not be deemed to constitute, a right of such
registered owner hereunder or under the Indenture, and the registered owner of
this Bond shall not be entitled to institute any suit, action or proceeding in
law or equity under the Indenture for the performance of any right under the
aforesaid Tender and Option Agreement or for the payment of the purchase price
under said Agreement from any moneys held under the Indenture.
This Bond is one of a series of Bonds of the Authority
aggregating ninety-four million five hundred fifty thousand dollars
($94,550,000) in principal amount. This Bond and the series of Bonds of which
it is one are authorized to be issued and are issued under and in full
compliance with the Constitution and statutes of the State of Tennessee,
including particularly the Metropolitan Airport Authority Act, and under and
pursuant to the Indenture dated as of August 1, 1979 as amended and
supplemented and a Fourth Supplemental Indenture dated as of December 1, 1984,
each between the Authority and Commerce Union Bank in Nashville, Tennessee,
Trustee (herein the "Trustee") (the Indenture as amended and supplemented by
the Fourth Supplemental Indenture and by all other indentures supplemental to
the Indenture entered into prior to the Fourth Supplemental Indenture being
hereinafter called the "Indenture") and resolutions duly adopted by the Board
of Commissioners of the Authority.
This Bond and the series of Bonds of which it is one
constitute part of a duly authorized issue of Bonds (herein called the "Bonds")
issued, or to be issued, under the Indenture for the purpose of constructing,
furnishing and equipping a special facility to be used as air cargo facilities
and to be located at the Memphis International Airport (herein called the
"Special Facility") and any additions or improvements thereto, or for providing
for the refunding of any such Bonds. Such issue of Bonds is unlimited as to
principal amount except as provided in the Indenture and applicable law and
comprises or may comprise one or more series in various principal amounts and
of varying denominations, dates, maturities, interest rates and other
provisions, as provided in the Indenture. All Bonds issued and to be issued
under the Indenture are and will be equally and ratably secured by the pledges,
liens, charges and covenants made therein, except as otherwise expressly
provided or permitted in the Indenture. Copies of the Indenture are on file in
the office of the Authority and at the principal office of the Trustee.
Reference is hereby made to the Indenture, to all of the provisions of which
any holder of this Bond by his acceptance hereof thereby assents, for a
description of the nature and extent of the security for the Bonds issued or to
be issued under the Indenture, including this Bond; definitions of terms; the
funds and moneys pledged for the payment of the interest and principal of the
Bonds and the nature and extent and manner of enforcement of the pledge; the
rights and remedies of the holders of the Bonds with respect thereto; the
conditions for and extent of alteration, modification and amendment of the
Indenture; the terms and conditions upon which this Bond and the series of
which this Bond is one are issued and upon which heretofore may have been
issued and hereafter may be issued other Bonds payable as to principal,
interest and premium on a parity with this Bond and the series of which this
Bond is one and equally and ratably secured therewith; the rights, duties and
obligations of the Authority and the Trustee thereunder; the events of default
upon which the principal of this Bond may be declared or may become due and
payable and the manner and effect thereof; and the terms and conditions upon
which the liens, pledges and assignments made in the Indenture for the security
of this Bond, and upon which the covenants, agreements and other obligations of
the Authority made therein, may be discharged at or prior to the maturity or
redemption of this Bond upon making provision for the payment thereof in the
manner set forth in the Indenture. The provisions of the Indenture shall be a
contract with the holder or holders of the Bonds and the duties thereunder of
the Authority and the executive head thereof shall be enforceable by any
Bondholder, by mandamus or other appropriate suit, action or proceeding, in any
court of competent jurisdiction in the State of Tennessee. The Indenture has
been amended by a Second Supplemental Indenture between the Authority and the
Trustee, dated May 1, 1982, with respect to the definition and the amount of
the Reserve Account Requirement and the application of the moneys on deposit in
the Bond Fund created under the Indenture to the credit of the Reserve Account
therein, the definition of Leased Equipment, and the issuance of bonds, notes,
certificates, warrants or other evidences of indebtedness for any purpose
relating to the Special Facility payable from the revenues derived by the
Authority from said Special Facility subject and subordinate to the deposits
and credits to be made to said Bond Fund. Such amendments will become
effective on the earlier of the time when the Memphis-Shelby County Airport
Authority Special Facilities Revenue Bonds, Series 1979 (Federal Express
Corporation) heretofore issued under and pursuant to the Indenture
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<PAGE> 17
are no longer Outstanding under the Indenture or the time when the holders of
the requisite Outstanding principal amount of the aforesaid Series 1979 Bonds
shall have consented in accordance with the provisions of the Indenture to such
amendments.
This Bond and the Bonds of the series of which it is one and
the Bonds of the issue of which such series is a part are payable solely from
and secured solely by the revenues (exclusive of certain additional rental,
trustees' and paying agents' fees, charges and expenses and all costs of
operation, maintenance and repair of the Special Facility paid to the
Authority) derived by the Authority from the Special Facility, including the
rentals payable under subparagraphs (b) and (c) of Section 3.3 of the Special
Facility Lease Agreement dated as of August 1, 1979, as amended and
supplemented, by and between the Authority, as lessor, and Federal Express
Corporation, as lessee, whereby the Authority has leased the Special Facility
to said corporation. This Bond and the Bonds of the series of which it is one
and the Bonds of the issue of which such series is a part are and shall be
equally and ratably secured by the assignments, pledges and charges made or
created by the Indenture and by a co-equal lien on such revenues (subject to
such exclusion) without priority by reason of series, number, date of Bonds,
sale, execution, authentication, issuance or delivery or otherwise (except as
to maturity and except as any Term Bond Principal Installments required in
accordance with the provisions of the Indenture may afford additional security
for the Bonds of any series). Pursuant to a Guaranty dated as of August 1,
1979, as amended and supplemented, Federal Express Corporation has guaranteed
the payment of the principal of and interest and premium, if any, on the Bonds
to the Trustee. This Bond and the Bonds of the series of which it is one and
the Bonds of the issue of which such series is a part shall not constitute, and
are not, an obligation of the City of Memphis or the County of Shelby or of any
other municipality in the State of Tennessee.
The Bonds of the series of which this Bond is one may be
called for redemption prior to their stated maturities in whole at any time at
a redemption price equal to the principal amount redeemed, together with the
interest accrued on such principal amount to the date fixed for redemption, (i)
if the Special Facility is destroyed in whole or is damaged by fire or other
casualty to the extent that (A) such damage is not capable, in the reasonable
estimation of the lessee under the Special Facility Lease Agreement, of being
repaired within 180 days from the date on which such fire or other casualty
occurs or (B) the cost of such repair is reasonably estimated by such lessee to
be equal to or greater than one-half of the principal amount of the Bonds
outstanding under the Indenture on the date on which such fire or other
casualty occurs, or (ii) in the event of the taking of the whole or
substantially the whole of the Special Facility as a result, or in
anticipation, of the exercise of the right of condemnation or eminent domain or
the taking of less than the whole or less than substantially the whole of the
Special Facility as a result, or in anticipation, of the exercise of the right
of condemnation or eminent domain if in either event, (A) the remaining portion
of the Special Facility is not capable in such lessee's reasonable estimation
of being reconstructed and reequipped so that the same will constitute a
complete and functional unit suitable for the purposes for which it is intended
within 180 days from the date upon which such taking occurs or (B) the cost of
such reconstruction and reequipping is reasonably estimated by such lessee to
be equal to or greater than one-half of the principal amount of the Bonds
outstanding under the Indenture on the date on which such taking occurs, and
shall be called for redemption prior to their stated maturity in whole from
prepayments of certain rentals under said Special Facility Lease Agreement on
the next practicable interest payment date either upon a judgment or order of a
court of competent jurisdiction which is final (either because the time for
appeal thereof has expired or because the judgment or order is issued by that
Court having final appellate jurisdiction over the matter and is not subject to
collateral attack), or upon a determination of the Internal Revenue Service
which is final (because the tax has been paid pursuant thereto and the time for
filing a claim for refund of such tax has expired) to the effect that the
interest paid or payable on any Bond of the series of which this Bond is one to
other than a substantial user of the Special Facility or a related person is or
was includable in the gross income of the holder thereof for Federal income tax
purposes as a result of a failure by the lessee under said Special Facility
Lease Agreement to observe or perform any covenant or agreement to be observed
or performed by it under said Special Facility Lease Agreement or as a result
of facts within the control of the lessee under said Special Facility Lease
Agreement which are contradictory to any representation or warranty made by the
lessee under said Special Facility Lease Agreement. The holder hereof by
acceptance of this Bond, shall be deemed to agree, if requested by the lessee
under the Special Facility Lease Agreement, to have an attorney-in-fact,
qualified to practice before the Internal Revenue Service, appointed by such
lessee for the purpose of appealing any judgment, order or determination
provided such lessee provides indemnity reasonably satisfactory to the
bondholder against any
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<PAGE> 18
additional tax liability, penalties or interest that may result from any such
appeal and pays the legal fees and costs incurred in prosecuting such appeal.
This Bond (or portions thereof in installments of $5,000 or
any integral multiple thereof) and the Bonds of the series of which this Bond
is one are also subject to redemption at the option of the Authority, at the
direction of Federal Express Corporation, prior to and on the Conversion Date
as a whole or in part on any interest payment date by lot (a) at the principal
amount of the Series 1984 Bond or Bonds to be redeemed if redeemed on September
1 in any year and (b) at the principal amount of the Series 1984 Bond or Bonds
to be redeemed plus one-eighth (1/8) of one percent (1%) of the principal
amount of the Series 1984 Bonds to be redeemed, if redeemed on March 1 in any
year.
This Bond (or portions thereof in installments of $5,000 or
any integral multiple thereof) and the Bonds of the series of which this Bond
is one shall be subject to redemption at the option of the Authority, at the
direction of Federal Express Corporation, after the Conversion Date as a whole
at any time or in part on any interest payment date by lot at the times and at
the redemption prices (expressed as a percentage of the principal amount, or
portion thereof, of Series 1984 Bonds to be redeemed) set forth below together
with the interest accrued thereon to the date fixed for redemption:
(a) if the Conversion Date is on or before September 1,
1991, then the Series 1984 Bond will be noncallable for redemption
until September 1, 2001, and thereafter shall be subject to redemption
at a redemption price of 103%, which price shall decline by 1/2 of 1%
per annum, until reaching a price of 100%, over the remaining term of
the Series 1984 Bonds;
(b) if the Conversion Date is after September 1, 1991,
and on or before September 1, 1997, then the Series 1984 Bonds shall
be noncallable for redemption until September 1, 2005, and thereafter
shall be subject to redemption at a redemption price of 102% per
annum, which price shall decline by 1/2 of 1% per annum, until
reaching a price of 100%, over the remaining term of the Series 1984
Bonds;
(c) if the Conversion Date is after September 1, 1997,
and on or before September 1, 2000, then the Series 1984 Bonds shall
be noncallable for redemption until September 1, 2006, and thereafter
shall be subject to redemption at a redemption price of 101%, which
price shall decline by one-half of 1% per annum, until reaching a
price of 100%, over the remaining term of the Series 1984 Bonds;
(d) if the Conversion Date is after September 1, 2000,
and on or before September 1, 2003, then the Series 1984 Bonds shall
be noncallable for redemption until September 1, 2007, and thereafter
shall be subject to redemption at a redemption price of 101%, which
price shall decline by one-half of 1% per annum, until reaching a
price of 100%, over the remaining term of the Series 1984 Bonds;
(e) if the Conversion Date is after September 1, 2003,
and before September 1, 2007, then the Series 1984 Bonds shall be
callable for redemption on March 1, 2009 at a redemption price of 100%
and on March 1, 2008 and September 1, 2008, at a price of 100-1/2%,
and prior thereto shall be noncallable for redemption; and
(f) if the Conversion Date is September 1, 2007, the
Series 1984 Bonds shall be callable for redemption on March 1, 2009,
at a redemption price of 100%.
In the event that at any time less than all the Bonds are
called for redemption, the Bonds to be redeemed shall be selected by lot in any
manner the Trustee deems fair.
In the event this Bond shall be called for such redemption,
notice of redemption shall be mailed not less than thirty (30) days prior to
the redemption date, to the registered holder of this Bond at his address as
shown on the books of registry. If this Bond be of a denomination in excess of
$5,000, portions of the principal amount hereof in installments of $5,000 or
any integral multiple thereof may be redeemed and in such case upon surrender
of this Bond to the Trustee (or its successor as such Trustee) there shall be
issued to the registered owner hereof without charge therefor, for the then
unredeemed balance of the principal amount thereof, at the option of
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<PAGE> 19
the holder, registered Bonds of like series, maturity and interest rate in any
of the authorized denominations provided by the Indenture and aggregating in
principal amount the then unredeemed balance of the principal amount hereof.
If this Bond (or any portion of the principal amount hereof) shall have been
duly called for redemption and notice of such redemption duly given, and if on
or before the redemption date the payment of the applicable redemption price of
the principal amount hereof to be redeemed and the interest accrued on such
principal amount hereof to the redemption date shall be duly made or provided
for, then this Bond (or the portion of the principal amount hereof to be
redeemed) shall become due and payable at such redemption price upon such
redemption date and from and after such date interest on the principal amount
hereof to be redeemed shall cease to accrue.
This Bond is transferable by the registered owner hereof, in
person or by his attorney duly authorized in writing, at the principal office
of the aforesaid Trustee (or its successor as such Trustee), but only in the
manner, subject to the limitations and upon payment of the charges, if any,
provided in the Indenture and upon the surrender hereof for cancellation. Upon
such transfer a new fully registered Bond or Bonds of authorized denominations
and of the same principal amount, series, interest rate and maturity as the
Bond surrendered, will be issued to the transferee in exchange therefor.
It is hereby certified, recited and declared that all acts,
conditions and things required to exist, happen and be performed precedent to
and in the issuance of this Bond, exist, have happened and have been performed
in due time, form and manner as required by the Constitution and laws of the
State of Tennessee, and that the amount of this Bond, together with all other
indebtedness of the Authority, does not exceed any limit prescribed by the
Constitution or laws of the State of Tennessee, and is not in excess of the
amount of Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any security, right or
benefit under the Indenture, or be valid or obligatory for any purpose, unless
the Certificate of Authentication hereon has been duly executed by the Trustee.
IN WITNESS WHEREOF, the Memphis-Shelby County Airport
Authority has caused this Bond to be executed in its name and on its behalf by
the facsimile signature of its President, to be sealed with the facsimile seal
of the Memphis-Shelby County Airport Authority, attested by the facsimile
signature of its Secretary, all as of the Original Issue Date (specified
above).
(Seal of Memphis-Shelby County MEMPHIS-SHELBY COUNTY AIRPORT
Airport Authority) AUTHORITY
By
---------------------------
President
Attest:
- ----------------------------------
Secretary
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<PAGE> 20
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds described in the
within-mentioned Indenture and is one of the Memphis-Shelby County Airport
Authority Special Facilities Revenue Bonds, Series 1984 (Federal Express
Corporation).
COMMERCE UNION BANK
Trustee
By
---------------------------
Authorized Officer
Date of Authentication:
---------------------
[FORM OF ASSIGNMENT OF
FULLY REGISTERED BONDS]
For value received ____________________________________ hereby
sells, assigns and transfers unto ________________________ the within-mentioned
Bond and hereby irrevocably constitutes and appoints ________________________
attorney-in-fact, to transfer the same on the books of registry with full
power of substitution in the premises.
[ENDORSEMENT]
NOTE: The signature of this assignment must correspond with the name
as written on the face of the within Bond in every
particular, without alteration or enlargement or any
change whatsoever.
Section 2.8. Series 1984 Bonds to Constitute Bonds. The
Series 1984 Bonds shall constitute and be "Bonds" as defined and used in the
Indenture. The Series 1984 Bonds shall: (i) be issued under Sections 2.06 and
2.08 of the Indenture; (ii) shall be entitled to the benefits, security and
protection of the Indenture, equally and ratably with one another and with any
other Bonds heretofore or hereafter issued thereunder; (iii) shall be payable
as provided in the Indenture solely from the Revenues and other moneys
specified in the Indenture on a parity with one another and with all Bonds
heretofore or hereafter issued under the Indenture; and (iv) shall be equally
and ratably secured under the Indenture with one another and with all Bonds
heretofore or hereafter issued thereunder, without priority by reason of
series, number, date of adoption of the Supplemental Indenture providing for
the issuance thereof, date of Bonds, date of sale, date of execution, date of
authentication, date of issuance, date of delivery, or otherwise, by the liens,
pledges, charges and assignments created by the Indenture.
ARTICLE III
DISPOSITION OF PROCEEDS OF SERIES 1984 BONDS; SALE
Section 3.1. Application of Series 1984 Bond Proceeds. From
the proceeds derived from the sale of the Series 1984 Bonds there shall be
deposited:
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<PAGE> 21
1. With the Trustee hereunder for deposit into the Bond
Fund for credit to the Reserve Account the amount necessary to bring the amount
held for that Account up to an amount equal to the Reserve Account Requirement
in respect of all outstanding Bonds, including the Series 1984 Bonds, as
determined in accordance with Section 2.6 hereof.
2. With the Trustee for deposit into the Construction
Fund the remaining proceeds of the sale of the Series 1984 Bonds.
Section 3.2. Application of Certain Moneys in Construction
Fund. In order to provide for the payment of interest on the Series 1984 Bonds
payable to and including September 1, 1985, there shall be credited to the
Construction Interest Account in the Construction Fund an amount equal to such
interest. The balance of moneys in the Construction Fund shall be credited to
the Construction Account therein. The Trustee shall, without further direction
or authorization, transfer on or prior to any interest payment date on the
Series 1984 Bonds to and including September 1, 1985 from the Construction
Interest Account to the Bond Fund an amount equal to the interest to become due
and payable on such interest payment date on the Series 1984 Bonds. Moneys
credited to the Construction Account from the proceeds of the Series 1984 Bonds
shall be disbursed and applied in accordance with the provisions of Section 2.3
of the Initial Lease to pay the costs of the 1984 Federal Express Acquisition
Project. Moneys on deposit in the Bond Fund and Construction Fund shall be
invested as provided in Sections 3.05 and 4.06, respectively, of the Indenture.
Section 3.3. Sale of Series 1984 Bonds. The Series 1984
Bonds shall be sold to the initial purchasers thereof on the terms and
conditions set forth in the resolution of the Board of Commissioners of the
Authority authorizing the issuance, sale and delivery of the Series 1984 Bonds.
ARTICLE IV
AUTHORITY; FINDINGS AND DETERMINATIONS;
ARBITRAGE AND INDUSTRIAL DEVELOPMENT BOND PROVISIONS
Section 4.1. Authority. This Fourth Supplemental Indenture:
(i) supplements the Indenture; (ii) is hereby found, determined and declared to
constitute and to be a "Supplemental Indenture" within the meaning of the
quoted words as defined in and used in the Indenture; and (iii) has been
authorized pursuant to and under the Authority of the Indenture.
Section 4.2 Findings and Determinations. The Authority
hereby finds and determines (the Airport Consultant to the Authority having
filed with the Authority its concurrence of such findings and determinations
set forth in subparagraphs 1 through 5 below), the following:
1. Pursuant to the provisions of Section 5.2 of the
Initial Lease as amended Federal Express is required (i) to maintain, or cause
to be maintained, and to keep or cause to be kept, the Special Facility in good
condition and in as reasonably safe condition as its operations permit; and
(ii) to make, or cause to be made, all necessary and proper repairs, renewals,
replacements and substitutions thereof, including the substitution of materials
handling equipment which has been designed to accommodate the loading and
unloading of aircraft being operated by Federal Express as of the date thereof
and ground flight training equipment which is being used to train pilots and
other personnel for operation of such aircraft, with materials handling
equipment which will be designed to accommodate the loading and unloading of
aircraft which is to be operated by Federal Express in the future and with
ground flight training equipment designed for the training of pilots and other
personnel for the operation of such future aircraft, (a) resulting from or
required by ordinary wear and tear, or want of care, on the part of Federal
Express, or obsolescence or other cause, or (b) required to keep, place and
maintain the Special Facility in good and efficient operating condition. The
estimated useful life of the 1984 Federal Express Acquisition Project is at
least twenty-five years and the cost of acquisition of the 1985 Federal Express
Acquisition Project, which is to be financed from the proceeds of the Series
1984 Bonds, is $80,000,000.
2. The construction or acquisition and leasing for use
or occupation of the Special Facility (which includes the 1984 Federal Express
Acquisition Project) will not (a) be constructed or acquired and leased
-18-
<PAGE> 22
for use and occupation to provide services, facilities, commodities or supplies
which are adequately being made available through the Airport (as defined in
Resolution No. 73-0530 of the Authority adopted June 15, 1973 by the Board of
Commissioners of the Authority ("Resolution No. 73-0530") as now existing, or
(b) result in a reduction of Revenues (as defined in Resolution No. 73-0530)
below the minimum amount of Revenues (as defined in Resolution No. 73-0530)
covenanted to be produced and maintained in accordance with said Resolution No.
73-0530.
3. The Initial Lease (including the Third Supplemental
Lease), which meets the requirements for a Special Facility Lease provided for
in Resolution No. 73-0530, has been entered into as of the date hereof.
4. The payments to be made by Federal Express pursuant
to subparagraph (b), (c) and (d) of Section 3.3 of the Initial Lease and
Section 4 of the First Supplemental Lease, Section 3 of the Second Supplemental
Lease and Section 3 of the Third Supplemental Lease in accordance with
subparagraphs 2, 3 and 4 of Section 27 of Resolution No. 73-0530 will be
sufficient to pay the principal of and interest and premium (if any) on the
Series 1979 Bonds, the Series 1982A Bonds, the Series 1982B Bonds and the
Series 1982C Bonds heretofore issued by the Authority and the Series 1984 Bonds
authorized hereby as the same become due and to pay all trustee's, fiscal
agents', paying agents' and Bank's fees and expenses in connection therewith.
5. The additional rental payable pursuant to
sub-paragraph (a) of Section 3.3 of the Initial Lease and Section 4 of the
First Supplemental Lease, Section 3 of the Second Supplemental Lease and
Section 3 of the Third Supplemental Lease in accordance with clause (iii) of
subparagraph 2 of Resolution No. 73-0530, is fair and reasonable.
6. The entering into of the Third Supplemental Lease
will not be in violation of or result in a breach of any covenant contained in
any resolution or indenture authorizing any bonds of the Authority now
outstanding.
Section 4.3. Additional Findings and Determinations. The
Authority further finds and determines: (i) the Indenture has not been amended
or supplemented or rescinded since the execution and delivery thereof other
than by the First, Second and Third Supplemental Indentures; (ii) there does
not exist an Event of Default as defined in Section 9.01 of the Indenture, nor
does there exist any condition which, after the passage of time, would
constitute such an "Event of Default"; and (iii) at the time of issuance of the
Series 1984 Bonds all payments of principal of and premium, if any, and
interest on any Bonds that have become due have been paid and no deficiencies
exist in the Bond Fund.
Section 4.4. Additional Findings as to the Initial Lease.
The Authority further finds and determines: (i) the Initial Lease and the
guaranty dated as of August 1, 1979 from Federal Express Corporation to the
Trustee has not terminated and are each in full force and effect; (ii) the
Initial Lease has been amended in such manner that the current term thereof
shall be for a period extending at least to the final maturity date of all
Bonds to be Outstanding upon the issuance of the Series 1984 Bonds; and (iii)
the Initial Lease, the First Supplemental Lease, the Second Supplemental Lease
and the Third Supplemental Lease contain provisions including an amount in the
rentals payable under subparagraphs (b) and (c) of Section 3.3 of the Lease,
Section 4 of the First Supplemental Lease, Section 3 of the Second Supplemental
Lease and Section 3 of the Third Supplemental Lease at least equal to the
principal of and premium (if any) and interest on all Bonds to be Outstanding
upon the issuance of the Series 1984 Bonds.
Section 4.5. Arbitrage and Industrial Development Bond
Provisions. No part of the proceeds of the Series 1984 Bonds or any other
funds held under the Indenture shall at any time be used directly or indirectly
to acquire securities or obligations, the acquisition of which would cause any
of the Series 1984 Bonds to be an "arbitrage bond", as defined in Subsection
(c)(2) of 103 of the Internal Revenue Code of 1954, as amended (the "Code"),
subject to treatment under Subsection (c)(1) of such Section 103 as an
obligation not described in Subsection (a)(1) of such Section 103.
-19-
<PAGE> 23
The proceeds of the Series 1984 Bonds will be applied such
that the facilities financed from the proceeds of at least ninety percent (90%)
of the Series 1984 Bonds will qualify as airport facilities within the meaning
of Section 103(b)(4)(D) of the Internal Revenue Code of 1954, as amended, and
the application of the proceeds of the Series 1984 Bonds will not result in
more than ten percent (10%) of the aggregate amount of expenditures from the
Construction Fund at any time being used for facilities which would not qualify
as airport facilities under such Section 103(b)(4)(D). The Authority will not
cause or permit any plans and specifications in connection with the 1984
Federal Express Acquisition Project to be changed or revised, or such Project
to be operated, maintained, repaired or renovated, in a manner such that the
facilities to be financed from the proceeds of at least ninety percent (90%) of
the proceeds of the Series 1984 Bonds will not qualify as airport facilities
within the meaning of such Section 103(b)(4)(D), or take any other action which
would cause the loss of the exemption of interest on any Series 1984 Bonds from
federal income taxation.
The securing of the covenant under Section 6 of the Third
Supplemental Lease shall be deemed compliance with this Section.
ARTICLE V
MISCELLANEOUS
Section 5.1. Headings, Table of Contents. The headings or
titles of the several articles and sections hereof, and any table of contents
appended hereto or to copies hereof, shall be solely for convenience of
reference and shall not affect the meaning, construction, interpretation or
effect of this Fourth Supplemental Indenture.
Section 5.2. Law and Place of Enforcement. This Fourth
Supplemental Indenture shall be construed and interpreted in accordance with
the laws of the State of Tennessee. All suits and actions against the
Authority arising under this Fourth Supplemental Indenture shall be instituted
in a court of competent jurisdiction in said State.
Section 5.3. Effective Date. This Fourth Supplemental
Indenture shall become effective upon the occurrence of the last of the
following events: (i) the execution and delivery hereof pursuant to Section
8.01 of the Indenture and applicable law; and (ii) the delivery to the Trustee
of a copy hereof, certified by the Authority, together with an Opinion of
Counsel to the Authority to the effect required under Sections 2.08 and 8.03 of
the Indenture.
Section 5.4. Reference to Fourth Supplemental Indenture.
Notwithstanding the actual date of the effectiveness hereof, for convenience
and purposes of reference this Fourth Supplemental Indenture shall be dated as
of December 1, 1984 and may be cited and referred to as the "Fourth
Supplemental Indenture dated as of December 1, 1984 between the Memphis-Shelby
County Airport Authority and Commerce Union Bank, Trustee."
-20-
<PAGE> 24
IN WITNESS WHEREOF, the Authority has caused this Fourth
Supplemental Indenture to be signed by its President, its seal to be hereunto
affixed, and attested by its Secretary and Commerce Union Bank, Trustee, has
caused this Fourth Supplemental Indenture to be signed in its name and on its
behalf by one of its Vice Presidents, its seal to be hereunto affixed and its
seal to be attested to by one of its Assistant Secretaries.
MEMPHIS-SHELBY COUNTY AIRPORT
AUTHORITY
By /s/ W. M. FLETCHER
----------------------------------
President
(SEAL)
Attest:
/s/ LARRY D. COX
- ----------------------------------------
Secretary
Approved:
/s/ R. GRATTON BROWN, JR.
- ----------------------------------------
Counsel
Memphis-Shelby County Airport Authority
COMMERCE UNION BANK, TRUSTEE
By /s/ PAUL WILLIAMS
-----------------------------------
Vice President
(SEAL)
Attest:
/s/ C. B. SELF
- ----------------------------------------
Assistant Secretary
-21-
<PAGE> 25
STATE OF TENNESSEE )
) ss:
COUNTY OF SHELBY )
On this 6th day of December, 1984 before me appeared W. M.
Fletcher, to me personally known, who, being by me duly sworn (or affirmed) did
say that he is the President of Memphis-Shelby County Airport Authority, and
that the seal affixed to the foregoing instrument is the corporate seal of said
Authority, and that said instrument was signed and sealed in behalf of said
Authority, by authority of its Board of Commissioners and he acknowledged said
instrument to be the free act and deed of said Authority.
/s/ CLARA F. BELL
----------------------------------------------
Notary Public
My Commission Expires September 7, 1988
STATE OF TENNESSEE )
) ss:
COUNTY OF DAVIDSON )
On this 7th day of December, 1984 before me appeared Paul
Williams, to be personally known, who, being by me duly sworn (or affirmed) did
say that he is the Vice President of Commerce Union Bank, and that the seal
affixed to the foregoing instrument is the corporate seal of said Bank, and
that said instrument was signed and sealed in behalf of said Bank, by authority
of its Board of Directors and he acknowledged said instrument to be the free
act and deed of said Bank.
/s/ VICKI D. YORK
--------------------------------------------
Notary Public
My Commission Expires April 20, 1986
-22-
<PAGE> 1
Exhibit 10.25
EXECUTION COPY
================================================================================
THIRD SPECIAL FACILITY SUPPLEMENTAL LEASE AGREEMENT
BY AND BETWEEN
MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY
AND
FEDERAL EXPRESS CORPORATION
DATED AS OF DECEMBER 1, 1984
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Parties to Third Supplemental Lease Agreement . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Granting of Leasehold . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3. Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 4. Prepayment of Certain Rental . . . . . . . . . . . . . . . . . . . . 4
SECTION 5. 1984 Federal Express Acquisition Project . . . . . . . . . . . . . . 4
SECTION 6. Special Covenants of the Lessee . . . . . . . . . . . . . . . . . . 6
SECTION 7. Right to Permanently Fix the Interest Rate on
the Series 1984 Bonds . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 8. Grant of Options to Tender . . . . . . . . . . . . . . . . . . . . . 7
SECTION 9. Lease Still in Effect; Provisions Thereof Applicable
to this Third Supplemental Lease . . . . . . . . . . . . . . . . 8
SECTION 10. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 11. Effectiveness of this Third Supplemental Lease . . . . . . . . . . . 8
SECTION 12. Execution of Counterparts . . . . . . . . . . . . . . . . . . . . . 9
Execution Clauses . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
(i)
<PAGE> 3
THIRD SPECIAL FACILITY
SUPPLEMENTAL LEASE AGREEMENT
THIS THIRD SPECIAL FACILITY SUPPLEMENTAL LEASE AGREEMENT (the "Third
Supplemental Lease") made this thirteenth day of December, 1984 but dated for
convenience of reference as of the first day of December, 1984, by and between
MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY (herein sometimes referred to as
"Lessor"), party of the first part, a public and governmental body politic and
corporate of the State of Tennessee, and FEDERAL EXPRESS CORPORATION (herein
sometimes referred to as "Lessee"), party of the second part, a private
corporation duly organized and existing under the laws of the State of Delaware
and qualified to do business in the State of Tennessee;
WITNESSETH:
WHEREAS, Lessor and Lessee on August 21, 1979 entered into a Special
Facility Lease Agreement dated as of August 1, 1979 (said Special Facility
Lease Agreement as heretofore supplemented being herein referred to as the
"Lease"); and
WHEREAS, Lessor and Lessee on May 6, 1982 entered into a First Special
Facility Supplemental Lease Agreement dated as of May 1, 1982 (the "First
Supplemental Lease") so as to provide for the lease by Lessee from Lessor of
additional facilities and equipment to be included in the Special Facility as
defined in the Lease as heretofore and herein supplemented (the "1982 Federal
Express Project"); and
WHEREAS, Lessor and Lessee on December 9, 1982 entered into a Second
Special Facility Supplemental Lease Agreement dated as of November 1, 1982 (the
"Second Supplemental Lease") so as to provide for the lease by Lessee from
Lessor of additional facilities and equipment to be included in the Special
Facility (the "Federal Express Acquisition Project"); and
WHEREAS, Lessor and Lessee have agreed to supplement the Lease so as
to provide for the lease by Lessee from Lessor of additional facilities and
equipment to be included in the Special Facility (such additional facilities
and equipment hereinafter defined and referred to as the "1984 Federal Express
Acquisition Project"), all as hereinafter set forth;
<PAGE> 4
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and agreements hereinafter contained to be kept and performed by the
parties hereto and upon the provisions and conditions hereinafter set forth,
Lessor and Lessee do hereby covenant and agree, and each for itself does hereby
covenant and agree, as follows:
SECTION 1. Definitions. Except as otherwise provided herein, and
unless the context shall clearly require otherwise, all words and terms used in
this Third Supplemental Lease which are defined in the Lease shall, for all
purposes of this Third Supplemental Lease, have the respective meanings given to
them in the Lease.
The following words and terms which are defined in the Lease shall be
and hereby are supplemented as follows:
Leased Equipment. On and after the effective date hereof the term
"Leased Equipment" shall, in addition and supplemental to the meaning
given that term in the Lease, also include the furnishings, machinery
and equipment designated as "Leased Equipment" on Exhibit 1 of this
Third Supplemental Lease.
Leased Facilities. On and after the effective date hereof the term
"Leased Facilities" shall, in addition and supplemental to the meaning
given that term in the Lease also include (1) the improvements to the
Leased Facilities designated as Buildings and Improvements on Exhibit
2 of this Third Supplemental Lease and (2) all other improvements on
the land whereupon the Special Facility is situated in or incident to
the aforesaid that are designated for use in connection therewith and
which constitute "fixtures" or real property.
Unless the context shall clearly require otherwise, the following
terms shall, for all purposes of the Lease and of any agreement amendatory or
supplemental thereto (including for all purposes this Third Supplemental Lease)
have the meanings herein specified, with the following definitions to be
equally applicable to both the single and plural forms of any of the terms
herein defined:
1984 Federal Express Acquisition Project. The term "1984 Federal
Express Acquisition Project" shall mean and include that portion of
the Leased Facilities and Leased Equipment added pursuant to this Third
Supplemental Lease and shall constitute and be a part of the Special
Facility.
2
<PAGE> 5
Fourth Supplemental Indenture. The term "Fourth Supplemental
Indenture" shall mean the Fourth Supplemental Indenture dated as of
December 1, 1984 between the Lessor and the Trustee supplementing the
Indenture, as the same may theretofore or thereafter be supplemented
or amended as provided in the Indenture.
Series 1984 Bonds. The term "Series 1984 Bonds" shall mean the
$94,550,000 principal amount of special obligation bonds of Lessor
designated Special Facilities Revenue Bonds, Series 1984 (Federal
Express Corporation) and issued under Section 2.06 and 2.08 of the
Indenture and in accordance with Section 5.8 of the Lease.
Tender Agreement. The term "Tender Agreement" shall mean the Tender
and Option Agreement dated as of December 1, 1984 by and among the
Lessee, Commerce Union Bank, Kidder Peabody & Co., Incorporated,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan, Keegan
& Company, Inc., as the same may be supplemented and amended from time
to time in accordance with the provisions thereof.
SECTION 2. Granting of Leasehold. In addition to the lease and
demise to Lessee of the Leased Facilities and Leased Equipment set forth in
Section 3.1 of the Lease and Section 2 of the First Supplemental Lease and
Section 2 of the Second Supplemental Lease, the Lessor hereby leases and
demises to Lessee, and Lessee hereby takes the hires from Lessor, for and
during the term of the Lease, and upon and subject to the provisions and
conditions set forth in the Lease and this Third Supplemental Lease to have and
to hold for said term that portion of the Leased Facilities and Leased
Equipment added by this Third Supplemental Lease.
SECTION 3. Rental. Lessee shall pay the rentals reserved to the
Lessor under Section 3.3 of the Lease at the time, place and manner set forth
therein, which from and after the date specified in this section, in addition to
the amounts payable as of the date hereof under said Section 3.3, under Section
4 of the First Supplemental Lease and under Section 3 of the Second Supplemental
Lease shall include (a) an amount equal to the principal of, premium (if any)
and interest on, the Series 1984 Bonds as and when the same become due and
payable by reason of stated maturity or redemption of such Bonds as provided in
the Indenture, (b) an annual rental of one dollar, which after taking into
consideration the amount of ground rental payable by the Lessee as lessee under
that certain Consolidated and Restated Lease Agreement dated as of August 1,
1979 between Lessor and Lessee, is hereby determined to be equal to the
allocable share of the administrative costs
3
<PAGE> 6
of the Lessor arising out of the Lease and the issuance and servicing of the
Bonds, and which may be increased by the Lessor upon at least thirty days prior
written notice to reflect actual administrative costs demonstrably shown by the
Lessor to arise out of the Lease and the issuance and servicing of the Bonds,
such rental to be payable in advance on the first day of September in each year
of the term of the Lease, (c) all other amounts payable under said Section 3.3
in connection with the Series 1984 Bonds. The rentals to be paid by Lessee
under said Section 3.3 in connection with the 1984 Federal Express Acquisition
Project leased hereby shall commence as of September 1, 1985 and continue
during the term hereof.
SECTION 4. Prepayment of Certain Rental. (a) Lessee may prepay the
rentals required hereby in accordance with subsections A, B and C of Section 3.4
of the Lease, and receive the credits provided therein.
(b) In the event a judgment or order of a court of competent
jurisdiction which is final (either because the time for appeal thereof has
expired or because the judgment or order is issued by that Court having final
appellate jurisdiction over the matter and is not subject to collateral
attack), or a determination of the Internal Revenue Service which is final
(because the tax has been paid pursuant thereto and the time for filing a claim
for refund of such tax has expired) to the effect that the interest paid or
payable on any Series 1984 Bond to other than a substantial user of the Special
Facility or a related person is or was includable in the gross income of the
holder thereof for Federal income tax purposes as a result of a failure by the
Lessee to observe or perform any covenant or agreement to be observed or
performed by it under the Lease or as a result of facts within the control of
the Lessee which are contradictory to any representation or warranty made by
the Lessee under the Lease, the Lessee shall prepay on the next scheduled rent
payment date the entire amount of rent due under subparagraph (b) of Section
3.3 of the Lease and pursuant to Section 3 hereof to effect redemption of the
then outstanding Series 1984 Bonds in accordance with the Indenture.
SECTION 5. 1984 Federal Express Acquisition Project. The Lessor and
the Lessee agree that the cost of constructing and equipping the 1984 Federal
Express Acquisition Project in accordance with the proposal approved by the
Lessor and the Lessee on the date of the execution hereof is estimated at
$80,000,000. The aggregate sum of the proceeds of the sale of the Series 1984
Bonds deposited in the Construction Fund, including the income from and
increment to the proceeds of the sale of the Series 1984 Bonds derived from the
investment thereof during the Construction Period is estimated to be sufficient
in amount to pay such estimated cost.
4
<PAGE> 7
If the Lessee requests the Lessor to issue Completion Bonds, the
Lessor shall upon request forthwith, use its best efforts to issue and sell
Completion Bonds, subject to the provisions and limitations of applicable law
and the provisions of the Indenture and subject also to approval by the Lessee
of the terms of such Completion Bonds and the terms of sale thereof. If the
Lessor issues Completion Bonds, the amount of rentals reserved to the Lessor
under subparagraphs (b) and (c) of Section 3.3 in the Lease and Section 3
hereof shall from and after the issuance of such Completion Bonds be
appropriately increased throughout the term hereof in order to reflect the
issuance of such Completion Bonds, and the Lessee, if requested to do so by the
Lessor, shall enter into a lease supplemental to the Lease providing for the
payment of the Lessee of such increases in such rentals. If, however, the
Lessor is unable so to issue and sell such Completion Bonds as aforesaid, then
the Lessee shall upon demand pay, or reimburse the Lessor for, all costs and
expenses of the Lessor incurred in attempting to sell such Completion Bonds.
The Lessor does not make any warranty, either express or implied, that
the moneys which will be paid into the Construction Fund and which, under the
provisions of this Third Supplemental Lease or the Fourth Supplemental
Indenture, will be available for payment of the costs of the 1984 Federal
Express Acquisition Project pursuant to Section 2.3 of the Lease will be
sufficient to pay all the costs which will be incurred in that connection. The
Lessee agrees that if after exhaustion of the moneys in the Construction Fund
available for the costs of the 1984 Federal Express Acquisition Project the
Lessee should pay any portion of the said costs pursuant to the provisions of
this section, it shall not be entitled to any reimbursement therefor from the
Lessor or from the Trustee or from the holders of any of the Bonds, nor shall
it be entitled to any diminution of the rentals payable pursuant hereto and to
Section 3.3 of the Lease and Section 3 hereof.
Lessor shall apply the proceeds of the Series 1984 Bonds in accordance
with the terms of the Fourth Supplemental Indenture, the form, terms and
provisions of which the Lessee hereby approves.
Except as provided in Section 2.2 of the Lease which relates solely to
the Special Facility as initially designed and except as hereinafter provided
in this section, that portion of improvements to the Leased Facilities and
Leased Equipment being leased pursuant to this Third Supplemental Lease shall
be carried out and effected as provided in Article II of the Lease for the
initial construction and equipping of the Special Facility, with the same force
and effect as though:
(a) all references in said Article II (other than Section 2.2
thereof) to the "Leased Equipment" were to that portion of
Leased Equipment being leased pursuant to this Third
Supplemental Lease;
5
<PAGE> 8
(b) all references in said Article II (other than Section 2.2
thereof) to the "Leased Facilities" were to that portion of
the improvements to the Leased Facilities being leased
pursuant to this Third Supplemental Lease;
(c) all references in said Article II (other than Section 2.2
thereof) to the "Plans and Specifications" were to plans and
specifications for the 1984 Federal Express Acquisition
Project;
(d) all references in said Article II (other than Section 2.2
thereof) to the "Series 1979 Bonds" were to the Series 1984
Bonds and the reference in the third paragraph of subsection A
of Section 2.1 and paragraph (k) of subsection A of Section
2.3 to the date to which interest shall be capitalized were to
August 31, 1985; and
(e) all references in said Article II (other than Section 2.2
thereof) to the "Special Facility" were to the 1984 Federal
Express Acquisition Project and the reference in clause 4 of
subsection C of Section 2.1 to the date for the construction
and equipping to be completed were to August, 1986.
SECTION 6. Special Covenants of the Lessee. The Lessee covenants and
agrees with the Lessor that so long as the Series 1984 Bonds are outstanding, it
will provide the Lessor with copies of all reports, notices, financial
statements or other documents that the Lessee is required to provide its lenders
under the Lessee's Credit Agreement dated December 1, 1981, between the Lessee
and The First National Bank of Chicago, for itself and as agent for the banks
named therein, as the same may be supplemented or amended from time to time, and
the analogous provisions of any other debt agreement entered into by the Lessee
in lieu of said Credit Agreement and shall include the Lessor on its list of
major lenders of Lessee for receipt of all information made available to such
lenders.
The Lessee further covenants and agrees that the proceeds of the
Series 1984 Bonds will be applied such that the facilities financed from the
proceeds of at least ninety percent (90%) of the Series 1984 Bonds will qualify
as airport facilities within the meaning of Section 103(b)(4)(D) of the
Internal Revenue Code of 1954, as amended, and application of the proceeds of
the Series 1984 Bonds will not result in more than ten percent (10%) of the
aggregate amount of expenditures from the Construction Fund at any time being
used for facilities which would not qualify as airport facilities under said
Section 103(b)(4)(D). The Lessee will not cause or permit any plans and
specifications in connection with the 1984 Federal Express Acquisition Project
to be financed from the proceeds of the Series 1984 Bonds to be changed or
revised, or such Project to be operated, maintained, repaired or renovated, in
a manner such that the facilities to be financed from the
6
<PAGE> 9
proceeds of at least ninety percent (90%) of the proceeds of the Series 1984
Bonds will not qualify as airport facilities within the meaning of Section
103(b)(4)(D) of the Code, or take any other action which would cause the loss
of the exemption of interest on any Series 1984 Bonds from federal income
taxation.
SECTION 7. Right to Permanently Fix the Interest Rate on Series 1984
Bonds. The Authority has provided in the Fourth Supplemental Indenture that
the Special Facilities Revenue Bonds, Series 1984 (Federal Express Corporation)
referred to in the definition of Series 1984 Bonds set forth in Section 1 hereof
(hereinafter referred to as the "Series 1984 Bonds") shall bear interest at the
rate of seven and one quarter per centum (7.25%) per annum from the date thereof
to and including August 13, 1985. Pursuant to the terms of the Fourth
Supplemental Indenture the interest rate may change on September 1 of each year
commencing September 1, 1985 and may be permanently fixed on September 1, 1985
and on any September 1 thereafter. In consideration of the payment of the
rentals provided herein, which are at least equal to the principal of and
interest on all Bonds issued under the Indenture, the Authority hereby grants to
the Lessee the right to direct the declaration of September 1, 1985 or any
subsequent September 1 prior to the maturity of the Series 1984 Bonds as the
date on which the interest rate on the Series 1984 Bonds may be permanently
fixed; provided such declaration shall be in accordance with the terms and
provisions of the Fourth Supplemental Indenture.
SECTION 8. Grant of Options to Tender. The Lessee has entered into
the Tender Agreement for the benefit of the holders of the Series 1984 Bonds.
Pursuant and subject to the terms and conditions set forth therein, the Lessee
has granted to the holders from time to time of the Series 1984 Bonds options to
tender Series 1984 Bonds to Commerce Union Bank in its individual corporate
capacity and not as Trustee under the Indenture, for purchase at a purchase
price equal to the principal amount tendered on September 1, 1985 or on any
subsequent September 1 prior to the maturity of the Series 1984 Bonds to and
including the date referred to in Section 7 hereof on which the interest rate on
the Series 1984 Bonds is permanently fixed. The Lessee hereby covenants and
agrees that it shall enter into the Tender Agreement in substantially the form
attached hereto as Exhibit 3, and shall comply with all terms, provisions and
agreements thereof and perform all of its duties and obligations thereunder. The
Lessee hereby agrees to be bound by all terms and provisions of the Fourth
Supplemental Indenture insofar as they bear on, and establish rights, duties and
obligations with respect to, said agreement and covenants that it will not amend
the Tender Agreement in any manner which would have an adverse affect on the
rights granted the holders of the Series 1984 Bonds by the Lessee under the
Tender Agreement except in the manner permitted for amendment of the Lease. The
Lessee acknowledges that it has entered into the Tender Agreement for the
benefit of, and to induce the purchase of the Series 1984 Bonds by, all who
shall at any time and from time to
7
<PAGE> 10
time become holders of the Series 1984 Bonds, and such holders are entitled to
the benefits of said Agreement as third party beneficiaries. Accordingly, the
Lessee hereby consents to the enforcement of the terms and provisions of the
Tender Agreement by the Trustee under the Indenture on behalf of the holders of
the Series 1984 Bonds. The Lessor agrees to set forth the provisions of the
options to tender granted to the holders of the Series 1984 Bonds under the
Tender Agreement in the form of the Series 1984 Bonds. However, it is
expressly understood that such options shall not constitute a part of the
contract between the Lessor and the holders of the Series 1984 Bonds
represented by such Bonds.
SECTION 9. Lease Still in Effect; Provisions Thereof Applicable to
this Third Supplemental Lease. All of the terms, provisions, conditions,
covenants and agreements of the Lease shall continue in full force and effect
as amended and supplemented hereby, and shall be applicable to each of the
provisions of this Third Supplemental Lease during the term hereof with the
same force and effect as though the provisions hereof were set forth in the
Lease.
SECTION 10. Descriptive Headings. The descriptive headings of the
sections of this Third Supplemental Lease are inserted for convenience of
reference only and do not constitute a part of this Third Supplemental Lease and
shall not affect the meaning, construction, interpretation or effect of this
Third Supplemental Lease.
SECTION 11. Effectiveness of this Third Supplemental Lease. This
Third Supplemental Lease shall become effective upon delivery of and payment for
the Series 1984 Bonds.
SECTION 12. Execution of Counterparts. This Third Supplemental Lease
may be simultaneously executed in several counterparts, each of which shall be
an original and all of which shall constitute but one and the same instrument.
8
<PAGE> 11
IN WITNESS WHEREOF, MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY AND
FEDERAL EXPRESS CORPORATION have caused this Third Supplemental Lease to be
duly executed in their respective behalf, this 13th day of December, 1984.
MEMPHIS-SHELBY COUNTY AIRPORT
AUTHORITY
By /s/ W. M. FLETCHER
------------------------------------------
President
ATTEST:
/s/ LARRY D. COX
- -------------------------------
Secretary
APPROVED:
/s/ R. GRATTON BROWN, JR.
- -------------------------------
Counsel
Memphis-Shelby County Airport
Authority
FEDERAL EXPRESS CORPORATION
By /s/ DAVID C. ANDERSON
-------------------------------------------
ATTEST:
/s/ ROBERT L. COX
- -------------------------------
9
<PAGE> 12
STATE OF TENNESSEE )
) ss:
COUNTY OF SHELBY )
On this 7th day of December, 1984, before me appeared W.M. Fletcher,
to me personally known, who, being by me duly sworn (or affirmed) did say that
he is the President of Memphis-Shelby County Airport Authority, and that the
seal affixed to the foregoing instrument is the corporate seal of said
Authority, and that said instrument was signed and sealed in behalf of said
Authority, by authority of its Board of Commissioners and he acknowledged said
instrument to be the free act and deed of such Authority.
(seal)
/s/ CLARA F. BELL
--------------------------------------------
Notary Public
My Commission Expires:
10
<PAGE> 13
STATE OF TENNESSEE )
) ss:
COUNTY OF SHELBY )
On this 11th day of December, 1984, before me appeared David C.
Anderson, to me personally known, who, being by me duly sworn (or affirmed) did
say that he is the Senior Vice President & Chief Financial Officer of Federal
Express Corporation, and that the seal affixed to the foregoing instrument is
the corporate seal of said corporation, and that said instrument was signed and
sealed in behalf of said corporation, by authority of its Board of Directors
and he acknowledged said instrument to be the free act and deed of such
corporation.
MY COMMISSION EXPIRES
MY COMMISSION EXPIRES OCT. 20, 1985
- -----------------------------------------
/s/ VICKI L. SHIREY
--------------------------------
, Notary Public
(seal)
11
<PAGE> 14
EXHIBIT I
Leased Equipment
1. Document handling systems, consisting of:
(a) Additional document sort equipment expanding capacity from
180,000 pieces per night to 300,000 pieces.
(b) Operational prototype of automated sort equipment.
2. Material handling systems
(a) Expansion of the primary matrix sort system by 22 automatic
sort lines.
(b) System controllers (computers).
(c) Manual secondaries.
(d) 135 dual scale decks.
(e) Slat conveyors and related equipment.
(f) Truck and van unload dock.
(g) New primary input on the southeast corner of the hub.
(h) Expansion of secondary sort system by extension of AS belts.
(j) Secondary feed conveyors.
<PAGE> 15
EXHIBIT II
1. East Primary Building Expansion
(a) 175,000 additional square feet
(b) Drive aisle over Hurricane Creek
(c) Upgrade of electrical feed systems
(d) Expansion of hub offices and buffeteria
2. North Ramp Secondaries Building Expansion
(a) 112,000 square feet addition
(b) Relocation of fuel farm
3. North Input Nonconveyables Building Expansion -
a 37,000 foot addition with a canopy
4. Southeast Input Building Expansion - a 400 foot
long extension of the primary building
5. Southeast Ramp Expansion
(a) 130,000 square yards of concrete ramp
(b) Electrical systems and hydrant fueling
6. Employee Parking Lot - 2,600 new spaces
<PAGE> 1
Exhibit 10.40
OAKLAND INTERNATIONAL AIRPORT
FORM "A"
South Airport Tenant (A.O.A.)
Date: August 1, 1989
--------------------------
Ref: - Lease Agreement/Right of Entry Between Port
of Oakland and Tenant/Lessee
- FAR 107.11(B)
- M.O.I.A. Security Program dated 5/1/88
"EXCLUSIVE AREA SECURITY AGREEMENT"
This letter serves as an agreement between Federal Express Corporation
("Federal Express") and the Port of Oakland. The purpose of this agreement is
to identify the "Restricted Area(s)" and "Air Operations Area(s)" of the (AOA)
as associated access points for which Federal Express agrees herein to
exercise exclusive security responsibility under the Metropolitan Oakland
International Airport Security Program, and the F.A.R. 107.11B. A copy of
the Federal Express exclusive area is depicted on Tab "T" of the M.O.I.A.
Security Manual and identified as those doors and/or gates of the AOA/or
restricted areas which borders Bldg. 119; all doors, thoroughfares and ramp
area(s) adjacent to the building complex, Gates #C-5 and C-6____________________
________________________________________________________________________________
________________________________________________________________________________
associated with leased facilities. The procedures implemented by Federal
Express to secure these AOA'(s) or Restricted Area(s) in accordance with the
M.O.I.A. Security Program are also described below:
1. For that portion of the AOA which borders all doors and/or
thoroughfare(s) of Building M-119 and the associated ramp, Federal
Express personnel will control access to this AOA by locking all
doors when unattended. All personnel entries into exclusive area via
Building M-119 will be subjected to the exclusive control of Federal
Express Personnel access beyond "exclusive areas" onto common use
AOA's will be first established by positive identification and
authorized access certification as outlined in, Section 404 of the
M.O.I.A. Security Program.
2. Federal Express agrees to control the movement of persons within its
exclusive area by the posting of signs and necessary surveillance as
required to maintain compliance with Section 404 of the M.O.I.A.
Security Program.
3. Federal Express will ensure that "back ground check(s)" are
accomplished and that current records are maintained in accordance
with Section 404.A3 and B of the M.O.I.A. Security Manual.
4. Federal Express agrees to maintain a current manifest of personnel
having authorized airport I.D. Access Badges and will promptly
notify the Airport Manager or his delegated representative of any
assigned I.D. Badge deemed out of control due to termination of
employee, loss of I.D. badge(s), etc.
5. Federal Express personnel will challenge all persons within or
adjacent to their exclusive use area(s) not recognized as authorized
presence within the AOA (Re:
<PAGE> 2
Page 2
"EXCLUSIVE AREA SECURITY AGREEMENT"
FORM "A" South Airport Tenant (continued)
404 of the M.O.I.A. Security Program) and promptly report them to
airport management (i.e., Airport Operations Control Center).
6. Federal Express will immediately notify the Airport Manager or his
designated representative each time a suspicious act is observed or
an unresolved question arises concerning airport security.
7. Federal Express will promptly notify the Airport Manager or his
designated representative when the procedures described herein are
not adequate to perform the control function as stated.
8. Federal Express personnel and/or representative(s) when utilizing
common use passenger gates/doors which affords access onto the
AOA (i.e., loading bridges, baggage carousel(s), baggage door
portals, etc.) will secure common use doors immediately upon
completion of aircraft/passenger operations and will ensure that
common use gates and/or doors are not left unattended while open
during aircraft/passenger operation details.
9. Federal Express personnel and/or representative(s) when escorting
(i.e., sponsoring and/or facilitating) cargo operations within
the common use area(s) of the AOA will control movement of person by
abiding by the personnel identification rules as outlined in section
404 of the M.O.I.A. Security Program.
10. Federal Express will ensure compliance with vehicle access I.D.
program (Positive Identification) for company and/or contract
service vehicle(s) while within/on the AOA.
11. Federal Express agrees to control the movement of persons sponsored
and/or escorted onto the A.O.A. as required and to maintain
compliance with Section 404 of the M.O.I.A. Security Program.
Federal Express shall promptly reimburse the Port the amount of
any civil penalty or fine that may be assessed against the Port
by any governmental agency for violation of airport security
rules or regulations which violation is caused by Federal Express
failure to comply with "Exclusive Area Security Agreement."
- ------------------------ ----------------------------------
Date Airline Station Manager/Tenant
08/10/89 /s/ BEN BETANCOUNT
- ------------------------ ----------------------------------
Date Airport Manager
Attachment FEDERAL EXPRESS CORPORATION
BY: /s/ GILBERT MOOK
-------------------------------
TITLE: VP
----------------------------
cc: M.O.I.A. Security Manual - Tab "T"
Airport Properties Department
Airport Tenant Chron File
<PAGE> 1
Exhibit 10.51
THIS SUPPLEMENT SHALL NOT BE BINDING UPON
THE PORT AUTHORITY UNTIL DULY EXECUTED BY
AN EXECUTIVE OFFICER THEREOF AND DELIVERED
TO THE LESSEE BY AN AUTHORIZED REPRESENTATIVE
OF THE PORT AUTHORITY
Port Authority Lease No. ANA-041
Supplement No. 4
Facility: Newark International
Airport
SUPPLEMENTAL AGREEMENT
THIS SUPPLEMENTAL AGREEMENT, made as of March 1, 1993, by and between
THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY (hereinafter called "the Port
Authority"), and FEDERAL EXPRESS CORPORATION (hereinafter called "the Lessee");
WITNESSETH, That
WHEREAS, the Port Authority and the Lessee as of October 1, 1983
entered into an agreement of lease (which agreement of lease, as the same has
been heretofore supplemented or amended, is hereinafter called "the Lease"),
covering certain premises, rights and privileges at and in respect to Newark
International Airport (hereinafter called "the Airport") as therein set forth;
and
WHEREAS, the Port Authority and the Lessee desire to amend the Lease in
certain respects as hereinafter provided;
NOW, THEREFORE, for and in consideration of the covenants and mutual
agreements herein contained, the Port Authority and the Lessee hereby agree,
effective as of March 1, 1993 unless otherwise stated, as follows:
1. (a) The Lessee, at its sole cost and expense, shall design
and perform the Construction Work, as defined in subparagraph (b) hereof, on
the premises and related construction work off the premises in accordance with
all the following terms and conditions.
(b) The work to be performed by the Lessee shall consist
generally of the following: (i) the construction on the premises of an
aircraft ramp with a ramp Taxilane FD, including
<PAGE> 2
the construction of an off-premises taxiway connection between Taxiway O and
the said new ramp Taxilane FD; (ii) the construction on the premises of a
flight line maintenance building consisting of approximately 1100 square feet;
(iii) in addition to the provisions of subparagraph (viii) of paragraph (a) of
Section 2 of the Lease, the construction and installation of further additions
and modifications to the Fuel System (as defined in Section 49A of the Lease),
including but not limited to, Distribution Facilities and Terminal Distribution
Units (as defined in Section 49A of the Lease) and underground pipelines, fuel
mains and stubs, said work to be located on and off the premises where required
to tie into the portion of the Fuel System located on the premises (all of the
foregoing work in this item [iii] being sometimes hereinafter called the
"Additional Fuel System work"); (iv) the construction of an off-premises
taxiway connection between the on-premises ramp Taxilane FE and Taxiway PC
currently under construction; the foregoing items (i), (ii) and (iii) being as
more fully set forth in Tenant Alteration Application NFE-38 previously
submitted by the Lessee to the Port Authority for Port Authority approval and
the plans and specifications forming a part thereof and the foregoing item (iv)
to be as more fully set forth in a further Tenant Alteration Application to be
submitted by the Lessee to the Port Authority for Port Authority approval and
the plans and specifications forming a part thereof, said Applications being
hereinafter collectively referred to as the "Applications"; all of the work set
forth in items (i), (ii), (iii) and (iv) being herein collectively referred to
as the "Construction Work."
(c) All of the Construction Work shall be performed in
accordance with and subject to all the terms and conditions of the Lease,
including but not limited to, all the terms and conditions of Paragraph 2 of
Supplement No. 3 to the Lease as if the same were set forth herein in full, and
the Applications and final plans and specifications as and when the same have
been approved by the Port Authority, and any conditions which may be set forth
therein or imposed by the General Manager of the Airport.
(d) All locations where the Construction Work is to be
performed shall be as specified in the Applications. Notwithstanding any
approval of the Applications and notwithstanding any reference therein to
various proposed property lines or to space occupied by the Lessee, it is
hereby understood and agreed that the areas upon which the Lessee shall perform
the off-premises portions of the Construction Work shall be areas at the
Airport which are not currently covered by any lease, permit or other agreement
relating to occupancy of said areas between the Lessee and the
-2-
<PAGE> 3
Port Authority. Without limiting the foregoing, the Lessee shall not and shall
not have the right to commence the Construction Work or any portion thereof
until and unless the respective Application covering the same has been approved
by the Port Authority and this Supplemental Agreement has been fully executed
and delivered to the Lessee by the Port Authority.
(e) The Lessee shall bear and pay any and all costs and
expenses for, related to or in connection with the Construction Work, both on
and off the premises, without any reimbursement or payment of any type from the
Port Authority.
(f) The Lessee shall stage and schedule the portions of
the Construction Work covering the off-premises taxiway connection to Taxiway
PC so as not to obstruct the aircraft using Cargo Building No. 155 from having
access to the aircraft ramp serving said Cargo Building.
(g) The Port Authority will assign one or more field
engineers to the Construction Work. The Lessee shall pay to the Port Authority
for the services of said engineers the sum of Four Hundred Forty Dollars and No
Cents ($440.00) for each day or part thereof that each such engineer is so
assigned.
(h) All portions of the Construction Work constructed by
the Lessee on the premises shall be and become part of the premises under the
Lease except for the Additional Fuel System Work, as hereinbefore defined,
which shall not be or become part of the premises under the Lease, it being
understood and agreed that the Additional Fuel System Work shall, upon
completion, be and become part of the Fuel System, as defined in Section 49A of
the lease and subject to all the terms and conditions of the lease. In
addition, the Lessee understands and agrees that the portions of the
Construction Work constructed off the premises shall not be or become a part of
the premises and that the portions of the Construction Work constituting the
off-premises taxiway connections (as described in items [i] and [iv] of
subparagraph [b] hereof) shall, upon completion, be and become a part of the
Public Aircraft facilities at the Airport.
(i) The Lessee shall substantially complete the
performance of that portion of the Construction Work set forth in item (iv) of
subparagraph (b) hereof no later than November 6, 1993, unless otherwise
permitted by the General Manager of the Airport.
2. (a) The Lessee hereby specifically acknowledges that this
Supplemental Agreement does not grant nor shall it be
-3-
<PAGE> 4
deemed to grant any rights whatsoever in the Lessee to lease any land from the
Port Authority or any interest in or right to use or occupy any area or areas
upon which the off-premises portions of the Construction work is performed,
other than as expressly provided in the Lease with respect to the premises
thereunder.
(b) Neither this Supplemental Agreement nor any work
performed hereunder shall or shall be deemed to alter, modify or affect in any
way whatsoever the terms. provisions, covenants and conditions of the Lease,
nor to grant to the lessee any right, claim or interest in the areas upon which
the off-premises portions of the Construction Work are performed.
3. This Supplemental Agreement does not constitute either party
the agent or representative of the other party for any purpose whatsoever, nor
shall any partnership or joint venture be deemed created hereby.
4. The Lessee represents and warrants that no broker has been
concerned in the negotiation of this Supplemental Agreement and that there is
no broker who is or may be entitled to be paid a commission in connection
therewith. The Lessee shall indemnify and save harmless the Port Authority of
and from any and all claims for commission or brokerage made by any and all
persons, firms or corporations whatsoever for services in connection with the
negotiation and execution of this Supplemental Agreement.
5. Neither the Commissioners of the Port Authority nor any of
them, nor any officer, agent or employee thereof, shall be charged personally
by the Lessee with any liability, or held liable to it under any term or
provision of this Supplemental Agreement, or because of its execution or
attempted execution or because of any breach thereof.
6. As hereby amended, all of the terms, covenants, provisions,
conditions and agreements of the Lease shall be and remain in full force and
effect.
7. This Supplemental Agreement and the Lease which it amends
constitute the entire agreement between the Port Authority and the Lessee on
the subject matter, and may not be changed, modified, discharged or extended
except by instrument in writing duly executed on behalf of both the Port
Authority and the Lessee. The Lessee agrees that no representations or
warranties shall be binding upon the Port Authority unless expressed in writing
in the Lease or this Supplemental Agreement.
-4-
<PAGE> 5
IN WITNESS WHEREOF, the Port Authority and the Lessee have executed
these presents as of the date first above written.
ATTEST: THE PORT AUTHORITY OF NEW YORK
AND NEW JERSEY
/s/ LAWRENCE L. HOFICLETER By /s/ GERALD P. FITZGERALD
- ---------------------------------- --------------------------------
Assistant Secretary Deputy Director
(Title) of Aviation
---------------------------
(Seal)
ATTEST: FEDERAL EXPRESS CORPORATION
/s/ SYBILLE S. NOBLE By /s/ GILBERT MOOK
- ---------------------------------- --------------------------------
Assistant Secretary V.P. Properties
(Title) and Facilities
---------------------------
(Corporate Seal)
-5-
<PAGE> 6
FORM XLD - Ack., N.J. 51380
STATE OF NEW YORK
ss.
COUNTY OF NEW YORK
On this 25 day of May, 1993, before me, the subscriber, a notary
public of New York, personally appeared Gerald P. Fitzgerald the Deputy
Director of Aviation of The Port Authority of New York and New Jersey, who I
am satisfied is the person who has signed the within instrument; and, I having
first made known to him the contents thereof, he did acknowledge that he
signed, sealed with the corporate seal and delivered the same as such officer
aforesaid and that the within instrument is the voluntary act and deed of such
corporation, made by virtue of the authority of its Board of Commissioners.
/s/ ROSE ANN GUDDEM
-------------------------------------
(Notarial seal and stamp)
Term Expires June 30, 1993
STATE OF TENNESSEE
ss.
COUNTY OF SHELBY
On this 19th day of April, 1993, before me, the subscriber, a notary
public, personally appeared Gil Mook a Vice President of Federal Express
Corporation who I am satisfied is the person who has signed the within
instrument; and I having first made known to him the contents thereof, he did
acknowledge that he signed, sealed with the corporate seal and delivered the
same as such officer aforesaid and that the within instrument is the voluntary
act and deed of such corporation, made by virtue of the authority of its Board
of Directors.
/s/ VICKI L. SHIREY
-------------------------------------
(Notarial seal and stamp)
My Commission Expires
September 21, 1993
<PAGE> 1
Exhibit 10.52
THIS SUPPLEMENT SHALL NOT BE BINDING
UPON THE PORT AUTHORITY UNTIL DULY
EXECUTED BY AN EXECUTIVE OFFICER THEREOF
AND DELIVERED TO THE LESSEE BY AN
AUTHORIZED REPRESENTATIVE OF THE PORT AUTHORITY
Port Authority Lease No. ANA-041
Supplement No. 5
Port Authority Facility -
Newark International Airport
SUPPLEMENTAL AGREEMENT
THIS SUPPLEMENTAL AGREEMENT, made as of February 1, 1994, by and
between THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY (hereinafter called "the
Port Authority") and FEDERAL EXPRESS CORPORATION (hereinafter called "the
Lessee"),
WITNESSETH, That:
WHEREAS, the Port Authority and the Lessee are parties to an agreement
of lease dated October 1, 1983 (which agreement of lease, as the same has been
heretofore supplemented and amended, is hereinafter called "the Lease"),
covering certain premises, rights and privileges at and in respect to Newark
International Airport (hereinafter called "the Airport") as therein set forth;
and
WHEREAS, the parties desire to amend the Lease in certain respects:
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed effective as of February
1, 1994, as follows:
1.(a) Exhibit Z attached to the Lease is hereby amended as follows:
Paragraph 9 thereof (as set forth on pages 3 and 4 of said Exhibit Z) shall be
deemed amended to read as set forth in the exhibit attached hereto, hereby made
a part thereof and marked "Exhibit Z-Paragraph 9," which shall be and form a
part of Exhibit Z of the Lease as if therein set forth in full.
(b) It is expressly recognized that the aforesaid amendment to
Exhibit Z of the Lease is based on the specific request of the Lessee as
reflected by the amendment of the fuel service agreement between the Lessee and
the Port Authority's
<PAGE> 2
independent contractor (sometimes called the "Operator"), which amendment is
attached hereto and marked as "Exhibit A", and, further, without limiting any
other term or provision of the Lease or of Exhibit Z, that the contents of
Exhibit Z, as hereby amended, form a part of the said fuel service agreement
between the Port Authority's independent contractor and the Lessee, and,
further, that neither Exhibit Z as hereby amended nor anything contained
therein shall limit, modify or alter any rights and remedies or obligations of
the Port Authority as a party to the said agreement between the Operator and
the Lessee. It is further specifically understood and agreed that neither said
Exhibit Z, as hereby amended, nor anything contained therein shall be deemed to
impose any liability or responsibility of any type whatsoever on the part of
the Port Authority for any failure of the Operator to perform or for any
improper performance by the Operator of any of its obligations under the said
agreement between the Operator and the Lessee.
2.(a) It is specifically recognized that, pursuant to the terms of
the Lease, Exhibit Z may be changed, modified or amended (including the
amendment herein provided) upon agreement of the Port Authority and a majority
of the "Airline Lessees" as defined in the Lease, and that accordingly, this
Supplemental Agreement shall be deemed effective upon (i) the execution hereof
by the Lessee and the Port Authority and (ii) upon the execution of a agreement
substantially similar to this Agreement by each of the airlines constituting
said majority of "Airline Lessees."
(b) It is also hereby specifically recognized and agreed that the
said amendment to Exhibit Z of the Lease will be incorporated into the fuel
storage permit of each fuel storage permittee at the Airport by an appropriate
supplement or endorsement thereto, and that neither the failure or refusal of
any such fuel storage permittee to execute said supplement or endorsement shall
affect the effectiveness of the amendment to Exhibit Z hereunder.
3. Except as hereinbefore provided, all the terms, covenants and
conditions of the Lease shall be and remain in full force and effect.
4. No Commissioner, director, officer, agent or employee of
either party shall be charged personally or held contractually liable by or to
the other party under any term or provision of this Agreement or because of its
or their execution or attempted execution or because of any breach or attempted
or
-2-
<PAGE> 3
alleged breach thereof. The Lessee agrees that no representations or
warranties with respect to this Agreement shall be binding upon the Port
Authority unless expressed in writing herein.
5. This Supplemental Agreement, together with the Lease (to which
it is supplementary) constitutes the entire agreement between the Port
Authority and the Lessee on the subject matter, and may not be changed,
modified, discharged or extended except by instrument in writing duly executed
on behalf of the Port Authority and the Lessee. The Lessee agrees that no
representations or warranties shall be binding upon the Port Authority unless
in writing in the Lease or in this Supplemental Agreement.
IN WITNESS WHEREOF, the parties hereto have executed these presents as
of the day and year first above written.
ATTEST: THE PORT AUTHORITY OF NEW YORK
AND NEW JERSEY
/s/ X By /s/ GERALD P. FITZGERALD
- --------------------------------- ---------------------------------
ACTING Secretary DEPUTY DIRECTOR
(Title) OF AVIATION
-----------------------------
(Seal)
ATTEST: FEDERAL EXPRESS CORPORATION
/s/ Sybille S. Noble By /s/ GILBERT MOOK
- --------------------------------- ---------------------------------
Assistant Secretary V.P. PROPERTIES
AND
(Title) FACILITIES
-----------------------------
(Corporate Seal)
-3-
<PAGE> 4
"Exhibit Z - Paragraph 9"
8-Point Test
The "8-Point Test" shall consist of the following:
<TABLE>
<CAPTION>
Test Specification
---- -------------
<S> <C> <C>
1. Color, Saybolt, min. Report
2. API Gravity at 60 F 37(degree) - 51(degree)
3. Flash Point, TCC, min. 100(degree) - 150(degree) F
4. Copper Strip Corrosion, max. No. 1
(2h at 212 F)
5. Freeze Point, ASTM D2386 max. Jet A - 40(degree) C
Jet A-1 - 47(degree) C
6. Water Tolerance:
Separatin Rating, max. 2
Interface rating, max. 1(b)
ML, change Report
7. Distillation:
10% Evaporated, max. Temp. 400(degree) F
50% Evaporated, max. Temp. Report
90% Evaporated, max. Temp. Report
Final Boiling Point, max. Temp. 572(degree) F
Residue, max. % 1.5%
Loss, max. % 1.5%
8. Water Separometer Index, 85
Modified min.
</TABLE>
/s/ J.B.
------------------------------
For the Port Authority
Initialed:
/s/ D.M.
------------------------------
For the Lessee
<PAGE> 5
Ogden Aviation Service Company
of New Jersey
Marine Air Terminal
Building 7 South
LaGuardia Airport
Flushing, New York 11371
Attention: Mr. Bruce R. Pashley
RE: Revised 8-Point Test
Dear Sirs:
This is to confirm the following agreement among the undersigned (the
"Airline"), Ogden Aviation Service Company of New Jersey, Inc., ("Ogden") and
the other airline members of the EWR Airline Fuel Committee:
1. From and after the effective date of this agreement, the
8-point test set forth in the Exhibit attached hereto shall be the
"8-point test" applied by Ogden's independent testing laboratory as
required under the fueling standards, specifications and delivery
procedures set forth in Article 2 and Exhibit 1 of each of the fuel
service agreements between Ogden and each EWR Fuel Storage Permittee.
2. This agreement shall become effective as of the day on which:
(a) Each of the other airline members of the EWR Airline
Fuel Committee shall have delivered to Ogden an executed
agreement to the same effect as this agreement and Ogden shall
have executed each such agreement and this agreement, and
(b) The Port Authority of New York and New Jersey shall
have provided to Ogden evidence of its approval for the use
herein contemplated of the 8-point test set forth in the
attached Exhibit which approval may be in the form of a notice
from the Port Authority to Ogden indicating that the Port
Authority and the Required number of Master Airline Lessees as
specified in the Newark Master Airline Leases have agreed to
the changes in the 8-Point Test.
<PAGE> 6
3. Promptly after the effective date of this agreement, Ogden
shall notify each Fuel Storage Permittee and provide to each a copy of
the 8-point test set forth in the attached Exhibit, and the 8-point
test referred to in each Ogden service agreement shall thereupon be
deemed amended to conform to the 8-point test set forth in the
attached Exhibit without further amendment to any such documents.
If Ogden agrees to the foregoing, please so indicate in the place provided
below and on the enclosed duplicate copy hereof, and return the executed
duplicate to the undersigned.
Agreed:
FEDERAL EXPRESS CORPORATION
--------------------------------
(Airline)
By /s/ William Stark
------------------------------
Its Mng. Dir. - Fuel
----------------------------
Agreed this 28th day of
January, 1994
Ogden Aviation Service Company
of New Jersey, Inc.
By /s/ John W. Bauknecht
-----------------------------
Its Vice President
----------------------------
John W. Bauknecht
Vice President
<PAGE> 7
EXHIBIT 1
8-Point Test
The "8-Point Test" shall consist of the following:
<TABLE>
<CAPTION>
Test Specification
---- -------------
<S> <C> <C>
1. Color, Saybolt, min. Report
2. API Gravity at 60 F 37(degree) - 51(degree)
3. Flash Point, TCC, min. 100(degree) - 150(degree) F
4. Copper Strip Corrosion, max. No. 1
(2h at 212 F)
5. Freeze Point, ASTM D2386 max. Jet A - 40(degree) C
Jet A-1 - 47(degree) C
6. Water Tolerance:
Separatin Rating, max. 2
Interface rating, max. 1(b)
ML, change Report
7. Distillation:
10% Evaporated, max. Temp. 400(degree) F
50% Evaporated, max. Temp. Report
90% Evaporated, max. Temp. Report
Final Boiling Point, max. Temp. 572(degree) F
Residue, max. % 1.5%
Loss, max. % 1.5%
8. Water Separometer Index, 85
Modified min.
</TABLE>
<PAGE> 8
CSL-61373; - ACK. N.J.; CORP. & CORP.
STATE OF NEW JERSEY )
) ss.
COUNTY OF )
On this 28 day of February 1995, before me, the subscriber, a notary
public of New York, personally appeared G. P. Fitzgerald the Deputy Dir. of
Aviation of The Port Authority of New York and New Jersey, who I am satisfied is
the person who has signed the within instrument; and, I having first made known
to him the contents thereof, he did acknowledge that he signed, sealed with the
corporate seal and delivered the same as such officer aforesaid and the within
instrument is the voluntary act and deed of such corporation made by virtue of
the authority of its Board of Commissioners.
/s/ Jacqueline White
---------------------------------
(notarial seal and stamp)
Commission Expires: May 31, 1995
STATE OF TENNESSEE )
) ss.
COUNTY OF SHELBY )
On this 10th day of November, 1994, before me, the subscriber, a notary
public of Tennessee, personally appeared Gilbert Mook, the Vice President of
FEDERAL EXPRESS CORPORATION, who I am satisfied is the person who has signed the
within instrument; and, I having first made known to him the contents thereof,
he did acknowledge that he signed, sealed with the corporate seal and delivered
the same as such officer aforesaid and the within instrument is the voluntary
act and deed of such corporation made by virtue of the authority of its Board of
Directors.
/s/ Sandra Y. Snell
---------------------------------
(notarial seal and stamp)
Commission Expires: September 1, 1995
STATE OF )
) ss.
COUNTY OF )
On this ______ day of ___________ , 1994, before me, the subscriber, a
______________________personally appeared __________________ the President of
____________who I am satisfied is the person who has signed the within
instrument; and, I having first made known to him the contents thereof, he did
acknowledge that he signed, sealed with the corporate seal and delivered the
same as such officer aforesaid and the within instrument is the voluntary act
and deed of such corporation made by virtue of the authority of its Board of
Directors.
---------------------------------
(notarial seal and stamp)
<PAGE> 1
Exhibit 10.62
SUBIC BAY INTERNATIONAL AIRPORT
FACILITIES LEASE AND OPERATING AGREEMENT
This Facilities Lease and Operating Agreement, entered into this 9th
day of October, 1994, by and between:
SUBIC BAY METROPOLITAN AUTHORITY, a government agency organized and
established under Republic Act No. 7227, with office address at
Building No. 229, Waterfront Road, Subic Bay Freeport Zone,
Philippines, represented herein by its Chairman and Administrator,
Richard J. Gordon (hereinafter referred to as the "SBMA");
- and -
FEDERAL EXPRESS CORPORATION, a corporation duly organized and existing
under the laws of the State of Delaware, United States of America with
principal offices at 2005 Corporate Avenue, Memphis, TN, U.S.A.
represented herein by its Vice-President, Gilbert D. Mook (hereinafter
referred to as "FedEx");
WITNESSETH:
WHEREAS, pursuant to Republic Act No. 7227, a special economic and
freeport zone was created consisting, among others, of the lands and other
properties occupied by the former Subic Naval Base and its contiguous
extensions as covered by the 1947 Military Bases Agreement between the
Philippines and the United States of America, also known as the "Subic Bay
Freeport" (hereinafter referred to as the "SBF");
WHEREAS, pursuant to the Act, all such land and properties, including
the land and/or properties subject of this Facilities Lease and Operating
Agreement, were transferred and conveyed to the SBMA;
WHEREAS, Proclamation No. 50 was issued on 18 September 1992, adopting
the Subic Conversion Program for economic development and designating the SBMA
as the implementing agency thereof;
WHEREAS, the SBMA owns and operates Subic Bay International Airport
("Airport") and intends to construct, develop and equip the Airport in
accordance with the plans and specifications set out in Appendix A;
WHEREAS, FedEx desires to locate its primary intra-Asia transshipment
center at the Airport.
WHEREAS, in the exercise of its powers under the Act and its
Implementing Rules and Regulations, (i) the SBMA hereby leases in favor of
FedEx the Exclusive-Use Space specifically described under this Agreement and
FedEx accepts the lease subject to the terms and conditions herein set forth;,
and (ii) the parties desire to enter into this Facilities Lease and Operating
Agreement (this "Agreement"), which shall set forth the terms and conditions by
which the SBMA makes the Airport and its facilities available to FedEx for its
business, as described herein, including air transportation services, upon
completion of such construction, development and equipping.
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<PAGE> 2
NOW, THEREFORE, for and in consideration of the foregoing premises and
the covenants hereinafter stipulated, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Primary Definitions. In addition to words and terms
elsewhere defined in this Agreement, the following words and terms as used in
this Agreement shall have the following meanings unless some other meaning is
apparent from the context in which the words and terms are used:
Airline. A business entity, including FedEx, that provides Air
Transportation services and such other transportation services as may be
carried out at the Airport.
Air Transportation. Subject to the limitations expressly set forth
herein, the carriage of property, cargo, or mail by aircraft and the other
activities, functions, and operations incidental thereto, including the
carriage of persons employed by FedEx and such other persons as FedEx shall be
authorized to carry under United States Federal Aviation Regulations, it being
understood that FedEx will not conduct a passenger air transportation business
from the Airport.
Aircraft Landing. A complete aircraft cycle (one landing and one
take-off) at the Airport of an aircraft in the Airline's revenue service.
Airport. The real property and facilities of Subic Bay International
Airport as it exists on the date of execution of this Agreement, and as
modified or expanded in the future. The existing facilities and boundaries of
the Airport are shown in Appendix A and described in the site plan.
Airport Services. The general administration and operation of the
Airport by the SBMA, including, but not limited to the following functions by
the SBMA at the Airport: Airport police, crash, rescue and fire protection, and
ground traffic control; clearing, grading and draining, the costs of which are
not charged or chargeable in specific terms to users under other agreements;
the collection and removal or treatment of sewage and other wastes; roadway
systems; perimeter fencing and utility systems; the furnishing of
communications systems, facilities and tunnels; landscaping; the construction,
equipment and maintenance of facilities on the Airport and the maintenance of
such land itself, facilities and areas or subdivisions of the Airport necessary
in the operation and maintenance thereof, including the SBMA's administration,
maintenance, police, crash, rescue, fire and operations space and facilities.
Airport System. Subic Bay International Airport, as it now exists,
and as it is to be constructed in accordance with the requirements of Appendix
A, including the Airport, air navigation facilities, and other related
facilities and related properties (real, personal, or mixed), and any rights or
interests in the Airport, air navigation facilities, and other related
facilities and related properties, now or hereafter belonging to or controlled
by the SBMA or under the administration, jurisdiction, control, and management
of the SBMA, and all equipment, improvements, extensions, or betterments
thereto constructed or acquired, belonging to or controlled by the SBMA.
Without limiting the generality of the foregoing, the term Airport System shall
include any and all of the following of or belonging or pertaining to such
Airport or air navigational facilities or such rights or interests: lands or
water areas, rights-of-way, approaches, contract rights, airport terminal
buildings, hangars and other
2
<PAGE> 3
buildings and facilities erected on such lands, runways, taxiways, paved areas,
access roads, parking lots, airport equipment, and any other equipment and
property (real, personal or mixed) incidental to and included in such
properties.
Applicable Law. All present and future laws, orders, ordinances,
rules, regulations, international treaties and conventions of the Philippine
government, the SBMA, and other applicable government bodies, departments and
agencies, including, where appropriate, those of the United States of America.
Apron Area. As shown in Appendix B hereto the space provided to FedEx
for loading and unloading passengers, cargo and mail to and from its aircraft
and the aircraft of its vendors, providing such aircraft with fueling and
lubricate, performing ramp service operations, inspection, maintenance of
aircraft, and the parking of equipment used in connection therewith. More
specifically, the terms Apron and Apron Area include the following:
Preferential Aircraft Apron. That apron area described in
Appendix B. FedEx shall from time to time provide the SBMA, at least
thirty (30) days prior to the effective date thereof, its aircraft
schedule(s) and the schedules of its Vendor Carriers and FedEx shall
identify the parking gates within the Preferential Aircraft Apron
FedEx prefers to use to accommodate said schedule(s). All such gates
shall be made available to FedEx and the entire area comprised of
these gates shall be the Preferential Aircraft Apron Area.
Overflow Aircraft Apron. The apron areas described in
Appendix B which is intended to accommodate unscheduled needs that may
include, without limitation, extra sections (flights to supplement
regularly scheduled operations), charters or aircraft with maintenance
problems.
Common-Use Aircraft Apron. All aircraft parking positions not
designated as Preferential Aircraft Apron or Overflow Aircraft Apron.
Exclusive Ramp. The ramp area designated on Appendix B
attached hereto that includes (a) the area immediately adjacent to
buildings leased by FedEx, and (b) for the period FedEx conducts its
Air Transportation operations, the Preferential Aircraft Apron, for
use by FedEx to stage and store GSE, ULDs, equipment and its
personnel.
Certificated Maximum Gross Takeoff Weight ("MGTOW"). The maximum
takeoff weight at which each aircraft operated by FedEx is authorized by the
FAA to operate, as recited in the flight manual governing that aircraft.
Common-Use Space. All space at the Airport other than the
Exclusive-Use Space as more particularly delineated in Appendix B for use by
FedEx in common with the general public.
Exclusive-Use Space. The space as shown and marked as "Exclusive-Use
Space" on Appendix B attached hereto and leased exclusively by FedEx pursuant
to Section 5.01.
FAA. The Federal Aviation Administration of the Department of
Transportation of the United States of America or its authorized successor.
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<PAGE> 4
Landing Fees. Those fees levied on FedEx and its Vendor Carriers for
the use of the landing areas, taxiways and aprons of the Airport System, as
established in Section 6.02 of this Agreement.
Milestone Dates. Those dates set forth in Appendix A hereto by which
the SBMA shall complete or commence the designated task, subject to applicable
cure periods.
Operation Date. 1 May 1995, which shall be the date on which FedEx
shall occupy the Airport for the purpose of commencing its Air Transportation
services.
Plans and Specifications. Those plans and specifications set forth in
the construction and equipment purchase contracts entered into by the SBMA and
its designated contractors.
SBMA Labor Pool Inventory. A list maintained by the SBMA of persons
who are eligible for employment on the Airport by FedEx or FedEx's vendors.
Telecom Vendor. Subic Telecom, the joint venture between AT&T, PLDT
and the SBMA to provide telecommunication services to Airlines at the Airport.
Vendor Carriers. Aircraft of other carriers serving the Airport at
the request of FedEx to load or off-load freight handled by FedEx at its
transshipment facility which meet at least one of the following criteria: (i)
more than fifty percent (50%) of the cargo capacity of said aircraft has been
contracted to FedEx, (ii) the aircraft loads or unloads at least one thousand
kilograms (1000 kg) of freight under contract to FedEx, or (ii) the aircraft
loads or unloads at least two (2) pallets or containers of freight under
contract to FedEx. Vendor Carriers may be serving the Airport by way of wet
lease, dry lease, straight charter, block space or other commercial arrangement
with FedEx. Block space and commercial arrangements shall be with regularly
scheduled commercial carriers. All Vendor Carriers and their respective flight
crews shall be fully licensed, certified, authorized, and qualified to fly to
the Airport.
ARTICLE 2
CONSTRUCTION OF AIRPORT
SECTION 2.01. Construction and Completion of the Airport System. (a)
The SBMA agrees that, as a condition precedent to the obligations of FedEx
under this Agreement, the SBMA shall, at its sole cost and expense, complete
the construction of the Airport System described in Appendix A, all in
accordance with the Plans and Specifications and the Milestone Dates for
construction set out in Appendix A to this Agreement and in no event at a date
later than the Operation Date.
(b) If any Milestone Date is not met and is not cured within the time
set forth in Appendix A, FedEx shall have the right to (i) terminate this
Agreement immediately upon written notice to the SBMA and, in such event, FedEx
shall have no further rights or obligations to the SBMA under this Agreement
and the SBMA shall have no duties or obligations to FedEx under this Agreement;
or (ii) extend the completion date for the construction of the Airport System
and the Operation Date to a date mutually agreeable to FedEx and the SBMA. The
remedies in Section 2.01(b) shall be the sole remedies of FedEx if any
Milestone Date is not met and is not cured within the time set forth in
Appendix A.
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<PAGE> 5
(c) During the period of construction of the Airport, FedEx and its
authorized representatives shall have the full right of inspection.
Additionally, during any such period of construction that FedEx has agreed to
occupy any facilities upon the Airport, FedEx shall have the right, at all
reasonable times with notice to the SBMA, to enter such facilities for the
purpose of constructing and installing its fixtures and equipment and
performing tenant finish work, provided FedEx agrees to exercise due care and
agrees not to interfere unreasonably with the SBMA's construction of the
Airport System.
(d) The following approvals and certifications shall be acquired by
the SBMA in respect of the Airport on or before the Operation Date:
(i) The completion date of the construction of the Airport shall
be evidenced by a certificate signed by the SBMA's architects
and engineers stating that with the exception of push list
items the construction of the Airport System has been
completed substantially in accordance with the Plans and
Specifications; and
(ii) Certifications of fitness from the Air Transport Office of the
Philippines and from such other Philippine and international
organizations and agencies as shall be required to operate the
Airport as a 24-hour international airport.
SECTION 2.02. Operational Airport. The SBMA shall complete all work
on and to the Airport System and the Airport shall be operational on or before
1 April 1995 so as to provide FedEx with a minimum of thirty (30) days to
conduct tests on the Airport System and train its personnel prior to the
Operation Date. The Airport shall be deemed to be operational when the
following criteria are satisfied:
(a) The runway and apron reconstruction and overlays have been
fully completed in accordance with the Plans and
Specifications and all surfaces have fully cured in accordance
with standard industry practice;
(b) Two connectors between the runway and the taxi way/apron have
been reconstructed and overlaid in accordance with the Plans
and Specifications and all surfaces have cured in accordance
with standard industry practice;
(c) The parallel taxi way west of the tower has been reconstructed
and overlaid in accordance with the Plans and Specifications
and all surfaces have cured in accordance with standard
industry practice;
(d) The ASR has been installed and certified for operation;
(e) All airfield and navigational lighting, and navigational aids
have been installed and are fully operative;
(f) All approaches to the Airport have been finalized and approved
by the applicable government bodies; said approaches meet
FedEx requirements for flight minimums; and said approaches
have been published by Jepperson's;
(g) The aircraft control tower has been fully reconstructed and
remodeled in accordance with the Plans and Specifications and
there is
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<PAGE> 6
employed by the SBMA and other such applicable government
agencies a sufficient number of fully trained operators to
conduct safe, 24-hour daily flight operations at the Airport;
(h) The certifications required in Section 2.01 (d) have been
obtained without condition or limitation that would materially
impede the ability of FedEx to operate its Air Transportation
Business at the Airport;
(i) There exists at the Airport sufficient and appropriate ground
services, including access to fuel, to conduct 24-hour daily
flight operations; and
(j) The Airport has been fully fenced and has been secured in
accordance with international standards in use at
international airports in OECD countries.
The construction of the entire Airport System in accordance with the
Plans and Specifications shall be fully completed on or before 1 June 1995.
ARTICLE 3
TERM
SECTION 3.01. Term. (a) This Agreement shall become effective upon
execution and delivery by the SBMA and FedEx (the "Effective Date"), but the
rights of use and occupancy granted hereunder and obligations to pay rents and
fees shall not commence until the Operation Date.
(b) This Agreement will have a seven (7) year term, commencing with
the Operation Date, with two (2) successive renewal terms of three (3) years
each. Provided no event of termination has occurred under Section 11.05 and
FedEx is not in material default under the terms of this Agreement at the time
of exercise of any renewal term or at the commencement of any renewal term, the
renewal terms shall be exercised by FedEx upon written notice to the SBMA not
less than one hundred and twenty (120) days prior to the expiration of the term
or any renewal term, as applicable. Except for Landing Fees and rental for the
Exclusive-Use Space, which are subject to renegotiation on any renewal,
renewals shall be on the same terms and conditions as stated herein unless
otherwise agreed to in writing.
ARTICLE 4
USE OF THE AIRPORT AND ITS FACILITIES
SECTION 4.01. Uses of the Airport. FedEx is granted the right to use
the Airport, in common with others, for the sole purpose of conducting FedEx's
business, including an Air Transportation business. In addition to all rights
granted elsewhere in this Agreement, FedEx's use of the Airport for the conduct
of its business includes the right to:
(i) Land, takeoff, fly, taxi, push, tow, load, or unload aircraft;
(ii) Repair, maintain, condition, service, test, park, or store aircraft or
other equipment belonging to or operated by FedEx;
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<PAGE> 7
(iii) Perform or cause to be performed by contract, customary aircraft
fueling, servicing, and line maintenance, of aircraft and other
equipment operated by FedEx, or by any Vendor Carrier, at aircraft
parking positions adjacent to the Exclusive Ramp or on aprons, before
loading and takeoff or as soon as practical following landing and
unloading;
(iv) Handle, bill and manifest shipments, and sell transportation of cargo,
mail, and personal property by air, and perform, or cause to be
performed by contract, the customary handling of passengers, baggage,
cargo, and mail;
(v) Install, maintain, or operate, by FedEx alone or in conjunction with
any other Airline, air-to-ground and other communication,
meteorological, and aerial navigation systems between locations on the
Airport, provided such equipment and facilities do not interfere with
other Airport communication, meteorological, or aerial navigation
systems. Specifically, FedEx shall have the right to develop,
construct and operate, at its own expense and for a nominal access
fee, a back-up communication system, operated by FedEx, at its
discretion, in conjunction with Telecom Vendor. The back-up system is
to be used in the event of a failure of Telecom Vendor's primary
system;
(vi) Hire, train and supervise ground personnel on the Airport necessary
for the conduct of FedEx's Air Transportation business;
(vii) Transport by air or land, load, and unload persons, property, cargo,
and mail at the Airport;
(viii) Operate motor vehicles or other ground transportation equipment
required for the conduct of FedEx's business. This shall include the
right to operate a ground transportation business to or from the
Airport for the carriage of cargo and FedEx personnel only;
(ix) Install, maintain, and operate lounges, cafeterias, break rooms and
rest areas in FedEx's Exclusive-Use Space and to sell refreshments and
food, directly or through vendors of its choice, in such areas solely
to FedEx employees or to FedEx vendors and their employees;
(x) Install and maintain FedEx's identification signs, advertising, or
similar matter on FedEx's Exclusive-Use Space;
(xi) Purchase FedEx's requirements of personal property or services,
including fuel, oil, lubricants, in-flight food or beverages, and
other equipment, materials or supplies. FedEx may purchase goods and
services from any person or company of FedEx's choice; provided,
however, FedEx agrees that, wherever possible, and assuming such
vendors meet FedEx's requirements for quality, service and price,
FedEx shall select those vendors that are recommended by the SBMA.
(xii) Sell, lease, transfer, dispose, or exchange FedEx's aircraft, engines,
accessories, equipment, materials or supplies to and from other
Airlines, as necessary or incidental to the operation of its Air
Transportation business.
(xiii) Establish and maintain business and operations offices in the
Exclusive-Use Space in connection with its services, including an Air
Transportation business, which may include customer service
operations, accounting and billing functions and other matters related
to the business of FedEx;
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<PAGE> 8
(xiv) Provide administrative offices for FedEx employees in the
Exclusive-Use Space; and
(xv) Conduct any other operation or activity that is reasonably necessary
or incidental to the conduct by FedEx of its Air Transportation
business and its logistical services business as conducted by Federal
Express Logistics, a division of FedEx; provided that FedEx shall not
conduct any business listed in Part 5 of the Aeronautical Fees and
Charges, the SBMA Administrative Order No. 1, 15 December 1992. All
such business shall be solely for the account of FedEx.
Notwithstanding the foregoing, FedEx may provide aircraft handling
services to entities other than Vendor Carriers upon receipt of a
concession to provide such services from the SBMA. The SBMA shall
grant such a concession to FedEx in a timely fashion upon payment of
non-discriminatory concession fee by FedEx to the SBMA from time to
time at rates to be mutually agreed upon between FedEx and the SBMA.
SECTION 4.02. Limitation on Use. In connection with the exercise of
its rights under this Agreement, FedEx:
(i) Shall not do or permit to be done anything at or about the Airport
that may interfere unreasonably with the effectiveness or
accessibility of any of the Airport System or Airport Services or any
system serving the Exclusive-Use Space, including the water system,
drainage and sewage system, fire protection system, traffic
circulation, sprinkler system, alarm system, fire hydrants and hoses,
heating or ventilation system, air conditioning system, electrical
system, natural gas, or other Airport systems installed or located on
or within the Airport;
(ii) Shall not do or permit to be done any act or thing upon the Airport
that will invalidate or conflict with any fire or other casualty
insurance policies covering the Airport or any part thereof; provided,
however, said policies must be similar in form and content to policies
held by other international airports offering twenty-four (24) hour
flight operations;
(iii) Shall not dispose of or permit any employee, agent or contractor to
dispose of any waste material taken from, or products used with
respect to, its aircraft, except in accordance with all applicable
regulations of appropriate governmental or administrative bodies
having jurisdiction over activities at the Airport;
(iv) Shall not commit or permit any activity upon the Exclusive-Use Space
that shall be inconsistent with or materially disrupt the operation of
the Airport on a twenty-four (24) hour basis; and
(v) Shall comply and make all reasonable efforts to cause its Vendor
Carriers to comply with all Applicable Laws.
ARTICLE 5
PREMISES
SECTION 5.01. Exclusive- and Common-Use Space. Commencing at the
Operation Date, and pursuant to the terms of this Agreement, the SBMA will
lease to FedEx and FedEx shall lease from the SBMA, on an exclusive basis, the
Exclusive-Use Space. In connection with said lease, FedEx shall have the right
to use the Common-Use Space also listed in Appendix B, in common with others.
Prior to the Operation Date FedEx shall have the right of access to the
Exclusive-Use Space at no charge for the purpose of conducting non-revenue
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<PAGE> 9
generating activities related to its Air Transportation business which shall
include training, fit-out of the Exclusive-Use Space with FedEx leasehold
improvements, and to support testing and training flight operations.
SECTION 5.02. Apron Area. FedEx is granted the use of the Apron
Areas designated for FedEx's use from time to time, all subject to the
following:
(a) Preferential Aircraft Apron.
(i) FedEx shall be permitted to stage Ground Support Equipment
("GSE"), Unit Load Devices ("ULDs"), static racks and other
equipment in the Preferential Apron Area at no cost in
addition to that which FedEx shall pay in rental for the
Exclusive-Use Space under Section 6.01 hereof. FedEx shall
only use such space in such a manner as not to impede the use
of an adjacent taxi lane or parking position. Aircraft
belonging to Vendor Carriers shall be permitted to use parking
gates within the Preferential Aircraft Apron.
(ii) SBMA may permit any other Airline to park aircraft at parking
gates within the Preferential Aircraft Apron subject to the
following:
(1) There are no other parking gates available on the
Airport;
(2) The operator of the subject aircraft moves the aircraft
out of the Preferential Aircraft Apron at least two (2)
hours prior to the scheduled arrival of FedEx (or a
Vendor Carrier) aircraft which are designated to use the
subject parking gate;
(3) In the event an operator fails to timely do so, the SBMA
shall move those subject aircraft that are capable of
being moved and shall make reasonable efforts to move
all other subject aircraft;
(4) The parking of an aircraft in the Preferential Aircraft
Apron shall not require FedEx to move any FedEx GSE,
ULDs, static racks or other equipment staged by FedEx in
the Apron; and
(5) SBMA will make reasonable efforts to cause the operator
of the other aircraft to take responsibility for any and
all damages done to FedEx GSE, ULDs, static racks and
other equipment staged in said Apron.
(b) Overflow Aircraft Apron. FedEx and the SBMA acknowledge and agree
that there may be competing uses for the Overflow Aircraft Apron and
that use of same shall be on a first come first served basis in common
with others; provided, however, that the SBMA shall cooperate with
FedEx to meet the reasonable requirements of FedEx with regard to the
Overflow Aircraft Apron. Specifically, during FedEx scheduled and
properly noticed Air Transportation operations, the SBMA shall not
permit the use of the Overflow Aircraft Apron on a scheduled basis and
shall endeavor to move aircraft parked on said Apron to other
locations. FedEx shall only use such space in such a manner as not to
impede the use of an adjacent taxi lane or parking position.
(c) Common-Use Aircraft Apron. The SBMA may assign said gates in the
Common-Use Aircraft Apron in the manner it deems appropriate.
(d) Exclusive Ramp. The Exclusive Ramp shall be provided to FedEx for its
exclusive use at no charge in addition to that which FedEx shall pay
in rental for the Exclusive-Use Space under Section 6.01 hereof.
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<PAGE> 10
(e) Notice of Release. FedEx shall provide the SBMA reasonable notice of
its intention not to further expand its parking requirements and those
gates identified by the parties as not required for FedEx needs shall
be released to the SBMA and shall no longer be designated or be
capable of designation as Preferential or Overflow Aircraft Apron.
SECTION 5.03. Expansion Space. (a) On or after 1 April 1996, the
SBMA shall have the right to offer, in writing, to FedEx the lease on those
facilities on the southwest ramp as shown on Appendix B attached hereto (the
"Expansion Space") on rates and terms agreed to by the parties but consistent
with the rates and terms of this Agreement (the "Offer to Lease"). FedEx shall
have the right to lease all or part of the Expansion Space on the giving to the
SBMA of written confirmation of its intent to lease within thirty (30) days of
the date of the SBMA's offer.
(b) Until the SBMA makes the Offer to Lease, the SBMA will grant an
option to FedEx to lease all or a portion of the Expansion Space on rates and
terms agreed to by the parties but consistent with the rates and terms of this
Agreement, and FedEx shall have the right to occupy such space not earlier than
six months following the date of FedEx's exercise of its option rights. FedEx's
option rights hereunder shall expire on the date of the Offer to Lease.
(c) FedEx shall exercise its option to lease the Option Space, or any
portion thereof, from time to time by providing the SBMA with not less that six
(6) months prior written notice for each building or piece of land in the
Option Space that FedEx desires to lease. The SBMA shall make such building or
land available to FedEx on or before the date of expiration of said notice
period.
(d) Until such time as FedEx exercises its options with regards to
the Option Space, the SBMA may lease all or parts of the Option Space to third
parties; provided that (i) all such leases shall be subject to termination upon
six (6) months notice, (ii) the SBMA shall issue notice of termination to
existing tenants immediately after receiving notice from FedEx of intention to
exercise its option rights herein, and (iii) the SBMA shall not permit tenants
to remain after the expiration of said notice of termination and shall take all
steps available to it under law and equity to remove any tenants attempting to
holdover. Once the SBMA has made the Offer to Lease and FedEx has elected not
lease all or a portion of the Expansion Space, the SBMA shall be free to lease
any such Space not taken by FedEx to any party without restriction.
SECTION 5.04. Family Housing Units. (a) FedEx shall have the
option, until 31 August 1995, to lease two additional duplex housing units in
the Cubic Housing Area under the same rental and terms and conditions contained
in Lease Agreements between FedEx and the SBMA for Building 8220 (units A and
B). FedEx shall exercise its options under this Section 5.04 by giving thirty
(30)-days' prior written notice to the SBMA. Until such time as FedEx exercises
its options hereunder, the SBMA shall have the right to lease all or a part of
said housing units to third parties.
(b) Housing Units shall be leased to FedEx full or partly furnished
at the request of FedEx from furniture and appliances held by the SBMA in its
inventories; provided, however, if FedEx decides to renovate any housing unit
or to replace any the SBMA owned fixture, furniture or appliances, any salvaged
fixtures, furniture or appliances shall be returned to the SBMA.
SECTION 5.05. SBMA's Improvements. On or before the dates set forth
in Appendix C, or such later date agreed to by the parties, the SBMA shall
cause the leasehold
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improvements specified in Appendix C ("Improvements") to be completed for the
Exclusive-Use Space and Housing Units leased to FedEx under this Agreement. The
cost for the Improvements shall be for the account of the SBMA. Leasehold
improvements required by FedEx in addition to the Improvements shall be deemed
alterations subject to the provisions of Section 5.06 of this Agreement.
SECTION 5.06. Alterations, Improvements and Repairs. (a) Subject to
the provisions of Section 12.04, FedEx shall have the right to employ such
architects, contractors or builders as FedEx shall deem necessary or desirable
in connection with the authorized construction, installation, alteration,
modification, repair or maintenance of any building, structure or improvement
upon any of the Exclusive-Use Space. Before beginning construction of any
alteration, improvement or repair, FedEx will submit to the SBMA for the SBMA's
approval detailed drawings of the proposed construction and specifications of
the proposed repair. All such alterations, improvements and repairs shall be
completed in accordance with such drawings or specifications.
(b) The SBMA will review and approve or disapprove the proposed
alterations, improvements or repairs in writing within twenty (20) days after
receipt of the construction drawings; provided, however, that with respect to
repairs that are urgently required in the reasonable opinion of FedEx for FedEx
to carry on its business, FedEx may effect such repairs without the prior
approval of the SBMA and may deliver repair specifications to the SBMA after
repairs have commenced or have been completed. Unless disapproval is given
within said twenty (20)-day period, approval shall be deemed to have been
given. The SBMA shall assist FedEx at FedEx's expense in obtaining all required
permits, certificates and other approvals required from appropriate government
agencies for the construction of FedEx's leasehold improvements. Upon
compliance with the permit requirements, the SBMA shall provide official
building permits to FedEx for all qualifying projects under this Section 5.06.
(c) Any construction by FedEx must be performed in a safe, neat
manner and meet the following criteria:
(i) Not unreasonably interfere with the activities of the SBMA or
its tenants;
(ii) Be compatible with the architecture of the building as
determined by the SBMA;
(iii) Be performed at no cost to the SBMA; and
(iv) Comply with all Applicable Laws.
(d) FedEx shall pay or cause to be paid all uncontested claims
lawfully made by its contractors, subcontractors, materialmen and workmen
arising out of or in connection with the construction work; provided, however,
that nothing herein contained shall be construed to limit the right of FedEx to
contest any claim of a contractor, subcontractor, materialman or workman and no
such contested claim shall be considered to be an obligation of FedEx within
the meaning of this Agreement unless and until the same shall be fully
adjudicated. Notwithstanding the foregoing, FedEx shall promptly remove or bond
any lien or charge filed against the Airport or any interest therein by any
such contractor, subcontractor, materialman or workman directly attributable to
FedEx's construction work.
(e) Within thirty (30) days after completion of the construction of
any alteration or improvement, FedEx will deliver to the SBMA detailed copies
of as-built drawings showing
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the location and dimensions of the alteration or improvement constructed,
including structural, mechanical, and electrical systems.
(f) FedEx hereby assumes the risk of loss or damage to all of the
construction work it conducts prior to the completion thereof and the risk of
loss or damage to all property of the SBMA arising out of or in connection with
the performance of such construction work so long as the SBMA has taken all
steps reasonably prudent of a landlord to avoid contributing to any such loss
or damage. FedEx shall procure and maintain such insurance as is standard in
the Philippines for the type of construction work FedEx intends to conduct.
Such insurance shall be in compliance with and subject to the applicable
provisions of Article 9 hereof and shall name the SBMA as additional assureds
and such policy shall provide that the loss shall be adjusted with and payable
to FedEx. Such proceeds shall be used by FedEx to repair, replace or rebuild
any the SBMA property for which FedEx may be liable hereunder with any excess
to be used by FedEx at FedEx's sole discretion.
SECTION 5.07. Ownership of Improvements. The ownership of
improvements, furnishings, equipment, and fixtures that are constructed or
installed on the Exclusive-Use Space by FedEx is as follows:
(i) Title to all removable furniture, furnishings, fixtures, or equipment
installed by FedEx remains vested in FedEx at all times during the
term of this Agreement; provided that FedEx shall be liable for the
cost of removal and repair. If not removed within thirty (30) days
after the expiration or termination of this Agreement, all removable
furniture, furnishings, fixtures, and equipment will become the
property of the SBMA.
(ii) Title to any structure or other improvement that cannot be removed
without damage to the Exclusive-Use Space, vests in the SBMA unless
otherwise provided by a successor agreement. These improvements
include interior walls, ceilings, carpeting, finished flooring,
electrical wiring, air conditioning ducts and equipment, furnishings,
interior decoration, or finishing. The SBMA shall use its best efforts
to use the Exclusive-Use Space with all such improvements intact. If
removal or repair of structure and improvements is required by the
SBMA to use said Space immediately after vacation of same by FedEx,
the reasonable cost of such repairs or removal shall be for the
account of FedEx.
(iii) Except as set forth in this Section 5.07, upon expiration, termination
or cancellation of this Agreement, FedEx shall surrender all the SBMA
property, buildings and non-movable improvements located in the
Exclusive-Use Space in the same order and condition as they were on
the Operation Date, ordinary wear and tear and casualty damage to the
extent covered by insurance excepted.
SECTION 5.08. Ingress and Egress. The SBMA grants the right of
adequate ingress to and egress from the Airport and the Exclusive-Use Space to
FedEx and its officers, employees, customers, agents or the contractors,
invitees, suppliers, and furnishers of services of any of them (the "Priority
Users"). FedEx's rights shall be subject to: (i) nondiscriminatory easements,
restrictions, covenants and agreements to which the premises may be subject and
rights of the public to the Common-Use Space, (ii) rights of any enterprise
which is furnishing, heating, lighting, power, telegraph, telephone, steam, or
transportation services, and (iii) permits, licenses, regulations and
restrictions, if any, the Philippines government, the SBMA or other agency.
Specifically, the SBMA shall:
(a) Immediately develop and implement an expedited procedure for the
issuance of gate passes and documentation or authority required to
permit such persons going to and
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coming from the customs territory, to and from the SBF as well as the
Airport and the Exclusive-Use Space, within a reasonable and
acceptable time frame for FedEx operations, but in no case more than
three (3) days. The SBMA shall use its best efforts to issue
immediately gate passes and such other authorizations on an emergency
basis. In the case of FedEx and Priority Users' vehicles, the SBMA
shall likewise afford immediate access to and from the SBF. On or
before the Operation Date, the SBMA shall establish and identify such
gate(s) where FedEx and Priority Users' vehicles may be granted easy
and unimpeded access on a 24-hour basis in accordance with these
expedited procedures.
(b) The SBMA shall construct, improve and maintain all surface roads
within the SBF to a standard necessary to meet the reasonable
requirements of its tenants. The SBMA shall ensure that the road
system of the SBF is adequate to permit the vehicles of FedEx and the
Priority Users to travel to and from an SBF checkpoint at the
boundaries of the SBF to the FedEx gate at the Airport, during peak
traffic times, without unreasonable delay.
(c) The SBMA may, upon the giving of seventy-two (72)-hour notice to
FedEx, or without notice in the event of an emergency only,
temporarily close, or consent to or request the closing of, any
roadway so long as FedEx and the Priority Users have a means of
ingress and egress to the SBF and the Airport that is sufficient to
meet the needs of FedEx and does not cause delay of ingress or egress
of any vehicle or person connected with a Priority User.
SECTION 5.09. SBMA Entry. The SBMA, its directors, officers,
employees, agents and representatives shall have the right of entry to the
Exclusive-Use Space from time to time to (i) perform its obligations under this
Agreement, (ii) ensure compliance by FedEx of its obligations under this
Agreement, and (iii) respond to any emergency applicable to the Exclusive-Use
Space, subject to the limitations on and requirements for entry set forth in
this Agreement. The SBMA shall not enter the Exclusive-Use Space, nor shall the
SBMA cause or permit any person, except someone acting under the authority of
law, to enter the Exclusive-Use Space for any reason other than those stated
immediately above. Except for emergencies, entry shall be conducted in the
following manner only: (x) the SBMA shall provide notice to FedEx during normal
business hours at least twenty-four (24) hours prior to the intended date of
entry, (y) at the time of entry, the SBMA representatives shall present
themselves, with such identification and authorizations as FedEx shall
reasonably require, to FedEx security personnel at the main entry to the
Exclusive-Use Space, and (z) the SBMA representatives shall be accompanied by
FedEx personnel at all times when in the Exclusive-Use Space. The SBMA shall
use its best efforts to ensure that any entry by the SBMA, for any purpose,
does not disturb, interrupt or impede the business of FedEx at the Airport.
ARTICLE 6
RENTS AND FEES
SECTION 6.01. Rents and Fees. (a) FedEx will pay monthly to the
SBMA as rent for the Exclusive-Use Space the rates per square meter described
in Appendix D, as amended from time to time by the inclusion of additional
facilities pursuant to the Option granted FedEx herein. All rent for the
Exclusive-Use Space is due on the first day of each month, commencing on the
Operation Date. In the event the Operation Date or the date of termination or
expiration of the term this Agreement or any renewals hereof shall be on a day
other than the first or last day of a calendar month, amounts owing under this
Section 6.01 shall be pro rated on the basis of thirty (30) days in a month.
Except as otherwise
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provided in this Agreement, there shall be no additional rent or other charges
imposed on FedEx for it use of Common-Use Space or Apron Areas.
(b) Except as otherwise provided in this Agreement: (i) rents and
fees for the use of all other facilities, rights, and privileges granted to
FedEx in this Agreement, are combined in and represented by the Landing Fees
and Parking Charges set out in Appendix E; and (ii) no other fee, assessment or
charge of any nature may be imposed on FedEx for its use or exercise of the
facilities, rights and privileges granted under this Agreement.
SECTION 6.02. Calculation and Payment of Landing Fees. (a) The
Landing Fees will be payable monthly by FedEx based on an activity report to be
prepared and certified by FedEx as accurate. FedEx shall self-invoice using
said activity report. The activity report, invoice and payment thereon shall be
provided and paid over to the SBMA within twenty-five (25) days of the last day
of each calendar month. The Landing Fees for each Aircraft Landing will be
calculated in the manner provided in Appendix E and will be based on the
Certified Maximum Gross Takeoff Weight (MGTOW) for each Aircraft and each
individual landing up to a monthly cumulative MGTOW of 28,000,000 kilograms for
all FedEx aircraft and Vendor Carriers. Once the 28,000,000 kilograms
cumulative weight is reached, the calculation method for Landing Fees shall be
adjusted as set forth in Appendix E.
(b) If FedEx fails to furnish the SBMA with the certified activity
report, invoice and payment required by Section 6.02(a) within twenty-five (25)
days of the last day of each calendar month, the SBMA may determine FedEx's
Landing Fee by assuming that the total takeoff weight for FedEx during the
subject month was one hundred percent (100%) of the total takeoff weight of
FedEx set forth in the last certified activity report. After delivery of a late
certified activity report, invoice and payment by FedEx, the SBMA will
recalculate the Landing Fee and will invoice FedEx for the actual amount. If
there is an overpayment or underpayment, a credit or charge shall be applied to
the appropriate invoices in the next succeeding month. FedEx remains
responsible for submitting a certified activity report for each month
regardless of any estimate made by the SBMA.
(c) Commencing on the fifth (5th) anniversary of this Agreement,
Landing Fees shall be increased by five percent (5%) and the new Landing Fees
shall remain in place for the balance of the term of this Agreement.
SECTION 6.03. Fuel Flowage Fee. The SBMA shall not impose fuel
flowage charges on FedEx during the term of this Agreement or any renewals. The
SBMA may impose fuel flowage fees on fuel vendors at the Airport at its
discretion, provided, however, that any such fees charged to a vendor used by
FedEx shall not be greater than fuel flowage fees charged by the SBMA to
Coastal Subic, Incorporated as of 29 January 1994 and shall remain constant
during the term of this Agreement and may be revised only on the renewal of
this Agreement.
SECTION 6.04. Aircraft Parking Charges. (a) For aircraft comprising
the first fifty million pounds (based on MGTOW) of landed weight in a calendar
month, the first four (4) hours of parking shall be free. The parking charge
per thirty (30) minutes after the first four hours shall be as set forth at
Section 2.00 of Appendix E and shall be determined on the MGTOW of each
individual aircraft.
(b) Once an aggregate of fifty million kilograms (based on MGTOW)
have landed in a given calendar month, parking for each aircraft landing
thereafter shall be charged for parking (i) the first six (6) hours in
accordance with Section 2.01 of Appendix E, and (ii) for each 30 minutes after
six hours in accordance with Section 2.02 of Appendix E and shall be determined
on the MGTOW of each individual aircraft.
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(c) The invoicing and payment procedures for Parking Charges shall be
the same as those used for Landing Fees as set forth in Section 6.02 hereof.
SECTION 6.05. Commitment. (a) Subject to Section 6.05(d) FedEx shall
be unconditionally obligated to pay to the SBMA the cumulative payment of
eleven million five-hundred-and-fifty thousand dollars (USD$11,550,000) over
the initial seven (7) year term of this Agreement for rentals applicable to the
Exclusive-Use Space as of the date of this Agreement, Landing Fees and Parking
Charges. The first anniversary date of this Commitment shall be 30 June 1996.
(b) FedEx shall pay to the SBMA on or before 1 August 1996 and August
1st of each year thereafter during the term of this Agreement the difference
between one million six-hundred-and-fifty thousand dollars (USD$1,650,000) and
the actual amount paid during said preceding twelve-month period (fourteen
months in the case of the first year) by FedEx to the SBMA for rentals on the
Exclusive-Use Space as of the date of this Agreement, Landing Fees and Parking
Charges under this Section 6.05. If the amount paid by FedEx in rentals on the
Exclusive-Use Space as of the date of this Agreement, Landing Fees and Parking
Charges during said period exceeds USD$1,650,000, no payment under this Section
6.05 shall be owing for said period.
(c) Once FedEx has paid to the SBMA a cumulative amount equal to or
exceeding USD$11,550,000 in rentals on the Exclusive-Use Space as of the date
of this Agreement, Landing Fees and Parking Charges under this Section 6.05,
the obligations of FedEx hereunder shall expire.
(d) If an event of termination set forth in Section 11.03 hereof
shall occur, FedEx's obligations under this Section 6.05 shall expire.
SECTION 6.06. Payment Provisions; Interest on Overdue Payments. (a)
Landing Fees and Parking Charges shall be due and payable as stated in Sections
6.02 and 6.04 hereof and rental payments and other charges shall be due and
payable on invoice on the first day of each month unless otherwise agreed.
Acceptance by the SBMA of any payment does not preclude the SBMA from verifying
the accuracy of FedEx's calculations and from refunding or recovering any
difference established by the SBMA.
(b) Any payment due and not received by the due date accrues interest
at the rate of twelve percent (12%) per annum, which shall be compounded
monthly until full payment is remitted. Interest on disputed amounts will not
be charged to FedEx if the dispute is resolved in FedEx's favor in whole or in
part.
SECTION 6.07. Vendor Carriers. Aircraft of Vendor Carriers shall pay
Landing Fees and Parking Fees equal to those set forth in Appendix E. The MGTOW
of all aircraft of Vendor Carriers shall be counted in determining the landed
weight for the purpose of calculating Landing Fees for FedEx aircraft. FedEx
shall pay the Landing Fees and Parking Charges of Vendor Carriers and all such
payments shall be applied to any amounts committed by FedEx to the SBMA under
Section 6.05.
SECTION 6.08. Exempt Operations. Non-revenue flight operations
conducted by FedEx shall not be subject to Landing Fees. Non-revenue flight
operations shall include only flights that (i) immediately return to the
Airport because of mechanical, meteorological, or other precautionary reasons,
or (ii) sightseeing, test, ferry, courtesy, inspection or training flights;
provided, however, all such flights designated in (i) and (ii) above that
exceed ten (10) in any calendar month shall not be considered non-revenue
flights.
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SECTION 6.09. Domestic Flight. Any aircraft operation at the Airport
by FedEx or a Vendor Carrier where the location of departure before arriving at
the Airport is another location in the Philippines shall be considered a
domestic operation, according to international standards, and Landing Fees and
Parking Charges for domestic flights shall apply.
ARTICLE 7
FEDEX'S ADDITIONAL RESPONSIBILITIES
SECTION 7.01. Reporting. FedEx will file with the SBMA information
describing its operations at the Airport not later than 30 days after the
Operation Date. FedEx will update this information within 60 days after the
beginning of each fiscal year of FedEx. The report will be limited to the
following:
(i) Names, addresses and telephone numbers of FedEx officials responsible
for various major FedEx functions at the Airport including station
operations, flight operations, scheduling, properties, facilities, and
similar information;
(ii) A general description of FedEx's operations, including number of
employees and employee parking requirements; and
(iii) Such other information as the SBMA shall reasonably request.
SECTION 7.02. Maintenance. FedEx has the following maintenance,
repair, and alteration responsibilities. FedEx will at its sole expense and in
a manner acceptable to the SBMA:
(i) Maintain the Apron Area in a neat, clean, and orderly condition free
from litter, debris, refuse, petroleum products, or grease that may
result from the activities of FedEx's employees, licensees, invitees,
agents, or suppliers. All oil and grease spills attributable to
FedEx's or Vendor Carriers' aircraft or equipment will be removed
promptly. The SBMA shall undertake all other general maintenance of
the Apron Area.
(ii) Assume the entire responsibility and shall relieve the SBMA from all
responsibility for all repair, rebuilding and maintenance whatsoever
of the Exclusive-Use Space and all personal property, equipment and
fixtures associated therewith, whether such repair, rebuilding or
maintenance be ordinary or extraordinary, partial or entire, inside or
outside, foreseen or unforeseen, structural or otherwise, including,
without limitation:
1. Repair of all personal property and equipment, including
fixtures, doors, interior windows, package conveyors and
belts, floor coverings, and counters; and
2. Maintenance and repair of all electrical, plumbing, heating,
ventilating, and air conditioning appliances and fixtures.
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Any amounts expended by FedEx for the repair of the Exclusive-Use
Space shall reduce the amount of the Commitment set forth in Section
6.05 for the year in which such repair are made; provided (i) such
reduction in the committed amount shall not limit, affect, or alter
FedEx's obligations to make payments hereunder (other than payments
under the Commitment) and such payments for repair shall not be
credited against Landing Fees, Parking Charges, rent or other sums due
hereunder; (ii) FedEx shall not commence making such repairs without
first giving the SBMA at least twenty (20)-days' notice, or such
shorter notice as time and circumstances permit in the case of
emergency repairs, and the opportunity to make such repairs at the
expense of the SBMA in which case FedEx shall receive no credit
against the committed amount hereunder, and (iii) the term 'repairs
as used in this subparagraph shall encompass expenditures reasonably
necessary to repair damages to the Exclusive-Use Space which must be
repaired to make the space functional for the use intended by FedEx;
and the term shall not include capital improvements undertaken by
FedEx.
(iii) Immediately repair any damage in any other space at the Airport caused
by the fault or negligence of FedEx, its servants, contractors,
agents, licensees, or employees;
(iv) Provide and maintain all fire protection and safety equipment of every
kind and nature required in the Exclusive-Use Space by any Applicable
Law; and
(v) Ensure that the SBMA has emergency access to FedEx's Exclusive-Use
Space either by delivering keys to the SBMA's representative or by
providing emergency telephone numbers by which FedEx or its agent can
be reached on a 24-hour basis.
SECTION 7.03. Security. (a) FedEx will comply with all Applicable
Laws relating to Airport security imposed from time to time by the SBMA and
cooperate in controlling the Exclusive-Use Space so as to prevent or deter
unauthorized access to the restricted areas of the Airport. FedEx will provide
its own internal security for its Exclusive-Use Space and, subject to the
provisions of Section 12.04 of this Agreement, shall have the ability to hire
its own employees to provide said service or contract with an outside party,
including the SBMA, to provide such security.
(b) FedEx agrees that neither its employees nor its contractors may
carry firearms on the Exclusive-Use Space without the consent of the SBMA. The
SBMA shall not unreasonably withhold consent to a request by FedEx that FedEx-
employed security personnel be permitted to carry firearms.
(c) To assist FedEx in its security obligations under this Agreement,
the SBMA agrees, to the extent permitted by Applicable Law, to provide FedEx
access to Navy employment records (where existing) and current NBI clearances
for each applicant that FedEx interviews that is on the SBMA Labor Pool
Inventory.
SECTION 7.04. Abandonment. During the term of this Agreement, FedEx
shall maintain and occupy the Exclusive-Use Space and maintain its Air
Transportation business and shall not abandon or vacate the same.
SECTION 7.05. Additional Obligations of FedEx. (a) FedEx shall
conduct its business and operations at the Airport in an orderly, proper, safe
and careful manner consistent with international industry practice and use its
best efforts so as to not annoy, disturb or be offensive to others at the
Airport and to minimize jet- or prop- blast interference to aircraft operations
or buildings or structures at the Airport.
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(b) FedEx agrees that it will not erect, construct or maintain or
otherwise create or continue any obstacle or park or store any aircraft or
other object on the Apron Area so as to create any obstacle that will hamper or
interfere with the free, orderly, unobstructed and uninterrupted passage of
vehicles, aircraft or of the wings or other integral part of aircraft of any
type, nature or description, while such vehicle is operating or aircraft is
taxiing or being transported or towed along runways, taxiways and roads outside
of and adjacent to the Apron Areas; provided, however, that enforcement of this
provision is subject to the priority rights of FedEx to the Preferential
Aircraft Apron and with the full knowledge of the SBMA that certain ICAO
airport standards cannot be met at the Airport due to space limitations and
FedEx shall not be held to same.
(c) FedEx shall not do or permit to be done anything which may
interfere with the effectiveness or accessibility of the drainage and sewerage
system, water system, communication systems, electrical system, fire protection
system, sprinkler system, if any, installed or located on, under or in the
Exclusive-Use Space or Apron Areas save and except for actions which are normal
and acceptable in the conduct by FedEx of its business.
(d) Recognizing the physical limitations and constraints of the
Airport, FedEx shall not do or permit to be done any act or thing outside of
its standard operating procedures or industry standards as applied in similar
locations which will invalidate or conflict with any fire insurance, extended
coverage or rental insurance policies covering the Airport System, or any part
thereof.
(e) FedEx shall not use or permit the use of the Exclusive-Use Space
for the sale of tickets to the general public for passenger air transportation.
Nothing herein shall in any manner be considered a limitation on the ability of
FedEx to sell cargo transportation services in the SBF, the Philippines or any
other location.
(f) FedEx shall comply with the rules and regulations of any
government body having jurisdiction over the Airport as to the lighting,
physical description and location of all exterior advertising and signs on the
Airport. So long as FedEx complies with said rules and regulations, FedEx may
install advertising and signs at its discretion on the exterior of the
Exclusive-Use Space and in the Exclusive Ramp. FedEx shall have the right to
install advertising and signs elsewhere on the Airport and at other locations
in the SBF with the prior approval of the SBMA or other applicable government
body. Approval shall be deemed given if the SBMA or such applicable government
body fails to approve or disapprove a request for advertising or signage within
seven (7) calendar days of such request. Upon the termination of this Agreement
or any approval for advertising or signage, FedEx shall remove, obliterate or
paint out any and all signs and advertising on the Airport or the SBF and shall
restore the location of such advertising or signage to good condition. The SBMA
shall consult with its tenants prior to enacting any rule or regulation
governing advertising or signage and shall give due consideration to the
comments of said tenants. All advertising or signage that violates any rule or
regulation promulgated by the SBMA after the same has been erected shall be
permitted to remain in place.
(g) FedEx shall use its best efforts to avoid committing any unlawful
nuisance, waste or injury on the premises and shall operate the premises in
accordance with the highest standards and in such manner that there will be at
all times a minimum of air pollution, water pollution or any other type of
pollution and a minimum of noise emanating from, arising out of or resulting
from the operation, use or maintenance of the premises.
(h) FedEx shall use its best efforts to cause its Vendor Carriers to
comply with this Section 7.05.
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ARTICLE 8
THE SBMA'S RESPONSIBILITIES
SECTION 8.01. Airport Operations. (a) During the term of this
Agreement, the SBMA will:
(i) Obtain and maintain all certification required by the
Philippine government, the FAA and applicable international
organizations to operate the Airport, all in accordance with
international standards for the operation of airports;
(ii) Operate and maintain the Airport in good condition and repair
including the runways, taxiways, aprons, roadways, vehicle
parking areas, public areas of the terminal buildings, and all
appurtenances, facilities, and services, and shall keep the
Airport and its aerial approach free from obstruction and
interference for the safe and proper use thereof;
(iii) Use all rents and fees collected in respect of the Airport
only for Airport operating expenses, debt obligations and
other financial obligations of the SBMA in connection with the
Airport;
(iv) Keep the public areas of the Airport adequately equipped,
furnished, and decorated, as well as clean and presentable. In
the public areas of the Airport, the SBMA will provide and
supply directional and informational signs, electricity,
light, power, air conditioning, wastewater disposal, water,
and janitorial services, including rubbish removal.
(v) Excluding the Exclusive-Use Space, maintain existing and
future utility systems on the Airport in reasonable condition
and repair, including, electricity, fire alarm, fire
protection, sprinkler, air conditioning, telephone, telegraph,
and other telecommunication services, and any lines, pipes,
mains, wires, conduits and equipment connected with or
appurtenant to all those systems.
(vi) Maintain, operate and annually test emergency systems and
procedures to ensure safe, uninterrupted operation of the
Airport.
(b) The SBMA will use its best efforts to restore service as soon as
practical after any interruption in the services described in this Section
8.01.
(c) In the event the SBMA determines to make capital improvements at
the Airport, the SBMA agrees that it will not increase the rents and fees
charged to FedEx under this Agreement in respect of said capital improvements
without the consent of FedEx.
SECTION 8.02. Fuel Supply. The SBMA will make reasonable efforts to
enter into appropriate agreements with vendors to ensure that adequate fuel,
fuel storage and pipeline access will be available to Airlines operating at the
Airport at market rates. In the event that the fuel supply is interrupted for
any reason, FedEx and the SBMA shall each endeavor to obtain a new fuel supply
at similar rates of service and cost as the old supply, and failing to
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obtain such new supply of fuel within fifteen (15) days, FedEx's sole remedy
shall be to terminate this Agreement immediately on notice to the SBMA.
SECTION 8.03. Telecommunications. (a) The SBMA will make reasonable
efforts to cause Telecom Vendor to provide telecommunication services to FedEx
at the Airport. Charges to FedEx for use of the local exchange (and
international calls) provided by Telecom Vendor, which FedEx hereby agrees to
use, shall be as agreed between the SBMA and Telecom Vendor in that certain
Agreement between them dated 29 June 1994, subject to such reasonable annual
increases as the SBMA may grant to Telecom Vendor. The SBMA will make
reasonable efforts to cause Telecom Vendor to: (i) provide cable connections
that meet FedEx's specifications at Exclusive-Use Space leased by FedEx; (ii)
redo trunk routing where required to satisfy FedEx's requirements; and (iii)
provide FedEx at the Exclusive-Use Space on the Operation Date a minimum number
of 100 telephone lines, and on demand such additional number of lines required
by FedEx in the future. All telephone lines will be connected to a public
exchange with IDD access. FedEx shall have the ability to operate a back-up
communication system through Telecom Vendor in accordance with Section 4.01
hereof; or, when Applicable Law permits, the SBMA shall authorize FedEx to
operate its own international gateway telecommunications systems, for FedEx's
private use and not for resale to the public.
(b) The SBMA will make reasonable efforts to ensure that FedEx can
obtain, by no later than 1 February 1994, licenses to operate (i) ground-to-air
radio communications, and (ii) a portable radio system at the Airport and the
environs of the Subic Bay Freeport Zone.
(c) In the event that (i) there are outages with telecommunication
services provided by Telecom Vendor or such services are not adequate for any
reason, or (ii) the radio license in Section 8.03(b) is revoked or otherwise
not usable, FedEx and the SBMA shall each endeavor to obtain a new provider of
telecommunication services at similar or better rates of service and cost as
Telecom Vendor, and failing to obtain such new provider within fifteen (15)
days, FedEx's sole remedy shall be to terminate this Agreement immediately on
notice to the SBMA.
SECTION 8.04. Vendor Selection, Licensing and Permitting. (a) FedEx
shall have the right to contract with those vendors of its choosing. FedEx
shall attempt to contract with vendors suggested by the SBMA, but where such
vendors do not, in the sole opinion of FedEx, meet FedEx standards, FedEx shall
contract with any vendor of its choosing.
(b) Subject to applicable the SBMA rules and regulations the SBMA
will provide vendors and employees of vendors selected by FedEx with licenses
and other credentials required by the SBMA, including gate passes and other
documentation required to access the Airport, within one week of notification
by FedEx to the SBMA of such selection. In the event a vendor is to supply
FedEx with fifty (50) or more personnel, FedEx shall notify the SBMA and
together the parties shall agree on the length of time required by the SBMA to
provide the required licenses and credentials, time being of the essence.
SECTION 8.05. Aircraft Recovery Plan. (a) The SBMA shall maintain,
update annually (or more frequently as required) and implement an aircraft
recovery plan that will detail, among other things, the manner in which the
SBMA will cause appropriate size cranes to be present at the Airport in the
event the recovery of an aircraft is required. The SBMA shall acquire or make
arrangements for on-call access to all equipment required to comply with such
aircraft recovery plan and conduct such training as to ensure that its
employees have the skill levels necessary to execute the plan.
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(b) If any aircraft owned or operated by FedEx, through accident or
any other reason, is disabled or abandoned in any area on the Airport which
could interfere with the continuous, normal operations or any landing and field
facilities, the SBMA will:
(i) Make reasonable efforts to immediately remove the aircraft to
a location designated by the SBMA, unless the aircraft is
required to remain in place pending investigation by the
appropriate regulatory agencies of the Philippine government;
and
(ii) In the event of any accident where governmental investigation
in place is required, immediately, upon receiving clearance to
do so from the governmental agency investigating such
accident, make reasonable efforts to remove the aircraft and
any resulting wreckage or debris to the area designated by the
governmental agency authorizing the removal; otherwise the
aircraft wreckage and debris will be immediately removed from
the Airport and stored at a location approved by the SBMA.
(c) FedEx will reimburse the SBMA for all reasonable costs and
expenses (including storage costs) incurred in the removal.
(d) FedEx shall have no liability to the SBMA arising out of the
SBMA's failure to remove an aircraft covered by this Section 8.05 if the SBMA
shall have failed to make available for the SBMA's use sufficient and adequate
removal equipment.
SECTION 8.06. Power. (a) On or before the Operation Date, the SBMA
will cause sufficient power to be delivered to the Airport to ensure that,
despite a loss of power, (i) power needs required to operate at the Airport
electronic equipment vital for continued flight operations, including
navigational aids, are met; and (ii) electronic equipment required by FedEx to
operate its Air Transportation business will continue to operate. The SBMA
shall meet its commitment hereunder by rebuilding and upgrading the primary
link from the nearest substation to the Airport and locating a back-up
generator of sufficient power at or near the Airport. The SBMA shall also use
its reasonable efforts to deliver to the Airport, as soon as is reasonably
practical, a second independent routing of power from the nearest substation to
the Airport as a back-up.
(b) The SBMA shall deliver to FedEx a grid layout of the power system
for the Airport and major power lines serving the Airport, and will provide to
FedEx, at no cost to FedEx, from the SBMA's equipment inventory operational
back-up generators at FedEx's Exclusive-Use Space to meet FedEx's emergency
power requirements. FedEx shall install, operate and maintain the generators at
FedEx's sole cost and expense.
(c) The SBMA shall ensure that there is sufficient power at the
Exclusive-Use Space for FedEx to conduct the construction work it needs to
complete prior to the Operation Date. FedEx shall provide the SBMA with FedEx's
power requirements for such construction along with a timetable for same.
SECTION 8.07. Electricity. The SBMA shall, directly or by arrangement
with appropriate utility companies or suppliers, supply FedEx with electrical
current in such quantities, voltages, and phases as FedEx shall reasonably
require. FedEx shall pay the SBMA for all such utility services that FedEx uses
at rates that shall not exceed the then current rates charged from time to time
to corporate customers by Metro Manila power authorities subject to government
rate review.
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SECTION 8.08. Airport Parking. The SBMA shall construct, operate and
maintain during the term of this Agreement parking facilities for Airline
employees working on the Airport, and will provide a reasonable amount of
parking at the Airport for FedEx employees, at no charge to FedEx. The SBMA and
FedEx shall mutually agree on the issue of how much parking can be made
available from time to time. FedEx agrees that it will be responsible for
installing and maintaining fencing to secure the parking area designated by the
SBMA for FedEx employees.
SECTION 8.09. Airport Security. (a) The SBMA shall develop,
maintain, update annually (or more frequently as required) and implement a
security plan for the Airport operations area. The SBMA shall continuously
operate and provide security at the Airport under and in strict accordance with
said plan and shall advise FedEx in advance and consult with FedEx on any
changes in same.
(b) The SBMA shall have the sole obligation to provide all necessary
personnel to provide adequate security protection on the Airport (excluding
FedEx's Exclusive-Use Space) and will adequately secure the Airport operations
area before and after the Operation Date, including, without limitation the
installation and maintenance of fencing and gates on the perimeter of the
Airport Operations Area which shall be completed on or before 1 April 1995. All
gates to the Airport shall be manned by the SBMA security personnel. The SBMA
will cause gates convenient to FedEx to be manned on a 24-hour basis.
SECTION 8.10. Customs Operations. The SBMA acknowledges that the
implementation of a customs operations on the Airport is critical to the
successful operation of FedEx's Air Transportation business at the Airport.
Therefore, the SBMA and FedEx agree to cooperate with appropriate customs
officials of the Philippine government to (i) establish, on or before the
Operation Date, a customs operation on the Airport that meets FedEx's
operational needs at the Airport and, (ii) ensure that customs clearance
procedures at the Airport, the SBF checkpoints and the Exclusive-Use Space are
continually improved and updated. It is the intent of the parties to work
toward implementing at the SBF and the Airport the most accurate and fast
clearance procedures at the least amount of cost.
SECTION 8.11. Training. The SBMA will assist FedEx in meeting its
initial and continuing training requirements for current and future employees.
The SBMA will provide, where possible, access to the SBMA facilities, at no
cost to FedEx, for employee training classes. The SBMA will work with FedEx to
develop personnel development programs for Olongapo residents to better prepare
said residents for jobs FedEx offers, or may offer in the future.
SECTION 8.12. Transportation. Subject to the provisions of Section
12.04 of this Agreement, FedEx shall have the ability to provide transportation
services on the Airport to its employees, either directly or through vendors.
In the event that the SBMA operates or licenses a common carrier to operate a
transportation service, the SBMA will require that carrier to provide services
to the Airport area at non-discriminatory rates.
SECTION 8.13. Permit to Operate. The SBMA shall issue to FedEx on or
before the Operation Date, a permit to operate or such other certifications,
permits or authorizations the SBMA requires of enterprises before they can
commence business in the SBF.
SECTION 8.14. Registration. To the extent registration is possible,
immediately following the execution and delivery of this Agreement, the SBMA
shall cause this Agreement to be registered with the relevant Registry of Deeds
at SBMA's cost and shall provide FedEx with proof that such registration has
been completed.
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SECTION 8.15. Laydown Area. In the event FedEx shall require a
laydown area in the conduct of its construction work on the Exclusive-Use Space
or any other facility, including the facilities covered under the option
granted herein to FedEx, the SBMA shall provide an area sufficient to meet
FedEx requirements without charge to FedEx for the duration of FedEx's
construction; provided that Airport operations are not interfered with thereby.
SECTION 8.16. The SBMA Programs. From time to time the SBMA may
develop plans and programs to benefit the SBF, the surrounding communities and
the people residing or employed therein. FedEx recognizes that the SBMA is
developing a reasonable and sustainable Provident Fund program for the benefit
of all employees within the SBF and agrees to subscribe thereto provided that
substantially all employers within the SBF are required on a non-discriminatory
basis to participate therein. FedEx agrees to carefully consider its voluntary
participation in any other such plans or programs.
ARTICLE 9
INDEMNIFICATION, INSURANCE, AND SUBROGATION
SECTION 9.01. General Indemnification. FedEx will indemnify, hold
harmless, and defend the SBMA, its officers, agents, and employees from claims,
actions, and liabilities of any nature or kind, including costs and expenses,
for or on account of any and all legal actions or claims of any character
whatsoever based upon or arising out of FedEx's use and occupancy of the
premises and exercise of rights under this Agreement. All liability or costs
for legal actions or claims including defense costs resulting from death or
injury to any person(s) or damage to property which are caused by the joint
negligence of the SBMA and FedEx arising out of this Agreement will be
apportioned on a comparative fault basis. FedEx s obligations to indemnify,
hold harmless and defend under this Section 9.01 shall apply to claims, actions
and liabilities of any nature or kind arising out of the use and occupancy of
the premises by Vendor Carriers operating by way of wet lease, dry lease or
straight charter.
SECTION 9.02. Environmental Indemnification. (a) The SBMA shall
not be liable for and FedEx agrees to hold harmless, indemnify, and defend the
SBMA from any and all claims, fees, costs, penalties and charges assessed
against or imposed upon the SBMA, including attorneys' fees and costs, as a
result of FedEx's or Vendor Carriers' use, dispensing, handling, storage,
transpiration, generation, sale, disposal, release or discharge of hazardous
materials, including but not limited to, costs and expenses incurred in
connection with any investigation, cleanup, or remedial, removal or restoration
work in or about the Airport or other place required by any Applicable Law or
standard because of hazardous materials that came or otherwise emanated from
FedEx's or Vendor Carriers' use of the Exclusive-Use Space, Apron Areas or the
Airport, or environmental damages to the Airport and its environs resulting
therefrom.
(b) The SBMA will indemnify, defend and hold harmless FedEx, its
officers, directors, employees and agents from any and all claims, fees, costs,
penalties and charges assessed against or imposed upon FedEx, including
attorneys' fees and costs, as a result of all other environmental damages to
the Exclusive-Use Space, the Apron Areas, the Airport and its environs, whether
or not known as of the Effective Date of this Agreement.
(c) A Phase I and Phase II environmental impact study on the
Exclusive-Use Space and Apron Areas to be used by FedEx has been conducted by
Dames and Moore who have issued a report thereon, the receipt of which both the
SBMA and FedEx acknowledge. Said report will provide the baseline for
determining liability under this Section 9.02.
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SECTION 9.03. Insurance. (a) The SBMA will, during the term of this
Agreement, procure and maintain comprehensive general liability and fire and
extended coverage insurance for the Airport, terminal buildings, and other the
SBMA facilities at the Airport, in such amounts and for such insured coverages
as may be required to obtain the certifications required under Section 2.01(d)
hereof.
(b) FedEx will, during the term of this Agreement, procure and
maintain liability insurance for public liability, aviation liability,
premises, property damage, bodily injury and death, with contractual liability
endorsements insuring all of FedEx's operations under this Agreement, including
its obligations under the indemnity clause in Section 9.01 of this Agreement.
These policies will be with limits not less than those set forth below. These
policies and minimum limits will be consistently applied to all Airlines with
similar operations and will be consistent with prudent airport industry
practices and this Agreement.
<TABLE>
<CAPTION>
Insurance Coverages Minimum Limits
<S> <C>
Airline/Aircraft/Airport $50,000,000
Public Liability Insurance or Equivalent
Insurance $10,000,000 Combined Single Limit
</TABLE>
(c) Each policy must provide that it may not be canceled or
materially changed during its term without at least 30-days' advance written
notice to the SBMA or FedEx, as appropriate.
(d) A certificate certifying coverage of required insurance must be
delivered to the other party within 30 days of the Operation Date of this
Agreement.
(e) Where any such policy has a normal expiration during the term of
this Agreement, each party will provide to the other a certificate or
satisfactory written evidence of continued coverage prior to such expiration.
Prior to the effective date of any cancellation or reduction in the amount or
extent of insurance coverage, each party will deliver to the other a
certificate or satisfactory written evidence certifying coverage that
reinstates or otherwise provides at least the required insurance coverage.
(f) The failure by either party at any time to enforce the provisions
in this Section will not be construed as a waiver of these provisions and will
not reduce the other party's obligations under this Agreement.
SECTION 9.04. Waiver of Subrogation. FedEx and the SBMA agree to
waive their respective rights of recovery or claim against the other for any
loss or damage to the Exclusive-Use Space, or their contents (excluding
aircraft) resulting from fire or other "all-risk" insurable property hazards
caused by the other. Notwithstanding Section 9.01, any fire or "all-risk"
property insurance policies carried by either party will include a waiver of
subrogation clause waiving any rights of subrogation against the other party to
this Agreement.
SECTION 9.05. Additional Insured. FedEx agrees that every insurance
policy required under Section 9.03(b) will include an endorsement naming the
SBMA as an additional insured.
SECTION 9.06. Notice of Claim. Each party will give the other party
prompt and reasonable notice of any claim or action involving this Agreement.
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SECTION 9.07. Survival. The provisions of this Article shall survive
the expiration, termination or early cancellation of this Agreement.
ARTICLE 10
ASSIGNMENT OR SUBLEASE
SECTION 10.01. Assignment or Sublease. (a) Assignment. Except as
permitted herein, FedEx shall not sell, convey, transfer, mortgage, pledge or
assign this Agreement without the advance written approval of the SBMA. The
SBMA will approve an assignment or sublease of FedEx's Exclusive-Use Space or
this Agreement in whole or in part, if:
(i) It is made to an entity controlled by FedEx which entity shall
carry on FedEx's Air Transportation business without any
interruption or decrease in operations or, in the case of a
sublease of partial space, it is to an entity whose presence
within the Exclusive-Use Space is required to support FedEx's
Air Transportation business;
(ii) In the SBMA's reasonable opinion, the proposed assignment does
not make a negative impact on the level or quality of
operations at the Airport; and
(iii) In the SBMA's opinion the proposed assignee or sublessee is
qualified and capable to execute the Agreement and perform all
obligations thereunder; provided, however, no such assignment
or sublease shall be effective until an agreement in form and
substance reasonably satisfactory to the SBMA has been entered
into between FedEx, the proposed assignee or sublessee, and
the SBMA which agreement shall contain provisions obligating
the proposed assignee or sublessee to assume all the
obligations of FedEx under this Agreement and warranting and
confirming to the SBMA that FedEx shall not be relieved of
liability under the Agreement and shall continue to be bound
by all obligations under the Agreement.
SECTION 10.02. Merger. This Article does not prevent the assignment
of this Agreement to any corporation or business entity that merges or
consolidates with FedEx so long as FedEx is the surviving entity, this
Agreement remains in full force and effect and is binding on FedEx, and written
documentation of the merger or consolidation is given to the SBMA within thirty
(30) days after the merger or consolidation.
SECTION 10.03. Assignment by the SBMA. (a) The SBMA reserves the
right to pledge, assign, transfer or encumber any of its rights and interests
under this Agreement to any entity with written notice to FedEx provided the
SBMA shall continue to remain liable hereunder.
(b) FedEx's consent to any such pledge, assignment, transfer or
encumbrance shall not be required to effect same; provided, however, that no
such pledge, assignment, transfer or encumbrance shall be effective with
respect to FedEx until FedEx shall have received notice of same.
(c) Certain of the obligations of the SBMA hereunder are not
assignable as same are not capable of being performed by any entity other than
the SBMA or the government of the Republic of the Philippines. The parties
agree that any pledge, assignment, or transfer by the SBMA of any of its
interest in an to this Agreement does not and cannot include those
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obligations of the SBMA that only it can perform and that despite any such
pledge, assignment or transfer, the SBMA shall remain primarily obligated in
respect of same and FedEx shall look to the SBMA in any event for performance.
ARTICLE 11
DEFAULT AND TERMINATION
SECTION 11.01. Reentry and Reletting After Default. Upon the
occurrence of any event specified in Section 11.05:
(a) Without terminating this Agreement, the SBMA may immediately reenter,
renovate, and relet all or part of the Exclusive-Use Space to others
and reassign preferential aircraft parking positions to others for the
account of FedEx.
(b) At any time before or after a reentry and reletting as provided in
this Section, the SBMA may terminate FedEx's rights under this
Agreement, reenter and take possession of the Exclusive-Use Space, and
cancel all rights and privileges granted to FedEx without any
restriction on recovery by the SBMA for rents, fees and damages owed
by FedEx.
(c) In addition to the rights provided in this Agreement, the SBMA shall
have any and all additional rights and remedies as provided by law.
SECTION 11.02. Termination Due to Damage or Destruction. (a) If all
or any portion of the Exclusive-Use Space is damaged by fire or other casualty,
the SBMA will notify FedEx within thirty (30) days of the damage whether the
damaged Exclusive-Use Space is to be repaired. If the damaged Exclusive-Use
Space is to be repaired, the SBMA will repair the damage with due diligence and
will abate the rent allocated to the particular building, room, or other
portion of the Exclusive-Use Space rendered untenantable for the period from
the occurrence of the damage to the completion of the repairs. The SBMA shall
provide FedEx suitable temporary substitute space at a rental deemed reasonable
by FedEx and the SBMA until the repairs are completed.
(b) If the SBMA fails to notify FedEx within thirty (30) days after
destruction that the SBMA will repair the damaged Exclusive-Use Space, FedEx
may elect within one-hundred-and-twenty (120) days after destruction to:
(i) Terminate this Agreement, in whole or as to the portion of the
Exclusive-Use Space damaged or destroyed, effective on the
date of the damage; or
(ii) Continue this Agreement and repair such damage. During any
such repair, rental shall be abated pro rata using the ratio
of the area in need of repair to the total area in the
Exclusive-Use Space. FedEx may abate Landing Fees, rental, and
any other fees or charges due to the SBMA in respect of
FedEx's cost of repair.
(c) The remedies of FedEx, as set forth in Section 11.02(b), shall be
its sole remedies for failure by the SBMA to give the notice specified in
section 11.02(a); and FedEx shall have no claim against the SBMA as a result of
the SBMA's election not to repair the damage.
SECTION 11.03. Events Permitting Termination by FedEx. FedEx may
terminate this Agreement only if:
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(i) FedEx is prohibited by lawful authority from using the Airport because
of any deficiency or unsafe operating condition at the Airport for a
period exceeding fifteen (15) consecutive days unless the same shall
result from any action or omission by FedEx. FedEx may terminate this
Agreement immediately after said 15-day period by giving the SBMA
written notice of such termination;
(ii) FedEx is unable to fly aircraft to the Airport from major markets in
Asia for any reason and such inability substantially impairs its
ability to operate a hub operation at the Airport; or
(iii) Rights granted to FedEx in the Philippines either by way of bilateral
air treaty or otherwise are withdrawn, amended or otherwise limited so
as to prevent it from operating its Asian Hub at the Airport through
the use of Fifth Freedom change of gauge rights.
(iv) The SBMA, its successor or any governmental entity of the Philippines
passes a law, ordinance, regulation or other directive that, in the
sole reasonable judgment of FedEx, makes it impossible for FedEx to
conduct its business at the Airport.
(v) Commencing after 1 October 1996, if, in the consecutive twelve (12)-
month periods thereafter, FedEx or Vendor Carriers shall be required
to divert more than four percent (4%) of their scheduled flights from
SFS because of (i) weather conditions or (ii) operational deficiencies
at the Airport which could have been remedied by the SBMA, not
including acts or conditions caused by or constituting force majeure;
provided, however, FedEx must exercise this right of termination on or
before 1 November of each year or FedEx shall lose the right of
termination for the immediately preceding 12-month period.
(vi) The occurrence of such other right of termination expressly provided
for in this Agreement.
With respect to this Section 11.03 (ii), (iii) and (iv), termination
may be effected by FedEx by giving the SBMA thirty (30)-days written notice of
the date of such termination provided this Agreement shall continue in full
force and effect if prior to the expiration of such 30-day period the event
giving rise to the right of termination shall cease to exist. FedEx shall have
no other rights or remedies against the SBMA other than the termination of this
Agreement.
SECTION 11.04. Default by the SBMA and Remedies Upon Default. (a)
The SBMA shall be in default under this Agreement if it shall fail to perform
any material covenant in this Agreement for a period of thirty (30) days after
written notice from FedEx specifying such failure and declaring the SBMA to be
in default. The SBMA will be deemed to have cured the default if the SBMA
commences to cure the default within such 30-day period and diligently
continues the cure to completion.
(b) If a default by the SBMA shall have occurred and be continuing,
FedEx shall have no right to terminate this Agreement but may, in its sole
discretion:
(i) Seek judicial relief against the SBMA for all damages incurred
by FedEx as a result of such default, together with all other
amounts and penalties that FedEx is entitled to recover under
this Agreement, by law or in equity, together with all court
costs, attorneys' fees and expenses incurred by FedEx.
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(ii) Cure the default and the expense of FedEx's cure together with
interest thereon at the rate equal to the lesser of two
percent (2%) per month or the maximum rate permitted by law,
shall be paid by the SBMA to FedEx.
(iii) Seek injunctive relief against the SBMA.
(iv) Require the SBMA to submit to binding arbitration in
accordance with this Agreement.
SECTION 11.05. Events Permitting Termination by the SBMA and Remedies
of the SBMA. (a) Time being of the essence, the SBMA may terminate this
Agreement immediately and exercise all rights of entry and reentry upon the
Exclusive-Use Space after the occurrence of any of the following events:
(i) FedEx fails to provide regularly scheduled Air Transportation
to and from the Airport.
(ii) FedEx fails to pay any rent, Landing Fee, Parking Charge or
other fee due, including interest, within ten (10) days after
FedEx's receipt of written notice of default from the SBMA.
(iii) FedEx shall become insolvent or shall take the benefit of any
present or future insolvency statute, or shall make a general
assignment for the benefit of creditors, or file a voluntary
petition in bankruptcy or a petition or answer seeking an
arrangement or its reorganization or the readjustment of its
indebtedness under the federal bankruptcy laws or under any
other law or statute of the United States or any of any state
thereof or the Republic of the Philippines, or consent to the
appointment of a receiver, trustee, or liquidator of all or
substantially all of its property.
(iv) By order or decree of a court FedEx shall be adjudged bankrupt
or an order shall be made approving a petition filed by any of
its creditors or by any of the stockholders of FedEx, seeking
its reorganization or the readjustment of its indebtedness
under the federal bankruptcy laws or under any law or statute
of the United States or of any state thereof, provided that if
any such judgment or order is stayed or vacated within sixty
(60) days after the entry thereof, any notice of cancellation
shall be and become null, void and of no effect.
(v) By or pursuant to, or under authority of any legislative act,
resolution or rule, or any order or decree of any court or
governmental board, agency or officer having jurisdiction, a
receiver, trustee, or liquidator shall take possession or
control of all or substantially all of the property of FedEx,
and such possession or control shall continue in effect for a
period of thirty (30) days.
(vi) FedEx shall breach any of the covenants contained in Sections
4.02, 10.01, or 10.02 of this Agreement.
(b) If a FedEx Event of Termination shall have occurred and be
continuing, the SBMA may, in its sole discretion:
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(i) Seek judicial relief against FedEx for all damages incurred by
the SBMA as a result of such event of termination, together
with all other amounts and penalties the SBMA is entitled to
recover under this Agreement, by law, or in equity together
with all court costs, attorneys' fees and expenses incurred by
the SBMA.
(ii) In the event that the letting or this Agreement shall have
been terminated or in the event that the SBMA has re-entered,
regained or resumed possession of the premises, all the
obligations of FedEx under this Agreement shall survive such
termination or cancellation, or re-entry, regaining or
resumption of possession and shall remain in full force and
effect for the full term of this Agreement, and the amount or
amounts of damages or deficiency shall become due and payable
to the SBMA to the same extent, at the same time or times and
in the same manner as if no termination, cancellation,
re-entry, regaining or resumption of possession had taken
place. The SBMA may maintain separate actions each month to
recover the damage or deficiency then due or at its option and
at any time may declare all rent, Landing Fees, Parking
Charges and other amounts payable under this Agreement during
the remaining term of this Agreement immediately due and
payable and sue to recover the full damages or deficiency less
the proper discount, for the entire unexpired term. For the
purposes of determining the amount in Landing Fees and other
variable amounts payable under this Agreement, the average
usage and traffic during the previous twelve (12) calendar
months of operations shall be assumed to have continued for
the remainder of this Agreement.
(iii) By five (5)-days' written notice to FedEx, terminate this
Agreement and retain all rent and other amounts previously
paid by FedEx, such right of termination and the exercise
thereof to operate as a conditional limitation.
(iv) Cure the default and the expense of the SBMA's cure together
with interest thereon at the rate equal to the lesser of two
percent (2%) per month or the maximum rate permitted by law,
shall be paid by FedEx to the SBMA as additional rent.
(v) Seek injunctive relief against FedEx.
(vi) Require FedEx to submit to binding arbitration in accordance
with this Agreement.
(vii) Whether or not the SBMA elects to terminate this Agreement,
the SBMA may enter upon and repossess the premises and all
other property leased or utilized by FedEx (said repossession
being hereinafter referred to as "Repossession") by force,
summary proceedings, ejectment or otherwise and may remove
FedEx and all other persons and property therefrom. From time
to time after Repossession, whether or not this Agreement has
been terminated, the SBMA may, but shall not be obligated to,
alter the premises or attempt to relet the Exclusive-Use Space
and other property leased or utilized by FedEx in the name of
the SBMA or otherwise, for such
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<PAGE> 30
term or terms (which may be greater or lesser that the period
which would otherwise have constituted the balance of the term
of this Agreement) and for such other uses as the SBMA, in its
sole discretion, may determine, and may collect and receive
rent therefor. Any rent received (net of expenses) shall be
applied against FedEx's obligations hereunder, but the SBMA
shall not be responsible or liable for any failure to collect
any rent due upon such reletting.
(c) No acceptance by the SBMA of rentals, Landing Fees or other
payments, in whole or in part, for any period or periods after a default of any
of the terms, covenants and conditions hereof to be performed, kept or observed
by FedEx shall be deemed a waiver of any right on the part of the SBMA to
terminate the letting, except that no claim of default for non-payment shall be
asserted with respect any installment of rental, Landing Fee, Parking Charge or
other payment to the extent the same has been accepted by the SBMA.
(d) The rights upon termination described above shall be cumulative
and shall be in addition to any other rights of termination provided in this
Agreement and in addition to any rights and remedies that the SBMA would have
at law or in equity consequent upon any breach of this Agreement by FedEx, and
the exercise by the SBMA of any right of termination shall be without prejudice
to such other rights and remedies.
(e) The SBMA may not exercise any right to terminate this Agreement
based upon a breach by FedEx of the covenants contained in Section 4.02 unless
notice of the breach is given by the SBMA to FedEx and FedEx shall not have
cured the breach within thirty (30) days of such notice.
SECTION 11.06. Default by FedEx and Remedies Upon Default. (a) FedEx
shall be in default under this Agreement, if it shall fail to perform any
covenant in this Agreement, other than the covenants encompassed in Section
11.05, for a period of thirty (30) days after written notice from the SBMA
specifying such failure and declaring FedEx to be in default. FedEx will be
deemed to have cured the default if FedEx commences to cure the default within
such 30-day period and diligently continues the cure to completion.
(b) If a default by FedEx shall have occurred and be continuing, the
SBMA shall have no right to terminate this Agreement, but may, in its
discretion, exercise any other right provided for in Section 11.05.
SECTION 11.07. Surrender of the Exclusive-Use Space. The SBMA is not
required to give FedEx notice to quit possession of the Exclusive-Use Space at
the expiration of this Agreement. Upon the expiration or termination of this
Agreement, the SBMA has the right to take possession of the Exclusive-Use
Space. FedEx agrees to surrender the Exclusive-Use Space peaceably and in good
condition, except for reasonable wear and tear.
SECTION 11.08. Holdover. If FedEx holds over without a written
renewal after the expiration of this Agreement, the holding over does not
operate as a renewal or extension of the term of this Agreement but only
creates a month to month extension of this Agreement regardless of any rent or
fee payment accepted by the SBMA. The obligations of the SBMA and FedEx to
perform under this Agreement continue until the month to month holdover is
terminated. Either party may terminate the holdover at any time by giving the
other party at least thirty (30)-days' advance written notice.
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<PAGE> 31
ARTICLE 12
COMPLIANCE WITH LAWS, TAXES, AND POLICIES
SECTION 12.01. Compliance With Laws. The SBMA will comply with all
Applicable Laws.
SECTION 12.02. Taxes. (a) FedEx will pay all taxes (including any
possessory interest tax, assessment, or similar charge) that at any time during
this Agreement are levied or liened against FedEx, it being understood and
agreed that there shall at no time be taxes, duties or other imposts levied
against the Airport facilities made available for FedEx's exclusive use, or
against FedEx's personal property except in accordance with Republic of the
Philippines Act No. 7227.
(b) Except as shall be permitted in sub-paragraph (a) above, in the
event the SBMA shall obtain taxing authority, the SBMA shall levy no
discriminatory taxes, charges or imposts of any nature against FedEx or any
subsidiary or affiliate of FedEx other than those it may lawfully levy on
SBF-Registered Enterprises.
(c) FedEx will indemnify and defend the SBMA from all costs that
result directly or indirectly from tax or assessment that FedEx is liable for
including taxes, penalties, expenses, and reasonable attorneys' fees incurred
by the SBMA.
(d) At its own expense, FedEx may contest the amount or validity of
any tax or assessment or similar charge, or contest the inclusion of the space
leased under this Agreement as taxable or assessable property directly with the
taxing or assessing authority. FedEx will indemnify the SBMA for all taxes,
penalties, costs, expenses, and reasonable attorneys' fees incurred by the SBMA
resulting directly or indirectly from any tax contest.
(e) Upon termination of this Agreement, FedEx will promptly pay in
full all due and payable taxes and liens.
SECTION 12.03. Policies. (a) FedEx will comply with all Applicable
Laws governing the use of Airport facilities. The SBMA shall consult with FedEx
prior to promulgating any law, regulation, directive, policy or procedure that
could make a material and adverse impact on FedEx and its operations at the
SBF, and the SBMA shall give due consideration to the comments of FedEx in
respect of same.
(b) The SBMA agrees not to promulgate any regulations governing use
of the Airport Facilities, the SBMA Policies and Procedures, or local Airport
directives as set forth by the SBMA contradictory to: (i) this Agreement; (ii)
any regulation of the FAA; (iii) any U.S. government agency regulation that is
binding upon FedEx.
SECTION 12.04. Labor. (a) Where vendors selected by FedEx are from
outside the Olongapo area, FedEx shall include in purchase contracts with such
vendors an obligation on the part of each vendor to hire persons listed in the
SBMA Labor Pool Inventory in accordance with the limitations and procedures set
forth in Section 12.04(b) below.
(b) FedEx shall hire and shall make reasonable efforts to cause its
vendors to hire employees at the Airport and in the area controlled by the SBMA
in accordance with FedEx's and such vendors specifications and requirements.
FedEx will endeavor, and make reasonable efforts to cause its vendors to
endeavor, to first hire its requirements from the SBMA Labor Pool Inventory.
Where qualified or acceptable applicants do not exist in the SBMA Labor Pool
Inventory, FedEx and its vendors may hire their personnel requirements from any
source they deem appropriate.
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<PAGE> 32
(c) The SBMA will assist FedEx in obtaining exemptions or waivers to
current labor regulations that: (i) restrict women from working night hours,
and (ii) require understudies for foreign employees.
ARTICLE 13
AGREEMENT NOT TO GRANT MORE FAVORABLE TERMS
SECTION 13.01. Agreement Not to Grant More Favorable Terms. If the
SBMA enters into any lease or agreement with any other international cargo
carrier prior to the termination date of this Agreement which provides for (i)
rent per square meter for space substantially similar to the Exclusive-Use
Space, (ii) landing fees, or (iii) telecommunications services to be provided
by Telecom Vendor, any of which are less than the comparable amounts charged
hereunder, then the SBMA shall notify FedEx to such effect and offer to amend
the applicable terms of this Agreement to reduce the applicable rate, fee or
charge to the level provided in said other lease or agreement, effective the
date on which such rate, fee or charge becomes payable under said other lease
or agreement.
ARTICLE 14
GENERAL PROVISIONS
SECTION 14.01. Delivery of Notices. Required notices must be hand
delivered, or sent by registered or certified mail, or by Federal Express
service to the addresses below:
If to the SBMA: Subic Bay Metropolitan Authority
Attention: Chairman and Administrator
SBMA Centre, Bldg. 229
Waterfront Road
Subic Bay Freeport Zone
Philippines
with copy to: Subic Bay Metropolitan Authority
Attention: Head - Legal Department
SBMA Centre, Bldg. 229
Waterfront Road
Subic Bay Freeport Zone
Philippines
If to FedEx: Federal Express Corporation
Attention: Vice President -
Properties and Facilities
2003 Corporate Avenue
Memphis, Tennessee 38132
with copy to: Federal Express Corporation
Attention: Vice President - Legal
Two Pacific Place, 34F
88 Queensway Road
Central, Hong Kong
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<PAGE> 33
(b) If notice is given in any other manner or at any other place,
notice must also be given in writing at the place and in the manner specified
in this Section in order to be effective under this Agreement. All notice
periods begin on the date of delivery of written notice at the address listed
in Section 14.01(a) except as provided elsewhere in this Agreement.
(c) Either party may change the address in this Section by written
notice to the other party.
SECTION 14.02. Quiet Enjoyment. Upon payment of the required rents
and fees, and subject to its performance of this Agreement, FedEx may peaceably
use the Exclusive-Use Space and the Airport during the term of this Agreement
and any renewal thereof.
SECTION 14.03. Officers, Agents, and Employees. No commissioner,
politician, director, officer, agent, employee, or other representative of
either party may be charged personally nor held contractually liable by the
other party for the enforcement, attempted enforcement, or breach of this
Agreement. The SBMA and FedEx remain liable for the acts of these persons that
are within the scope of their duties.
SECTION 14.04. Subordination to Agreements with the Philippine and
U.S. Government. This Agreement is subject to any present or future agreement
between the SBMA and the Government of the Republic of the Philippines or the
United States of America concerning the operation or maintenance of the Airport
System. FedEx may not hold the SBMA liable for any failure to perform any part
of this Agreement as a result of any national emergency declared by the U.S. or
Philippine government.
SECTION 14.05. Incorporation of Required Provisions. The parties
agree to incorporate into this Agreement any provision required by any
governmental agency, including the SBMA acting in its non-proprietary capacity,
now or in the future.
SECTION 14.06. Non-Waiver of Rights. No waiver of default of any
part of this Agreement by either party may operate as a waiver of any
subsequent default of any part of this Agreement that is to be performed by the
other party. Consent or notice by either party may not be construed as consent
or notice in the future.
SECTION 14.07. Force Majeure. Neither the SBMA nor FedEx will be in
violation of this Agreement if it is prevented from performance, nor shall
FedEx be entitled to any abatement, diminution or reduction of the rental,
Landing Fees, Parking Charges or other charges hereunder or otherwise expressly
set forth herein, nor entitled to exercise any right of termination herein
provided, by reason of strike, boycott, labor dispute, embargo, shortage of
energy or materials, act of God, act of public enemy, act of superior
governmental authority, weather condition, riot, rebellion, sabotage, or any
other circumstance for which it is not responsible and which is beyond its
control, whether foreseen or unforeseen.
SECTION 14.08. Contract Interpretation. The headings of articles and
sections are used only for convenience and reference, and may not be used to
define or interpret the scope or intent of this Agreement. The language in all
parts of this Agreement must be construed according to its fair meaning and not
strictly for or against either the SBMA or FedEx.
SECTION 14.09. Philippine Aviation Laws. This Agreement shall not be
construed to grant FedEx any exclusive right or privilege within the meaning of
the aviation laws of the Philippines, as amended, except that FedEx has the
right to exclusive possession of its Exclusive-Use Space.
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<PAGE> 34
SECTION 14.10. Radio Interference. At SBMA's request, FedEx will
stop using any machine or device that interferes with any government operated
transmitter, receiver, or navigation aid until the cause of the interference is
eliminated.
SECTION 14.11. Management Audits. The SBMA will conduct periodic
management and operation audits of the Airport and will take these audits into
consideration in managing the Airport.
SECTION 14.12. Governing Law. This Agreement is governed by the laws
of the Philippines.
SECTION 14.13. Arbitration. (a) Any dispute arising out of or in
connection with this Agreement shall be referred to arbitration under the
Arbitration Rules of the United Nations Commission on International Trade Law.
(b) The venue for the arbitration shall be Hong Kong or such other
location as the parties shall mutually agree.
(c) There shall be three arbitrators, each party selecting one
arbitrator and the two designees shall select a third.
(d) The parties agree to submit to written and oral interrogatories.
The parties may submit such written evidence as they deem appropriate, but
discovery of written materials shall not be permitted.
(e) Arbitration hearings shall commence within ninety (90) days of a
written request for same and a final arbitral award must be passed down in
writing no later than eighteen (18) months from the date of such request. If
the arbitrators deem that failure to meet these deadlines is due substantially
to the fault of one party, the arbitrators shall award to the other party its
costs, including arbitration expenses and reasonable legal fees, but not travel
costs.
(f) Proceedings shall be in the English language and where required
the procedural laws of Hong Kong or such other location as shall be mutually
agreed shall apply.
(g) Each party shall bear its own costs. The expense of arbitration,
including fees paid to arbitrators, shall be split between the parties equally.
(h) The parties expressly agree and acknowledge that a judgment of
any court with jurisdiction over the relevant party may be entered upon the
arbitral award and each of the parties hereby waives all rights to appeal
awards of the arbitral tribunal, with the sole exceptions being for grounds of
appeal as stated in the New York Convention on the Recognition and Enforcement
of Foreign Arbitral Awards.
SECTION 14.14. Inspection of Books and Records. At its own expense
and upon reasonable notice, each party has the right from time to time to
inspect the books, records, or other data of the other party relating to this
Agreement. Inspections must be conducted during regular business hours;
provided, however, the right to inspect books shall be limited to only those
books (i) that are required to be kept by Philippines law in respect of
operations in the Philippines and then with respect only to operations and
business at the Airport, or (ii) have been used by FedEx in the calculation by
it of amounts owing to the SBMA hereunder.
SECTION 14.15. Modification Necessary for Grant of Government Funds.
If the Philippine government or any public or institutional lender requires
that this Agreement be
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<PAGE> 35
amended as a condition to the granting of funds for the improvement of the
Airport, FedEx shall agree to, and enter into, any such amendment provided that
the terms of such amendment do not (i) increase FedEx's financial obligations
hereunder, (ii) materially increase its other obligations, (iii) materially
decrease its rights hereunder, (iv) cause FedEx to limit or alter its aircraft
and ground transportation schedules, or (v) limit the ability of FedEx to
efficiently conduct its business at the Airport.
SECTION 14.16. Consent Not to be Unreasonably Withheld. Neither the
SBMA nor FedEx will unreasonably withhold any consent or approval required by
this Agreement.
SECTION 14.17. Prudent Operations. The SBMA will manage the Airport
and FedEx will manage its business at the Airport in a prudent and reasonable
manner.
SECTION 14.18. Independent Contractor. FedEx is neither an agent nor
an employee of the SBMA but is an independent contractor with respect to all
FedEx's activities on the Airport, including any installation, construction, or
service provided.
SECTION 14.19. Condemnation. In the event a substantial portion of
the premises are condemned by any proper authority and material rights and
privileges are impaired such that FedEx becomes unable to conduct its business
at the Airport, this Agreement may be terminated automatically on the date
FedEx is required to surrender possession of the property. The SBMA is entitled
to all the condemnation proceeds provided that FedEx shall be paid the portion
of the proceeds attributable to the fair market value of any improvements
placed on the property by an independent assessor and not any compensation for
consequential or severance damages including business damages, lost profits, or
leasehold advantage.
SECTION 14.20. Incorporation of Appendices. All Appendices described
in this Agreement shall be deemed to be incorporated in and made a part of this
Agreement, except that if there is any inconsistency between this Agreement and
the provisions of any Appendix the provisions of this Agreement shall control.
Terms used in an Appendix and also used in this Agreement shall have the same
meaning in the Appendix as in this Agreement.
SECTION 14.21. Representations and Warranties. (a) FedEx represents
and warrants to the SBMA that:
i. it is a corporation in good standing under the laws of the
State of Delaware, U.S.A.;
ii. has all right, power and authority to enter into this
Agreement; and
iii. as of the date of this Agreement holds all certifications,
licenses and approvals from the Governments of the United
States of America and the republic of the Philippines to
operate aircraft on routes to and from the Philippines.
(b) The SBMA represents and warrants to FedEx that:
i. it has title to the properties it leases to FedEx under this
Agreement and holds all right, power and authority to lease
the same to FedEx; and
ii. it has all right, power and authority to enter into this
Agreement.
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<PAGE> 36
SECTION 14.22. No Representations. FedEx acknowledges that it has
not relied upon any representation or statement of the SBMA or its
Commissioners, officers, employees or agents as to the condition of the
premises or the suitability thereof for the operations permitted on the
premises by this Agreement.
SECTION 14.23. Place of Payments. All payments required of FedEx by
this Agreement shall be made at the office of the Subic Bay Metropolitan
Authority, or to such other office or address as may be substituted therefor.
SECTION 14.24. Estoppel Certificates. At any time and from time to
time upon not less than ten (10)-days' prior notice by the SBMA to FedEx, FedEx
shall, without charge, execute, acknowledge and deliver to the SBMA a statement
prepared by the SBMA certifying (i) that this Agreement is unmodified and in
full force and effect (or if there have been modifications, that the same is in
full force and effect as modified and stating the modifications), (ii) whether
the term has commenced and rent, Landing Fees, Parking Charges, and other
charges have become payable hereunder and, if so, the dates to which they have
been paid, (iii) whether or not, to the best knowledge of the signer of such
certificate, the SBMA is in default in performance of any of the terms of this
Agreement and, if so, specifying each such default of which the signer may have
knowledge, (iv) whether FedEx has made any claim against the SBMA under this
Agreement and, if so, the nature thereof and the dollar amount, if any, of such
claim, (v) whether there exist any offsets or defenses performed, and, if so,
specifying the same, and (vi) such further information with respect to this
Agreement as the SBMA may reasonably request, it being intended that any such
statement delivered pursuant hereto may be relied upon by any prospective
purchaser of, or lender against, SBMA's interest hereunder. The failure of
FedEx to execute, acknowledge and deliver to the SBMA a statement in accordance
with the provisions of this Section shall constitute an acknowledgment by
FedEx, which may be relied on by any person who would be entitled to rely upon
any such statement, that such statement is submitted by the SBMA is true and
correct.
SECTION 14.25. Successors and Assigns. The terms and conditions of
this Agreement shall be binding upon and inure to the benefit of the successors
and assigns of the SBMA and FedEx and shall be construed as covenants running
with the real property leased hereunder.
SECTION 14.26. Severability. If any part of this Agreement is
declared to be invalid by a court of competent jurisdiction, so long as that
part is not material, the other parts of this Agreement remain in full force.
SECTION 14.27. Entire Agreement. This Agreement with all attached
appendices constitutes the entire agreement between the SBMA and FedEx at the
Airport. Statements previously made, verbal or written, are merged in this
Agreement. Until signed by the representatives of the SBMA and FedEx, this
Agreement is of no effect. This Agreement may only be amended in a writing that
is signed by the authorized representatives of both parties.
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<PAGE> 37
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the date first above written.
SUBIC BAY METROPOLITAN AUTHORITY FEDERAL EXPRESS CORPORATION
/S/ FERDINAND M. ARISTORENS /S/ GILBERT D. MOOK
- ---------------------------------- ----------------------------------
FERDINAND M. ARISTORENS GILBERT D. MOOK
HEAD - LEGAL DEPARTMENT VICE PRESIDENT
PROPERTIES AND FACILITIES
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APPENDIX A
MILESTONES
<TABLE>
<CAPTION>
EVENT DATE
----- ----
<S> <C> <C>
1. Runway paving starts Nov. 15, 1994
2. SFS designated by Government of Philippines Dec. 15, 1995
as co-terminal point with MNL
3. Asphalt paving starts Dec. 15, 1995
4. Alternate airport to SFS at MNL fully approved. Dec. 15, 1994
Fully approved means that sufficient apron space
is available to park all FedEx and Vendor Carrier
scheduled operations in the event of a diversion;
FedEx has access to a covered facility to do some
sorting/transloading; and 24-hour operations are
acceptable to regulatory authorities.
5. Telecommunication lines are installed and operational Jan. 1, 1995
at the Exclusive Use Space.
6. VOR/DME and ASR are installed, flight tested and Feb. 1, 1995
certified and operational.
7. VOR/DME approaches and missed approaches are Feb. 1, 1995
approved, flight tested, certified and published.
8. ATO staff required to conduct flight operations at Feb. 15, 1995
SFS are hired, trained and on site. Other staff
required to operate the airport (Crash, Fire and
Rescue, Air Control Tower, and Airport
Management) are hired and on site.
9. Labor certification for FedEx crew members and Feb. 15, 1995
waiver of understudy program for crew obtained.
10. Operational Airport as defined in Section 2.02 April 1, 1995
</TABLE>
Cure periods for Milestone Dates 1 through 9 shall be thirty (30) days. Cure
period for Milestone Date 10 shall be ninety (90) days.
A-1
<PAGE> 39
Blueprint
Subic Bay International Airport Site Plan
A-2
<PAGE> 40
APPENDIX B
EXCLUSIVE-USE SPACE
Section 1.00. Exclusive-Use Space. FedEx shall lease under this
Agreement Buildings #8045 and #8306.
Section 2.00. Exclusive Ramp and Apron. The Exclusive Ramp to FedEx
and the Apron Areas to be used by FedEx, including the Preferential Aircraft
Apron, Overflow Aircraft Apron and Common-Use Apron along with the
Exclusive-Use Space and the buildings for which the option of Section 5.03 of
this Agreement shall apply are marked and identified in Appendix B-1.
B-1
<PAGE> 41
Appendix B-1.2
Blueprint
Designation of Airport Apron
B-2
<PAGE> 42
APPENDIX C
IMPROVEMENTS TO BE MADE BY SBMA
Section 1.00. Improvements to Exclusive-Use Space. On or before the
Operation Date or such other dates stated below, SBMA will deliver to FedEx each
Exclusive-Use Space after having performed the following work:
(a) Connection of each existing building in the Exclusive-Use
Space to power for electrical requirements;
(b) Connection of each existing building in the Exclusive-Use
Space to telephone lines;
(c) Connection of each existing building in the Exclusive-Use
Space to water supply;
(d) All sewer, waste water and storm drains will be inspected and
prepared for use;
(e) All air-conditioning units, central and window units, will be
inspected and put in working order;
(f) Fire sprinkler systems will be inspected, tested and made
operable;
(g) All windows and doors will be inspected and replaced as
required;
(h) All doors and locks will be inspected and put in working
order; all doors will be labeled and keys supplied;
(i) Hangar doors on Bldg. 8045 will be capable of being opened and
closed by a means that is not detrimental to the doors, the
building or the equipment used to effect same;
(j) Toilets, sinks and showers will be inspected and repaired to
usable condition;
(k) By December 1, 1995, all electrical panels will be checked for
proper load distribution. Loads will be redistributed as
required;
(l) By December 1, 1995, all electrical wiring, outlets and
fixtures will be inspected; repairs and upgrade will be
completed to put said wiring, outlets and fixtures in working
order to the extent required for the power requirements of
FedEx;
(m) By December 1, 1995, all panels and breakers will be labeled;
(n) SBMA will ensure that as much electricity as FedEx shall
require, initially or at any other time, will be brought to
FedEx facilities as required;
(o) Inspect for corrosion;
(p) Inspect and repair all gates and fences; and
C-1
<PAGE> 43
(q) As built plans will be provided for each building the extent
same are within the possession or control of SBMA.
Section 2.00. Improvements to Housing Units. All items detailed at
Section 1.00 of this Appendix C where applicable to Housing Units shall be
performed on each Housing Unit to be occupied by FedEx on or before the lease
start date; provided, that in addition to the foregoing SBMA will paint
interiors and exteriors and do basic landscaping work for each Housing Unit.
C-2
<PAGE> 44
APPENDIX D
BUILDING LEASE RATES
(in USD$ per square meter per month)
Section 1.00. Lease Rates for Exclusive-Use Space. (a) The lease
rates for the two buildings making up the Exclusive-Use Space as of the
Operation Date shall be as follows (rates are in USD$):
<TABLE>
<S> <C> <C>
Bldg# 8045 8306
Std Lease 4.00 1.50
Rate
Credit for 1.50 0
FedEx LI-II
Agreed Lease 2.50 1.50
Rate
</TABLE>
(b) FedEx shall make improvements of at least $863,000.00 for the
entire amount of credit to apply.
(c) Approximate areas for each building are as follows (subject to
later survey, if required): 8045 - 9,597 sq.m; 8306 - 1,067 sq.m.
(d) Exclusive Ramp is approximately 21,730 sq.m. (subject to later
survey, if required) and the rental therefor has been blended into the lease
rates for the Exclusive-Use Space.
Section 2.00. Lease Rates of Other Buildings. The buildings set
forth below are included among those reserved for FedEx under the option
granted under Section 5.03 of the Agreement. Should FedEx exercise its option
to lease any of the following buildings, the lease rate it shall pay shall be
as set forth below. The following does not include all buildings that are
subject to the option of Section 5.03. For those other buildings not listed
below, should FedEx exercise its option on same, the lease rate shall be
negotiated separately in accordance with Section 5.03. The Agreed Lease Rate
shall be determined by subtracting from the Standard Lease Rate an amount equal
to FedEx' estimated leasehold improvements on each such facility.
<TABLE>
<S> <C> <C> <C> <C>
Bldg# 8048 8066 8331 8301
Std Lease 3.00 1.50 1.50 1.50
Rate
</TABLE>
D-1
<PAGE> 45
APPENDIX E
AERONAUTICAL FEES AND CHARGES
ARTICLE 1
INTERNATIONAL FEES AND CHARGES
Aircraft arriving at the Airport whose last point of departure is from a
location outside of the Philippines will be levied the following charges for
the use of runways, taxiways, apron parking areas, and lighting facilities.
All rates are in US Dollars.
These rates cover Federal Express aircraft and the aircraft of Vendor Carriers.
Section 1.00. Landing Fees.
Basis: Fees are computed on the maximum take off weight in each aircraft's
certification and are applied to a complete aircraft cycle (one landing and one
take-off).
Section 1.01. First 28,000,000 kilograms. Landing Fees for the first
28,000,000 kilograms cumulative weight for FedEx aircraft landing at the
Airport on an international flight during any calendar month shall be as set
forth below:
<TABLE>
<CAPTION>
Aircraft Weight Rate Per 1,000 kg
- --------------- -----------------
<S> <C>
First 50,000 kg. $3.35
Second 50,000 kg. $3.90
Third 50,000 kg. $4.50
Above 150,000 kg. $4.80
</TABLE>
Landing Fees are to be calculated from a zero base for each individual aircraft
cycle.
Section 1.02. Above 28,000,000 kilograms. Landing fees for any FedEx
aircraft landing at the Airport on an international flight during any calendar
month after the 28,000,000 kilogram cumulative weight break has been reached
shall be USD$2.50 per 1,000 kilograms irrespective of the MGTOW of the
aircraft.
Section 2.00. Parking Fees. Basis: Fees are computed based on the
maximum take-off weight in each aircraft's certification.
Section 2.01. First 50,000,000 kg. per month. Parking Fees for all
aircraft prior to reaching of a cumulative weight, based on MGTOW of each FedEx
aircraft, of 50,000,000 kilograms in any calendar month shall have the first
four hours parking at the Airport free of charge. The rate for each aircraft
after four hours shall be charged based on the MGTOW of that aircraft in
accordance with the following schedule:
<TABLE>
<CAPTION>
Aircraft Weight Rate after the First Four Hours
- --------------- -------------------------------
<S> <C>
50,000 kg and below $3.00 per half-hour
50,0001 to 100,000 kg $6.00 per half hour
</TABLE>
E-1
<PAGE> 46
<TABLE>
<S> <C>
100,001 to 150,000 kg $9.00 per half hour
Above 150,000 kg $13.00 per half hour
</TABLE>
Section 2.02. After first 50,000,000 kilograms. For all FedEx
aircraft parking at the Airport in any calendar month once the threshold of
50,000,000 kilograms of cumulative weight (based on MGTOW) has been reached,
the following parking charges shall apply:
<TABLE>
<CAPTION>
Aircraft Weight Rate for First Four Hours
- --------------- -------------------------
<S> <C>
50,000 kg and below $50
50,001 to 100,000 kg $60
100,001 to 150,000 kg $80
Above 150,000 kg $100
</TABLE>
<TABLE>
<CAPTION>
Aircraft Weight Rate after the First Four Hours
- --------------- -------------------------------
<S> <C>
50,000 kg and below $3.00 per half hour
50,0001 to 100,000 kg $6.00 per half hour
100,001 to 150,000 kg $9.00 per half hour
Above 150,000 kg $13.00 per half hour
</TABLE>
Section 3.00. Lighting Fees
Exempted
ARTICLE II
DOMESTIC FEES AND CHARGES
Aircraft arriving at the Airport whose last point of departure is from a
location inside of the Philippines will be levied the following charges for the
use of runways, taxiways, apron parking areas, and lighting facilities. All
rates are in US Dollars. These rates cover Federal Express aircraft and the
aircraft of Vendor Carriers.
Section 1.01. Landing Fees.
Basis: Fees are computed on the maximum take off weight in each aircraft's
certification and are applied to a complete aircraft cycle (one landing and one
take-off).
<TABLE>
<CAPTION>
Aircraft Weight Rate Per 1,000 kg
- --------------- -----------------
<S> <C>
First 50,000 kg. $0.90
Second 50,000 kg. $1.05
Third 50,000 kg. $1.20
Above 150,000 kg. $1.30
</TABLE>
Landing Fees are to be calculated from a zero base for each individual aircraft
cycle.
2.00 Parking Fees
Basis: Fees are computed on the maximum take off weight in each aircraft's
certification
E-2
<PAGE> 47
<TABLE>
<CAPTION>
Aircraft Weight First Four Hours
- --------------- ----------------
<S> <C>
First 50,000 kg. $25
Second 50,000 kg. $32
Third 50,000 kg. $42
Above 150,000 kg. $53
</TABLE>
<TABLE>
<CAPTION>
Aircraft Weight Rates after the First Four Hours
- --------------- --------------------------------
<S> <C>
First 50,000 kg. $1.50 per half hour
Second 50,000 kg. $3.20 per half hour
Third 50,000 kg. $5.00 per half hour
Above 150,000 kg. $6.70 per half hour
</TABLE>
Landing Fees are to be calculated from a zero base for each individual aircraft
cycle.
3.00 Lighting Fees
$20.00 per landing and $20.00 per take-off during the hours of 6:00 PM and 6:00
AM.
E-3
<PAGE> 1
Exhibit 10.77
AMENDED AND RESTATED
CREDIT AGREEMENT
among
FEDERAL EXPRESS CORPORATION,
THE LENDERS,
and
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
Dated as of May 12, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. DEFINITIONS 1
ARTICLE II. THE CREDITS 16
2.1. Commitment 16
2.2. Mandatory Payments; Termination 17
2.3. Ratable Loans; Types of Advances 17
2.4. Determination of Levels 17
2.5. Facility Fee; Agent's Fee; Reductions in Aggregate
Commitment 17
2.6. Minimum Amount of Each Advance 18
2.7. Optional Principal Payments 18
2.8. Method of Selecting Types and Interest Periods for
New Advances 18
2.9. Conversion and Continuation of Outstanding Advances 19
2.10. Changes in Interest Rate, etc 20
2.11. Rates Applicable After Maturity of Advances 20
2.12. Method of Payment 20
2.13. Notes; Telephonic Notices 20
2.14. Interest Payment Dates; Interest and Fee Basis 21
2.15. Notification of Advances, Interest Rates, Prepayments
and Commitment Reductions 21
2.16. Lending Installations 21
2.17. Non-Receipt of Funds by the Agent 22
2.18. Withholding Tax Exemption 22
ARTICLE III. CHANGE IN CIRCUMSTANCES 23
3.1. Yield Protection 23
3.2. Changes in Capital Adequacy Regulations 23
3.3. Availability of Types of Advances 24
3.4. Funding Indemnification 24
3.5. Lender Statements; Survival of Indemnity 24
ARTICLE IV. CONDITIONS PRECEDENT 25
4.1. Closing 25
4.2. Each Advance 26
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE V. REPRESENTATIONS AND WARRANTIES 27
5.1. Corporate Existence and Standing 27
5.2. Authorization and Validity 27
5.3. No Conflict; Government Consent 27
5.4. Financial Statements 27
5.5. Taxes 28
5.6. Litigation and Contingent Obligations 28
5.7. Subsidiaries 28
5.8. ERISA 28
5.9. Accuracy of Information 28
5.10. Regulation U 29
5.11. Material Agreements 29
5.12. Compliance With Laws 29
5.13. Existing Liens 29
5.14. Investment Company Act 29
5.15. Citizenship 29
5.16. Status as Air Carrier 29
5.17. Pari Passu 30
ARTICLE VI. COVENANTS 30
6.1. Financial Reporting 30
6.2. Use of Proceeds 32
6.3. Notice of Default 32
6.4. Conduct of Business 32
6.5. Citizenship and Regulatory Certificates 32
6.6. Payment of Taxes 33
6.7. Insurance 33
6.8. Compliance with Laws 33
6.9. Maintenance of Properties 33
6.10. Inspection 33
6.11. Dividend Declarations and Restricted Investments 33
6.12. Leverage 34
6.13. Fixed Charge Coverage 34
6.14. Consolidated Adjusted Net Worth 34
6.15. Merger and Consolidation 34
6.16. Sales of Assets 35
6.17. Loans, Advances and Investments 36
6.18. Contingent Liabilities 37
6.19. Liens 38
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VII. DEFAULTS 40
ARTICLE VIII. ACCELERATION, WAIVERS, AMENDMENTS AND
REMEDIES 42
8.1. Acceleration 42
8.2. Amendments 42
8.3. Preservation of Rights 43
ARTICLE IX. GENERAL PROVISIONS 44
9.1. Survival of Representations 44
9.2. Governmental Regulation 44
9.3. Taxes 44
9.4. Headings 44
9.5. Entire Agreement 44
9.6. Several Obligations; Benefits of this Agreement 44
9.7. Expenses; Indemnification 44
9.8. Numbers of Documents 45
9.9. Severability of Provisions 45
9.10. Nonliability of Lenders 45
9.11. Choice of Law 45
9.12. Consent to Jurisdiction 45
9.13. Waiver of Jury Trial 46
9.14. Confidentiality 46
9.15. Accounting 46
9.16. Effect on Prior Agreement; Ratification 46
ARTICLE X. THE AGENT 47
10.1. Appointment 47
10.2. Powers 47
10.3. General Immunity 47
10.4. No Responsibility for Loans, Recitals, etc 47
10.5. Action on Instructions of Lenders 47
10.6. Employment of Agents and Counsel 48
10.7. Reliance on Documents; Counsel 48
10.8. Agent's Reimbursement and Indemnification 48
10.9. Rights as a Lender 48
10.10. Lender Credit Decision 49
10.11. Successor Agent 49
10.12. Distribution of Information 49
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE XI. SETOFF; RATABLE PAYMENTS 50
11.1. Setoff 50
11.2. Ratable Payments 50
ARTICLE XII. BENEFIT OF AGREEMENT; ASSIGNMENTS;
PARTICIPATIONS 50
12.1. Successors and Assigns 50
12.2. Participations 51
12.2.1. Permitted Participants; Effect 51
12.2.2. Voting Rights 51
12.2.3. Benefit of Setoff 51
12.3. Assignments 52
12.3.1. Permitted Assignments 52
12.3.2. Required Assignments 52
12.3.3. Effect; Effective Date 53
12.4. Dissemination of Information 53
12.5. Tax Treatment 53
ARTICLE XIII. NOTICES 53
13.1. Giving Notice 53
13.2. Change of Address 54
ARTICLE XIV. COUNTERPARTS 54
EXHIBITS
EXHIBIT "A" - Note 84
EXHIBIT "B" - Opinion of Counsel 86
EXHIBIT "C" - Assignment Agreement 90
EXHIBIT "D" - Loan/Credit Related Money Transfer Instruction 99
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
SCHEDULES
<S> <C> <C> <C>
SCHEDULE "1" - Significant Subsidiaries 100
SCHEDULE "2" - Compliance Calculations 101
</TABLE>
<PAGE> 7
FEDERAL EXPRESS CORPORATION
AMENDED AND RESTATED
CREDIT AGREEMENT
This Agreement, dated as of May 12, 1995, is among Federal Express
Corporation, the Lenders and The First National Bank of Chicago, as Agent. The
parties hereto agree as follows:
WHEREAS, the Borrower (this and other capitalized terms shall have the
respective meanings set forth in Article I hereinbelow), the Agent, and certain
lenders (the "Prior Lenders") are parties to that certain Credit Agreement
dated as of May 7, 1993, as heretofore amended (as so amended the "Prior
Agreement"), pursuant to which the Prior Lenders agreed to make available to
the Borrower revolving credit loans on the terms and conditions set forth
therein (hereinafter the "Prior Credit Facility"); and
WHEREAS, the Borrower, the Agent, and the Lenders desire to
restructure the Prior Credit Facility and to amend and restate the Prior
Agreement in certain respects as more fully set forth herein, and to release
those Prior Lenders which are not continuing as Lenders (hereinafter the
"Withdrawing Lenders"); and
WHEREAS, pursuant to the terms of this Agreement, on the Effective
Date, (i) the Prior Credit Facility shall be restructured in the form of the
credit facility described herein, (ii) all loans and other obligations of the
Borrower to the Lenders outstanding as of such date shall be deemed to be loans
and obligations outstanding under the revolving credit facility described
herein, (iii) the Withdrawing Lenders shall no longer be parties to this
Agreement, and (iv) all provisions of this Amended and Restated Credit
Agreement not previously in effect shall become effective;
NOW, THEREFORE, in consideration of the undertakings set forth herein
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree that, effective upon the
Effective Date, the Prior Agreement is hereby amended and restated in its
entirety to read as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or division thereof,
whether through purchase of assets, merger or otherwise or
Page 1
<PAGE> 8
(ii) directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage or
voting power) of the outstanding partnership interests of a partnership.
"Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Loans made by the Lenders to the Borrower of the same
Type and, in the case of Fixed Rate Advances, for the same Interest Period.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
when used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means The First National Bank of Chicago in its capacity as
agent for the Lenders pursuant to Article X, and not in its individual capacity
as a Lender, and any successor Agent appointed pursuant to Article X.
"Aggregate Commitment" means the aggregate of the Commitments of all
the Lenders, as reduced from time to time pursuant to the terms hereof.
"Agreement" means this amended and restated credit agreement, as it
may be amended or modified and in effect from time to time.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Corporate Base Rate for such day and (ii) the
sum of the Federal Funds Effective Rate for such day plus 1/2% per annum.
"Applicable Margin" means:
(a) at all times that the Borrower's debt ratings are at Level I:
.20% with respect to Eurodollar Advances and
.325% with respect to Fixed CD Rate Advances;
(b) at all times that the Borrower's debt ratings are at Level II:
.225% with respect to Eurodollar Advances and
.35% with respect to Fixed CD Rate Advances;
(c) at all times that the Borrower's debt ratings are at Level
III:
Page 2
<PAGE> 9
.25% with respect to Eurodollar Advances and
.375% with respect to Fixed CD Rate Advances;
(d) at all times that the Borrower's debt ratings are at Level IV:
.35% with respect to Eurodollar Advances and
.475% with respect to Fixed CD Rate Advances;
and
(e) at all times that the Borrower's debt ratings are at Level V
or the Borrower's senior unsecured long- term debt is not rated:
.425% with respect to Eurodollar Advances and
.55% with respect to Fixed CD Rate Advances.
Each change in the Applicable Margin resulting from a change in the rating of
the Borrower's senior unsecured long-term debt by either S&P or Moody's shall
take effect at the time such change in such rating is publicly announced by the
relevant rating agency.
"Article" means an article of this Agreement unless another document
is specifically referenced.
"Assessment Rate" means, for any CD Interest Period, the assessment
rate per annum (rounded upwards to the next higher multiple of 1/100 of 1% if
the rate is not such a multiple) payable to the Federal Deposit Insurance
Corporation (or any successor) for the insurance of domestic deposits of First
Chicago, as reasonably determined by the Agent on the first day of such CD
Interest Period.
"Authorized Officer" means any one of the Chief Executive Officer, the
Chief Operating Officer, the Chief Financial Officer, the Treasurer, or the
Managing Director Corporate Finance and Assistant Treasurer of the Borrower or
any other officer or employee of the Borrower designated in writing as an
"Authorized Officer" under this Agreement by any one of the Chief Executive
Officer, the Chief Operating Officer, the Chief Financial Officer, the
Treasurer, or the Managing Director Corporate Finance and Assistant Treasurer
of the Borrower.
"Beneficial Owner" means a Person deemed the "Beneficial Owner" of any
securities as to which such Person or any of such Person's Affiliates is or may
be deemed to be the beneficial owner pursuant to Rule 13d-3 or 13d-5 under the
Securities Exchange Act of 1934 (as the same may from time to time be amended,
modified or readopted), as well as any securities as to which such Person or
any of such Person's Affiliates has the right to become such a beneficial owner
(whether such right is exercisable immediately or only after the passage of
time or the occurrence of a specified event) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights,
Page 3
<PAGE> 10
rights, warrants or options, or otherwise. In determining the percentage of
the outstanding Voting Stock with respect to which a Person is the Beneficial
Owner, all shares as to which such Person is deemed the Beneficial Owner shall
be deemed outstanding.
"Borrower" means Federal Express Corporation, a Delaware corporation,
and its successors and assigns.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.8.
"Business Day" means (i) with respect to any borrowing, payment or
rate selection of Eurodollar Advances, a day (other than a Saturday or Sunday)
on which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market and (ii)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago for the conduct of substantially all of their
commercial lending activities.
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.
"Capitalized Operating Lease Value" means the present value, using a
discount rate equal to 12.5%, of the Borrower's future minimum lease payments
for aircraft leases scheduled to terminate more than 365 days after their
respective dates of execution.
"CD Interest Period" means, with respect to a Fixed CD Rate Advance, a
period of 30, 60, 90 or 180 days commencing on a Business Day selected by the
Borrower pursuant to this Agreement. If such CD Interest Period would end on a
day which is not a Business Day, such CD Interest Period shall end on the next
succeeding Business Day.
"Code" means the Internal Revenue Code of 1986, as amended, reformed
or otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such Lender to
make Loans not exceeding the amount set forth opposite its signature below, as
such amount may be modified from time to time pursuant to the terms hereof.
"Consolidated Adjusted Net Worth" means, at any date as of which the
amount thereof is to be determined, (a) the sum of the amounts set forth as
preferred stock, common stock,
Page 4
<PAGE> 11
capital in excess of par value or paid-in surplus and retained earnings on a
consolidated balance sheet of the Borrower and the Consolidated Subsidiaries
prepared as of such date in accordance with GAAP, minus (b) the sum of the
amounts set forth on such consolidated balance sheet as (i) the cost of any
shares of the Borrower's common stock held in the treasury and (ii) any surplus
resulting from any write-up of assets after the date of this Agreement and
(iii) the aggregate value of all goodwill, all determined in accordance with
GAAP.
"Consolidated Adjusted Total Assets" means, at any date as of which
the amount thereof is to be determined, (a) the aggregate amount set forth as
the assets of the Borrower and the Consolidated Subsidiaries on a consolidated
balance sheet of the Borrower and the Consolidated Subsidiaries prepared as of
such date in accordance with GAAP, minus (b) the aggregate book value as of
such date of determination of all assets of the Borrower or a Consolidated
Subsidiary subject on such date of determination to a Lien permitted by Section
6.19(j).
"Consolidated Cash Flow" means, on a consolidated basis for the
Borrower and its Consolidated Subsidiaries for the twelve most recent complete
fiscal months, the sum of (i) income (loss) before income taxes, plus (ii)
Interest Expense, plus (iii) Rent Expense, in each case as determined in
accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income (or
net loss) of the Borrower and the Consolidated Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP and after giving
appropriate effect to any outside minority interests in the Consolidated
Subsidiaries, excluding
(a) any aggregate net gain arising from the sale or other
disposition of any assets other than any such gain arising from the
sale or other disposition of assets (including aircraft) in the
ordinary course of business,
(b) any gain arising from any write-ups of assets,
(c) any unrealized capital gain or loss on any investment,
(d) any portion of the earnings of any Consolidated
Subsidiary which for any reason is unavailable for payment of
dividends to the Borrower or another Consolidated Subsidiary,
(e) any amount representing the interest of the Borrower
and the Consolidated Subsidiaries in the undistributed earnings of any
other Person (other than a Consolidated Subsidiary), and
(f) the net income (or net loss) of any Person prior to
the date it became a Consolidated Subsidiary.
Page 5
<PAGE> 12
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Borrower
in its consolidated financial statements in accordance with GAAP if such
statements were prepared as of such date.
"Contingent Obligation" of a Person means any agreement, undertaking
or arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person,
or agrees to maintain the net worth or working capital or other financial
condition of any other Person, or otherwise assures any creditor of such other
Person against loss, including, without limitation, any comfort letter,
operating agreement, take-or-pay contract or application for a Letter of
Credit.
"Continuing Director" means an individual who is a member of the Board
of Directors of the Borrower on the date of this Agreement or who shall have
become a member of the Board of Directors of the Borrower subsequent to such
date and who shall have been nominated or elected by a majority of the other
Continuing Directors then members of the Board of Directors of the Borrower.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any of its Subsidiaries,
are treated as a single employer under Section 414 of the Code.
"Corporate Base Rate" means a rate per annum equal to the corporate
base rate of interest announced by First Chicago from time to time, changing
when and as said corporate base rate changes.
"Current Market Price" means, with respect to any security on any
date, the last sale price or, in case no such sale takes place on such date,
the average of the closing bid and asked prices for such security, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock
Exchange, Inc. or, if such security is not then listed or admitted to trading
on the New York Stock Exchange, Inc., as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which such security is listed or admitted to
trading or, if such security is not then listed or admitted to trading on any
national securities exchange, on the NASDAQ National Market System or, if such
security is not then quoted on such National Market System, the average of the
closing bid and asked prices for such security in the over-the-counter market,
as reported by NASDAQ or such other system then in use, or, if on any such date
such security is not then quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market-maker then
making a market in such security selected by the Board of Directors of the
Borrower or a duly authorized committee thereof; provided,
Page 6
<PAGE> 13
however, that if on any such date such security is not listed or admitted to
trading on a national securities exchange or traded in the over-the-counter
market, the "Current Market Price" of such security on such date shall mean the
fair value thereof on such date as determined in good faith by the Board of
Directors of the Borrower or a duly authorized committee thereof.
"Current Maturities" means, as of any date with respect to the Long
Term Debt or the Capitalized Lease Obligations of any Person, any portion of
such Long Term Debt or Capitalized Lease Obligations, as the case may be, which
would in accordance with GAAP be classified as a current liability of such
Person.
"Dealer" means a Lender, First Tennessee Bank, N.A., Union Planters
National Bank of Memphis or any other national or state bank or trust company
or dealer or broker of government securities having either (A) capital, surplus
and undivided profits or (B) total equity of at least $250,000,000, or any
affiliate thereof authorized to deal in the commercial products described in
clauses (i), (ii), and (iii) of Section 6.17(e).
"Default" means an event described in Article VII.
"Effective Date" means the Business Day on or before June 1, 1995 on
which (a) the Borrower, the Agent and the Lenders have executed this Agreement,
(b) the Borrower has satisfied all of the terms and conditions of Section 4.1,
and (c) the Borrower has paid all fees then due to the Agent and the Lenders in
connection with this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Advance" means an Advance which bears interest at a
Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for
the relevant Eurodollar Interest Period, the rate determined by the Agent to be
the arithmetic average of the rates reported to the Agent by each Reference
Lender as the rate at which deposits in U.S. dollars are offered by such
Reference Lender to first-class banks in the London interbank market at
approximately 11 a.m. (London time) two Business Days prior to the first day of
such Eurodollar Interest Period, in the approximate amount of such Reference
Lender's relevant Eurodollar Loan and having a maturity approximately equal to
such Eurodollar Interest Period. If any Reference Lender fails to provide such
quotation to the Agent, then the Agent shall determine the Eurodollar Base Rate
on the basis of the quotations of the remaining Reference Lender(s).
"Eurodollar Interest Period" means, with respect to a Eurodollar
Advance, a period of one, two, three, or six months commencing on a Business
Day selected by the Borrower pursuant to this Agreement. Such Eurodollar
Interest Period shall end on (but exclude) the day which corresponds
numerically to such date one, two, three, or six months thereafter, provided,
however, that if there is no such numerically corresponding day in such next,
Page 7
<PAGE> 14
second, third, or sixth succeeding month, such Eurodollar Interest Period shall
end on the last Business Day of such next, second, third, or sixth succeeding
month. If a Eurodollar Interest Period would otherwise end on a day which is
not a Business Day, such Eurodollar Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Eurodollar Interest Period
shall end on the immediately preceding Business Day.
"Eurodollar Loan" means a Loan which bears interest at a Eurodollar
Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Advance for the
relevant Eurodollar Interest Period, the sum of (i) an amount equal to (a) the
Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided by
(b) one minus the Reserve Requirement (expressed as a decimal), if any,
applicable to such Eurodollar Interest Period, and (ii) the Applicable Margin.
The Eurodollar Rate shall be rounded to the next higher multiple of 1/16 of 1%
if the rate is not such a multiple.
"FAA" means the Federal Aviation Administration or any other
governmental agency succeeding to the jurisdiction thereof.
"Facility Termination Date" means May 31, 2000 or any earlier date on
which the Commitments are cancelled by the Borrower or otherwise terminated
pursuant to this Agreement.
"Fair Market Value" means (i) as to securities which are publicly
traded, the average of the Current Market Prices of such securities for each
day during the period of 10 consecutive trading days immediately preceding the
date of determination and (ii) as to securities which are not publicly traded
or any other property, the fair value thereof as determined in good faith by
the Board of Directors of the Borrower or a duly authorized committee thereof.
"Federal Aviation Act" means the Federal Aviation Act of 1958, as
amended from time to time.
"Federal Funds Effective Rate" means, for any day, an interest rate
per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations at approximately 10 a.m.
(Chicago time) on such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by the Agent in its
sole discretion.
"First Chicago" means The First National Bank of Chicago in its
individual capacity, and its successors.
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<PAGE> 15
"Fixed CD Base Rate" means, with respect to a Fixed CD Rate Advance
for the relevant CD Interest Period, the rate determined by the Agent to be the
arithmetic average of the rate reported to the Agent by each Reference Lender
as the prevailing bid rate for the purchase at face value at or before 10 a.m.
(Chicago time) on the first day of such CD Interest Period by three New York or
Chicago certificate of deposit dealers of recognized standing selected by such
Reference Lender of certificates of deposit of such Reference Lender in the
approximate amount of such Reference Lender's relevant Fixed CD Rate Loan and
having a maturity approximately equal to such CD Interest Period, provided that
if such quotations from such dealers are not available to such Reference
Lender, such Reference Lender shall notify the Agent of a reasonably equivalent
rate determined by it on the basis of a reliable alternative source for
certificate of deposit rates reflecting comparable and current interest rates
for such CD Interest Period selected by it in accordance with its usual
business practices. If any Reference Lender fails to provide such quotation to
the Agent, then the Agent shall determine the Fixed CD Base Rate on the basis
of the quotations of the remaining Reference Lender(s).
"Fixed CD Rate" means, with respect to a Fixed CD Rate Advance for the
relevant CD Interest Period, a rate per annum equal to the sum of (i) an amount
equal to (a) the Fixed CD Base Rate applicable to such CD Interest Period,
divided by (b) one minus the Reserve Requirement (expressed as a decimal), if
any, applicable to such CD Interest Period, and (ii) the Assessment Rate
applicable to such CD Interest Period, plus (iii) the Applicable Margin. The
Fixed CD Rate shall be rounded to the next higher multiple of 1/100 of 1% if
the rate is not such a multiple.
"Fixed CD Rate Advance" means an Advance which bears interest at a
Fixed CD Rate.
"Fixed CD Rate Loan" means a Loan which bears interest at a Fixed CD
Rate.
"Fixed Rate" means the Fixed CD Rate or the Eurodollar Rate.
"Fixed Rate Advance" means an Advance which bears interest at a Fixed
Rate.
"Fixed Rate Loan" means a Loan which bears interest at a Fixed Rate.
"Flight Equipment" means, collectively, aircraft, aircraft engines,
appliances and spare parts, all as defined in the Federal Aviation Act, and
related parts.
"Floating Rate" means, for any day, a rate per annum equal to the
Alternate Base Rate for such day, changing when and as the Alternate Base Rate
changes.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate.
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"Funded Debt" means any Indebtedness (other than items characterized
as Indebtedness pursuant to clause (vii) of the definition thereof) of the
Borrower or any Consolidated Subsidiary that is outstanding on the date of
determination.
"GAAP" means generally accepted principles of accounting as in effect
at the time of application to the provisions hereof provided that any
modification in generally accepted accounting principles which is made within
twelve months prior to any such application and which would result in a Default
or Unmatured Default shall be disregarded.
"Indebtedness" of a Person means without duplication, such Person's
(i) obligations for borrowed money, (ii) obligations representing the deferred
purchase price of Property or services (other than accounts payable arising in
the ordinary course of such Person's business payable on terms customary in the
trade), (iii) obligations, whether or not assumed, secured by Liens or payable
out of the proceeds or production from property now or hereafter owned or
acquired by such Person, (iv) obligations which are evidenced by notes,
acceptances, or other instruments, (v) Capitalized Lease Obligations, (vi) net
liabilities under interest rate swap, exchange or cap agreements, (vii)
Contingent Obligations, and (viii) obligations created through asset
securitization financing programs.
"Interest Expense" means, for any period, the gross interest expense
(without regard to any offsetting interest income or reduction for capitalized
interest) of the Borrower and its Consolidated Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"Interest Period" means a CD Interest Period or a Eurodollar Interest
Period.
"Investment" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in the
trade), deposit account (other than a demand deposit account maintained in the
ordinary course of business) or contribution of capital by such Person to any
other Person or any investment in, or purchase or other acquisition of, the
stock, partnership interests, notes, debentures or other securities of any
other Person made by such Person.
"Lenders" means the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the Agent,
any office, branch, subsidiary or affiliate of such Lender or the Agent.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Level" means any of Level I, Level II, Level III, Level IV, or Level
V.
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"Level I" means, with respect to the Borrower's senior unsecured
long-term public debt and subject to Section 2.4, a rating equal to or better
than A- from S&P or A3 from Moody's.
"Level II" means, with respect to the Borrower's senior unsecured
long-term public debt and subject to Section 2.4, a rating equal to or better
than BBB+ from S&P or Baa1 from Moody's but less than a rating that would place
the Borrower at Level I.
"Level III" means, with respect to the Borrower's senior unsecured
long-term public debt and subject to Section 2.4, a rating equal to or better
than BBB from S&P or Baa2 from Moody's but less than a rating that would place
the Borrower at Level I or Level II.
"Level IV" means, with respect to the Borrower's senior unsecured
long-term public debt and subject to Section 2.4, a rating equal to or better
than BBB- from S&P or Baa3 from Moody's but less than a rating that would place
the Borrower at Level I, Level II or Level III.
"Level V" means, with respect to the Borrower's senior unsecured
long-term public debt and subject to Section 2.4, ratings lower than BBB- from
S&P and Baa3 from Moody's.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loan" means, with respect to a Lender, such Lender's portion of any
Advance.
"Loan Documents" means this Agreement and the Notes.
"Long Term Debt" means, as of any date with respect to any Person, all
liabilities of such Person outstanding on such date which would in accordance
with GAAP be classified as long term debt of such Person.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents, or
(iii) the validity or enforceability of any of the Loan Documents or the rights
or remedies of the Agent or the Lenders thereunder.
"Moody's" means Moody's Investors Service, Inc. or, if Moody's shall
cease rating Indebtedness of the Borrower and its ratings business with respect
to Indebtedness of the Borrower shall have been transferred to a successor
Person, such successor Person; provided, however, that if Moody's ceases rating
securities similar to Indebtedness of the Borrower and its ratings business
with respect to Indebtedness of the Borrower shall not have been transferred to
any successor Person, then "Moody's" shall mean any other nationally
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recognized rating agency (other than S&P) selected by the Borrower that rates
any Indebtedness of the Borrower.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Note" means a promissory note, in substantially the form of Exhibit
"A" hereto, duly executed by the Borrower and payable to the order of a Lender
in the amount of its Commitment, including any amendment, modification, renewal
or replacement of such promissory note.
"Notice of Assignment" is defined in Section 12.3.3.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the
Lenders or to any Lender, the Agent or any indemnified party hereunder arising
under the Loan Documents.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each February, May, August, and
November after the date of this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Person" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust or other entity or organization, or
any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code as to which the Borrower or any member of the Controlled Group may
have any liability.
"Prior Agreement" is defined in the recitals to this Agreement.
"Prior Credit Facility" is defined in the recitals to this Agreement.
"Prior Lenders" is defined in the recitals to this Agreement.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned
or leased by such Person.
"Purchaser" is defined in Section 12.3.1.
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"Reference Lenders" means First Chicago, The Chase Manhattan Bank,
N.A., and National Westminster Bank PLC.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by banks for the purpose of purchasing or carrying
margin stocks applicable to member banks of the Federal Reserve System.
"Rent Expense" means, for any period, the rental expense of the
Borrower and its Consolidated Subsidiaries determined on a consolidated basis
in accordance with GAAP excluding rental expense with respect to leases of
aircraft scheduled to terminate no more than 365 days after their respective
dates of execution.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of
the notice requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least
66-2/3% of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least 66-2/3% of the aggregate
unpaid principal amount of the outstanding Advances.
"Reserve Requirement" means, with respect to a CD Interest Period or a
Eurodollar Interest Period, the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which is
imposed under Regulation D on new non-personal time deposits of $100,000 or
more with a maturity equal to that of such CD Interest Period (in the case of
Fixed CD Rate Advances) or on Eurocurrency liabilities (in the case of
Eurodollar Advances).
"Restricted Investment" means any Investment other than an Investment
permitted by Sections 6.17(a) through (j).
"Restructuring Event" means any of the following: (1) any Person
becoming the Beneficial Owner of Voting Stock of the Borrower having more than
30 percent of the voting
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power of all of the then outstanding Voting Stock of the Borrower; (2)
individuals who are not Continuing Directors constituting a majority of the
Board of Directors of the Borrower; (3) the Borrower consolidating with or
merging into any other Person, or any other Person consolidating with or
merging into the Borrower, pursuant to a transaction in which capital stock of
the Borrower then outstanding (other than capital stock held by the Borrower or
capital stock held by any Person which is a party to such consolidation or
merger) is changed or exchanged unless the Borrower is the surviving entity and
no Default or Unmatured Default shall occur upon giving effect to such
consolidation or merger; (4) the Borrower, in one transaction or a series of
related transactions, conveying, transferring or leasing, directly or
indirectly, all or substantially all of the assets of the Borrower and its
Subsidiaries taken as a whole (other than to a Wholly-Owned Subsidiary of the
Borrower); or (5) the Borrower or any of its Subsidiaries paying or effecting a
dividend or distribution (including by way of recapitalization or
reclassification) in respect of its capital stock (other than solely to the
Borrower or any of its Wholly-Owned Subsidiaries and other than solely for
capital stock of the Borrower), or purchasing, redeeming, retiring, exchanging
or otherwise acquiring for value any of its capital stock (other than solely
from the Borrower or any of its Wholly-Owned Subsidiaries and other than solely
for capital stock of the Borrower), if the cash and Fair Market Value of the
securities and assets paid or distributed in connection therewith (determined
on the record date for such dividend or distribution or the effective date for
such purchase, redemption, retirement, exchange or other acquisition), together
with the cash and Fair Market Value of the securities and assets paid or
distributed in connection with all other such dividends, distributions,
purchases, redemptions, retirements, exchanges and acquisitions effected within
the 12-month period preceding the record date for such dividend or distribution
or the effective date for such purchase, redemption, retirement, exchange or
other acquisition (determined on the respective record or effective dates for
such other dividends, distributions, purchases, redemptions, retirements,
exchanges and acquisitions), exceeds 30 percent of the aggregate Fair Market
Value of all capital stock of the Borrower outstanding on the record date for
such dividend or distribution or the effective date for such purchase,
redemption, retirement, exchange or other acquisition (determined on such
record or effective date).
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc., or, if S&P shall cease rating Indebtedness of the Borrower
and its ratings business with respect to Indebtedness of the Borrower shall
have been transferred to a successor Person, such successor Person; provided,
however, that if S&P ceases rating securities similar to Indebtedness of the
Borrower and its ratings business with respect to Indebtedness of the Borrower
shall not have been transferred to any successor Person, then "S&P" shall mean
any other nationally recognized rating agency (other than Moody's) selected by
the Borrower that rates any Indebtedness of the Borrower.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Significant Subsidiary" means, during each fiscal year of the
Borrower, any Subsidiary of the Borrower which had revenues (determined in
accordance with GAAP) for the immediately preceding fiscal year of the Borrower
in excess of 1.0% of the consolidated
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revenues (determined in accordance with GAAP) of the Borrower and the
Consolidated Subsidiaries for such immediately preceding fiscal year.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Subsidiary" of a Person means (i) any corporation more than 50% of
the outstanding Voting Stock of which shall at the time be owned or controlled,
directly or indirectly, by such Person or by one or more of its Subsidiaries or
by such Person and one or more of its Subsidiaries, or (ii) any partnership,
association, joint venture or similar business organization more than 50% of
the ownership interests having power to direct the ordinary affairs thereof of
which shall at the time be so owned or controlled. Unless otherwise expressly
provided, all references herein to a "Subsidiary" shall mean a Subsidiary of
the Borrower.
"Substantial Portion" means, with respect to the Property of the
Borrower and its Subsidiaries, Property which (i) represents more than 10% of
the consolidated assets of the Borrower and its Subsidiaries as would be shown
in the consolidated financial statements of the Borrower and its Subsidiaries
as at the beginning of the twelve-month period ending with the month in which
such determination is made, or (ii) is responsible for more than 10% of the
consolidated net sales or of the consolidated net income of the Borrower and
its Subsidiaries as reflected in the financial statements referred to in clause
(i) above.
"Tiger International" means Tiger International, Inc. a Delaware
corporation.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as a Floating
Rate Advance, Eurodollar Advance or Fixed CD Rate Advance.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested nonforfeitable benefits under all Single Employer Plans
exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"Voting Stock" means all outstanding shares of capital stock of the
Borrower entitled to vote generally in the election of directors.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (ii) any partnership,
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association, joint venture or similar business organization 100% of the
ownership interests having ordinary voting power of which shall at the time be
so owned or controlled.
"Withdrawing Lenders" is defined in the recitals to this Agreement.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
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ARTICLE II
THE CREDITS
2.1. Commitment. From and including the date of this Agreement
and prior to the Facility Termination Date, each Lender severally agrees, on
the terms and conditions set forth in this Agreement, to make Loans to the
Borrower from time to time in amounts not to exceed in the aggregate at any one
time outstanding the amount of its Commitment. Subject to the terms of this
Agreement, the Borrower may borrow, repay and reborrow at any time prior to the
Facility Termination Date. The Commitments to lend hereunder shall expire on
the Facility Termination Date.
2.2. Mandatory Payments; Termination. (a) The Borrower will
promptly give notice to the Agent and the Lenders of the occurrence of a
Restructuring Event. If, within 30 days after the later of the occurrence of a
Restructuring Event or the date on which the Agent and the Lenders have
received notice from the Borrower that a Restructuring Event has occurred, the
Agent on behalf of the Required Lenders notifies the Borrower in writing that
the Required Lenders desire the prepayment and cancellation of this Agreement
(such notice hereinafter a "Cancellation Notice"), then (i) the Borrower shall
within 30 days after its receipt of such Cancellation Notice prepay in full the
entire principal amount, if any, outstanding on the Notes and all of the other
Obligations, and (ii) on the earlier of (1) the date that the Borrower prepays
the Notes and all of the other Obligations pursuant to clause (i) of this
sentence, or (2) the 30th day after the Borrower receives such Cancellation
Notice, the outstanding balance of the Notes and all other Obligations shall
mature and be due and payable in full and the Aggregate Commitment and the
Commitment of each Lender shall be automatically and permanently terminated and
reduced to zero. As of the date of such Cancellation Notice, the Borrower
shall no longer be permitted to borrow additional Advances under this
Agreement.
(b) Any outstanding Advances and all other unpaid Obligations
shall mature and be paid in full by the Borrower on the Facility Termination
Date.
2.3. Ratable Loans; Types of Advances. Each Advance hereunder
shall consist of Loans made from the several Lenders ratably in proportion to
the ratio that their respective Commitments bear to the Aggregate Commitment.
The Advances may be Floating Rate Advances, Fixed CD Rate Advances or
Eurodollar Advances, or a combination thereof, selected by the Borrower in
accordance with Sections 2.8 and 2.9. Not more than fifteen Fixed Rate
Advances may be outstanding at any one time.
2.4. Determination of Levels. The applicable Level of the
Borrower's senior unsecured long-term public debt rating will be determined as
set forth in the respective definition of each Level unless there is a split of
ratings between the rating given by S&P and the rating given by Moody's. In
the event of a split in the Borrower's ratings, the higher of the Borrower's
ratings will determine the applicable Level except as provided in the following
sentence. In the event of a split of two or more ratings, the applicable Level
will be
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determined as set forth in the respective definition of each Level except that
for purposes of applying such definitions the higher of the two ratings will be
deemed to be reduced to the rating that is one rating below the actual rating.
2.5. Facility Fee; Agent's Fee; Reductions in Aggregate
Commitment. The Borrower agrees to pay to the Agent for the account of each
Lender a facility fee on the daily amount of such Lender's Commitment from the
Effective Date to and including the Facility Termination Date in the amount of
.10% per annum at all times that the Borrower's debt ratings are at Level I,
.11% per annum at all times that the Borrower's debt ratings are at Level II,
.125% per annum at all times that the Borrower's debt ratings are at Level III,
.175% per annum at all times that the Borrower's debt ratings are at Level IV,
and .20% per annum at all times that the Borrower's debt ratings are at Level
V. Each change in the rate of the facility fee resulting from a change in the
rating of the Borrower's senior unsecured long-term debt by either rating
agency shall take effect at the time such change in such rating is publicly
announced by the relevant rating agency. Such facility fee shall be payable on
each Payment Date hereafter and on the Facility Termination Date. The Borrower
shall pay to the Agent as compensation for its services hereunder the fees
specified in the letter agreement of April 5, 1995, between the Agent and the
Borrower as it may be amended or supplemented from time to time. The Borrower
may permanently reduce the Aggregate Commitment in whole, or in part ratably
among the Lenders in the minimum amount of $20,000,000 and in integral
multiples of $10,000,000 in excess thereof, upon at least ten Business Days'
written notice to the Agent, which notice shall specify the amount of any such
reduction, provided, however, that the amount of the Aggregate Commitment may
not be reduced below the aggregate principal amount of the outstanding
Advances. All accrued facility fees shall be payable on the effective date of
any termination of the obligations of the Lenders to make Loans hereunder.
2.6. Minimum Amount of Each Advance. Each Advance shall be in the
minimum amount of $5,000,000 (and in integral multiples of $1,000,000 if in
excess thereof), provided, however, that any Floating Rate Advance may be in
the amount of the unused Aggregate Commitment.
2.7. Optional Principal Payments. The Borrower may from time to
time pay, without penalty or premium, all outstanding Floating Rate Advances,
or, in a minimum aggregate amount of $5,000,000 or any integral multiple
thereof, any portion of the outstanding Floating Rate Advances upon one
Business Day's prior notice to the Agent. A Fixed Rate Advance may not be paid
prior to the last day of the applicable Interest Period except pursuant to an
acceleration or a mandatory prepayment in accordance with this Agreement.
2.8. Method of Selecting Types and Interest Periods for New
Advances. The Borrower shall select the Type of Advance and, in the case of
each Fixed Rate Advance, the Interest Period applicable to each Advance from
time to time. The Borrower shall give the Agent irrevocable notice (a
"Borrowing Notice") not later than 10:00 a.m. (Chicago time) on the Borrowing
Date of each Floating Rate Advance, at least one Business Day before the
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Borrowing Date of each Fixed CD Rate Advance and at least three Business Days
before the Borrowing Date for each Eurodollar Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Fixed Rate Advance, the Interest Period
applicable thereto.
Not later than noon (Chicago time) on each Borrowing Date, each Lender shall
make available its Loan or Loans, in funds immediately available in Chicago to
the Agent at its address specified pursuant to Article XIII. Upon satisfaction
or waiver in accordance with the terms of this Agreement of the applicable
conditions precedent set forth in Article IV, the Agent will make the funds so
received from the Lenders available to the Borrower at the Agent's aforesaid
address.
2.9. Conversion and Continuation of Outstanding Advances.
Floating Rate Advances shall continue as Floating Rate Advances unless and
until such Floating Rate Advances are converted into Fixed Rate Advances. Each
Fixed Rate Advance of any Type shall continue as a Fixed Rate Advance of such
Type until the end of the then applicable Interest Period therefor, at which
time such Fixed Rate Advance shall be automatically converted into a Floating
Rate Advance unless the Borrower shall have given the Agent a
Conversion/Continuation Notice requesting that, at the end of such Interest
Period, such Fixed Rate Advance shall either continue as a Fixed Rate Advance
of such Type for the same or another Interest Period or be converted into an
Advance of another Type. Subject to the terms of Section 2.6, the Borrower may
elect from time to time to convert all or any part of an Advance of any Type
into any other Type or Types of Advances; provided that any conversion of any
Fixed Rate Advance shall be made on, and only on, the last day of the Interest
Period applicable thereto. The Borrower shall give the Agent irrevocable
notice (a "Conversion/Continuation Notice") of each conversion of an Advance or
continuation of a Fixed Rate Advance not later than 10:00 a.m. (Chicago time)
on the date of the requested conversion, in the case of a conversion of any
Advance into a Floating Rate Advance, at least one Business Day, in the case of
a conversion into or continuation of a Fixed CD Rate Advance, or at least three
Business Days, in the case of a conversion into or continuation of a Eurodollar
Advance, prior to the date of the requested conversion or continuation,
specifying:
(i) the requested date, which shall be a Business Day, of such
conversion or continuation;
(ii) the aggregate amount and Type of the Advance which is to be
converted or continued; and
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(iii) the amount and Type(s) of Advance(s) into which such Advance
is to be converted or continued and, in the case of a
conversion into or continuation of a Fixed Rate Advance, the
duration of the Interest Period applicable thereto.
2.10. Changes in Interest Rate, etc. Each Floating Rate Advance
shall bear interest on the outstanding principal amount thereof, for each day
from and including the date such Advance is made or is converted from a Fixed
Rate Advance into a Floating Rate Advance pursuant to Section 2.9 to but
excluding the date it becomes due or is converted into a Fixed Rate Advance
pursuant to Section 2.9 hereof, at a rate per annum equal to the Floating Rate
for such day. Changes in the rate of interest on that portion of any Advance
maintained as a Floating Rate Advance will take effect simultaneously with each
change in the Alternate Base Rate. Each Fixed Rate Advance shall bear interest
from and including the first day of the Interest Period applicable thereto to
(but not including) the last day of such Interest Period at the interest rate
determined as applicable to such Fixed Rate Advance. No Interest Period may
end after the Facility Termination Date.
2.11. Rates Applicable After Maturity of Advances. Notwithstanding
anything to the contrary contained in Section 2.8 or 2.9, no Advance may be
made as, converted into or continued as a Fixed Rate Advance (except with the
consent of the Required Lenders) when any Default or Unmatured Default has
occurred and is continuing. If any Advance is not paid at maturity, whether by
acceleration or otherwise, (i) each Fixed Rate Advance shall bear interest for
the remainder of the applicable Interest Period at the rate otherwise
applicable to such Fixed Rate Advance for such Interest Period plus 1% per
annum and at the end of each Interest Period shall automatically convert to a
Floating Rate Advance bearing interest in accordance with clause (ii) of this
Section, and (ii) each Floating Rate Advance shall bear interest at a rate per
annum equal to the Floating Rate otherwise applicable to the Floating Rate
Advance plus 1% per annum.
2.12. Method of Payment. All payments of the Obligations hereunder
shall be made, without setoff, deduction, or counterclaim, in immediately
available funds to the Agent at the Agent's address specified pursuant to
Article XIII, or at any other Lending Installation of the Agent specified in
writing by the Agent to the Borrower, by noon (local time) on the date when
due. Each such payment shall be applied to any Advances and other amounts then
due in accordance with the written instructions from the Borrower to the Agent
accompanying such payment and shall be applied ratably by the Agent among the
Lenders. Each payment delivered to the Agent for the account of any Lender
shall be delivered promptly by the Agent to such Lender in the same type of
funds that the Agent received at such Lender's address specified pursuant to
Article XIII or at any Lending Installation specified in a notice received by
the Agent from such Lender. The Agent is hereby authorized to charge the
account of the Borrower maintained with First Chicago for each payment of
principal, interest and fees as it becomes due hereunder.
2.13. Notes; Telephonic Notices. Each Lender is hereby authorized
to record the principal amount of each of its Loans and each repayment on the
schedule attached to its Note or otherwise in accordance with its usual
business practices, provided, however, that the
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failure to so record shall not affect the Borrower's obligations under such
Note. The Borrower hereby authorizes the Lenders and the Agent to extend,
convert or continue Advances, effect selections of Types of Advances and to
transfer funds based on telephonic notices made by any person or persons the
Agent or any Lender in good faith believes to be an Authorized Officer acting
on behalf of the Borrower. The Borrower agrees to deliver promptly to the
Agent a written confirmation of each telephonic notice signed by an Authorized
Officer. If the written confirmation differs in any material respect from the
action taken by the Agent and the Lenders, the records of the Agent and the
Lenders shall govern absent manifest error.
2.14. Interest Payment Dates; Interest and Fee Basis. Interest
accrued on each Floating Rate Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof, on any date
on which the Floating Rate Advance is prepaid, whether due to acceleration or
otherwise, and at maturity. Interest accrued on that portion of the
outstanding principal amount of any Floating Rate Advance converted into a
Fixed Rate Advance on a day other than a Payment Date shall be payable on the
date of conversion. Interest accrued on each Fixed Rate Advance shall be
payable on the last day of its applicable Interest Period, on any date on which
the Fixed Rate Advance is prepaid, whether by acceleration or otherwise, and at
maturity. Interest accrued on each Fixed Rate Advance having an Interest
Period longer than three months shall also be payable on the last day of each
three-month interval during such Interest Period. Interest on Fixed Rate
Advances shall be calculated for actual days elapsed on the basis of a 360-day
year. All other interest and fees shall be calculated for actual days elapsed
on the basis of a 365- or 366-day year, as appropriate. Interest shall be
payable for the day an Advance is made but not for the day of any payment on
the amount paid if payment is received prior to noon (local time) at the place
of payment. If any payment of principal of or interest on an Advance shall
become due on a day which is not a Business Day, such payment shall be made on
the next succeeding Business Day and, in the case of a principal payment, such
extension of time shall be included in computing interest in connection with
such payment.
2.15. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions. Promptly after receipt thereof, the Agent will notify
each Lender of the contents of each Aggregate Commitment reduction notice,
Borrowing Notice, Conversion/Continuation Notice, and repayment notice received
by it hereunder. The Agent will notify each Lender of the interest rate
applicable to each Fixed Rate Advance promptly upon determination of such
interest rate and will give each Lender prompt notice of each change in the
Alternate Base Rate. Each Reference Lender agrees to furnish timely
information for the purpose of determining the Eurodollar Rate or the Fixed CD
Rate, as applicable.
2.16. Lending Installations. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written notice
to the Agent and the Borrower, designate a Lending Installation through which
Loans will be made by it and for whose account Loan payments are to be made.
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2.17. Non-Receipt of Funds by the Agent. Unless the Borrower or a
Lender, as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption.
If such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers
such amount at a rate per annum equal to (i) in the case of payment by a
Lender, the Federal Funds Effective Rate for such day or (ii) in the case of
payment by the Borrower, the interest rate applicable to the relevant Loan.
2.18. Withholding Tax Exemption. At least five Business Days prior
to the first date on which interest or fees are payable hereunder for the
account of any Lender, each Lender that is not incorporated under the laws of
the United States of America, or a state thereof, agrees that it will deliver
to each of the Borrower and the Agent two duly completed copies of United
States Internal Revenue Service Form 1001 or 4224, certifying in either case
that such Lender is entitled to receive payments under this Agreement and the
Notes without deduction or withholding of any United States federal income
taxes. Each Lender which so delivers a Form 1001 or 4224 further undertakes to
deliver to each of the Borrower and the Agent two additional copies of such
form (or a successor form) on or before the date that such form expires
(currently, three successive calendar years for Form 1001 and one calendar year
for Form 4224) or becomes obsolete or after the occurrence of any event
requiring a change in the most recent forms so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, in each case certifying that such
Lender is entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal income taxes,
unless an event (including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such form with
respect to it and such Lender advises the Borrower and the Agent that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax.
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ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. Yield Protection. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any interpretation thereof, or the compliance
of any Lender therewith,
(i) subjects any Lender or any applicable Lending Installation to
any tax, duty, charge or withholding on or from payments due
from the Borrower (excluding federal taxation of the overall
net income of any Lender or applicable Lending Installation),
or changes the basis of taxation of payments to any Lender in
respect of its Loans or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender or any
applicable Lending Installation (other than reserves and
assessments taken into account in determining the interest
rate applicable to Fixed Rate Advances), or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending
Installation of making, funding or maintaining loans or
reduces any amount receivable by any Lender or any applicable
Lending Installation in connection with loans, or requires
any Lender or any applicable Lending Installation to make any
payment calculated by reference to the amount of loans held
or interest received by it, by an amount deemed material by
such Lender,
then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an
amount received which such Lender determines is attributable to making, funding
and maintaining its Loans and its Commitment.
3.2. Changes in Capital Adequacy Regulations. If a Lender
determines that the amount of capital required or expected to be maintained by
such Lender, any Lending Installation of such Lender or any corporation
controlling such Lender is increased as a result of a Change, then, within 15
days of demand by such Lender, the Borrower shall pay such Lender the amount
necessary to compensate for any shortfall in the rate of return on the portion
of such increased capital which such Lender determines is attributable to this
Agreement, its Loans or its obligation to make Loans hereunder (after taking
into account such Lender's policies as to capital adequacy). "Change" means
(i) any change after the date of this Agreement in the Risk-Based Capital
Guidelines or (ii) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which
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affects the amount of capital required or expected to be maintained by any
Lender or any Lending Installation or any corporation controlling any Lender.
"Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in
effect in the United States on the date of this Agreement, including transition
rules, and (ii) the corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988 report of the
Basle Committee on Banking Regulation and Supervisory Practices Entitled
"International Convergence of Capital Measurements and Capital Standards,"
including transition rules, and any amendments to such regulations adopted
prior to the date of this Agreement.
3.3. Availability of Types of Advances. If any Lender determines
that maintenance of its Eurodollar Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation, or directive, whether or
not having the force of law, or if the Required Lenders determine that (i)
deposits of a type and maturity appropriate to match fund Fixed Rate Advances
are not available or (ii) the interest rate applicable to a Type of Advance
does not accurately reflect the cost of making or maintaining such Advance,
then the Agent shall suspend the availability of the affected Type of Advance
and require any Fixed Rate Advances of the affected Type to be converted to an
unaffected type. Subject to the provisions of Article II hereof, the Borrower
may select any unaffected Type for purposes of such conversion. If the
Borrower fails to select a new Type of Advance, the affected Advances shall be
converted to Floating Rate Advances.
3.4. Funding Indemnification. If any payment or conversion of a
Fixed Rate Advance occurs on a date which is not the last day of the applicable
Interest Period, whether because of acceleration, prepayment or otherwise, or a
Fixed Rate Advance is not made on the date specified by the Borrower for any
reason other than default by the Lenders, the Borrower will indemnify each
Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain the Fixed Rate Advance.
3.5. Lender Statements; Survival of Indemnity. To the extent
reasonably possible, each Lender shall designate an alternate Lending
Installation with respect to its Fixed Rate Loans to reduce any liability of
the Borrower to such Lender under Sections 3.1 and 3.2 or to avoid the
unavailability of a Type of Advance under Section 3.3, so long as such
designation is not disadvantageous to such Lender as determined by such Lender
in its sole discretion. Each Lender shall deliver a written statement of such
Lender as to the amount due, if any, under Section 3.1, 3.2 or 3.4. Such
written statement shall set forth in reasonable detail the calculations upon
which such Lender determined such amount and shall be final, conclusive and
binding on the Borrower in the absence of manifest error. Determination of
amounts payable under such Sections in connection with a Fixed Rate Loan shall
be calculated as though each Lender funded its Fixed Rate Loan through the
purchase of a deposit of the type and maturity corresponding to the deposit
used as a reference in determining the Fixed Rate applicable to such Loan,
whether in fact that is the case or not. Unless otherwise provided herein, the
amount specified in the written statement shall be payable on demand after
receipt
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by the Borrower of the written statement. The obligations of the Borrower
under Sections 3.1, 3.2 and 3.4 shall survive payment of the Obligations and
termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Closing. The Lenders shall not be required to make the
initial Advance hereunder unless on or before the Effective Date the Borrower
has furnished to the Agent with sufficient copies for the Lenders:
(i) Copies of the articles of incorporation of the Borrower,
together with all amendments, and a certificate of good
standing, both certified on or within 15 days prior to the
Effective Date by the appropriate governmental officer in its
jurisdiction of incorporation.
(ii) Copies, certified as of the Effective Date by the Secretary
or Assistant Secretary of the Borrower, of its by-laws and of
its Board of Directors' resolutions (and resolutions of other
bodies, if any are reasonably deemed necessary by counsel for
any Lender) authorizing the execution, delivery, and
performance of the Loan Documents.
(iii) An incumbency certificate, executed as of the Effective Date
by the Secretary or Assistant Secretary of the Borrower,
which shall identify by name and title and bear the signature
of the officers of the Borrower authorized to sign the Loan
Documents and to make borrowings hereunder, upon which
certificate the Agent and the Lenders shall be entitled to
rely until informed of any change in writing by the Borrower.
(iv) A certificate, dated the Effective Date, signed by the Chief
Financial Officer or Treasurer of the Borrower, stating that
on such date no Default or Unmatured Default has occurred and
is continuing.
(v) A written opinion of the Borrower's counsel, addressed to the
Lenders in substantially the form of Exhibit "B" hereto.
(vi) Notes payable to the order of each of the Lenders.
(vii) Written money transfer instructions, in substantially the
form of Exhibit "D" hereto, addressed to the Agent and signed
by an Authorized Officer, together with such other related
money transfer authorizations as the Agent may have
reasonably requested.
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(viii) A written representation and warranty by the Borrower that,
as of the Effective Date, since February 28, 1995, there has
been no change in the business, Property, prospects,
condition (financial or otherwise) or results of operations
of the Borrower and its Subsidiaries taken as a whole which
could reasonably be expected to have a Material Adverse
Effect.
(ix) Payment of all fees due and owing to the Agent, the Prior
Lenders, and the Lenders as at the Effective Date, including,
without limitation, all accrued and unpaid facility fees
under the Prior Agreement.
(x) Such other documents as any Lender or its counsel may have
reasonably requested.
4.2. Each Advance. The Lenders shall not be required to make any
Advance, unless on the applicable Borrowing Date:
(i) There exists no Default or Unmatured Default and no Default
or Unmatured Default shall occur upon giving effect to the
application of the proceeds of such Advance.
(ii) The representations and warranties contained in Article V are
true and correct as of such Borrowing Date except for changes
in the Schedules hereto reflecting transactions permitted by
this Agreement.
(iii) All legal matters incident to the making of such Advance
shall be satisfactory to the Lenders and their counsel.
Each Borrowing Notice with respect to each such Advance shall
constitute a representation and warranty by the Borrower that the conditions
contained in Sections 4.2(i) and (ii) have been satisfied.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1. Corporate Existence and Standing. Each of the Borrower and
its Significant Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted and where the failure to have
such requisite authority would have a material adverse effect on the business
of the Borrower and the Significant Subsidiaries taken as a whole.
5.2. Authorization and Validity. The Borrower has the corporate
power and authority and legal right to execute and deliver the Loan Documents
and to perform its obligations thereunder. The execution and delivery by the
Borrower of the Loan Documents and the performance of its obligations
thereunder have been duly authorized by proper corporate proceedings, and the
Loan Documents constitute legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and subject also to
the availability of equitable remedies if equitable remedies are sought.
5.3. No Conflict; Government Consent. Neither the execution and
delivery by the Borrower of the Loan Documents, nor the consummation of the
transactions therein contemplated, nor compliance with the provisions thereof
will violate any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on the Borrower or any of its Significant Subsidiaries
or the Borrower's or any Significant Subsidiary's articles of incorporation or
by-laws or the provisions of any material indenture, instrument or agreement to
which the Borrower or any of its Significant Subsidiaries is a party or is
subject, or by which it, or its Property, is bound, or conflict with or
constitute a default thereunder, or result in the creation or imposition of any
Lien in, of or on the Property of the Borrower or a Significant Subsidiary
pursuant to the terms of any such indenture, instrument or agreement. No
order, consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any governmental or public
body or authority, or any subdivision thereof, is required to authorize, or is
required in connection with the execution, delivery and performance of, or the
legality, validity, binding effect or enforceability of, any of the Loan
Documents.
5.4. Financial Statements. The May 31, 1994 audited consolidated
financial statements and February 28, 1995 unaudited consolidated financial
statements of the Borrower and its Subsidiaries heretofore delivered to the
Lenders were prepared in accordance with GAAP in effect on the dates such
statements were prepared and fairly present the consolidated financial
condition and operations of the Borrower and its Consolidated Subsidiaries at
such
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dates and the consolidated results of their operations for the periods then
ended (except, in the case of such unaudited statements, for normal year-end
adjustments).
5.5. Taxes. The Borrower and its Significant Subsidiaries have
filed all United States federal tax returns and all other material tax returns
which are required to be filed and have paid all taxes due pursuant to said
returns or pursuant to any assessment received by the Borrower or any of its
Significant Subsidiaries, except such taxes, if any, as are being contested in
good faith and as to which adequate reserves determined in accordance with GAAP
have been provided. The charges, accruals and reserves on the books of the
Borrower and its Significant Subsidiaries in respect of any taxes or other
governmental charges are adequate.
5.6. Litigation and Contingent Obligations. Except for such
matters as are referenced in the form of opinion of counsel attached hereto as
Exhibit "B", there is no litigation, arbitration, governmental investigation,
proceeding or inquiry pending or, to the knowledge of any of their officers,
threatened against or affecting the Borrower or any of its Significant
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect. Other than any liability incident to such litigation, arbitration or
proceedings, the Borrower has no material contingent obligations not provided
for or disclosed in the financial statements referred to in Section 5.4.
5.7. Subsidiaries. Schedule "1" hereto contains an accurate list
of all of the presently existing Significant Subsidiaries of the Borrower,
setting forth their respective jurisdictions of incorporation and the
percentage of their respective capital stock owned by the Borrower or other
Subsidiaries. All of the issued and outstanding shares of capital stock of
such Subsidiaries have been duly authorized and issued and are fully paid and
non-assessable.
5.8. ERISA. The Unfunded Liabilities of all Single Employer Plans
do not in the aggregate exceed $80,000,000. Each Plan complies in all material
respects with all applicable requirements of law and regulations, no Reportable
Event has occurred with respect to any Plan, neither the Borrower nor any other
member of the Controlled Group has withdrawn from any Plan or initiated steps
to do so, and no steps have been taken to reorganize or terminate any Plan.
5.9. Accuracy of Information. No information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Agent or to any
Lender in connection with the negotiation of, or compliance with, the Loan
Documents contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein,
in light of the circumstances under which they were made, not misleading.
5.10. Regulation U. Margin stock (as defined in Regulation U)
constitutes less than 25% of the value of those assets of the Borrower and its
Subsidiaries which are subject to any limitation on sale, pledge, or other
restriction hereunder.
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5.11. Material Agreements. Neither the Borrower nor any Subsidiary
is a party to any agreement (including, without limitation, this Agreement) or
instrument or subject to any charter or other corporate restriction which could
reasonably be expected to have a Material Adverse Effect. Neither the Borrower
nor any Subsidiary is in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any agreement
to which it is a party, which default could reasonably be expected to have a
Material Adverse Effect.
5.12. Compliance With Laws. The Borrower and its Subsidiaries have
complied in all material respects with all applicable statutes, rules,
regulations, orders and restrictions of any domestic or foreign government or
any instrumentality or agency thereof, having jurisdiction over the conduct of
their respective businesses or the ownership of their respective Property.
Neither the Borrower nor any Subsidiary has received any notice to the effect,
nor does any Authorized Officer have any actual knowledge, that its operations
are not in material compliance with any of the requirements of applicable
federal, state and local environmental, health and safety statutes and
regulations or the subject of any federal or state investigation evaluating
whether any remedial action is needed to respond to a release of any toxic or
hazardous waste or substance into the environment, which non-compliance or
remedial action could reasonably be expected to have a Material Adverse Effect.
5.13. Existing Liens. None of the assets of the Borrower or any of
its Subsidiaries is subject to any Lien other than those permitted by Section
6.19.
5.14. Investment Company Act. Neither the Borrower nor any
Subsidiary thereof is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
5.15. Citizenship. The Borrower is a citizen of the United States,
as defined in 49 U.S.C. Section 40102(a)(15). The Borrower is not a national
of any foreign country designated in Presidential Executive Order No. 8389 or
9193, as amended, and the regulations issued thereunder, as amended, or a
national of any foreign country designated in the Foreign Assets Control
Regulations or in the Cuban Assets Control Regulations of the United States
Treasury Department, 31 C.F.R., Chapter V, as amended.
5.16. Status as Air Carrier. The Borrower is authorized to engage
in all cargo domestic and international air service under certificates issued
pursuant to 49 U.S.C. Section 41103 and 49 U.S.C. Section 41102(a),
respectively, and the Borrower is the holder of a valid and effective operating
certificate issued by the FAA pursuant to Part 121 of the Federal Aviation
Regulations. Such certificates are in full force and effect and are adequate
for the conduct of the business of the Borrower as now conducted. There are no
actions, proceedings or investigations pending or, to the knowledge of any of
its officers, threatened (or any basis therefor known to the Borrower) to
amend, modify, suspend or revoke any such certificate in whole or in part,
which would have any material adverse effect on any such certificate or any of
the operations of the Borrower.
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5.17. Pari Passu. All the payment obligations of the Borrower
arising under or pursuant to the Loan Documents will at all times rank pari
passu with all other unsecured and unsubordinated payment obligations and
liabilities (including contingent obligations and liabilities) of the Borrower
(other than those which are mandatorily preferred by laws or regulations of
general application).
ARTICLE VI
COVENANTS
During the term of this Agreement and so long as any Obligations are
outstanding or any Commitment is in effect hereunder, unless the Required
Lenders shall otherwise consent in writing:
6.1. Financial Reporting. The Borrower will maintain, for itself
and each Subsidiary, a system of accounting established and administered in
accordance with GAAP, and furnish to the Lenders:
(i) Within 90 days after the close of each of its fiscal years,
an unqualified audit report certified by independent
certified public accountants of recognized national standing,
acceptable to the Lenders, prepared in accordance with GAAP
on a consolidated basis for itself and the Consolidated
Subsidiaries, including a balance sheet as of the end of such
period, related profit and loss and reconciliation of surplus
statements, and a statement of cash flows, accompanied by (a)
any management letter prepared by said accountants, and (b) a
certificate of said accountants that, in the course of their
examination necessary for their certification of the
foregoing, they have obtained no knowledge of any Default or
Unmatured Default, or if, in the opinion of such accountants,
any Default or Unmatured Default shall exist, stating the
nature and status thereof.
(ii) Within 45 calendar days after the end of each of the first
three quarters of each fiscal year of the Borrower, for
itself and the Consolidated Subsidiaries, an unaudited
consolidated balance sheet as at the close of such period and
consolidated profit and loss and reconciliation of surplus
statements and a statement of cash flows for the period from
the beginning of such fiscal year to the end of such quarter,
all certified as complete and accurate and prepared in
accordance with GAAP by its Chief Financial Officer,
Treasurer or Controller.
(iii) Together with the financial statements required hereunder, a
certificate signed by its Chief Financial Officer or
Treasurer stating that no Default or Unmatured Default
exists, or if any Default or Unmatured Default exists,
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stating the nature and status thereof, and stating the steps
the Borrower is taking to cure such Default or Unmatured
Default.
(iv) As soon as available, and in any event within 45 calendar
days after the end of each of the first three quarters of
each fiscal year of the Borrower and within 90 calendar days
after the end of the fourth quarter of each fiscal year of
the Borrower, a schedule in substantially the form of
Schedule "2" hereto, certified as being accurate by the
Borrower's Chief Financial Officer, Treasurer or Controller,
showing, as of the end of such quarter, the Borrower's
calculation, in form and detail satisfactory to the Agent, of
the calculations required to be made to determine compliance
with each of Section 6.12, Section 6.13, and Section 6.14.
(v) Promptly upon becoming available, copies of:
(a) All financial statements, reports, notices and proxy
statements sent by the Borrower or any Significant
Subsidiary to its stockholders.
(b) All prospectuses (other than on Form S-8 or a similar
form) of the Borrower or any Consolidated Subsidiary
filed with the Securities and Exchange Commission or
any other governmental agency succeeding to the
jurisdiction thereof.
(c) All regular and periodic reports filed by the
Borrower or any Consolidated Subsidiary with any
securities exchange or with the Securities and
Exchange Commission or any other governmental agency
succeeding to the jurisdiction thereof.
(vi) As soon as possible and in any event within 10 days after
receipt by the Borrower, a copy of (a) any notice or claim to
the effect that the Borrower or any of its Subsidiaries is or
may be liable to any Person as a result of the release by the
Borrower, any of its Subsidiaries, or any other Person of any
toxic or hazardous waste or substance into the environment,
and (b) any notice alleging any violation of any federal,
state or local environmental, health or safety law or
regulation by the Borrower or any of its Subsidiaries, which,
in either case, could reasonably be expected to have a
Material Adverse Effect.
(vii) Such other information (including non-financial information)
as the Agent or any Lender may from time to time reasonably
request.
6.2. Use of Proceeds. The Borrower will, and will cause each
Subsidiary to, use the proceeds of the Advances as liquidity support for the
issuance of commercial paper by the Borrower, for Acquisitions not prohibited
under the following sentence, for general corporate purposes and working
capital of the Borrower, and to repay outstanding Advances. The Borrower will
not, nor will it permit any Subsidiary to, use any of the proceeds of the
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Advances to purchase or carry any "margin stock" (as defined in Regulation U)
or to make any Acquisition which has not been approved or consented to by the
board of directors or equivalent governing body of the Person whose assets or
equity interests are to be acquired.
6.3. Notice of Default. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lenders of the occurrence
of any Default or Unmatured Default and of any other development, financial or
otherwise, which could reasonably be expected to have a Material Adverse
Effect.
6.4. Conduct of Business. The Borrower will, and will cause each
Significant Subsidiary to, carry on and conduct its business in substantially
the same manner and in substantially the same fields of enterprise as it is
presently conducted and to do all things necessary to remain duly incorporated,
validly existing and in good standing as a domestic corporation in its
jurisdiction of incorporation and maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted and where
the failure to have such requisite authority could reasonably be expected to
have a Material Adverse Effect.
6.5. Citizenship and Regulatory Certificates. The Borrower will
continue to be (a) a citizen of the United States, as defined in 49 U.S.C.
Section 40102(a)(15), (b) authorized to engage in all cargo domestic and
international air service under certificates issued pursuant to 49 U.S.C.
Section 41103 and 49 U.S.C. Section 41102(a), respectively, (c) the holder of
all other certificates, rights, permits, franchises and concessions from
appropriate governments or governmental authorities necessary or appropriate to
enable the Borrower to conduct its business in all material respects as
presently being conducted, and (d) the holder of a valid and effective
operating certificate issued by the FAA pursuant to Part 121 of the Federal
Aviation Regulations. The Borrower will, and will cause each of its
Subsidiaries to, use its best efforts to maintain, preserve and keep in full
force and effect its certificates, rights, permits, franchises and concessions
from appropriate governments or governmental authorities and use its best
efforts from time to time to obtain appropriate renewals or replacements,
provided, that nothing in this Section 6.5 shall prevent the Borrower or any of
its Subsidiaries from abandoning, or permitting the amendment, expiration or
termination of, any such certificate, right, permit, franchise or concession
if, in the opinion of the Borrower, such abandonment, amendment, expiration or
termination is in the interest of the Borrower and not prejudicial in any
material respect to the Lenders.
6.6. Payment of Taxes. The Borrower will, and will cause each
Significant Subsidiary to, pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits,
or upon any property belonging to it, and all lawful claims which, if unpaid,
would become a Lien, except where failure to do any of the foregoing would not
have a material adverse effect on the business of the Borrower and the
Significant Subsidiaries taken as a whole and provided that neither the
Borrower nor a Significant Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim the payment of which is being contested in
good faith and by appropriate proceedings; and make monthly accruals of all of
the estimated liability of the Borrower and the Significant Subsidiaries for
such taxes, assessments, charges and levies, determined in accordance with
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GAAP, and establish adequate reserves determined in accordance with GAAP, for
such thereof as may be contested, and reflect such accruals and reserves in all
financial statements furnished hereunder.
6.7. Insurance. The Borrower will, and will cause each Subsidiary
to, maintain with financially sound and reputable insurance companies insurance
on all its respective Property in such amounts and covering such risks as is
consistent with sound business practice, and the Borrower will furnish to any
Lender upon request full information as to the insurance carried.
6.8. Compliance with Laws. The Borrower will, and will cause each
Significant Subsidiary to, comply with all laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it may be subject,
except where failure to do so could not reasonably be expected to have a
Material Adverse Effect.
6.9. Maintenance of Properties. The Borrower will, and will cause
each Significant Subsidiary to, do all things necessary to maintain, preserve,
protect and keep its Property in good repair, working order and condition, and
make all necessary and proper repairs, renewals and replacements so that its
business carried on in connection therewith may be properly conducted at all
times, except where failure to do any of the foregoing could not reasonably be
expected to have a Material Adverse Effect.
6.10. Inspection. The Borrower will, and will cause each
Subsidiary to, permit the Lenders, by their respective representatives and
agents, to inspect any of the Property, corporate books and financial records
of the Borrower and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and each Subsidiary, and
to discuss the affairs, finances and accounts of the Borrower and each
Subsidiary with, and to be advised as to the same by, their respective officers
at such reasonable times and intervals as the Lenders may designate upon
reasonable notice to the Borrower.
6.11. Dividend Declarations and Restricted Investments. The
Borrower will not, nor will it permit any Consolidated Subsidiary to, declare
any dividend on any of its shares payable more than 60 calendar days after the
declaration date, or make any Restricted Investment except Restricted
Investments made by the Borrower or a Consolidated Subsidiary provided that,
after giving effect to any such Restricted Investment, (i) the aggregate amount
of all such Restricted Investments existing on the date of such proposed action
shall not exceed (x) $200,000,000 plus (y) 75% (or in the case of a deficit,
minus 100%) of the Consolidated Net Income for the period commencing on June 1,
1992 and ending on and including the date of any such proposed action (the
"Computation Period") plus (z) the aggregate amount of the net cash proceeds
received by the Borrower during the Computation Period from the sale of its
stock and Indebtedness of the Borrower convertible into stock of the Borrower
(but only to the extent that any such Indebtedness has been converted into
shares of such stock during such period), and (ii) there shall exist no Default
or Unmatured Default.
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6.12. Leverage. The Borrower will maintain at all times a ratio of
(i) the sum of (a) the aggregate unpaid principal amount of all outstanding
Funded Debt of the Borrower and its Consolidated Subsidiaries, plus (b)
Capitalized Operating Lease Value of the Borrower, to (ii) the sum of (a) the
items listed in clause (i) above plus (b) Consolidated Adjusted Net Worth, of
not more than .765 to l.
6.13. Fixed Charge Coverage. The Borrower will at all times
maintain a ratio of (a) Consolidated Cash Flow to (b) the sum of Interest
Expense and Rent Expense, in an amount not less than 1.15 to 1.
6.14. Consolidated Adjusted Net Worth. The Borrower will maintain
Consolidated Adjusted Net Worth at all times (i) on or after the Effective Date
and prior to May 31, 1996 in an amount not less than $1.4 billion, and (ii)
thereafter in an amount not less than the sum of $1.4 billion plus 50% of
Consolidated Net Income earned in each fiscal year of the Borrower ending on or
after May 31, 1996 but without regard to any net loss in any such fiscal year.
6.15. Merger and Consolidation. The Borrower will not, nor will it
permit any Consolidated Subsidiary to, merge or consolidate with or into or
enter into any analogous reorganization or transaction with any other Person,
except
(a) Any Consolidated Subsidiary or other corporation may
merge or consolidate with the Borrower, provided that, after giving
effect to any such merger or consolidation, (i) the Borrower shall be
the continuing or surviving corporation and (ii) no Default or
Unmatured Default shall exist,
(b) Any Consolidated Subsidiary may merge with any other
Consolidated Subsidiary,
(c) Any Consolidated Subsidiary may be liquidated or
dissolved,
(d) Any Consolidated Subsidiary may merge or consolidate
with any other Person, provided, however, that, unless after giving
effect to any such merger or consolidation the Borrower owns, directly
or indirectly, 100% of such Consolidated Subsidiary, (i) such merger
or consolidation shall be deemed to be a sale of such Consolidated
Subsidiary to such other Person pursuant to either Section 6.16(c) or
6.16(e) (as appropriate under the terms of Section 6.16) and (ii) such
merger or consolidation shall be a violation of this Section 6.15
unless such deemed sale is permitted by either Section 6.16(c) or
6.16(e) and the Borrower complies with all of the terms of Section
6.16(c) or Section 6.16(e), as the case may be, regarding such deemed
sale, and
(e) Any other corporation may merge or consolidate with
any Consolidated Subsidiary, provided that, after giving effect to any
such merger or consolidation, (i) the continuing or surviving
corporation shall be a Consolidated Subsidiary and (ii) no Default or
Unmatured Default shall exist.
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6.16. Sales of Assets. The Borrower will not, nor will it permit
any Consolidated Subsidiary to, sell, transfer, convey (including, without
limitation, any sale, transfer or conveyance related to a sale and leaseback
transaction but excluding sales of inventory in the ordinary course of
business) or lease (or enter into any commitment to sell, transfer, convey or
lease) all or any part of its assets (whether in one or a series of
transactions) except
(a) Leases by the Borrower and the Consolidated
Subsidiaries of Flight Equipment to others provided that the aggregate
book value of all Flight Equipment leased to any other Person or
Persons by the Borrower or any Consolidated Subsidiary shall not at
any time exceed $500,000,000,
(b) Sales of property by the Borrower or a Consolidated
Subsidiary provided that at the time of any such sale or other
disposition the Borrower or the Consolidated Subsidiary making such
sale or disposition shall have previously acquired or shall be
simultaneously acquiring, in contemplation of such sale or other
disposition, substantially similar property, or shall have previously
entered into, or shall be simultaneously entering into, a binding
purchase agreement or purchase agreements to acquire substantially
similar property, which property is acquired within three years of
such sale or other disposition,
(c) Sales of property (other than sales of property
permitted by Section 6.16(e) but including any deemed sales of
property pursuant to Section 6.15(d)) determined by the Borrower to be
surplus or obsolete provided that the aggregate net book value of all
such surplus or obsolete property sold in any one fiscal year of the
Borrower shall not exceed 12.5% of Consolidated Adjusted Net Worth as
of the last day of the fiscal year of the Borrower immediately
preceding the fiscal year of the Borrower during which any such sale
of assets shall take place,
(d) Sales of any property in order concurrently or
subsequently to lease as lessee such or similar property, provided
that (i) any such sale takes place within 360 days after (A) in the
case of personal property, the date on which the Borrower acquired
such property, and (B) in the case of real property or fixtures, the
later of the date on which the Borrower acquired such property or the
date on which construction of all improvements on such property was
completed, and (ii) after giving effect to the creation of the
Capitalized Lease Obligations, if any, of the Borrower or a
Consolidated Subsidiary resulting from the lease of such property by
the Borrower or a Consolidated Subsidiary, the Borrower is in
compliance with Section 6.12,
(e) Sales (including any deemed sales pursuant to Section
6.15(d)) of property owned on February 7, 1989 by Tiger International
or any of its Subsidiaries provided that (i) the property being sold
is reasonably determined by the Borrower to be unnecessary for the
operation of an integrated, worldwide all cargo air and ground
transportation system, and (ii) all such property is sold for an
amount at least equal to the fair market value thereof, and
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(f) Sales of Property commonly known as "Federal Express
Stage 3 Kits" in accordance with the Borrower's ordinary business
practices.
6.17. Loans, Advances and Investments. The Borrower will not, nor
will it permit any Consolidated Subsidiary to, make or suffer to exist any
Investments, or commitments therefor, except
(a) Marketable direct obligations of the United States of
America, or an instrumentality or agency thereof, having a remaining
term to maturity of not more than one year,
(b) Certificates of deposit or other obligations having a
remaining term to maturity of not more than one year and issued by a
Lender, First Tennessee Bank, N.A., Union Planters National Bank of
Memphis or any other national or state bank or trust company having
capital, surplus and undivided profits in excess of $250,000,000 in
the aggregate,
(c) Other certificates of deposit having a remaining term
to maturity of not more than one year and issued by a bank or other
financial institution approved in accordance with the Borrower's
corporate investment guidelines and procedures provided that the
aggregate outstanding principal amount of all such certificates of
deposit shall not at any one time exceed $1,000,000,
(d) Time deposits in any currency having a remaining term
to maturity of not more than one year and held by (i) foreign branches
of American banks, each such bank having capital, surplus and
undivided profits in excess of $250,000,000, or (ii) foreign banks,
each such bank having total capital, surplus and undivided profits in
excess of $250,000,000 or its equivalent in other currencies,
(e) For a period not in excess of one year, (i)
marketable direct obligations of the United States of America, or an
instrumentality or agency thereof, or (ii) instruments fully supported
by marketable direct obligations of the United States of America, or
an instrumentality or agency thereof, or (iii) open market commercial
paper maturing within one year after acquisition of such commercial
paper, which is rated A1 or better by S&P or P1 or better by Moody's;
in each case, purchased by the Borrower or a Consolidated Subsidiary
and actually delivered to or held by a Dealer for the account of the
Borrower or a Consolidated Subsidiary under a repurchase agreement
with the Dealer from which such obligations or commercial paper was
purchased obligating such Dealer to repurchase such obligations or
commercial paper within fourteen calendar days after the date of such
repurchase agreement,
(f) Open market commercial paper maturing within one year
after the acquisition thereof, which is rated A1 or better by S&P or
P1 or better by Moody's,
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(g) Investments in the capital stock of a Consolidated
Subsidiary,
(h) Loans and advances by the Borrower to a Consolidated
Subsidiary,
(i) Loans and advances by a Consolidated Subsidiary to
the Borrower,
(j) Investments in any Person not otherwise permitted by
this Section 6.17, which together with all other Investments at the
time outstanding under this Section 6.17(j), do not exceed 12.5% of
Consolidated Adjusted Net Worth provided that at least 66-2/3% of such
Investments are reasonably related to the same fields of enterprise as
those in which the Borrower and the Consolidated Subsidiaries are now
engaged, and
(k) Restricted Investments made in compliance with
Section 6.11.
In determining from time to time the amount of the Investments permitted by
this Section 6.17, loans and advances shall be taken at the principal amount
thereof then remaining unpaid at the time of such determination and other
Investments shall be taken at the original cost thereof, regardless of any
subsequent appreciation or depreciation therein.
6.18. Contingent Liabilities. The Borrower will not, nor will it
permit any Consolidated Subsidiary to, assume, guarantee (including entering
into any contract which is, in economic effect, substantially equivalent to a
guaranty), endorse, contingently agree to purchase or to provide funds for the
payment of, agree to maintain the net worth or working capital or any other
financial test of, or otherwise become liable upon, any obligation of, any
Person, except
(a) By the endorsement of negotiable instruments for
deposit or collection (or similar transactions) in the ordinary course
of business,
(b) Guaranties of customs fees in the ordinary course of
business, and
(c) Any other Contingent Obligation which after having
given effect thereto would not cause the Borrower to fail to be in
compliance with Section 6.12.
In determining from time to time the amount of guaranties and contingent
liabilities permitted by this Section 6.18, guaranties and contingent
liabilities shall be taken at the principal amount then remaining unpaid at the
time of such determination on the indebtedness and obligations so guaranteed or
related to such contingent liabilities.
6.19. Liens. The Borrower will not, nor will it permit any
Consolidated Subsidiary to, create, incur, assume or suffer to exist, any Lien,
or enter into, or make any commitment to enter into, any arrangement for the
acquisition of any Property through conditional sales, lease-purchase or other
title retention agreement, except
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(a) Liens which may be hereafter created to secure
payment of the Notes and all amounts due the Lenders and the Agent, as
the case may be, under this Agreement,
(b) Deposits or pledges, made in the ordinary course of
business, to secure payment of workers' compensation, unemployment
insurance, old age pensions or other social security obligations,
(c) Deposits or pledges, made in the ordinary course of
business, to secure performance of bids, tenders, contracts (other
than contracts for Indebtedness), leases, public or statutory
obligations, surety bonds, or other deposits or pledges for purposes
of like general nature made in the ordinary course of business,
(d) Deposits or pledges for the purpose of securing an
appeal, stay or discharge in the course of legal proceedings, or Liens
for judgments or awards which were not incurred in connection with
Indebtedness or the obtaining of advances or credits, provided such
deposits, pledges and Liens do not, in the aggregate for the Borrower
and the Consolidated Subsidiaries, materially detract from the value
of their assets or properties or materially impair the use thereof in
the ordinary course of business and such appeal, judgment or award, as
the case may be, is being diligently contested or litigated in good
faith by appropriate proceedings being diligently conducted, and
provided further there has been set aside on the books of the Borrower
or the Consolidated Subsidiaries, as the case may be, reserves in
accordance with GAAP with respect thereto, which reserves shall be
maintained until the related liabilities are paid or otherwise
discharged, and provided further execution is not levied upon any such
judgment or award,
(e) Liens for taxes, fees, assessments and governmental
charges not delinquent or which are being contested in good faith by
appropriate proceedings being diligently conducted, provided there has
been set aside on the books of the Borrower or the Consolidated
Subsidiaries, as the case may be, adequate reserves in accordance with
GAAP with respect thereto, which reserves shall be maintained until
the related liabilities are paid or otherwise discharged, and provided
further, execution is not levied upon any such Lien,
(f) Mechanics', carriers', workers', repairmen's or other
like Liens arising in the ordinary course of business securing
obligations which are not overdue for a period of more than 90
calendar days, or which are being contested in good faith by
appropriate proceedings being diligently conducted provided there has
been set aside on the books of the Borrower and the Consolidated
Subsidiaries, as the case may be, adequate reserves in accordance with
GAAP with respect thereto, which reserves shall be maintained until
the related liabilities are paid or otherwise discharged, and provided
further, execution is not levied upon any such Lien,
(g) Lessors' interests under Capitalized Leases,
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(h) Liens on property acquired or constructed with the
proceeds of any tax-exempt airport bond financing,
(i) Liens securing Indebtedness of a Consolidated
Subsidiary to the Borrower,
(j) Liens existing on the property of a corporation or
other business entity immediately prior to its being consolidated with
or merged into the Borrower or a Consolidated Subsidiary or its
becoming a Consolidated Subsidiary, or Liens existing on any property
acquired by the Borrower or a Consolidated Subsidiary at the time such
is so acquired (whether or not the Indebtedness secured thereby shall
have been assumed), provided that (i) no such Lien was created or
assumed in contemplation of such consolidation or merger or such
entity's becoming a Consolidated Subsidiary or such acquisition of
property and (ii) each such Lien shall only cover the acquired
property and, if required by the terms of the instrument originally
creating such Lien, property which is an improvement to or is acquired
for specific use in connection with such acquired property,
(k) Liens on Flight Equipment acquired on or after the
date of this Agreement which (i) secure the payment of all or any part
of the purchase price of such Flight Equipment or improvements
thereon, (ii) are limited to the Flight Equipment so acquired and
improvements thereon, and (iii) attach to such Flight Equipment within
one year after the acquisition or improvement of such Flight
Equipment, and
(l) Liens not otherwise permitted by Sections 6.19(a)
through (k) provided that at all times the sum of (i) the aggregate
principal amount of all outstanding Long Term Debt of the Consolidated
Subsidiaries (excluding the Current Maturities of any such Long Term
Debt and any Long Term Debt of a Consolidated Subsidiary owing to the
Borrower) which is unsecured, plus (ii) the aggregate principal amount
of all outstanding Long Term Debt of the Borrower or a Consolidated
Subsidiary (excluding the Current Maturities of any such Long Term
Debt and any Long Term Debt of a Consolidated Subsidiary owing to the
Borrower) which is secured as permitted by this Section 6.19(l), does
not exceed 8% of Consolidated Adjusted Total Assets.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made or deemed made by or on
behalf of the Borrower or any of its Subsidiaries to the Lenders or the Agent
under or in connection with
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this Agreement, any Loan, or any certificate or information delivered in
connection with this Agreement or any other Loan Document shall be materially
false on the date as of which made or deemed made.
7.2. Nonpayment of principal of any Note when due, or nonpayment
of interest upon any Note or of any facility fee or other obligations under any
of the Loan Documents within five days after the same becomes due.
7.3. The breach by the Borrower of any of the terms or provisions of
Section 6.2, 6.5, 6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 6.17, 6.18, or 6.19.
7.4. The breach by the Borrower (other than a breach which
constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the terms or
provisions of this Agreement which is not remedied within five days after
written notice from the Agent or any Lender.
7.5. Failure of the Borrower or any Consolidated Subsidiary to pay
when due or within any applicable grace period any portion of either any single
obligation constituting Indebtedness in excess of $20,000,000 (or the
equivalent thereof in any other currency) or Indebtedness in an aggregate
principal amount in excess of $60,000,000 (or the equivalent thereof in any
other currency); or any default or other event shall occur under or with
respect to either any agreement under which any single obligation constituting
Indebtedness in excess of $20,000,000 (or the equivalent thereof in any other
currency) was created or is governed, or any agreements under which
Indebtedness in an aggregate principal amount in excess of $60,000,000 (or the
equivalent thereof in any other currency) was created or is governed, the
effect of which, in either case, is to cause, or to permit the holder or
holders of such Indebtedness to cause, such Indebtedness to become due prior to
its stated maturity; or either any single obligation constituting Indebtedness
in excess of $20,000,000 (or the equivalent thereof in any other currency) or
Indebtedness in an aggregate principal amount in excess of $60,000,000 (or the
equivalent thereof in any other currency) shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
payment), prior to the stated maturity thereof; or the Borrower or any
Consolidated Subsidiary shall not pay, or admit in writing its inability to
pay, its debts generally as they become due.
7.6. The Borrower or any Consolidated Subsidiary shall (i) have an
order for relief entered with respect to it under the Federal bankruptcy laws
as now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any Substantial Portion of its Property, (iv) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file
an answer or other pleading denying the material allegations of any such
proceeding filed against it, (v) take any corporate action to authorize or
effect any of the foregoing actions set forth in
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this Section 7.6 or (vi) fail to contest in good faith any appointment or
proceeding described in Section 7.7.
7.7. Without the application, approval or consent of the Borrower or
any Consolidated Subsidiary, a receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Borrower or any Consolidated
Subsidiary or any Substantial Portion of its Property, or a proceeding
described in Section 7.6(iv) shall be instituted against the Borrower or any
Consolidated Subsidiary and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of 45 consecutive
days.
7.8. The Borrower or any Consolidated Subsidiary shall fail within 45
days to pay, bond or otherwise discharge any judgment or order for the payment
of money in excess of $1,000,000, which is not stayed on appeal or otherwise
being appropriately contested in good faith.
7.9. The Unfunded Liabilities of all Single Employer Plans shall
exceed in the aggregate $80,000,000 or any Reportable Event shall occur in
connection with any Plan.
7.10. An administrator, custodian or other representative, by or
pursuant to any legislative act, resolution or rule (other than the Federal
bankruptcy laws or any similar law, State or Federal, whether now or hereafter
existing) or any order or decree of any court or any governmental board or
agency (other than any order or decree issued pursuant to the Federal
bankruptcy laws or any similar law, State or Federal, whether now or hereafter
existing) shall take possession or control of all or such portions of the
property of any one or more of the Borrower and the Consolidated Subsidiaries
as would, in the sole opinion of the Required Lenders, materially interfere
with the operation of the business of the Borrower and the Consolidated
Subsidiaries, on a consolidated basis, and such possession or control shall
continue for 45 calendar days.
7.11. The Borrower or any of its Subsidiaries shall be the subject of
any proceeding or investigation pertaining to the release by the Borrower or
any of its Subsidiaries, or any other Person of any toxic or hazardous waste or
substance into the environment, or any violation of any federal, state or local
environmental, health or safety law or regulation, which, in either case, could
reasonably be expected to have a Material Adverse Effect.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration. If any Default described in Section 7.6 or 7.7
occurs with respect to the Borrower, the obligations of the Lenders to make
Loans hereunder shall automatically terminate and the Obligations shall
immediately become due and payable without any election or action on the part
of the Agent or any Lender. If any other Default occurs, the
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Required Lenders (or the Agent, with the written consent of the Required
Lenders) may terminate or suspend the obligations of the Lenders to make Loans
hereunder, or declare the Obligations to be due and payable, or both, whereupon
the Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Borrower hereby
expressly waives.
If, within 14 days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make Loans
hereunder as a result of any Default (other than any Default as described in
Section 7.6 or 7.7 with respect to the Borrower) and before any judgment or
decree for the payment of the Obligations due shall have been obtained or
entered, the Required Lenders (in their sole discretion) shall so direct, the
Agent shall, by notice to the Borrower, rescind and annul such acceleration
and/or termination, provided that the Borrower certifies to the Lenders to
their satisfaction that, upon giving effect to such rescission, no other
Indebtedness of the Borrower shall be accelerated by virtue of a
cross-acceleration to Indebtedness under this Agreement.
8.2. Amendments. Subject to the provisions of this Article VIII,
the Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving
any Default hereunder; provided, however, that no such supplemental agreement
shall, without the consent of each Lender affected thereby:
(i) Extend the maturity or the time of payment of any Loan or
Note or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon or
fees hereunder.
(ii) Reduce the percentage specified in the definition of Required
Lenders or amend, modify, or waive any provision requiring
action by the Required Lenders to require action by any other
Person in lieu of the Required Lenders.
(iii) Extend the Facility Termination Date, or reduce the amount or
extend the payment date for, the mandatory payments required
under Section 2.2, or increase the amount of the Commitment
of any Lender hereunder, or permit the Borrower to assign its
rights under this Agreement.
(iv) Amend, modify, or waive Section 2.2(a), Section 4.1, Section
4.2, this Section 8.2, or Section 12.1.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive
payment of the fee required under Section 12.3.3 without obtaining the consent
of any other party to this Agreement.
8.3. Preservation of Rights. No delay or omission of the Lenders
or the Agent to exercise any right under the Loan Documents shall impair such
right or be construed to be a
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waiver of any Default or an acquiescence therein, and the making of a Loan
notwithstanding the existence of a Default or the inability of the Borrower to
satisfy the conditions precedent to such Loan shall not constitute any waiver
or acquiescence. Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by the Lenders required pursuant to Section 8.2, and then only to the
extent in such writing specifically set forth. All remedies contained in the
Loan Documents or by law afforded shall be cumulative and all shall be
available to the Agent and the Lenders until the Obligations have been paid in
full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations and
warranties of the Borrower contained in this Agreement shall survive delivery
of the Notes and the making of the Loans herein contemplated.
9.2. Governmental Regulation. Anything contained in this
Agreement to the contrary notwithstanding, no Lender shall be obligated to
extend credit to the Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation.
9.3. Taxes. Any taxes (excluding income taxes on the overall net
income of any Lender) or other similar assessments or charges payable or ruled
payable by any governmental authority in respect of the Loan Documents shall be
paid by the Borrower, together with interest and penalties, if any.
9.4. Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any
of the provisions of the Loan Documents.
9.5. Entire Agreement. The Loan Documents embody the entire
agreement and understanding among the Borrower, the Agent and the Lenders and
supersede all prior agreements and understandings among the Borrower, the Agent
and the Lenders relating to the subject matter thereof.
9.6. Several Obligations; Benefits of this Agreement. The
respective obligations of the Lenders hereunder are several and not joint and
no Lender shall be the partner or agent of any other (except to the extent to
which the Agent is authorized to act as such). The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender
from any of its obligations hereunder. This Agreement shall not be construed
so as to confer any
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right or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns.
9.7. Expenses; Indemnification. The Borrower shall reimburse the
Agent for any and all reasonable costs, internal charges and out-of-pocket
expenses (including attorneys' fees and time charges of attorneys for the
Agent, which attorneys may be employees of the Agent) paid or incurred by the
Agent in connection with the preparation, negotiation, execution, delivery
(subject to, with respect to all the foregoing, the terms of that certain
commitment letter between the Agent and the Borrower dated April 5, 1995 as it
may be amended or supplemented from time to time), amendment, and modification,
of the Loan Documents. The Borrower also agrees to reimburse the Agent and the
Lenders for any and all reasonable costs, internal charges and out-of-pocket
expenses (including attorneys' fees and time charges of attorneys for the Agent
and the Lenders, which attorneys may be employees of the Agent or the Lenders)
paid or incurred by the Agent or any Lender in connection with the collection
and enforcement of the Loan Documents and the protection of rights thereunder.
The Borrower further agrees to indemnify the Agent and each Lender, its
directors, officers and employees against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not the Agent or
any Lender is a party thereto) which any of them may pay or incur arising out
of or relating to this Agreement, the other Loan Documents, the transactions
contemplated hereby or the direct or indirect application or proposed
application of the proceeds of any Loan hereunder. The obligations of the
Borrower under this Section shall survive the termination of this Agreement,
the cancellation of the Commitments, and the payment of all outstanding
Obligations.
9.8. Numbers of Documents. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Agent with
sufficient counterparts so that the Agent may furnish one to each of the
Lenders.
9.9. Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
9.10. Nonliability of Lenders. The relationship between the
Borrower and the Lenders and the Agent shall be solely that of borrower and
lender. Neither the Agent nor any Lender shall have any fiduciary
responsibilities to the Borrower. Neither the Agent nor any Lender undertakes
any responsibility to the Borrower to review or inform the Borrower of any
matter in connection with any phase of the Borrower's business or operations.
9.11. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW
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OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
9.12. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENT AND THE BORROWER HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN
SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST
THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING
BY THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT
OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING
OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY
IN A COURT IN CHICAGO, ILLINOIS.
9.13. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
9.14. Confidentiality. The Agent and each Lender agrees to hold
any confidential information which it may receive from the Borrower pursuant to
this Agreement or in the course of an inspection pursuant to Section 6.10 in
confidence, except for disclosure (i) to other Lenders and their respective
Affiliates, each of whom shall be made aware of the terms of this Section 9.14
and shall agree to abide thereby, (ii) to legal counsel, accountants, and other
professional advisors to the Agent or that Lender, (iii) to regulatory
officials (provided that, to the extent practicable and permissible, the Agent
and each Lender shall give the Borrower prior notice of such disclosure), (iv)
as required by law, regulation, or legal process, (v) in connection with any
legal proceeding to which the Agent or that Lender is a party, and (vi)
permitted by Section 12.4; provided that, in connection with any disclosure
permitted under clause (iv) or (v) hereinabove, the Agent or such Lender, as
appropriate, shall give the Borrower prior notice of such disclosure unless
such notice is prohibited by law, regulation, or process.
9.15. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP.
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9.16. Effect on Prior Agreement; Ratification. The Borrower, the
Agent, and the Lenders agree that, on the Effective Date, all indebtedness,
liabilities and obligations of the Borrower to the Lenders outstanding under
the Prior Agreement and the promissory notes delivered thereunder shall, to the
extent not paid on such date, be deemed to be Obligations outstanding hereunder
and under the Notes. Each Lender party to the Prior Agreement shall, promptly
after receipt of its Note hereunder, return to the Borrower the promissory note
received by it in connection with the Prior Agreement. As of the Effective
Date, the Withdrawing Lenders shall cease to be "Lenders" for all purposes
under this Agreement. The Borrower, the Agent, and the Lenders agree that (i)
all terms and conditions of the Prior Agreement which are amended and restated
by this Agreement shall remain effective until such amendment and restatement
becomes effective hereunder, and (ii) the representations, warranties and
covenants set forth herein shall become effective concurrently with the
occurrence of the Effective Date.
ARTICLE X
THE AGENT
10.1. Appointment. The First National Bank of Chicago is hereby
appointed Agent hereunder and under each other Loan Document, and each of the
Lenders irrevocably authorizes the Agent to act as the agent of such Lender.
The Agent agrees to act as such upon the express conditions contained in this
Article X. The Agent shall not have a fiduciary relationship in respect of the
Borrower or any Lender by reason of this Agreement.
10.2. Powers. The Agent shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the Agent by the
terms of each thereof, together with such powers as are reasonably incidental
thereto. The Agent shall have no implied duties to the Lenders, or any
obligation to the Lenders to take any action thereunder except any action
specifically provided by the Loan Documents to be taken by the Agent.
10.3. General Immunity. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the Borrower, the
Lenders or any Lender for any action taken or omitted to be taken by it or them
hereunder or under any other Loan Document or in connection herewith or
therewith except for its or their own gross negligence or willful misconduct.
10.4. No Responsibility for Loans, Recitals, etc. Neither the
Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or verify (i) any
statement, warranty or representation made in connection with any Loan Document
or any borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document; (iii) the
satisfaction of
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any condition specified in Article IV, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
any Loan Document or any other instrument or writing furnished in connection
therewith.
10.5. Action on Instructions of Lenders. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
under any other Loan Document in accordance with written instructions signed by
the requisite number of Lenders, and such instructions and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders and on
all holders of Notes unless the Required Lenders are not authorized to direct
the Agent to so act or so fail to act under the terms of this Agreement. The
Agent shall be fully justified in failing or refusing to take any action
hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action.
10.6. Employment of Agents and Counsel. The Agent may execute any
of its duties as Agent hereunder and under any other Loan Document by or
through employees, agents, and attorneys-in-fact and shall not be answerable to
the Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
10.7. Reliance on Documents; Counsel. The Agent shall be entitled
to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, telex, telecopy, telefacsimile, statement, paper or document believed
by it to be genuine and correct and to have been signed or sent by the proper
person or persons, and, in respect to legal matters, upon the opinion of
counsel selected by the Agent, which counsel may be employees of the Agent.
10.8. Agent's Reimbursement and Indemnification. The Lenders agree
to reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (i) for any amounts not reimbursed by the Borrower for which the
Agent is entitled to reimbursement by the Borrower under the Loan Documents,
(ii) for any other expenses incurred by the Agent on behalf of the Lenders, in
connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents to the extent such expenses are or may be
obligations of the Borrower to the Agent and (iii) for any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of the Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby, or the enforcement of any
of the terms thereof or of any such other documents, provided that no Lender
shall be liable for any of the foregoing to the extent they arise from the
gross negligence or willful misconduct of the Agent. The obligations of the
Lenders under this Section 10.8 shall survive payment of the Obligations and
termination of this Agreement.
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10.9. Rights as a Lender. With respect to its Commitment, Loans
made by it and the Note issued to it, the Agent shall have the same rights and
powers hereunder and under any other Loan Document as any Lender and may
exercise the same as though it were not the Agent, and the term "Lender" or
"Lenders" shall, at any time when the Agent is a Lender, unless the context
otherwise indicates, include the Agent in its individual capacity. The Agent
may accept deposits from, lend money to, and generally engage in any kind of
trust, debt, equity or other transaction, in addition to those contemplated by
this Agreement or any other Loan Document, with the Borrower or any of its
Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby
from engaging with any other Person. The Agent, in its individual capacity, is
not obligated to remain a Lender except as provided under Article XII.
10.10. Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Agent or any other Lender and
based on the financial statements prepared by the Borrower and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and
the other Loan Documents.
10.11. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, and the Agent may be
removed at any time with or without cause by written notice received by the
Agent from the Required Lenders. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint, on behalf of the Borrower and
the Lenders and with the consent of the Borrower (which shall not be
unreasonably withheld), a successor Agent. If no successor Agent shall have
been so appointed by the Required Lenders and consented to by the Borrower and
shall have accepted such appointment within thirty days after the retiring
Agent's giving notice of resignation, then the retiring Agent may appoint, on
behalf of the Lenders, a successor Agent, provided that the Borrower shall have
the right to remove such successor Agent and replace it with a successor of its
own designation with the consent of the Required Lenders (which shall not be
unreasonably withheld). Such successor Agent shall be a commercial bank having
capital and retained earnings of at least $250,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Agent, and the retiring or
removed Agent shall be discharged from its duties and obligations hereunder and
under the other Loan Documents. After any retiring or removed Agent's
resignation or removal hereunder as Agent, the provisions of this Article X
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Agent hereunder and under
the other Loan Documents.
10.12. Distribution of Information. The Borrower authorizes the
Agent, as the Agent may elect in its sole discretion, to discuss with and
furnish to the Lenders or to any other Person having an interest in the
Obligations (whether as a guarantor, pledgor of collateral, participant,
purchaser or otherwise) all financial statements, audit reports and other
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information pertaining to the Borrower and its Subsidiaries whether such
information was provided by the Borrower or prepared or obtained by the Agent,
subject to Section 9.14. Neither the Agent nor any of its employees, officers,
directors or agents makes any representation or warranty regarding any audit
reports or other analyses of the Borrower's and its Subsidiaries condition
which the Agent may elect to distribute, whether such information was provided
by the Borrower or prepared or obtained by the Agent, nor shall the Agent or
any of its employees, officers, directors or agents be liable to any person or
entity receiving a copy of such reports or analyses for any inaccuracy or
omission contained in or relating thereto.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. In addition to, and without limitation of, any
rights of the Lenders under applicable law, if the Borrower becomes insolvent,
however evidenced, or any Default or Unmatured Default occurs, any and all
deposits (including all account balances, whether provisional or final and
whether or not collected or available) and any other Indebtedness at any time
held or owing by any Lender to or for the credit or account of the Borrower may
be offset and applied toward the payment of the Obligations owing to such
Lender, whether or not the Obligations, or any part hereof, shall then be due.
11.2. Ratable Payments. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Loans (other than payments received
pursuant to Section 3.1, 3.2 or 3.4) in a greater proportion than that received
by any other Lender, such Lender agrees, promptly upon demand, to purchase a
portion of the Loans held by the other Lenders so that after such purchase each
Lender will hold its ratable proportion of Loans. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or
otherwise, receives collateral or other protection for its Obligations or such
amounts which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to their Loans. In case any
such payment is disturbed by legal process, or otherwise, appropriate further
adjustments shall be made to accomplish the intent of this Section.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and
the Lenders and their
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respective successors and assigns, except that (i) the Borrower shall not have
the right to assign its rights or obligations under the Loan Documents and (ii)
any assignment by any Lender must be made in compliance with Section 12.3.
Notwithstanding clause (ii) of this Section, any Lender may at any time,
without the consent of the Borrower or the Agent, assign all or any portion of
its rights under this Agreement and its Notes to a Federal Reserve Bank;
provided, however, that no such assignment shall release the transferor Lender
from its obligations hereunder. The Agent may treat the payee of any Note as
the owner thereof for all purposes hereof unless and until such payee complies
with Section 12.3 in the case of an assignment thereof or, in the case of any
other transfer, a written notice of the transfer is filed with the Agent. Any
assignee or transferee of a Note agrees by acceptance thereof to be bound by
all the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the holder of any Note, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
12.2. Participations.
12.2.1. Permitted Participants; Effect. Any Lender may,
in the ordinary course of its business and in accordance with
applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan owing to
such Lender, any Note held by such Lender, any Commitment of such
Lender or any other interest of such Lender under the Loan Documents.
In the event of any such sale by a Lender of participating interests
to a Participant, such Lender's obligations under the Loan Documents
shall remain unchanged, such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations, such
Lender shall remain the holder of any such Note for all purposes under
the Loan Documents, all amounts payable by the Borrower under this
Agreement shall be determined as if such Lender had not sold such
participating interests, and the Borrower and the Agent shall continue
to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents.
12.2.2. Voting Rights. Each Lender shall retain the sole
right to approve, without the consent of any Participant, any
amendment, modification or waiver of any provision of the Loan
Documents other than any amendment, modification or waiver with
respect to any Loan or Commitment in which such Participant has an
interest which forgives principal, interest or fees or reduces the
interest rate or fees payable with respect to any such Loan or
Commitment, postpones any date fixed for any regularly-scheduled
payment of principal of, or interest or fees on, any such Loan or
Commitment, releases any guarantor of any such Loan or releases any
substantial portion of collateral, if any, securing any such Loan.
12.2.3. Benefit of Setoff. Upon selling any
participating interest to a Participant pursuant to Section 12.2.1,
each Lender will have the option to, but shall not be required to,
give the Borrower and the Agent written notice of the fact that it has
made such a sale (without being required to specify the amount or any
other
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information concerning the participating interest sold) and the name
of the purchasing Participant (each Participant named in such a notice
is hereinafter referred to as an "Acknowledged Participant"). The
Borrower agrees that each Acknowledged Participant shall be deemed to
have the right of setoff provided in Section 11.1 as of the date of
the Borrower's receipt of the aforementioned notice in respect of its
participating interest in amounts owing under the Loan Documents to
the same extent as if the amount of its participating interest were
owing directly to it as a Lender under the Loan Documents, provided
that each Lender shall retain the right of setoff provided in Section
11.1 with respect to the amount of participating interests sold to
each Acknowledged Participant. The Lenders agree to share with each
Acknowledged Participant, and each Acknowledged Participant, by
exercising the right of setoff provided in Section 11.1, agrees to
share with each Lender, any amount received pursuant to the exercise
of its right of setoff, such amounts to be shared in accordance with
Section 11.2 as if each Acknowledged Participant were a Lender.
12.3. Assignments.
12.3.1. Permitted Assignments. Any Lender may, in the
ordinary course of its business and in accordance with applicable law,
at any time make one assignment to one bank or other entity (each a
"Purchaser") of all of its rights and obligations under the Loan
Documents. Any assignment under this Section 12.3 shall be
substantially in the form of Exhibit "C" hereto or in such other form
as may be agreed to by the parties thereto. Unless an acceleration of
the Obligations has occurred and is continuing, the consent of the
Borrower and the Agent shall be required prior to an assignment
becoming effective with respect to a Purchaser which is not a Lender
or an Affiliate thereof. Such consent shall not be unreasonably
withheld. Notwithstanding anything in this Article XII to the
contrary, nothing in this Agreement shall prohibit or limit the right
of any Lender to make assignments (and no consent shall be required in
connection with such assignments) of all or any part of its interests
under the Loan Documents (i) to a Purchaser which is a Lender or an
Affiliate thereof and (ii) after the occurrence and during the
continuance of an acceleration of the Obligations, to any Purchaser.
12.3.2. Required Assignments. The Borrower shall have
the right, by giving at least 15 Business Days' prior written notice
to the affected Lender and the Agent, at any time when no Default or
Unmatured Default has occurred and is continuing, to require any
Lender to assign all of its rights and obligations under the Loan
Documents to a Purchaser approved by the Borrower. Such assignment
shall be substantially in the form of Exhibit "C" hereto or in such
other form as may be agreed to by the parties thereto but shall be on
terms and conditions reasonably satisfactory to the affected Lender.
If the affected Lender is a Reference Lender, the Agent, with the
consent of the Borrower (which shall not be unreasonably withheld),
shall appoint a new Reference Lender from among the Lenders. The
Borrower shall remain liable to the affected Lender for any
indemnification provided under Section 3.4 with respect to
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Loans of such Lender outstanding on the effective date of an
assignment required under this Section 12.3.2.
12.3.3. Effect; Effective Date. Upon (i) delivery to the
Agent of a notice of assignment, substantially in the form attached as
Exhibit "I" to Exhibit "C" hereto (a "Notice of Assignment"), together
with any consents required by Section 12.3.1, and (ii) payment of a
$4,000 fee to the Agent for processing such assignment, such
assignment shall become effective on the effective date specified in
such Notice of Assignment. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender under
this Agreement and any other Loan Document executed by the Lenders and
shall have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if it were an original party hereto,
and no further consent or action by the Borrower, the Lenders or the
Agent shall be required to release the transferor Lender with respect
to the percentage of the Aggregate Commitment and Loans assigned to
such Purchaser and such Lender shall be immediately so released. Upon
the consummation of any assignment to a Purchaser pursuant to this
Section 12.3.3, the transferor Lender, the Agent and the Borrower
shall make appropriate arrangements so that a replacement Note is
issued to such transferor Lender and a new Note or, as appropriate, a
replacement Note, is issued to such Purchaser, in each case in
principal amounts reflecting their respective Commitments, as adjusted
pursuant to such assignment.
12.4. Dissemination of Information. The Borrower authorizes each
Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all information in such
Lender's possession concerning the creditworthiness of the Borrower and its
Subsidiaries; provided that each Transferee and prospective Transferee agrees
to be bound by Section 9.14 of this Agreement.
12.5. Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 2.18.
ARTICLE XIII
NOTICES
13.1. Giving Notice. Except as otherwise permitted by Section 2.13
with respect to borrowing notices, all notices and other communications
provided to any party hereto under this Agreement or any other Loan Document
shall be in writing or by telex or by facsimile and addressed or delivered to
such party at its address set forth below its signature hereto or at such other
address as may be designated by such party in a notice to the other parties.
Any notice, if mailed and properly addressed with postage prepaid or if
delivered to the Borrower's delivery service and properly addressed, shall be
deemed given when received; any notice, if
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transmitted by telex or facsimile, shall be deemed given when transmitted
(answerback confirmed in the case of telexes).
13.2. Change of Address. The Borrower, the Agent and any Lender
may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective upon receipt by the Agent of original or faxed
copies of such counterparts executed by the Borrower, the Agent and the
Lenders.
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IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have
executed this Agreement as of the date first above written.
FEDERAL EXPRESS CORPORATION
By: /s/ CHARLES M. BUCHAS, JR.
Charles M. Buchas, Jr.
Vice President and Treasurer
Federal Express Corporation
2007 Corporate Avenue
Memphis, Tennessee 38132
Attn: Vice President and
Treasurer
Telephone: 901-395-4533
Telecopy: 901-395-3910
Copy all notices and credit matters to:
Federal Express Corporation
2005 Corporate Avenue
Memphis, Tennessee 38132
Attn: General Counsel
Telephone: 901-395-3382
Telecopy: 901-395-3456
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COMMITMENT
- ----------
$56,000,000 THE FIRST NATIONAL BANK OF
CHICAGO, Individually and as Agent
By: /s/ DAVID G. DIXON
David G. Dixon
Authorized Agent
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
Attn: Transportation Division
Administrative Coordinator
Telephone: 312-732-8142
Telecopy: 312-732-3055
Copy all notices and credit matters to:
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670-0362
Attn: Christina D. Zautcke
Telephone: 312-732-1336
Telecopy: 312-732-3055
Copy all Borrowing Notices to:
The First National Bank of Chicago
One First National Plaza
Mail Suite 0634
Chicago, Illinois 60670-0634
Attn: Gregory A. Baranowski
Telephone: (312) 732-8573
Telecopy: (312) 732-4840
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COMMITMENT
- ----------
$46,000,000 BANK OF AMERICA ILLINOIS
By: /s/ TIMOTHY C. HINTZ
Timothy C. Hintz
Managing Director
555 S. Flower Street
11th Floor
Los Angeles, California 90071
Attn: Timothy C. Hintz
Telephone: (213) 228-2810
Telecopy: (213) 228-2756
Copy all notices and credit matters to:
Bank of America National
Trust and Savings Association
555 S. Flower Street
11th Floor
Los Angeles, California 90071
Attn: Timothy C. Hintz
Telephone: (213) 228-2810
Telecopy: (213) 228-2756
Copy all Borrowing Notices to:
Bank of America National
Trust and Savings Association
Corporate Service Center #5693
1850 Gateway Boulevard
Concord, California 94520
Attn: Milt Haverty
Telephone: (510) 675-8254
Telecopy: (510) 675-7531 or 7532
Page 56
<PAGE> 63
COMMITMENT
- ----------
$46,000,000 BANK OF TOKYO TRUST COMPANY
By: /s/ AMANDA S. RYAN
Amanda S. Ryan
Vice President
1251 Avenue of the Americas
12th Floor
New York, New York 10116
Attn: Amanda S. Ryan
Telephone: (212) 782-4322
Telecopy: (212) 782-6440
Copy all notices and credit matters to:
The Bank of Tokyo Trust Company
1251 Avenue of the Americas
12th Floor
New York, New York 10116
Attn: Amanda S. Ryan
Telephone: (212) 782-4322
Telecopy: (212) 782-6440
Copy all Borrowing Notices to:
The Bank of Tokyo Trust Company
1251 Avenue of the Americas
12th Floor
New York, New York 10116
Attn: Matthew Croghan
Telephone: (212) 782-4271
Telecopy: (212) 782-6402
Page 57
<PAGE> 64
COMMITMENT
- ----------
$46,000,000 CANADIAN IMPERIAL BANK
OF COMMERCE
By: /s/ KATHRYN W. SAX
Kathryn W. Sax
Vice President
Two Paces West
2727 Paces Ferry Rd.
Suite 1200
Atlanta, Georgia 30339
Attn: Kathryn W. Sax
Telephone: (404) 319-4903
Telecopy: (404) 319-4954
Copy all notices and credit matters to:
Canadian Imperial Bank of Commerce
Two Paces West
2727 Paces Ferry Rd.
Suite 1200
Atlanta, Georgia 30339
Attn: Kathryn W. Sax
Telephone: (404) 319-4903
Telecopy: (404) 319-4954
Copy all Borrowing Notices to:
Canadian Imperial Bank of Commerce
Two Paces West
2727 Paces Ferry Rd.
Suite 1200
Attn: Pluria Howell
Telephone: (404) 319-4814
Telecopy: (404) 319-4950
Page 58
<PAGE> 65
COMMITMENT
- ----------
$46,000,000 THE CHASE MANHATTAN
BANK, N.A.
By: /s/ MATTHEW H. MASSIE
Matthew H. Massie
Vice President
One Chase Manhattan Plaza
3rd Floor
New York, New York 10081
Attn: Sherwood E. Exum,
Managing Director
Telephone: (212) 552-4655
Telecopy: (212) 552-5879
Copy all notices and credit matters to:
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
3rd Floor
New York, New York 10081
Attn: Matthew H. Massie
Telephone: (212) 552-4655
Telecopy: (212) 552-5879
Copy all Borrowing Notices to:
The Chase Manhattan Bank, N.A.
Two Chase Manhattan Plaza
5th Floor
Credit Administration
New York, New York 10081
Attn: Carlos Morales
Telephone: (212) 552-4517
Telecopy: (212) 552-4455
Page 59
<PAGE> 66
COMMITMENT
- ----------
$46,000,000 CITICORP USA, INC.
By: /s/ M. KHURSHID ZAMAN
M. Khurshid Zaman
Authorized Signer
399 Park Avenue
12th Floor/Zone 2
New York, New York 10043
Attn: M. Khurshid Zaman
Telephone: (212) 559-0420
Telecopy: (212) 793-3734
Copy all notices and credit matters to:
Citibank, N.A.
399 Park Avenue
12th Floor/Zone 2
New York, New York 10043
Attn: M. Khurshid Zaman
Telephone: (212) 559-0420
Telecopy: (212) 793-3734
Copy all Borrowing Notices to:
Citibank, N.A.
Floor 7/Zone 2
1 Court Square
Long Island City
New York, New York 11120
Attn: Lillian Harvan
Telephone: (718) 248-4392
Telecopy: (718) 248-4844
Page 60
<PAGE> 67
COMMITMENT
- ----------
$46,000,000 COMMERZBANK AG,
ATLANTA AGENCY
By: /s/ H. YERGY /s/ E. KAGERER
H. Yergy E. Kagerer
Vice President Asst Vice President
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attn: Corporate Banking
Telephone: (404) 888-6500
Telecopy: (404) 888-6539
Copy all notices and credit matters to:
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attn: Eric R. Kagerer
Telephone: (404) 888-6517
Telecopy: (404) 888-6539
Copy all Borrowing Notices to:
Commerzbank AG, Atlanta Agency
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attn: Ute Brune
Telephone: (404) 888-6510
Telecopy: (404) 888-6539
Page 61
<PAGE> 68
COMMITMENT
- ----------
$46,000,000 NATIONAL WESTMINSTER BANK PLC,
NEW YORK BRANCH
By: /s/ MARIA AMARAL-LEBLANC
Maria Amaral-LeBlanc
Vice President
NATIONAL WESTMINSTER BANK PLC,
NASSAU BRANCH
By: /s/ MARIA AMARAL-LEBLANC
Maria Amaral-LeBlanc
Vice President
175 Water Street, 29th Floor
New York, New York 10038
Attn: Maria Amaral-LeBlanc
Telephone: (212) 602-4229
Telecopy: (212) 602-4500
Copy all notices and credit matters to:
National Westminster Bank PLC
175 Water Street, 29th Floor
New York, New York 10038
Attn: Maria Amaral-LeBlanc
Telephone: (212) 602-4229
Telecopy: (212) 602-4500
Copy all Borrowing Notices to:
National Westminster Bank PLC
175 Water Street, 19th Floor
New York, New York 10038
Attn: Nadira Fauder
Telephone: (212) 602-4180
Telecopy: (212) 602-4118
Page 62
<PAGE> 69
COMMITMENT
- ----------
$46,000,000 NATIONSBANK OF GEORGIA, N.A.
By: /s/ JOHN E. BALL
John E. Ball
Senior Vice President
600 Peachtree Street, N.E.
21st Floor
Atlanta Georgia 30308-2213
Telephone: (615) 749-3469
Telecopy: (615) 749-4640
Copy all notices and credit matters to:
NationsBank
One NationsBank Plaza
Fifth Floor
Nashville, Tennessee 37239-1697
Attn: John E. Ball
Telephone: (615) 749-3469
Telecopy: (615) 749-4640
Copy all Borrowing Notices to:
NationsBank
100 North Tryon
Charlotte, North Carolina 28255
Attn:
Telephone: (704) 386-4576
Telecopy: (704) 386-8694
Page 63
<PAGE> 70
COMMITMENT
- ----------
$46,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ STEPHEN B. KING
Stephen B. King
Vice President
60 Wall Street
New York, New York 10260
Attn: Stephen B. King
Telephone: (212) 648-7415
Telecopy: (212) 648-5336
Copy all notices and credit matters to:
Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, New York 10260
Attn: Stephen B. King
Timothy V. O'Donovan
Vice President
Telephone: (212) 648-7415/8111
Telecopy: (212) 648-5336
Copy all Borrowing Notices to:
Multi-Option Unit - Loan Department
c/o J. P. Morgan Services, Inc.
500 Stanton-Christiana Road
Newark, Delaware 19713
Telephone: (302) 634-1800
Telecopy: (302) 634-1094
Page 64
<PAGE> 71
COMMITMENT
- ----------
$35,000,000 THE BANK OF NEW YORK
By: /s/ GREGORY L. BATSON
Gregory L. Batson
Vice President
One Wall Street, 22nd Floor
New York, New York 10286
Attn: Gregory L. Batson
Telephone: (212) 635-6898
Telecopy: (212) 635-6434
Copy all notices and credit matters to:
The Bank of New York
One Wall Street, 22nd Floor
New York, New York 10286
Attn: Gregory L. Batson
Telephone: (212) 635-6898
Telecopy: (212) 635-6434
Copy all Borrowing Notices to:
The Bank of New York
One Wall Street
New York, New York 10286
Attn: Lorna O. Alleyne
Telephone: (212) 635-6737
Telecopy: (212) 635-6399, 6877
Page 65
<PAGE> 72
COMMITMENT
- ----------
$35,000,000 THE FUJI BANK, LIMITED
By: /s/ SHINICHIRO FUJIMOTO
Shinichiro Fujimoto
Joint General Manager
Marquis One Tower, Suite 2100
245 Peachtree Center Ave., N.E.
Atlanta, Georgia 30303-1208
Attn: Clarence J. Mahovlich
Telephone: (404) 653-2100
Telecopy: (404) 653-2119
Copy all notices and credit matters to:
The Fuji Bank, Limited
Marquis One Tower
245 Peachtree Center Ave., N.E.
Atlanta, Georgia 30303-1208
Attn: Clarence J. Mahovlich
Telephone: (404) 653-2100
Telecopy: (404) 653-2119
Copy all Borrowing Notices to:
The Fuji Bank, Limited
Marquis One Tower
245 Peachtree Center Ave., N.E.
Atlanta, Georgia 30303-1208
Attn: Connie Fowls
Telephone: (404) 653-2100
Telecopy: (404) 653-2119
Page 66
<PAGE> 73
COMMITMENT
- ----------
$35,000,000 KREDIETBANK N.V. , GRAND CAYMAN
BRANCH
By: /s/ DIANE M. GRIMMIG
Name: Diane M. Grimmig
Title: Vice President
By: /s/ ROBERT SNAUFFER
Name: Robert Snauffer
Title: Vice President
125 W. 55th Street
New York, New York 10019
Attn: Senior Lending Officer
Telephone: (212) 541-0600
Telecopy: (212) 956-5580
Copy all notices and credit matters to:
Kredietbank N.V.
125 W. 55th Street
New York, New York 10019
Attn: Senior Lending Officer
Telephone: (212) 541-0600
Telecopy: (212) 956-5580
Nancy D. Halwig/Kojo Asakura
Kredietbank N.V.
Two Midtown Plaza, Suite 1750
1360 Peachtree St.
Atlanta, Georgia 30309
Telephone: (404) 876-2556
Telecopy: (404) 876-3212
Copy all Borrowing Notices to:
Lynda Resuma/Charlene Cumberbatch
Kredietbank, N.V.
125 W. 55th Street
New York, New York 10019
Attn: Loan Administration
Telephone: (212) 541-0600
Telecopy: (212) 956-5580
Page 67
<PAGE> 74
COMMITMENT
- ----------
$35,000,000 THE LONG-TERM CREDIT BANK
OF JAPAN, LTD.
By: /s/ SATORU OTSUBO
Name: Satoru Otsubo
Title: Joint General Manager
165 Broadway
New York, New York 10006
Attn: Kathy Dorsch
Telephone: (212) 335-4578
Telecopy: (212) 608-2371
Copy all notices and credit matters to:
The Long-Term Credit Bank of Japan, Ltd.
245 Peachtree Center Ave. N.E.
Marquis One Tower
Suite 2801
Atlanta, Georgia 30303
Attn: Rebecca Sedlar-Silbert
Vice President
Telephone: (404) 659-7210
Telecopy: (404) 658-9751
Copy all Borrowing Notices to:
The Long-Term Credit Bank of Japan, Ltd.
165 Broadway
New York, New York 10006
Attn: Gennie Mayo Williams
Analyst
Telephone: (212) 335-4787
Telecopy: (212) 608-3452
Page 68
<PAGE> 75
COMMITMENT
- ----------
$35,000,000 MELLON BANK, N.A.
By: /s/ MARK F. JOHNSTON
Mark F. Johnston
Assistant Vice President
One Mellon Bank Center, Room 4530
Pittsburgh, PA 15258-0001
Attn:
Telephone: (412) 236-2793
Telecopy: (412) 236-1914
Copy all notices and credit matters to:
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258-0001
Attn: Mark Johnston
Telephone: (412) 236-2793
Telecopy: (412) 236-1914
Copy all Borrowing Notices to:
Mellon Bank, N.A.
3 Mellon Bank Center, Room 2305
Pittsburgh, PA 15259
Attn: Janice Pappert
Telephone: (412) 234-5049
Telecopy: (412)234-5049
Page 69
<PAGE> 76
COMMITMENT
- ----------
$35,000,000 SOCIETE GENERALE, SOUTHWEST
AGENCY
By: /s/ THIERRY NAMUROY
Thierry Namuroy
Vice President
4800 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75210
Attn: Ralph Saheb
Telephone: (214) 979-2777
Telecopy: (214) 979-1104
Copy all notices and credit matters to:
Societe Generale, Southwest Agency
1111 Bagby, Suite 2020
Houston, Texas 77002
Attn: Thierry Namuroy
Telephone: (713) 759-6316
Telecopy: (713) 650-0824
Copy all Borrowing Notices to:
Societe Generale, Southwest Agency
4800 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75210
Attn: Ralph Saheb
Telephone: (214) 979-2777
Telecopy: (214) 979-1104
Page 70
<PAGE> 77
COMMITMENT
- ----------
$35,000,000 THE TORONTO-DOMINION BANK
By: /s/ KIMBERLY BURLESON
Kimberly Burleson
Credit Manager
Three First National Plaza, Suite 1900
Chicago, Illinois 60602
Attn: Dylan MacKenzie
Managing Director/Corporate Accounts
Telephone: (312) 977-2119
Telecopy: (312) 782-6337
Copy all notices and credit matters to:
The Toronto-Dominion Bank
31 West 52nd Street
New York, New York 10019
Attn: Tom Westdyk
Manager/Corporate Finance
Telephone: (212) 468-0581
Telecopy: (212) 262-1926
Copy all Borrowing Notices to:
The Toronto-Dominion Bank
909 Fannin
Suite 1700
Houston, Texas 77010
Attn: Kimberly Burleson
Telephone: (713) 653-8241
Telecopy: (713) 951-9921
Page 71
<PAGE> 78
COMMITMENT
- ----------
$35,000,000 UNION BANK OF SWITZERLAND
NEW YORK BRANCH
By: /s/ ROBERT W. CASEY, JR.
Robert W. Casey, Jr.
Vice President
By: /s/ LAURENT J. CHAIX
Laurent J. Chaix
Vice President
299 Park Avenue
New York, New York 10171-0026
Attn: Robert W. Casey
Telephone: (212) 821-3329
Telecopy: (212) 821-3383
Copy all notices and credit matters to:
Union Bank of Switzerland
299 Park Avenue
New York, New York 10171-0026
Attn: Robert W. Casey
Telephone: (212) 821-3329
Telecopy: (212) 821-3383
Copy all Borrowing Notices to:
Union Bank of Switzerland
299 Park Avenue
New York, New York 10171-0026
Attn: Michael Peterson
Loan Service Department
Telephone: (212) 821-3230
Telecopy: (212) 821-3259
Page 72
<PAGE> 79
COMMITMENT
- ----------
$25,000,000 BANK OF HAWAII
By: /s/ JOSEPH T. DONALSON
Joseph T. Donalson
Vice President
1839 South Alma School Road, Suite 150
Mesa, Arizona 85210
Attn: Joseph T. Donalson
Telephone: (602) 752-8020
Telecopy: (602) 752-8007
Copy all notices and credit matters to:
Bank of Hawaii
1839 South Alma School Road, Suite 150
Mesa, Arizona 85210
Attn: Joseph T. Donalson
Telephone: (602) 752-8020
Telecopy: (602) 752-8007
Copy all Borrowing Notices to:
Bank of Hawaii
Attn: Iwalani Sabarre-Kapika
Telephone: (808) 484-3584
Telecopy: (808) 484-3506
Page 73
<PAGE> 80
COMMITMENT
- ----------
$25,000,000 THE BANK OF NOVA SCOTIA
By: /s/ CLAUDE ASHBY
Claude Ashby
Agent
600 Peachtree, N.E., Suite 2700
Atlanta, Georgia 30308
Attn: Claude Ashby
Telephone: (404) 877-1560
Telecopy: (404) 888-8998
Copy all notices and credit matters to:
The Bank of Nova Scotia
1100 Louisiana, Suite 3000
Houston, Texas 77002
Attn: Paul G. Gonin
Telephone: (713) 759-3443
Telecopy: (713) 752-2425
Copy all Borrowing Notices to:
The Bank of Nova Scotia
600 Peachtree, N.E., Suite 2700
Atlanta, Georgia 30308
Attn: Phyllis Walker
Telephone: (404) 877-1557
Telecopy: (404) 888-8998
Page 74
<PAGE> 81
COMMITMENT
- ----------
$25,000,000 CREDIT SUISSE
By: /s/ WILLIAM P. MURRAY
Name: William P. Murray
Title: Member Senior Management
By: /s/ KRISTINN R. KRISTINSSON
Name: Kristinn R. Kristinsson
Title: Associate
12 East 49th Street
New York, New York 10017
Attn: Kris Kristinsson
Telephone: (212) 238-5206
Telecopy: (212) 238-5247
Copy all notices and credit matters to:
Credit Suisse
191 Peachtree St. NE
Suite 3500
Atlanta, Georgia 30303
Attn: Michel A. Odermatt
Telephone: (404) 577-6100
Telecopy: (404) 577-9029
Copy all Borrowing Notices to:
Credit Suisse
12 East 49th Street
New York, New York 10017
Attn: Hazel Leslie
Telephone: (212) 238-5218
Telecopy: (212) 238-5247
Page 75
<PAGE> 82
COMMITMENT
- ----------
$25,000,000 FIRST AMERICAN NATIONAL BANK
By: /s/ WILLIAM R. STUTTS
William R. Stutts
Vice President
4894 Poplar Avenue
Memphis, Tennessee 38117
Attn: William R. Stutts
Telephone: (901) 762-5675
Telecopy: (901) 762-5665
Copy all notices and credit matters to:
First American National Bank
4894 Poplar Avenue
Memphis, Tennessee 38117
Attn: William R. Stutts
Telephone: (901) 762-5675
Telecopy: (901) 762-5665
Copy all Borrowing Notices to:
First American National Bank
4894 Poplar Avenue
Memphis, Tennessee 38117
Attn: William R. Stutts
Telephone: (901) 762-5675
Telecopy: (901) 762-5665
Page 76
<PAGE> 83
COMMITMENT
- ----------
$25,000,000 THE INDUSTRIAL BANK OF JAPAN,
LIMITED, ATLANTA AGENCY
By: /s/ JACKIE BRUNETTO
Jackie Brunetto
Vice President
One Ninety One Peachtree Tower
191 Peachtree Street, Suite 3600
Atlanta, Georgia 30303-1757
Attn: Jackie Brunetto
Telephone: (404) 420-3325
Telecopy: (404) 524-8509
Copy all notices and credit matters to:
The Industrial Bank of Japan, Limited,
Atlanta Agency
One Ninety One Peachtree Tower
191 Peachtree Street, Suite 3600
Atlanta, Georgia 30303-1757
Attn: Jackie Brunetto
Telephone: (404) 420-3325
Telecopy: (404) 524-8509
Copy all Borrowing Notices to:
The Industrial Bank of Japan, Limited,
Atlanta Agency
One Ninety One Peachtree Tower
191 Peachtree Street, Suite 3600
Atlanta, Georgia 30303-1757
Attn: Business Operations Department
Telephone: (404) 420-3307
Telecopy: (404) 577-6818
Page 77
<PAGE> 84
COMMITMENT
- ----------
$25,000,000 NBD BANK
By: /s/ KIMBERLY R. ZAZULA
Kimberly R. Zazula
Second Vice President
611 Woodward Avenue
Detroit, Michigan 48226
Attn: Kimberly R. Zazula
Telephone: (313) 225-2228
Telecopy: (313) 225-2649
Copy all notices and credit matters to:
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
Attn: Debbie Stuart
Telephone: (313) 225-3443
Telecopy: (313) 225-2649
Copy all Borrowing Notices to:
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
Attn: Debbie Stuart
Telephone: (313) 225-3443
Telecopy: (313) 225-2649
Page 78
<PAGE> 85
COMMITMENT
- ----------
$25,000,000 ROYAL BANK OF CANADA
By: /s/ D. G. CALANCIE
D.G. Calancie
Senior Manager
Grand Cayman (North America No. 1) Branch
Financial Square, 23rd Floor
New York, New York 10005-3531
Attn: Manager, Loans Administration
Telephone: (212) 428-6311
Telecopy: (212) 428-2372
Copy all notices and credit matters to:
Royal Bank of Canada
Financial Square, 24th Floor
New York, New York 10005-3531
Attn: D.G. Calancie
Telephone: (212) 428-6445
Telecopy: (212) 428-6459
Copy all Borrowing Notices to:
Royal Bank of Canada
Financial Square, 24th Floor
New York, New York 10005-3531
Attn: D.G. Calancie
Telephone: (212) 428-6445
Telecopy: (212) 428-6459
Page 79
<PAGE> 86
COMMITMENT
- ----------
$25,000,000 SAKURA BANK, LTD.
By: /s/ HIROYASU IMANISHI
Hiroyasu Imanishi
Vice President and Senior Manager
245 Peachtree Center Avenue, N.E.
Suite 2703
Atlanta, Georgia 30303
Attn: Charles S. Zimmerman
Telephone: (404) 521-3111
Telecopy: (404) 521-1133
Copy all notices and credit matters to:
Sakura Bank, Ltd.
245 Peachtree Center Avenue, N.E.
Suite 2703
Atlanta, Georgia 30303
Attn: Christy Joel
Telephone: (404) 521-3111
Telecopy: (404) 521-1133
Copy all Borrowing Notices to:
Sakura Bank, Ltd.
245 Peachtree Center Avenue, N.E.
Suite 2703
Atlanta, Georgia 30303
Attn: Christy Joel
Telephone: (404) 521-3111
Telecopy: (404) 521-1133
Page 80
<PAGE> 87
COMMITMENT
- ----------
$25,000,000 TOKAI BANK, LTD., ATLANTA AGENCY
By: /s/ NOBUO MINAMIKAWA
Nobuo Minamikawa
Deputy Manager and Senior Vice President
Marquis Two Tower, Suite 2802
285 Peachtree Center Avenue, N.E.
Atlanta, Georgia 30303
Attn: Nobuo Minamikawa
Telephone: (404) 880-0000
Telecopy: (404) 653-0737
Copy all notices and credit matters to:
Tokai Bank, Ltd., Atlanta Agency
Marquis Two Tower, Suite 2802
285 Peachtree Center Avenue, N.E.
Atlanta, Georgia 30303
Attn: Bruce R. Dearing
Telephone: (404) 880-4601
Telecopy: (404) 653-0737
Copy all Borrowing Notices to:
Tokai Bank, Ltd., Atlanta Agency
Marquis Two Tower, Suite 2802
285 Peachtree Center Avenue, N.E.
Atlanta, Georgia 30303
Attn: Constance Houghton
Telephone: (404) 880-4623
Telecopy: (404) 653-0737
Page 81
<PAGE> 88
COMMITMENT
- ----------
$25,000,000 WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By: /s/ ALAN S. BOOKSPAN
Alan S. Bookspan
Vice President
1211 Avenue of the Americas
New York, New York 10036
Attn: Alan S. Bookspan
Telephone: (212) 852-6023
Telecopy: (212) 852-6307
Copy all notices and credit matters to:
Westdeutsche Landesbank Girozentrale
1211 Avenue of the Americas
New York, New York 10036
Attn: David Smith
Telephone: (212) 852-6155
Telecopy: (212) 852-6300
Copy all Borrowing Notices to:
Westdeutsche Landesbank Girozentrale
1211 Avenue of the Americas
New York, New York 10036
Attn: David Smith
Telephone: (212) 852-6155
Telecopy: (212) 852-6300
Page 82
<PAGE> 89
EXHIBIT "A"
NOTE
$________________________,
FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Borrower"),
promises to pay to the order of _____________________________ (the "Lender")
the lesser of the principal sum of ___________________ Dollars or the aggregate
unpaid principal amount of all Loans made by the Lender to the Borrower
pursuant to Article II of the Amended and Restated Credit Agreement (as the
same may be amended or modified, the "Agreement") hereinafter referred to, in
immediately available funds at the main office of The First National Bank of
Chicago in Chicago, Illinois, as Agent, together with interest on the unpaid
principal amount hereof at the rates and on the dates set forth in the
Agreement. The Borrower shall pay the principal of and accrued and unpaid
interest on the Loans in full on the Facility Termination Date and shall make
such mandatory payments as are required to be made under the terms of Section
2.2 of the Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Loan and the date and amount of each principal
payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled to
the benefits of, the Amended and Restated Credit Agreement, dated as of May 12,
1995 among the Borrower, The First National Bank of Chicago, individually and
as Agent, and the lenders named therein, including the Lender, to which
Agreement, as it may be amended from time to time, reference is hereby made for
a statement of the terms and conditions governing this Note, including the
terms and conditions under which this Note may be prepaid or its maturity date
accelerated. Capitalized terms used herein and not otherwise defined herein
are used with the meanings attributed to them in the Agreement.
FEDERAL EXPRESS CORPORATION
By:
Charles M. Buchas, Jr.
Vice President and Treasurer
Page 83
<PAGE> 90
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF FEDERAL EXPRESS CORPORATION,
DATED MAY __, 1995
<TABLE>
<CAPTION>
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Loan Period Paid Balance
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
Page 84
<PAGE> 91
EXHIBIT "B"
OPINION OF COUNSEL
The Agent and the Lenders who are parties to the
Amended and Restated Credit Agreement described below.
_________________, 1995
Ladies and Gentlemen:
This is in regard to the Amended and Restated Credit Agreement dated
as of May 12, 1995 among Federal Express Corporation, the Lenders named therein
and The First National Bank of Chicago, as Agent (the "Agreement"). Unless the
context otherwise requires, all terms used in this opinion which are
specifically defined in the Agreement shall have the meanings given such terms
in the Agreement.
I am the Senior Vice President and General Counsel of the Borrower and
have acted as such in connection with the Agreement. I, or attorneys under my
supervision, have made such examination and investigation as I or they have
deemed necessary in order to give the following opinion.
Based upon the foregoing, it is my opinion that:
1. The Borrower is a corporation duly incorporated and
validly existing in good standing under the laws of the State of
Delaware. The Borrower is duly authorized to execute and deliver the
Agreement and the Notes and perform its obligations under the
Agreement and the Notes and to borrow under the Agreement. The
Borrower has all corporate power required to carry on its ordinary
course of business.
2. Each Significant Subsidiary is a corporation duly
incorporated and validly existing in good standing under the laws of
the jurisdiction of its incorporation.
3. Each of the Borrower and each Significant Subsidiary is
duly qualified as a foreign corporation in good standing to do
business in all jurisdictions where the failure to so qualify would
have a material adverse effect on the business of the Borrower and the
Significant Subsidiaries taken as a whole.
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4. The execution and delivery of the Agreement and the Notes
by the Borrower, the borrowings by the Borrower under the Agreement
and the performance by the Borrower of its obligations under the
Agreement and the Notes have been duly authorized by all necessary
corporate action and proceedings on the part of the Borrower and do
not at this time:
(a) require any consent of the Borrower's
shareholders; or
(b) contravene, or constitute a default under, any
provision of any law or regulation applicable to the Borrower
or of the certificate of incorporation or by-laws of the
Borrower or of any material contract, agreement, judgment,
order, decree, adjudication or other instrument binding upon
the Borrower, or by which the Borrower or its property may be
bound or affected, or result in the creation of any Lien on
any property now owned by the Borrower or any Significant
Subsidiary pursuant to the provisions of any agreement,
indenture or other instrument binding upon it.
5. The Agreement and the Notes delivered as of the date
hereof have been duly executed and delivered by the Borrower and
constitute the legal, valid and binding obligations of the Borrower
enforceable in accordance with their terms, except as such
enforceability may be limited by bankruptcy or similar laws relating
generally to the enforcement of creditors' rights and subject also to
the availability of equitable remedies if equitable remedies are
sought.
6. There is no action, suit, proceeding or investigation of
which I am aware pending or threatened against or affecting the
Borrower or any Significant Subsidiary before any court, regulatory
commission, arbitration tribunal, governmental department,
administrative agency or instrumentality which, if such action, suit,
proceeding or investigation were determined adversely to the interest
of the Borrower and the Significant Subsidiaries, would have a
material, adverse effect on the business, condition (financial or
otherwise) or operations of the Borrower or any Significant
Subsidiary, except the excise tax dispute discussed in the Borrower's
Annual Report on Form 10-K for the fiscal year ended May 31, 1994 as
updated in the Borrower's Quarterly Report on Form 10-Q for the
quarter ended February 28, 1995.
7. Neither the Borrower nor any Significant Subsidiary is in
default or violation in any respect which would have a material
adverse effect on the business or condition (financial or otherwise)
of the Borrower or any Significant Subsidiary with respect to any law,
rule, regulation, order, writ, judgment, injunction, decree,
adjudication, determination or award presently in effect and
applicable to it.
8. No approval, authorization, consent, adjudication or
order of any governmental authority, which has not been obtained by
the Borrower, is required to be obtained by the Borrower in connection
with the execution and delivery of the
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Agreement, the Notes, the borrowings under the Agreement or in
connection with the performance by the Borrower of its obligations
under the Agreement and the Notes.
9. The Borrower is not engaged principally or as one of
its important activities in the business of extending credit for the
purpose of purchasing or carrying any "margin stock" (as such term is
defined in Regulation U of the Board of Governors of the Federal
Reserve System).
10. The Borrower is not an "investment company", within the
meaning of the Investment Borrower Act of 1940, as currently in
effect.
11. The laws of the State of Tennessee which limit
interest rates or other amounts payable with respect to borrowed money
or interest thereon are not applicable to the Agreement or the Notes.
12. The Borrower is not a national of any foreign
country designated in Presidential Executive Order No. 8389 or 9193,
as amended, and the regulations issued thereunder, as amended, or a
national of any foreign country designated in the Foreign Assets
Control Regulations or in the Cuban Assets Control Regulations of the
United States Treasury Department, 31 C.F.R., Subtitle B, Chapter V,
as amended.
13. The certificates issued to the Borrower pursuant to 49
U.S.C. Section 41102(a) and 49 U.S.C. Section 41103 and the operating
certificates issued to the Borrower pursuant to Part 121 of the
Federal Aviation Regulations are in full force and effect and are
adequate for the conduct of the business of the Borrower as now
conducted. There are no actions, proceedings or investigations
pending or, to my knowledge, threatened (or any basis therefor known
to me) to amend, modify, suspend or revoke any such certificate in
whole or in part which would have any material adverse effect on any
such certificate or the operations of the Borrower.
This opinion is limited to the effect of the laws of the State of
Tennessee, the General Corporation Law of the State of Delaware and the laws of
the United States of America, and I express no opinion with respect to the laws
of any other jurisdiction. As a result, I have with your permission assumed
for purposes of this opinion that, notwithstanding the contrary choice of law
provisions contained therein, the Loan Documents are governed by the laws of
the State of Tennessee.
This opinion may be relied upon by the Agent, the Lenders, and their
respective permitted participants, assignees, and other transferees. It is
understood that this opinion speaks as of the date given, notwithstanding any
delivery as contemplated above on any other date.
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EXHIBIT "C"
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
______________________ (the "Assignor") and ___________________(the "Assignee")
is dated as of _____________, _____. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to an Amended and
Restated Credit Agreement (which, as it may be amended, modified, renewed or
extended from time to time is herein called the "Credit Agreement") described
in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings attributed to
them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns
to the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, an interest in and to the Assignor's rights and obligations under the
Credit Agreement such that after giving effect to such assignment the Assignee
shall have purchased pursuant to this Assignment Agreement the percentage
interest specified in Item 3 of Schedule 1 of all outstanding rights and
obligations under the Credit Agreement relating to the facilities listed in
Item 3 of Schedule 1 and the other Loan Documents. The aggregate Commitment
(or Loans, if the applicable Commitment has been terminated) purchased by the
Assignee hereunder is set forth in Item 4 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement
(the "Effective Date") shall be the later of the date specified in Item 5 of
Schedule 1 or two Business Days (or such shorter period agreed to by the Agent)
after a Notice of Assignment substantially in the form of Exhibit "I" attached
hereto has been delivered to the Agent. Such Notice of Assignment must include
any consents required to be delivered to the Agent by Section 12.3.1 of the
Credit Agreement. In no event will the Effective Date occur if the payments
required to be made by the Assignee to the Assignor on the Effective Date under
Sections 4 and 5 hereof are not made on the proposed Effective Date. The
Assignor will notify the Assignee of the proposed Effective Date no later than
the Business Day prior to the proposed Effective Date. As of the Effective
Date, (i) the Assignee shall have the rights and obligations of a Lender under
the Loan Documents with respect to the rights and obligations assigned to the
Assignee hereunder and (ii) the Assignor shall relinquish its rights and be
released from its corresponding obligations under the Loan Documents with
respect to the rights and obligations assigned to the Assignee hereunder.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the
Assignee shall be entitled to receive from the Agent all payments of principal,
interest and fees with respect to the interest assigned hereby. The Assignee
shall advance funds directly to the Agent with respect to all Loans and
reimbursement payments made on or after the Effective Date with respect to the
interest assigned hereby. [In consideration for the sale and assignment of
Loans hereunder, (i) the Assignee shall pay the Assignor, on the Effective
Date, an amount equal to
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the principal amount of the portion of all Floating Rate Loans assigned to the
Assignee hereunder and (ii) with respect to each Fixed Rate Loan made by the
Assignor and assigned to the Assignee hereunder which is outstanding on the
Effective Date, (a) on the last day of the Interest Period therefor or (b) on
such earlier date agreed to by the Assignor and the Assignee or (c) on the date
on which any such Fixed Rate Loan either becomes due (by acceleration or
otherwise) or is prepaid (the date as described in the foregoing clauses (a),
(b) or (c) being hereinafter referred to as the "Payment Date"), the Assignee
shall pay the Assignor an amount equal to the principal amount of the portion
of such Fixed Rate Loan assigned to the Assignee which is outstanding on the
Payment Date. If the Assignor and the Assignee agree that the Payment Date for
such Fixed Rate Loan shall be the Effective Date, they shall agree to the
interest rate applicable to the portion of such Loan assigned hereunder for the
period from the Effective Date to the end of the existing Interest Period
applicable to such Fixed Rate Loan (the "Agreed Interest Rate") and any
interest received by the Assignee in excess of the Agreed Interest Rate shall
be remitted to the Assignor. In the event interest for the period from the
Effective Date to but not including the Payment Date is not paid by the
Borrower with respect to any Fixed Rate Loan sold by the Assignor to the
Assignee hereunder, the Assignee shall pay to the Assignor interest for such
period on the portion of such Fixed Rate Loan sold by the Assignor to the
Assignee hereunder at the applicable rate provided by the Credit Agreement. In
the event a prepayment of any Fixed Rate Loan which is existing on the Payment
Date and assigned by the Assignor to the Assignee hereunder occurs after the
Payment Date but before the end of the Interest Period applicable to such Fixed
Rate Loan, the Assignee shall remit to the Assignor the excess of the
prepayment penalty paid with respect to the portion of such Fixed Rate Loan
assigned to the Assignee hereunder over the amount which would have been paid
if such prepayment penalty was calculated based on the Agreed Interest Rate.
The Assignee will also promptly remit to the Assignor (i) any principal
payments received from the Agent with respect to Fixed Rate Loans prior to the
Payment Date and (ii) any amounts of interest on Loans and fees received from
the Agent which relate to the portion of the Loans assigned to the Assignee
hereunder for periods prior to the Effective Date, in the case of Floating Rate
Loans, or the Payment Date, in the case of Fixed Rate Loans, and not previously
paid by the Assignee to the Assignor.]* In the event that either party hereto
receives any payment to which the other party hereto is entitled under this
Assignment Agreement, then the party receiving such amount shall promptly remit
it to the other party hereto.
5. FEES PAYABLE BY THE ASSIGNEE. The [Assignee shall pay to the
Assignor a fee on each day on which a payment of interest or facility fees is
made under the Credit Agreement with respect to the amounts assigned to the
Assignee hereunder (other than a payment of interest or commitment fees for the
period prior to the Effective Date or, in the case of Fixed Rate Loans, the
Payment Date, which the Assignee is obligated to deliver to the Assignor
pursuant to Section 4 hereof). The amount of such fee shall be the difference
between (i) the interest or fee, as applicable, paid with respect to the
amounts assigned to the
_______________
* Each Assignor may insert its standard payment provisions in lieu of the
payment terms included in this Exhibit.
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Assignee hereunder and (ii) the interest or fee, as applicable, which would
have been paid with respect to the amounts assigned to the Assignee hereunder
if each interest rate was ___ of 1% less than the interest rate paid by the
Borrower or if the commitment fee was ___ of 1% less than the commitment fee
paid by the Borrower, as applicable. In addition, the] Assignee agrees to pay
___% of the processing fee required to be paid to the Agent in connection with
this Assignment Agreement.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim. It is understood and agreed
that the assignment and assumption hereunder are made without recourse to the
Assignor and that the Assignor makes no other representation or warranty of any
kind to the Assignee. Neither the Assignor nor any of its officers, directors,
employees, agents or attorneys shall be responsible for (i) the due execution,
legality, validity, enforceability, genuineness, sufficiency or collectability
of any Loan Document, including without limitation, documents granting the
Assignor and the other Lenders a security interest in assets of the Borrower or
any guarantor, (ii) any representation, warranty or statement made in or in
connection with any of the Loan Documents, (iii) the financial condition or
creditworthiness of the Borrower or any guarantor, (iv) the performance of or
compliance with any of the terms or provisions of any of the Loan Documents,
(v) inspecting any of the Property, books or records of the Borrower, (vi) the
validity, enforceability, perfection, priority, condition, value or sufficiency
of any collateral securing or purporting to secure the Loans or (vii) any
mistake, error of judgment, or action taken or omitted to be taken in
connection with the Loans or the Loan Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that
it has received a copy of the Credit Agreement, together with copies of the
financial statements requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement, (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Loan Documents, (iii) appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under the
Loan Documents as are delegated to the Agent by the terms thereof, together
with such powers as are reasonably incidental thereto, (iv) agrees that it will
perform in accordance with their terms all of the obligations which by the
terms of the Loan Documents are required to be performed by it as a Lender,
[and] (v) agrees that its payment instructions and notice instructions are as
set forth in the attachment to Schedule 1, [and (vi) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying that
the Assignee is entitled to receive payments under the Loan Documents without
deduction or withholding of any United States federal income taxes].**
_______________
** to be inserted if the Assignee is not incorporated under the laws of the
United States, or a state thereof.
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8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the Assignee's
non-performance of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee
shall have the right or obligation pursuant to Article XII of the Credit
Agreement to assign the rights which are assigned to the Assignee hereunder to
any entity or person, provided that (i) any such subsequent assignment does not
violate any of the terms and conditions of the Loan Documents or any law, rule,
regulation, order, writ, judgment, injunction or decree and that any consent
required under the terms of the Loan Documents has been obtained and (ii)
unless the prior written consent of the Assignor is obtained, the Assignee is
not thereby released from its obligations to the Assignor hereunder, if any
remain unsatisfied, including, without limitation, its obligations under
Sections 4, 5 and 8 hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the
Aggregate Commitment occurs between the date of this Assignment Agreement and
the Effective Date, [the percentage interest specified in Item 3 of Schedule 1
shall remain the same, but the dollar amount purchased shall be recalculated
based on the reduced Aggregate Commitment] [the dollar amount specified in Item
4 of Schedule 1 shall remain the same, but the percentage interest purchased
shall be recalculated based on the reduced Aggregate Commitment].***
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached
Notice of Assignment embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings between
the parties hereto relating to the subject matter hereof.
12. GOVERNING LAW This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Illinois.
13. NOTICES. Notices shall be given under this Assignment Agreement
in the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall
be the addresses set forth in the attachment to Schedule 1.
_______________
*** At option of parties.
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IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
By: _______________________________
Title: _____________________________
[NAME OF ASSIGNEE]
By: _______________________________
Title: _____________________________
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SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement:
Amended and Restated Credit Agreement dated as of May 12, 1995 by and among
Federal Express Corporation, the Lenders party thereto, and The First
National Bank of Chicago, as Agent
2. Date of Assignment Agreement: ________________
3. Amounts (As of Date of Item 2 above):
a. Total of Commitments
(Loans)* under
Credit Agreement $
b. Assignee's Percentage
purchased under the
Assignment Agreement** %
4. Assignee's (Loan Amount)*
Commitment Amount
Purchased Hereunder: $
5. Proposed Effective Date: ________________
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
Title: Title:
___________________
* If a Commitment has been terminated, insert outstanding Loans in place of
Commitment
** Percentage taken to 10 decimal places
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Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
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EXHIBIT "I"
to Assignment Agreement
NOTICE
OF ASSIGNMENT
___________________,
To: FEDERAL EXPRESS CORPORATION
2007 Corporate Avenue, 4th Floor
Memphis, Tennessee 38132
Attention: Vice President and Treasurer
THE FIRST NATIONAL BANK OF CHICAGO
One First National Plaza
Mail Suite 0362
Chicago, Illinois 60670
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that Amended and Restated Credit Agreement (the
"Credit Agreement") described in Item 1 of Schedule 1 attached hereto
("Schedule 1"). Capitalized terms used herein and not otherwise defined herein
shall have the meanings attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and
delivered to the Borrower and the Agent pursuant to Section 12.3.3 of the
Credit Agreement.
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of ___________, _____ (the "Assignment"), pursuant to
which, among other things, the Assignor has sold, assigned, delegated and
transferred to the Assignee, and the Assignee has purchased, accepted and
assumed from the Assignor the percentage interest specified in Item 3 of
Schedule 1 of all outstanding, rights and obligations under the Credit
Agreement relating to the facilities listed in Item 3 of Schedule 1, including,
without limitation, such interest in the Assignor's Commitment (if applicable)
and the Loans owing to the Assignor relating to such facilities. The Effective
Date of the Assignment shall be the later of the date specified in Item 5 of
Schedule 1 to the Assignment ("Schedule 1") or two Business Days (or such
shorter period as agreed to by the Agent) after this Notice of Assignment and
any consents and fees required by Sections 12.3.1 and 12.3.3 of the Credit
Agreement have been delivered to the Agent, provided that the Effective Date
shall not occur if any condition precedent agreed to by the Assignor and the
Assignee has not been satisfied.
4. The Assignor and the Assignee hereby give to the Borrower and
the Agent notice of the assignment and delegation referred to herein. The
Assignor will confer with the Agent before the date specified in Item 5 of
Schedule 1 to determine if the Assignment Agreement will become effective on
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such date pursuant to Section 3 hereof, and will confer with the Agent to
determine the Effective Date pursuant to Section 3 hereof if it occurs
thereafter. The Assignor shall notify the Agent if the Assignment Agreement
does not become effective on any proposed Effective Date as a result of the
failure to satisfy the conditions precedent agreed to by the Assignor and the
Assignee. At the request of the Agent, the Assignor will give the Agent
written confirmation of the satisfaction of the conditions precedent.
5. The Assignor or the Assignee shall pay to the Agent on or
before the Effective Date the processing fee of $4,000 required by Section
12.3.3 of the Credit Agreement.
6. If Notes are outstanding on the Effective Date, the Assignor
and the Assignee request and direct that the Agent prepare and cause the
Borrower to execute and deliver new Notes or, as appropriate, replacements
notes, to the Assignor and the Assignee. The Assignor and, if applicable, the
Assignee each agree to deliver to the Agent the original Note received by it
from the Borrower upon its receipt of a new Note in the appropriate amount.
7. The Assignee advises the Agent that its notice and payment
instructions are set forth in the attachment to Schedule 1.
8. Each party consenting to the Assignment in the space indicated
below hereby releases the Assignor from any obligations to it which have been
assigned to the Assignee.
NAME OF ASSIGNOR NAME OF ASSIGNEE
By: By:
Title: Title:
ACKNOWLEDGED BY AND ACKNOWLEDGED BY AND
CONSENTED TO CONSENTED TO
THE FIRST NATIONAL BANK OF FEDERAL EXPRESS CORPORATION
CHICAGO, AS AGENT
By: By:
Title: Title:
[Attach photocopy of Schedule 1 to Assignment]
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EXHIBIT "D"
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To The First National Bank of Chicago,
as Agent (the "Agent") under the Credit Agreement
Described Below.
Re: Amended and Restated Credit Agreement, dated as of May 12, 1995 (as
the same may be amended or modified, the "Credit Agreement"), among
Federal Express Corporation (the "Borrower"), the Agent, and the
Lenders named therein
Terms used herein and not otherwise defined shall have the meanings
assigned thereto in the Credit Agreement.
The Agent is specifically authorized and directed to act upon the
following standing money transfer instructions with respect to the proceeds of
Advances or other extensions of credit from time to time until receipt by the
Agent of a specific written revocation of such instructions by the Borrower,
provided, however, that the Agent may otherwise transfer funds as hereafter
directed in writing by the Borrower in accordance with Section 13.1 of the
Credit Agreement or based on any telephonic notice made in accordance with
Section 2.13 of the Credit Agreement.
Facility Identification Number(s)
Customer/Account Name
Transfer Funds To
For Account No.
Reference/Attention To
Authorized Officer (Customer Representative) Date
(Please Print) Signature
Authorized Officer (Customer Representative) Date
(Please Print) Signature
Lender Officer Name Date
(Please Print) Signature
(Deliver Completed Form to Credit Support Staff For Immediate Processing)
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SCHEDULE "1"
SIGNIFICANT SUBSIDIARIES
(See Section 5.7)
<TABLE>
<CAPTION>
Significant Percent Jurisdiction of
Subsidiary Ownership Organization
- ---------------------------------- --------- ------------------
<S> <C> <C>
Federal Express Canada Ltd. 100% Canada
Federal Express (Hong Kong)
Limited(1) 100% Hong Kong
</TABLE>
________________________
(1) Federal Express (Hong Kong) Limited is a wholly-owned subsidiary of
Federal Express International, Inc. Federal Express International,
Inc. is a wholly-owned subsidiary of Federal Express Corporation.
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SCHEDULE "2"
COMPLIANCE CALCULATIONS
(See Section 6.1(iv))
SEE ATTACHED
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<PAGE> 1
Confidential commercial and financial information has
been omitted from the exhibit and filed separately with
the Securities and Exchange Commission pursuant to Rule
24b-2 under the Securities Exchange Act of 1934.
================================================================================
AIRCRAFT SALES AGREEMENT
BY AND BETWEEN
AMERICAN AIRLINES, INC.
AND
FEDERAL EXPRESS CORPORATION
DATED APRIL 7, 1995
================================================================================
SALE OF TWELVE MCDONNELL DOUGLAS MODEL MD-11 AIRCRAFT
GRANT OF OPTIONS ON SEVEN MCDONNELL DOUGLAS MODEL MD-11 AIRCRAFT
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE/SECTION PAGE
- --------------- ----
<S> <C>
ARTICLE 1 DEFINITIONS; CONSTRUCTION
Section 1.01 Primary Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 2 PURCHASE OF AIRCRAFT
Section 2.01 Firm Aircraft, Purchase Prices and Delivery Dates . . . . . . . . 9
Section 2.02 Put Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.03 Purchase Options . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.04 Designation and Substitution of Airframes
and Engines . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.05 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . 12
Section 2.06 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 3 AIRCRAFT DELIVERY, TITLE, RISK OF LOSS
Section 3.01 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.02 Inspection, Flight Checks and Discrepancies . . . . . . . . . . . 14
Section 3.03 [ * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ]
Section 3.04 Delivery Procedure . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.05 Delayed Delivery . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.06 Delivery Condition . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.07 Adjustments to Purchase Price for
Delivery Condition . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.08 Aircraft Delivery Certificate; Engine
Delivery Certificate . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.09 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.10 Title and Risk of Loss . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 4 SPARE PARTS
Section 4.01 MD-11 Spare Parts List . . . . . . . . . . . . . . . . . . . . . 25
Section 4.02 MD-11 Spare Parts Purchase Obligation. . . . . . . . . . . . . . 25
</TABLE>
____________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
i
<PAGE> 3
<TABLE>
<S> <C>
Section 4.03 Spare Engine, Spare APU and Spare
Thrust Reverser Purchase Obligation . . . . . . . . . . . . . . 26
Section 4.04 Effect of Expiration of Put Options on Certain
Spare Parts Purchase Obligations . . . . . . . . . . . . . . . . 28
Section 4.05 Designation of MD-11 Spare Parts to be
Acquired and Delivery . . . . . . . . . . . . . . . . . . . . . 28
Section 4.06 MD-11 Spare Parts Documentation . . . . . . . . . . . . . . . . . 29
ARTICLE 5 REPRESENTATIONS AND WARRANTIES
Section 5.01 American's Representations and Warranties . . . . . . . . . . . . 29
Section 5.02 No Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.03 FedEx's Representations . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 6 DOCUMENTATION
Section 6.01 Availability of Documentation . . . . . . . . . . . . . . . . . . 32
Section 6.02 Technical Data and Documents . . . . . . . . . . . . . . . . . . 32
ARTICLE 7 ASSIGNMENT OF WARRANTIES, SERVICE LIFE
POLICIES AND PATENT INDEMNITIES
Section 7.01 Assignment of Warranties . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 8 PAYMENT OF TAXES
Section 8.01 Payment of Taxes by FedEx . . . . . . . . . . . . . . . . . . . . 35
Section 8.02 Tax Consequences of Certain Deliveries . . . . . . . . . . . . . 36
Section 8.03 After-Tax Basis . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 9 EXCUSABLE DELAY
Section 9.01 Excusable Delay . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.02 Time Limits on Excusable Delays . . . . . . . . . . . . . . . . . 37
ARTICLE 10 INDEMNIFICATION
Section 10.01 FedEx's Indemnification . . . . . . . . . . . . . . . . . . . . . 38
Section 10.02 American's Indemnification . . . . . . . . . . . . . . . . . . . 38
ARTICLE 11 INSURANCE
Section 11.01 Liability Insurance . . . . . . . . . . . . . . . . . . . . . . . 38
Section 11.02 Hull Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.03 Insurance Certificates . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE 12 DEFAULT AND REMEDIES
Section 12.01 American Events of Default . . . . . . . . . . . . . . . . . . . 39
Section 12.02 FedEx Events of Default . . . . . . . . . . . . . . . . . . . . . 40
Section 12.03 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 12.04 Limitation of Damages . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 13 DISPUTE RESOLUTION
Section 13.01 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . 41
Section 13.02 Notice of Dispute . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 13.03 Dispute Resolution Through Negotiation . . . . . . . . . . . . . 41
Section 13.04 Dispute Resolution Through Mediation . . . . . . . . . . . . . . 42
Section 13.05 Dispute Resolution Through Arbitration . . . . . . . . . . . . . 42
Section 13.06 Forbearance During Resolution Process . . . . . . . . . . . . . . 43
Section 13.07 Limitation of Remedies . . . . . . . . . . . . . . . . . . . . . 43
Section 13.08 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 14 CONDITIONS
Section 14.01 Conditions to FedEx's Obligations . . . . . . . . . . . . . . . . 43
Section 14.02 Conditions to American's Obligations . . . . . . . . . . . . . . 44
ARTICLE 15 CONFIDENTIALITY
Section 15.01 Confidentiality Obligations . . . . . . . . . . . . . . . . . . . 45
ARTICLE 16 FURTHER ASSURANCES
Section 16.01 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 17 MISCELLANEOUS
Section 17.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 17.02 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 17.03 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 17.04 No Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 17.05 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 17.06 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 17.07 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 17.08 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 17.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 17.10 Brokers' Commissions . . . . . . . . . . . . . . . . . . . . . . 48
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
Section 17.11 No Remedy Exclusive . . . . . . . . . . . . . . . . . . . . . . . 48
Section 17.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 17.13 Survival of Provisions . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
iv
<PAGE> 6
EXHIBITS
Exhibit A Aircraft Subject to Aircraft Purchase Agreement
Exhibit B Aircraft Delivery Certificate
Exhibit C Warranty Bills of Sale
Exhibit D Data Relating to the Aircraft and Engines
Exhibit E Designation of an Airframe for Delivery on
Scheduled Delivery Date
Exhibit F Designation of a Substitute Airframe for Delivery
on Scheduled Delivery Date
Exhibit G Form of Assignment of Assignable Manufacturer's
Warranties
Exhibit H Designation of Engines for Conveyance on Scheduled
Delivery Date
Exhibit I Put Option Exercise
Exhibit J Purchase Option Notice
Exhibit K Purchase Option Exercise
Exhibit L Purchase Price Adjustment Formula-Airframe
Exhibit M Purchase Price Adjustment Formula-Engines
Exhibit N Purchase Price Adjustment Formula-Gear
Exhibit O Purchase Price Adjustment Formula-APU
Exhibit P Engine Delivery Certificate
Exhibit Q Spare Parts Purchase Schedule and Prices
Exhibit R Procedure for Engine Borescope Inspections
Exhibit S Form of [ * ]Agreement
Exhibit T Spares Purchase Price Adjustment Formula-Spare Engines
Exhibit U High-Hour and High-Cycle Airframe Certificate
__________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
v
<PAGE> 7
AIRCRAFT SALES AGREEMENT
This AIRCRAFT SALES AGREEMENT (the "Agreement") is made on April 7,
1995 by and between AMERICAN AIRLINES, INC., a Delaware corporation
("American") and FEDERAL EXPRESS CORPORATION, a Delaware corporation ("FedEx").
RECITALS
1. American owns twelve (12) McDonnell Douglas Model MD-11
aircraft that American desires to sell. American has agreed to sell to FedEx
and FedEx has agreed to buy from American twelve (12) of its McDonnell Douglas
Model MD-11 aircraft. In addition, FedEx has agreed to grant to American put
options to sell to FedEx up to seven (7) additional McDonnell Douglas Model
MD-11 aircraft.
2. American and FedEx desire to document the terms and conditions
for the sale and purchase of the Firm Aircraft, the Put Options with respect to
the Put Option Aircraft and the Purchase Options with respect to the Put Option
Aircraft, each as defined below.
FOR AND IN CONSIDERATION of the mutual covenants contained in this
Agreement and other good and valuable consideration, the receipt of which is
hereby acknowledged FedEx and American (each a "Party" and together the
"Parties") agree as follows:
ARTICLE 1
DEFINITIONS; CONSTRUCTION
Section 1.01. Primary Definitions. In addition to words and terms
elsewhere defined in this Agreement, the following words and terms shall have
the meanings set forth below:
"Affiliate" shall mean any person, directly or indirectly, through one
or more intermediaries, controlling, controlled by or under common control with
American or FedEx, as the case may be.
"Aircraft" shall mean any or all of the nineteen (19) McDonnell
Douglas Model MD-11 aircraft, the U.S. Registration Numbers and Manufacturer's
Serial Numbers of which are listed on Exhibit A, each such aircraft consisting
of an Airframe, three Engines and the Gear, the APU and any and all Parts
installed therein or thereon at Delivery.
-1-
<PAGE> 8
"Aircraft Delivery Certificate" shall mean a tender and acceptance
certificate, in the form of Exhibit B, executed by FedEx and American
concurrently with the Delivery of each Aircraft.
"Aircraft Records" shall mean that portion of the Data listed under
the caption "RECORDS" in Exhibit D.
"Airframe" or "Airframes" shall mean one or more, as the case may be,
of the McDonnell Douglas Model MD-11 airframes bearing one of the Manufacturer
s Serial Numbers set forth in Exhibit A.
"Airworthiness Directive" or "Airworthiness Directives" shall mean one
or more of the airworthiness directives prescribed in Part 39 of the FAR or any
successor regulation thereto to the extent such airworthiness directives apply
to the Aircraft other than the Passenger Parts.
"Airworthy" shall mean the condition of an Aircraft (1) which includes
the existence of a validly issued, current individual aircraft FAA Certificate
of Airworthiness with respect to the Aircraft and which satisfies all
requirements for the effectiveness of such FAA Certificate of Airworthiness,
(2) which complies with: (A) the MD-11 Type Design Data Certificate, including
all applicable supplemental type certificates which have been incorporated on
the Aircraft; (B) subject to the nondiscrimination covenant of American in
Section 3.06(a)(ii), all applicable FAA Airworthiness Directives which are
required to be complied with by the Scheduled Delivery Date of such Aircraft
and the requirements for maintaining data substantiating the status and method
of compliance for each such Airworthiness Directive; and (C) the Aircraft
records requirements of FAR Section 121.380; and (3) in which such Aircraft s
structure, systems and components are functioning in accordance with their
intended use as set forth in FAA-approved documentation, including, but not
limited to, any applicable original manufacturer's manuals, technical standard
orders, parts manufacturing approval certificates or American engineering
specification orders, provided, however, that clauses (1), (2) and (3) above
are subject in all respects to any discrepancies or deviations of such Aircraft
from, or failures of such Aircraft to comply with, the foregoing standards
which are solely the result of the removal of the Passenger Parts from the
Aircraft as contemplated by Sections 3.02 and 3.06(a)(x).
"American ESM" shall mean the American Airlines MD-11 Engineering
Specification Maintenance (ESM) Program as in effect on the Delivery Date of
the Aircraft to which the standards in such program are being applied.
"American Program" shall mean American's FAA-approved Maintenance
Program for the Airframes and the Engines as in effect from time to time,
including, without limitation, the American ESM. When used in Section 3.06 and
Exhibits L, M, N and O (whether expressly used therein or whether used in the
definition of
-2-
<PAGE> 9
any other defined term appearing therein), references to the American Program
shall be to the American Program as in effect on the Delivery Date of the
Aircraft to which the standards in such Section 3.06 and such exhibits are
being applied.
"American Serviceable Tag" shall mean a document containing
appropriate entries detailing conformity to type design of the Spare Parts,
and, if applicable, the maintenance certification of repair, which is properly
executed in accordance with the American's General Maintenance Policy and
Procedures Program. The American Serviceable Tags will be acceptable to FedEx
when signed by an FAA-certified individual or accompanied by a certificate of
repair or a certificate signifying conformity to type design and specifying
that the Spare Parts are serviceable. The affixing of an American Serviceable
Tag to a Spare Part shall signify that the Spare Part is in a serviceable
condition for operation on American's fleet of McDonnell Douglas MD-11 aircraft
and complies with applicable manufacturer's service bulletins, Airworthiness
Directives, and the aircraft records requirements of FAR Section 121.380.
"AMR Rate" shall mean [ * .
].
"APU" shall mean [ * .
].
"Average Unit Price" shall mean American's average unit price for any
Spare Parts as shown on the books of American as of January 20, 1995.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banking institutions in Ft. Worth, Texas, New York, New York
or Memphis, Tennessee are authorized or required by law to be closed.
"C Check" shall mean any C check of a McDonnell Douglas Model MD-11
airframe as prescribed by the American Program.
"Change Designation" shall mean a notice in the form set forth in
Exhibit F exercising the right to substitute Airframes set forth in Section
2.04.
"Citibank Prime" shall mean the rate of interest announced by
Citibank, N.A. from time to time as its prime lending rate to its most credit
worthy commercial customers, which rate shall not necessarily be its lowest
lending rate.
"Data" shall mean all of the manuals, documents, drawings, charts,
records
____________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
-3-
<PAGE> 10
and other written materials described in Exhibit D, on whatever medium, and
any successor, supplemental, modifying, amending or replacement manuals,
documents, drawings, charts, records and other written materials, on whatever
medium, all of which shall be current with the latest revisions available with
respect thereto at the time such Data is delivered to FedEx.
"Delayed Delivery Engine" or "Delayed Delivery Engines" shall mean one
or more, as the case may be, of the Engine or Engines which (i) are conveyed
with an Aircraft, but which are not installed on the Aircraft at Delivery, (ii)
which American will deliver within ninety (90) days after the Delivery of such
Aircraft and (iii) which, at the time of the Delivery of the Aircraft, American
expects to be and which, upon its delivery by American to FedEx, must be in the
condition required by Section 3.06 for Engines upon delivery to FedEx.
"Delivery" shall mean, with respect to any Aircraft, the occurrence of
all the following events, which events are to be performed in accordance with
this Agreement: (a) tender of the Aircraft by American to FedEx as evidenced by
American's execution and delivery to FedEx of an Aircraft Delivery Certificate
with respect to such Aircraft, (b) acceptance by FedEx of the Aircraft, as
evidenced by FedEx's execution and re-delivery of such Aircraft Delivery
Certificate to American, (c) sale by transfer of title of the Aircraft by
American to FedEx as evidenced by delivery to FedEx of the executed FAA Bill of
Sale and the executed Warranty Bill of Sale, and (d) payment by FedEx to
American of the Purchase Price for the Aircraft.
"Delivery Condition" shall mean the condition that an Aircraft must be
in at the time it is tendered by American to FedEx for Delivery as prescribed
by Section 3.06.
"Delivery Date" shall mean any date on which the Delivery of an
Aircraft is complete.
"Deposits" shall mean the cash deposits made by FedEx with American
pursuant to Section 2.06.
"Designation" shall mean a written notice in the form set forth in
Exhibit E designating a particular Airframe for delivery on a Scheduled
Delivery Date, either in connection with the sale of the Firm Aircraft, the
exercise of a Put Option, or the exercise of a Purchase Option.
"Direct Maintenance Costs" shall mean, with respect to a particular
maintenance bill of work, all direct labor costs, the aggregate Average Unit
Price of all materials and the cost of all outside services, less any warranty
payments and reimbursements.
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<PAGE> 11
"Engine" or "Engines" shall mean one or more, as the case may be,
General Electric CF6-80C2D1F aircraft engines to be conveyed to FedEx under
this Agreement as a part of an Aircraft, including Replacement Engines and
Delayed Delivery Engines, but excluding Non-Conforming Engines.
"Engine Designation" shall mean a written notice in the form set forth
in Exhibit H designating the Engines to be conveyed by American to FedEx as a
part of a Firm Aircraft, a Put Option Aircraft or a Purchase Option Aircraft.
"Engine Heavy Maintenance" or "EHM" shall mean that engine maintenance
build level in which there is complete refurbishment of all modules in a
General Electric CF6-80C2D1F aircraft engine in accordance with the "Detailed
Program Requirements" listed in American's Engineering Specification 6-3/DH/JP
contained in American's GE-CF6-80C2 Engine Manual or in any successor
engineering specification.
"Engine Maintenance" shall mean a HSC, HSM or EHM.
"Engine Records" shall mean that portion of the Data relating to the
Engines and the Spare Engines, including that portion of the Data set forth
under the caption "ENGINE RECORDS" in Exhibit D.
"Engine Lease Agreement" shall mean an engine lease agreement
substantially in the form attached hereto as Exhibit S.
"Event of Default" shall mean, as to American, any of the events of
default set forth in Section 12.01 and, as to FedEx, any of the events of
default set forth in Section 12.02.
"Excusable Delay" shall mean, subject to the time limitations set
forth in Section 9.02, any delay in the timely discharge and performance by a
Party of its obligations and duties under this Agreement to the extent such
delay shall be the result of (i) the occurrence of a Force Majeure Event with
respect to the Party whose performance is delayed, (ii) the fault of the other
Party, whether such fault arises from the failure of the other Party to
discharge and perform its obligations and duties hereunder or otherwise, (iii)
any other event that excuses as a matter of applicable law a Party's timely
performance of its contractual obligations and duties or (iv) with respect to
American only, any damage to, partial destruction of, total loss of, or
substantially complete or complete destruction of an Aircraft.
"FAA" shall mean the United States Federal Aviation Administration or
any successor agency thereto.
-5-
<PAGE> 12
"FAR" shall mean the United States Federal Aviation Regulations, 14
C.F.R Section 1 et seq., as promulgated pursuant to Title 49 Section 40101 et
seq. of the United States Code, and any successor statute thereto, as such
regulations are in effect from time to time.
"FAA Bill of Sale" shall mean a Federal Aviation Administration Bill
of Sale (AC Form 8050-2 or any successor form thereto) conveying title to the
Aircraft to FedEx.
"Firm Aircraft" shall mean any or all of the Aircraft to be sold by
American to FedEx pursuant to Section 2.01.
"First Interval Items" shall mean those maintenance significant items
set forth in pages 52-1 through 52-2 (as revised on April 21, 1993), pages 53-1
through 53-44 (as revised on February 8, 1995), pages 54-1 through 54-6 (as
revised through December 21, 1994), pages 55-1 through 55-12 (as revised on
February 2, 1994) and pages 57-1 through 57-21 (as revised on February 8, 1995)
of the American ESM which are required to be accomplished for the first time
sixty (60) months after the delivery of an Airframe to American by the
Manufacturer.
"Force Majeure Event" shall mean any act of God, action or regulation
of any governmental authority, fire, weather, flood, earthquake, accident,
mechanical or electrical failure other than with respect to an Aircraft being
delivered, act of the public enemy, war, civil disturbance, rebellion,
insurrection, work stoppage, work slow down, other labor or work action, labor
dispute, restraint of government or other cause or event beyond the control of
the Party claiming the benefit of the occurrence of any such force majeure.
"Gear" shall mean one or more, as the case may be, of the nose,
center, left and right landing gears on any Airframe.
"Hot Section/Compressor Maintenance" or "HSC" shall mean the engine
maintenance build level in which there is refurbishment of the HPT Rotor, HPT
1st Stage Nozzle Assembly, the 2nd Stage Nozzle Assembly and the HPC Rotor as
described in the American Program.
"Hot Section Maintenance" or "HSM" shall mean the engine maintenance
build level in which there is refurbishment of the HPT Rotor, HPT 1st Stage
Nozzle Assembly, and the 2nd Stage Nozzle Assembly as described in the American
Program.
"Lien" shall mean any mortgage, pledge, security interest, lien,
claim, encumbrance or other charge or rights of others of any kind on property.
-6-
<PAGE> 13
"Life Limited Part" or "Life Limited Parts" shall mean one or more, as
the case may be, Parts which must be removed from an Engine, a Spare Engine, an
APU or a Spare APU upon having been in such Engine, Spare Engine, APU or Spare
APU for the maximum permissible calendar time, flight cycles or flight hours
specified for such Part by its manufacturer.
"Manufacturer" shall mean McDonnell Douglas Corporation as to the
Airframes and General Electric Corporation as to the Engines.
"MD-11 Spare Part" or "MD-11 Spare Parts" shall mean any or all Parts
listed on the Spares List.
"More Restrictive" shall mean that measure of the interval between
maintenance events for an Airframe, Engine, Gear or APU or of the useful life
or the interval between maintenance events of a Part which yields the lowest
percentage of such interval remaining until the next such required maintenance
event or the lowest percentage of such useful life, as applicable.
"Non-Conforming Engine" or "Non-Conforming Engines" shall mean one or
more, as the case may be, General Electric C6F-80C2D1F engines installed on an
Aircraft which do not meet the delivery conditions for Engines set forth in
Section 3.06, but which are otherwise in a condition suitable for the purpose
of permitting ferry flights of the Aircraft on which such engines are installed
to the facilities of one or more third party vendors for conversion of such
Aircraft to a cargo configuration or for transition maintenance for such
Aircraft.
"Part" or "Parts" shall mean any item or items of avionics,
appliances, parts, furnishings, instruments, accessories and equipment suitable
for installation and use on an Aircraft.
"Passenger Parts" shall mean any Parts installed in the passenger
cabin of an Aircraft that relate to the passenger configuration of such
Aircraft, but excluding any Part in the passenger cabin of an Aircraft which is
necessary for the Aircraft to be modified into FedEx's freighter configuration,
including, without limitation, the forward starboard lavatory, the slide rafts
on the R1, R4, L1 and L4 doors and the forward starboard galley installed on
such Aircraft.
"Power Assurance Run Test" shall mean a power assurance run test on an
Engine conducted in accordance with the procedures in Test No. 6 in Chapter
71-00-00-5-1 of the McDonnell Douglas Aircraft Maintenance Manual pertaining to
McDonnell Douglas Model MD-11 aircraft.
"Purchase Option" and "Purchase Options" shall have the meanings set
forth in Section 2.03.
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<PAGE> 14
"Purchase Option Aircraft" shall mean any Put Option Aircraft as to
which FedEx has delivered a Purchase Option Exercise.
"Purchase Option Exercise" shall mean a written notice given by FedEx
to American exercising a Purchase Option as to any Put Option Aircraft, which
notice shall be in the form attached hereto as Exhibit K.
"Purchase Option Notice" shall mean a written notice, in the form
attached hereto as Exhibit J, given by American to FedEx notifying FedEx of
American's intent to offer for sale, or to otherwise permanently transfer
possession of, any of the Put Option Aircraft other than pursuant to the Put
Options or any agreements entered into by American pursuant to which American
has granted a security interest in the Aircraft in connection with the
financing of the Aircraft.
"Purchase Price" shall mean, as applicable, the purchase price of a
Firm Aircraft on a Scheduled Delivery Date as set forth in Section 2.01, of a
Put Option Aircraft on a Scheduled Delivery Date as set forth in Section 2.02
and of a Purchase Option Aircraft applicable for the month of the Delivery of
the Purchase Option Aircraft as set forth in Section 2.03, as adjusted in
accordance with Section 3.07.
"Put Option" and "Put Options" shall have the meanings set forth in
Section 2.02.
"Put Option Aircraft" shall mean any or all of the Aircraft as to
which FedEx has granted to American options to sell such Aircraft to FedEx
pursuant to Section 2.02.
"Put Option Exercise" shall mean a written notice given by American to
FedEx exercising a Put Option as to any Put Option Aircraft, which notice shall
be in the form attached hereto as Exhibit I.
"Replacement Engine" or "Replacement Engines" shall mean one or more,
as the case may be, General Electric C6F-80C2D1F engines to be conveyed by
American to FedEx in the stead of a Delayed Delivery Engine pursuant to Section
3.03, each of which engines meets the delivery condition requirements of
Section 3.06 with respect to Engines.
"Scheduled Delivery Date" shall mean a date on which an Aircraft is to
be delivered as set forth in Section 2.01 as to the Firm Aircraft, and Section
2.02 as to the Put Option Aircraft and Section 2.03 as to any Purchase Option
Aircraft or, as to any of the Aircraft, such other date as the Parties may
agree in writing.
"Second Interval Items" shall mean those maintenance significant items
set forth in pages 52-1 through 52-2 (as revised on April 21, 1993), pages 53-1
through 53-44 (as revised on February 8, 1995), pages 54-1 through 54-6 (as
revised through
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<PAGE> 15
December 21, 1994), pages 55-1 through 55-12 (as revised on February 2, 1994)
and pages 57-1 through 57-21 (as revised on February 8, 1995) of the American
ESM which are required to be accomplished for the first time ninety (90) months
after the delivery of an Airframe to American by the Manufacturer.
"Shop Findings Report" shall mean a report stating the root cause of
the failure of a Part and the materials used in returning such Part to a
serviceable condition which is executed by an authorized repairman, all in
accordance with the American Program.
"Spare APU" and "Spare APU's" shall mean one or more, as the case may
be, of the five_(5) APU's owned by American which are not installed on an
Aircraft, which APU's shall include a shipping stand.
"Spare Engine" and "Spare Engines" shall mean one or more, as the case
may be, of the ten (10) General Electric CF6-80C2D1F engines owned by American
that are not installed on the Aircraft. Each such engine shall be in a wing or
tail quick engine change configuration and shall include an engine shipping
stand suitable for such engines.
"Spares List" shall mean the list of Parts dated as of January 20,
1995 which American is delivering to FedEx pursuant to Section 4.01.
"Spare Part" and "Spare Parts" shall mean any or all of the MD-11
Spare Parts and the Spare APU's, the Spare Engines and the Spare Thrust
Reversers.
"Spares Purchase Price" shall mean the purchase price paid or to be
paid for Spare Parts or portions thereof pursuant to Article 4.
"Spare Thrust Reversers" shall mean one or more, as the case may be,
of the three (3) pairs of thrust reverser assemblies usable on the Engines of
the Aircraft which are not installed on an Aircraft.
"Warranty Bill of Sale" shall mean a warranty bill of sale conveying
title to an Aircraft to FedEx, which warranty bill of sale shall be in the form
attached hereto as Exhibit C.
Any defined term used in this Agreement and not expressly defined
herein shall have the meaning ascribed to it in the FAR if such term is
expressly defined in the FAR or, if not expressly defined in the FAR, such term
shall have the meaning customarily ascribed to it in the aircraft industry.
Section 1.02. Rules of Construction. The words "hereof," "herein,"
"hereunder," "hereto" and other words of similar import refer to this Agreement
in its entirety.
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<PAGE> 16
The terms "agree" and "agreements" contained herein are intended to
include and mean "covenant" and "covenants".
All references in this Agreement to articles, sections, subsections
and other subdivisions refer to corresponding articles, sections, subsections
and other subdivisions of this Agreement unless otherwise expressly provided.
All references in this Agreement to exhibits shall refer to the exhibits to
this Agreement unless otherwise provided.
The article and section headings in this Agreement have been inserted
solely for convenience and shall not be considered in construing this
Agreement.
ARTICLE 2
PURCHASE OF AIRCRAFT
Section 2.01. Firm Aircraft, Purchase Prices and Delivery Dates. On
the terms and subject to the conditions set forth herein, American agrees to
sell to FedEx, and FedEx agrees to purchase from American, the Firm Aircraft,
with one Firm Aircraft to be so sold and purchased on each Scheduled Delivery
Date as set forth below. The Purchase Price of each Firm Aircraft to be
delivered on each Scheduled Delivery Date and the latest date by which a
Designation as to a Scheduled Delivery Date may be given are as set forth in the
following table:
<TABLE>
<CAPTION>
LATEST SCHEDULED
DELIVERY DESIGNATION DELIVERY PURCHASE
NUMBER DATE DATE PRICE
------ -------------- ---------------- -----------------
<S> <C> <C> <C>
1 7-May-95 17-Jan-96 $
2 12-June-95 12-June-96 $
3 16-Oct-95 16-Oct-96 $
4 12-Feb-96 12-Feb-97 $
5 11-June-96 11-June-97 $
6 15-Oct-96 15-Oct-97 $ *
7 14-Jan-97 14-Jan-98 $
8 17-June-97 17-June-98 $
9 14-Oct-97 14-Oct-98 $
10 17-Feb-98 17-Feb-99 $
11 16-June-98 16-June-99 $
12 13-Oct-98 13-Oct-99 $
</TABLE>
Subject to Section 3.05(d), if due to the loss or, in American's sole
discretion, substantially complete destruction of one or more Aircraft,
American tenders to
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with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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FedEx for Delivery pursuant to this Agreement fewer than twelve (12) Firm
Aircraft, then on or before October 13, 1999 or such later date as the Parties
agree will be the Scheduled Delivery Date for the twelfth (12th) Firm Aircraft,
American will pay to FedEx $[* ] for each Firm Aircraft fewer than twelve
(12) that American delivers to FedEx. American will make such payment by a
wire transfer of immediately available funds.
Section 2.02. Put Options. (a) FedEx hereby grants to American
seven (7) options (the "Put Options" and each a "Put Option"), each of which
shall give American the right to sell one Aircraft to FedEx on each of the
Scheduled Delivery Dates set forth in the table in Section 2.02(c). Upon
American's exercise of each Put Option, FedEx shall purchase one Aircraft on the
terms and subject to the conditions set forth herein.
(b) A Put Option will be exercisable as to an Aircraft by American
giving to FedEx a Put Option Exercise on any date not later than the "Latest
Exercise Date" as set forth in Section 2.02(c).
(c) The latest date by which a Put Option may be exercised (each a
"Latest Exercise Date"), the latest date by which a Designation for a Scheduled
Delivery Date may be given, the Scheduled Delivery Dates for the Put Option
Aircraft and the Purchase Price of each Put Option Aircraft are as set forth in
the following table:
<TABLE>
<CAPTION>
LATEST LATEST SCHEDULED
DELIVERY EXERCISE DESIGNATION DELIVERY PURCHASE
NUMBER DATE DATE DATE PRICE
------ ------------ --------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
13 15-Feb-00 $
14 14-June-00 $
15 11-Oct-00 $
16 * * 14-Feb-01 $ *
17 12-June-01 $
18 16-Oct-01 $
19 12-Feb-02 $
</TABLE>
(d) American and FedEx intend the exercise of the Put Options to be
sequential and consistent with the schedule set forth above. If American fails
to give FedEx a Put Option Exercise exercising a particular Put Option on or
before the Latest Exercise Date for such Put Option, that Put Option will
expire. If a Put Option expires, the remaining Put Options may be cancelled by
FedEx giving to
___________________
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with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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American written notice of such cancellation on or before the earlier of
(i) the next following Latest Exercise Date set forth in Section 2.02(c) and
(ii) the seventh (7th) day next following the day on which FedEx receives a
written notice from American that FedEx has the right to cancel the remaining
Put Options. If FedEx fails to give American timely written notice of the
cancellation of the remaining, unexercised Put Options, the remaining,
unexercised Put Options will remain in full force and effect. The failure of
American to give to FedEx any notice that FedEx may cancel the remaining,
unexercised Put Options shall not be a breach, default or Event of Default under
the terms of this Agreement.
Section 2.03. Purchase Options. (a) If American intends to offer
any Put Option Aircraft not designated as a Firm Aircraft for sale to a third
party, FedEx shall have the right, but not the obligation, to purchase such Put
Option Aircraft from American on the terms and subject to the conditions set
forth in this Section 2.03 (the "Purchase Options" and each, a "Purchase
Option"). American shall give FedEx a Purchase Option Notice before American
makes an offer to sell any or all of the Put Option Aircraft to any third
party. FedEx may exercise the Purchase Options as to any or all of the Put
Option Aircraft stated in a Purchase Option Notice by giving American a
Purchase Option Exercise within fourteen (14) days after its receipt of the
Purchase Option Notice. The failure of FedEx to give American a Purchase
Option Exercise within [ * ] of its receipt of the Purchase
Option Notice will entitle American to sell the Put Option Aircraft to any
person or persons free of the Purchase Options, but such failure shall not be a
breach by FedEx of, or a default or an Event of Default under, the terms of
this Agreement. If FedEx does not exercise a Purchase Option as to a
particular Put Option Aircraft, (i) American may offer for sale and may sell
such Put Option Aircraft in such manner, at such time or times, for such price
or prices and on such other terms and subject to such conditions as American,
in its sole discretion, deems acceptable and (ii) American may nevertheless
exercise the remaining, unexpired Put Options in accordance with the terms and
subject to the conditions set forth in Section 2.02 without regard to any prior
Purchase Option Notice. American will provide a Designation with respect to
any Purchase Option Aircraft on or before the later to occur of (i) one year
prior to the Scheduled Delivery Date and (ii) the thirtieth (30th) day after
its receipt of a Purchase Option Exercise.
(b) The Purchase Price for any Purchase Option Aircraft which is
tendered by American for Delivery and which FedEx is obligated to purchase in
or before January, 1996, shall be $[ * ]. The Purchase Price for
any Purchase Option Aircraft which is tendered by American for Delivery and
which FedEx is obligated
________________
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with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 19
to purchase in any month thereafter shall be decreased by the amount of
$[ * ] for each month after [ * ] to, but excluding,
the month in which such tender for Delivery occurs.
(c) The Scheduled Delivery Date of the Purchase Option Aircraft to
be sold to FedEx by American pursuant to FedEx's exercise of a Purchase Option
shall be the date or dates specified by American in the Purchase Option Notice
as the Scheduled Delivery Date or Scheduled Delivery Dates of the Purchase
Option Aircraft; provided, however, that no such Scheduled Delivery Date shall
be less than [ * ] after the date of the Purchase Option Notice
specifying such Scheduled Delivery Date.
(d) If American sells one or more Purchase Option Aircraft to FedEx
pursuant to FedEx's exercise of one or more Purchase Options or sells any Put
Option Aircraft as to which FedEx does not exercise a Purchase Option after a
Purchase Option Notice is given, the number of Put Options that American can
exercise shall be reduced by a number equal to the number of Purchase Option
Aircraft and/or Put Option Aircraft so sold. Any Put Options terminated by any
such reduction shall be terminated in the reverse order of the Scheduled
Delivery Dates to which the Put Options relate. The remaining Put Options
shall remain in full force and effect.
(e) If one or more Put Options expire or are terminated for any
reason, American may dispose of an equivalent number of Aircraft free of the
Purchase Options at any time thereafter and an equivalent number of Purchase
Options will terminate simultaneously and automatically. Upon such expiration
or termination, the terminated Purchase Options shall be without further force
and effect, provided, however, that any such termination of Purchase Options
shall not affect any prior exercise of any Purchase Option with respect to any
Aircraft. American shall have the right to sell or otherwise dispose of such
number of the Put Option Aircraft as to which Purchase Options are reduced free
of the Purchase Options and the provisions of this Agreement and may determine
which Put Option Aircraft are so free of the Purchase Options in its sole
discretion.
Section 2.04. Designation and Substitution of Airframes and
Engines. (a) American will designate an Airframe from among all the
Airframes as a Firm Aircraft, a Put Option Aircraft, or a Purchase Option
Aircraft for Delivery on a Scheduled Delivery Date in accordance with Section
2.01, Section 2.02 and Section 2.03, respectively, by giving FedEx a Designation
on or before the latest date for giving such Designation specified in the
applicable such section. Each Airframe to
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with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 20
be designated by American to be part of a Firm Aircraft, a Put Option Aircraft
or a Purchase Option Aircraft to be delivered on any Scheduled Delivery Date as
to which a Designation is given will be chosen by American in its sole
discretion. American shall have the right as a result of operational
considerations to substitute a different Airframe for a previously designated
Airframe for delivery on a Scheduled Delivery Date by delivering a Change
Designation (i) on any date before the [ * ] prior to such Scheduled Delivery
Date or (ii) if such designation of a different Airframe for delivery on such
Scheduled Delivery Date would not cause a material delay in the conversion of
such different Airframe from a passenger configuration to a cargo
configuration, on any date before the [ * ]
prior to the original Scheduled Delivery Date, provided in either instance
that, within [ * ] after its receipt of FedEx's invoice setting forth in detail
the nature and amount of such costs, American reimburses FedEx for any
incremental engineering costs, incremental transition maintenance costs and
incremental modification costs incurred by FedEx solely as the result of the
substitution of the Airframe.
(b) No later than [ * ] prior to the Scheduled
Delivery Date for an Aircraft, American shall designate to FedEx the three
Engines to be conveyed to FedEx as part of such Aircraft to be delivered on
such Scheduled Delivery Date by giving FedEx a completed Engine Designation.
After designating such Engines, American will use its commercially reasonable
efforts to avoid substituting other Engines for such designated Engines, but
may do so upon written notice to FedEx, which notice shall be given by American
as soon as practicable after it determines to substitute Engines. Each Engine
to be designated by American to be a part of a Firm Aircraft, a Put Option
Aircraft or a Purchase Option Aircraft to be delivered on the various Scheduled
Delivery Dates as to which Designations are given will be chosen by American in
its sole discretion.
Section 2.05. Payment of Purchase Price. Each Purchase Price and
each Spares Purchase Price payable to American by FedEx shall be net of any and
all taxes, recording expenses, assessments, duties and similar governmental
charges and fees charged on or with respect to the sale of the Aircraft, any and
all of which amounts shall be paid by FedEx, subject, however, to the provisions
of Section 3.01. The Purchase Price for each Aircraft shall be paid on the
Delivery Date for such Aircraft, net of any applicable Deposit and the interest
calculated at the AMR Rate. The Spares Purchase Price for any Spare Parts
purchased pursuant to Article 4 shall be paid on the date the Spare Parts being
sold to FedEx are delivered by American to FedEx. The Purchase Prices, the
Spares Purchase Prices and any Deposits shall be paid by FedEx in United States
Dollars by wire transfer of
________________
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with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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immediately available funds to American's account at Chase Manhattan Bank in
New York, New York, ABA No. 021000021 Account 910-1-019884, Reference, as
applicable, Aircraft N[Insert Relevant FAA Registration Number] or MD-11 Spare
Parts.
Section 2.06. Deposits. FedEx will pay to American on the Business
Day next following the date of execution of this Agreement a cash deposit in the
amount of $[ * ] for each Firm Aircraft. FedEx will pay to American
within the ten-day period next following the date on which each Put Option is
exercised, a cash deposit of $[* ] in respect of the Put Option Aircraft as
to which such Put Option is exercised. FedEx will pay to American upon the
Business Day next following the exercise of any Purchase Option, a cash deposit
of $[ * ] in respect of each Purchase Option Aircraft. [ *
]. If American shall fail to perform
its obligation to deliver an Aircraft in accordance with this Agreement,
American will return to FedEx, upon FedEx's written request, any Deposits made
with respect to such Aircraft, with interest thereon calculated at a rate equal
to the AMR Rate. The Deposit applicable to a particular Aircraft, with an
amount of interest thereon calculated at the AMR Rate, will be applied to the
payment of the Purchase Price of such Aircraft on the Delivery Date. Neither
the retention of any Deposit by American in connection with the failure of
FedEx to perform its obligations under this Agreement nor the return of any
Deposit by American in connection with the failure of American to perform its
obligations under this Agreement shall be the exclusive remedy of the
non-defaulting Party in connection with any such default. Except as set forth
above, American shall be entitled to retain any interest earned on the
Deposits.
ARTICLE 3
AIRCRAFT DELIVERY, TITLE, RISK OF LOSS
Section 3.01. Delivery. American shall deliver each Firm Aircraft and
any Put Option Aircraft as to which a Put Option is exercised and each Purchase
Option Aircraft to FedEx on the Scheduled Delivery Date for each such Aircraft
pursuant to the procedures set forth in this Article 3. American shall tender
each Aircraft required to be delivered to FedEx under this Agreement by
delivering an Aircraft Delivery Certificate (completed as to the tender related
portion thereof) to FedEx with respect to such Aircraft. Delivery of each
Aircraft shall be made at (i)
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with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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Dallas/Fort Worth International Airport ("DFW"), (ii) at the option of
American, at an airport in the State of Nevada if American so advises FedEx at
least seven (7) days prior to the Scheduled Delivery Date for such Aircraft or
(iii) at such other location on FedEx's route system as American designates in
writing to FedEx at least ninety (90) days prior to the Scheduled Delivery Date
and to which FedEx consents, such consents not to be unreasonably withheld. If
any Scheduled Delivery Date is not a Business Day, the Aircraft to be delivered
shall be delivered and accepted on the Business Day next preceding the
Scheduled Delivery Date.
Section 3.02. Inspection, Flight Checks and Discrepancies. (a) FedEx
shall have access to each Aircraft no later than [ * ] prior to the Scheduled
Delivery Date for such Aircraft at American's maintenance facility at the Tulsa
International Airport in Tulsa, Oklahoma ("TUL"). At such time, FedEx shall
have the right to: (i) conduct all ground inspections reasonably necessary to
determine whether the Aircraft is in Delivery Condition, including, but not
limited to, engine borescopes conducted in accordance with Exhibit R, (ii)
functionally ground and flight check such Aircraft in accordance with the
requirements and procedures contained in the McDonnell Douglas Model MD-11
Production Flight Procedure Manual (the "MDAC PFPM") applicable to aircraft that
are completing a C Check and (iii) conduct on each Engine being delivered (other
than a Non-Conforming Engine) a Power Assurance Run Test to ensure that the
exhaust gas temperature margin for such Engine conforms to the requirements of
Section 3.06(i)(B)(4). Subject to Section 3.02(b), any such checks or test
flights shall be of a reasonable duration. In determining if an Aircraft is in
Delivery Condition, if there are differences in the tolerances stated in the
MDAC PFPM and the American Program, the more lenient tolerances will apply.
(b) The initial flight test of an Aircraft shall not be more than
[ * ] in duration. American will permit at least [ * ] of FedEx to
observe any functional flight check of an Aircraft made in
conjunction with the Delivery of such Aircraft. During the functional flight
check, American shall provide a pilot who shall function as pilot-in-command
and who shall maintain operational control and responsibility for the Aircraft.
FedEx shall provide a pilot who shall occupy a pilot's seat (left or right, at
the discretion of the pilot-in-command). FedEx's pilot shall physically
exercise the flight controls in such phases of flight as necessary to verify
the functional operation of the Aircraft. Insurance for all functional flight
checks shall be provided by American, at its sole expense under its existing
insurance policies, provided, however, that any FedEx personnel who are to be
present on such Aircraft during any such flight shall execute and
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with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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deliver to American prior to such flight a release and waiver of liability
containing terms and conditions reasonably satisfactory to American. American
shall provide the fuel necessary for such flight check.
(c) Upon completion of functional ground and flight check of an
Aircraft, American shall, at American's expense and in accordance with the
applicable criteria set forth in the American Program: (i) correct and/or
clear any items noted in the Aircraft's log book by American and which remain
un-cleared or un-corrected at the Scheduled Delivery Date and (ii) correct
and/or clear any discrepancies of the Aircraft from the Delivery Condition
otherwise noted during the functional ground and flight checks of such
Aircraft. If an additional flight check is required to demonstrate that a
discrepancy from the Delivery Condition for such Aircraft has been corrected,
such additional flight check shall be conducted in the manner set forth in
Section 3.02(a) and (b). Any additional flight check made to inspect the
correction of any discrepancy of such Aircraft from the required Delivery
Condition previously noted shall be limited to the time necessary to inspect
such discrepancy. If additional discrepancies from the Delivery Condition are
noted during a subsequent flight check (or the original discrepancy is not
satisfactorily corrected), American shall correct the discrepancy from the
Delivery Condition noted during the subsequent flight check. Notwithstanding
the foregoing, American shall not be required to correct or clear any items or
discrepancies of the Aircraft from Delivery Condition that are (x) cosmetic in
nature, (y) related solely to any Passenger Parts or (z) which the Parties
agree in writing in the Aircraft Delivery Certificate to correct and/or clear
after the Delivery of the Aircraft.
(d) Upon completion of the items in Sections 3.02(a) through 3.02(c)
on an Aircraft, FedEx shall execute and deliver to American the Aircraft
Delivery Certificate for such Aircraft pursuant to which FedEx shall certify
that it has accepted the Aircraft and that the Aircraft is in the Delivery
Condition, except to the extent that (i) any remaining discrepancies of the
Aircraft from the Delivery Condition are noted by the Parties in such Aircraft
Delivery Certificate or (ii) the failure of the Aircraft to meet Delivery
Condition requires an Adjustment (as defined below). Thereafter, American
shall not change or alter the configuration or operate such Aircraft for any
reason prior to Delivery (except as necessary to ferry such Aircraft to any
other location at which Delivery will occur) without the prior written consent
of FedEx.
Section 3.03. [ *
___________________
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with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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]
[ *
]
[ *
]
[ *
____________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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*
______________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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*
____________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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*
____________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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Section 3.04. Delivery Procedure. At the time of Delivery of
each Aircraft:
(i) FedEx shall execute and deliver to American the Aircraft
Delivery Certificate as provided in Section 3.02(d);
(ii) American shall execute and deliver to FedEx the FAA Bill of
Sale and the Warranty Bill of Sale;
(iii) FedEx shall pay American the Purchase Price in accordance with
Section 2.05, net of the Deposit applicable to the Aircraft being delivered and
the interest accrued on such Deposit at the AMR Rate;
(iv) Subject to the provisions of Section 6.01, American shall
deliver to FedEx the Data with respect to such Aircraft;
(v) American shall execute and deliver to FedEx an assignment of
any warranties with respect to the Aircraft that are assignable by American by
their terms and without the payment by American to the grantor of the warranty
of more than a nominal amount;
(vi) Concurrently with the delivery of the Warranty Bill of Sale
described in clause (ii) above, American shall cause the FAA Bill of Sale
executed by American to be filed and recorded with the FAA Aircraft Registry in
Oklahoma City, Oklahoma and FedEx shall cause an Application for Registration
of the Aircraft to be filed with the FAA Aircraft Registry. FedEx shall be
responsible for all costs of filing or recording of the FAA Bill of Sale, the
Application for Registration of the Aircraft and any such other acceptance
certificates, delivery receipts and any other documents as shall be agreed to
by the Parties as appropriate for the sale, purchase and Delivery of such
Aircraft;
(vii) At the time and upon completion of Delivery of each Aircraft,
Messrs. Daugherty, Fowler & Peregrin, special FAA counsel to FedEx, shall
confirm to FedEx that such counsel will furnish FedEx its opinion, addressed to
FedEx, to the effect that: (A) the FAA Bill of Sale with respect to the
Aircraft being delivered by American to FedEx and the FAA Application for
Registration relating thereto have been duly filed with the FAA; (B) legal
title to such Aircraft is vested in FedEx or its designee, and (C) such
Aircraft, including the Engines conveyed to FedEx in connection with such
Aircraft, is free and clear of all Liens, other than Liens arising by, through
or under FedEx or its designee, if any, that has taken title to the Aircraft.
Such opinion may be subject to the type of assumptions and qualifications
regularly included by experienced FAA counsel in similar opinions; and
(viii) If a Non-Conforming Engine which is not conveyed to FedEx
pursuant to Section 3.03(d) is installed on the Aircraft at the Delivery Date,
each of American
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and FedEx shall execute and deliver the Engine Lease Agreements with respect to
such Non-Conforming Engine and applicable Delayed Delivery Engine.
Section 3.05. Delayed Delivery. (a) If FedEx is obligated to accept
delivery of and purchase an Aircraft tendered by American for delivery on a
Scheduled Delivery Date, which Aircraft is in Delivery Condition and FedEx fails
to accept such Aircraft for delivery in accordance with this Agreement, unless
such failure is an Excusable Delay, FedEx will [*
]
If American is unable to deliver an Aircraft on a Scheduled Delivery Date,
unless such delay is an Excusable Delay (other than one arising as a result of
a Force Majeure Event involving any work stoppage, work slow down, other labor
or work action or labor dispute, if and to the extent such Excusable Delay
exceeds four (4) weeks in duration), [ *
] The payment of any such amounts shall not be the
exclusive remedy of American if FedEx fails to accept delivery of an Aircraft
on a Scheduled Delivery Date other than in circumstances constituting an
Excusable Delay nor the exclusive remedy of FedEx if American fails to deliver
an Aircraft on a Scheduled Delivery Date other than in circumstances
constituting an Excusable Delay.
(b) Notwithstanding the foregoing, with respect to non-excusable
delays resulting from American's actions or omissions, American shall not be
required to pay interest on the Purchase Price of any Aircraft as set forth
above if (i) delivery of such Aircraft is delayed for [ * ] or
less and (ii) the aggregate number of days for which deliveries of all the
Aircraft have been delayed [ * ] If, as to non-excusable delays resulting from
American's actions or omissions, the number of days by which any delivery of an
Aircraft is delayed exceeds [ * ] or the number of days by which
all deliveries of Aircraft are delayed exceeds [ * ] in the
aggregate, interest (computed as provided above) on the Purchase Price of the
Aircraft as to which a delay in excess of [ * ] occurs (less the amount of
applicable Deposit) or the aggregate Purchase Prices of the Aircraft as to
which aggregate delays in excess of [ * ] occur (less the
amount of applicable Deposit) shall be paid by American to FedEx as provided
above for each day for which deliveries of the Aircraft by American are
delayed. Notwithstanding the foregoing, with respect to non-excusable delays
resulting from FedEx's actions or omissions, FedEx shall not be required to pay
interest on the Purchase Price of any Aircraft as set forth above if (i) its
acceptance
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Securities Exchange Act of 1934.
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of an Aircraft is delayed for [ * ] or less and (ii) the aggregate
number of days for which FedEx's acceptances of all the Aircraft are delayed
does not exceed [ * ] If, as to non-excusable delays resulting
from FedEx's actions or omissions, the number of days by which any delivery of
an Aircraft is delayed exceeds [ * ] or the number of days by which
all deliveries of Aircraft are delayed exceeds [ * ] in the
aggregate, interest (computed as provided above) on the Purchase Price of the
Aircraft as to which the delay in excess of [ * ] occurs or the aggregate
Purchase Prices of the Aircraft as to which aggregate delays in excess of [ *
] occur shall be paid by FedEx to American as provided for above for each day
for which the acceptances of the Aircraft by FedEx are delayed.
(c) If an Aircraft which has been designated for delivery to FedEx on
a particular Scheduled Delivery Date sustains any damage or is partially
destroyed and such damage or partial destruction can be repaired or restored
and such Aircraft can be tendered for Delivery on the date (the "Partial
Casualty Delivery Date") that is the later to occur of (i) the Scheduled
Delivery Date with respect to such Aircraft or (ii) the date which is [ *
] after the occurrence of such damage or partial destruction, as promptly as
practicable after the occurrence of the damage or destruction of such Aircraft,
American shall notify FedEx in writing of such occurrence and whether American
elects (i) at American's sole cost and expense, to repair or restore the
damaged or partially destroyed Aircraft so that it will be in Delivery
Condition or (ii) to substitute another Aircraft, if any, for the damaged
Aircraft. Any repair required by damage to or partial destruction of the
Aircraft shall not (i) impose any restrictions on the FAA-certified
limitations, performance or operation as set forth in the Manufacturer s
FAA-approved Airplane Flight Manual for the Aircraft or (ii) materially impair
the fuel mileage performance of the Aircraft or (iii) increase the empty weight
of the Aircraft by more than [ * ]pounds.
(d) If, before the Delivery Date of any Committed Delivery (as
defined below), one or more Aircraft (each a "Casualty Aircraft") are lost or,
in American's sole judgment, substantially completely destroyed, or if American
determines, in its sole judgment, that repairing any substantial damage to any
Aircraft would be uneconomical, then American shall designate or re-designate
other Aircraft, if any, pursuant to Section 2.04 (without regard to the times
for taking actions set forth in such Section 2.04, but subject to Section 9.02)
in order to deliver an Aircraft to FedEx for each Committed Delivery (as
defined below) by the later to occur of (i) the Scheduled Delivery Date for
each Committed Delivery or (ii) the date which is [ *
] after the occurrence of the loss or substantially complete destruction of
_____________________
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with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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such Aircraft (the "Casualty Delivery Date"); provided, however, that
notwithstanding any such designation, one Committed Delivery per each such
Casualty Aircraft shall automatically terminate in reverse chronological order
of Scheduled Delivery Dates. If a Committed Delivery is terminated under this
Section 3.05(d), American and FedEx shall have no further obligation to sell or
purchase any Aircraft with respect to such Committed Delivery or sell or
purchase any Spare Parts associated with such cancelled Committed Delivery.
For purposes of this Section 3.05(d), the term "Committed Delivery" shall mean
a commitment to sell and deliver any Firm Aircraft or any Aircraft as to which
a Put Option has been properly exercised, whether or not a particular Aircraft
had been designated for such delivery.
Section 3.06. Delivery Condition. (a) At the time of the tender
of an Aircraft by American to FedEx in connection with its Delivery, the
Aircraft shall be in the following condition:
(i) The Aircraft shall meet the following standards:
(A) the Airframe of such Aircraft shall have:
(1) [ * ] of the number of flight hours or
calendar time, whichever is More Restrictive, between
C Checks as prescribed by the American ESM remaining
until its next C Check is required to be performed;
(2) [ * ] of the interval in days prescribed
by the American ESM as the time between
accomplishment of the First Interval Items remaining
until the date on which such items are required to be
next performed; and
(3) [ * ] of the interval in days prescribed
by the American ESM as the time between
accomplishment of the Second Interval Items remaining
until the date on which such items are required to be
next performed.
(B) Each Engine conveyed with the Airframe shall have:
(1) not more than [ * ] flight cycles since
the latest to occur of a HSM, HSC or EHM as
prescribed by the American Program;
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(2) not more than [ * ] flight cycles since the
last high pressure compressor refurbishment as
prescribed by the American Program;
(3) on its Life-Limited Parts, as specified by the
Manufacturer's Engine Overhaul Manual, not more than
the total flight cycles on the highest flight cycle
Airframe (whether or not previously delivered to
FedEx); and
(4) an exhaust gas temperature ("EGT") margin of not
less than [ * ] degrees Celsius as
determined by a Power Assurance Run Test conducted as
described in Section 3.02(a) in connection with the
acceptance of the Aircraft by FedEx and an EGT margin
of not less than [ * ] degrees Celsius
at its last test cell run immediately following the
latest Engine Maintenance to be accomplished.
(C) each Gear installed on such Aircraft shall have [ * ]
of the calendar time or flight cycles, whichever is More
Restrictive, between major overhauls as prescribed by the
American Program for such Gear remaining until the next
scheduled overhaul for such Gear ("Gear Half Time"); and
(D) the APU installed on such Aircraft shall have remaining
at Delivery, [ * ] of the total flight cycles or hours,
whichever is More Restrictive, in the service life of the
parts in such APU which are life limited, as specified by the
manufacturer of such APU ("APU Time Limit").
[ *
]
(ii) The Airframe, each Engine conveyed to FedEx along with the
Aircraft, each Gear, the APU installed on such Aircraft and all other
life-limited parts comprising part of the Aircraft shall have been
maintained by American on a non-discriminatory basis with all other
McDonnell Douglas Model MD-11 aircraft then in operation by American.
_______________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 33
(iii) No Engine being transferred with the Aircraft shall be subject
to any reduced inspection intervals or reduced calendar time, flight
hours or flight cycles restrictions that require the removal of the
Engine from an aircraft upon reaching such calendar time, flight hour,
or flight cycle thresholds. The results of any engine borescope
inspection conducted on an Engine pursuant to Section 3.02(a) shall
indicate that such Engine is within the serviceable limits prescribed
by the McDonnell Douglas Aircraft Maintenance Manual Chapter 72-00-07.
(iv) The Aircraft, each Engine conveyed to FedEx at the time of the
Delivery of the Aircraft, each Gear and the APU shall be in compliance
with American's Part 121 Maintenance Program, the Aircraft shall be
Airworthy and the Aircraft Records relating to such Aircraft, Engines,
Gear and APU shall be in compliance with American's Part 121
Maintenance Program and the applicable Federal Aviation Regulations
requiring the maintenance of such Aircraft Records. At the Scheduled
Delivery Date, no deferred or carryover maintenance items shall exist
with respect to the Aircraft, and all temporary repairs to the
Aircraft shall have been made permanent.
(v) The delivery of any Engine or other General Electric CF6-80C2D1F
engine installed on an Aircraft upon its Delivery shall be subject in
all respects to Section 3.03.
(vi) The Aircraft shall be registered on the United States Federal
Aviation Administration aircraft registry.
(vii) The Aircraft shall be in a configuration which complies with
American's operating specifications for McDonnell Douglas Model MD-11
aircraft at such time, except to the extent that any discrepancies or
deviations from such operating specifications shall result from the
removal of Passenger Parts from the Aircraft.
(viii) The Aircraft (including the Engines to which title is conveyed
therewith) shall be free of all Liens.
(ix) Prior to the delivery of the Aircraft, American shall have
painted over or stripped from the Aircraft any insignia, trademark or
tradename on the Aircraft identifying the Aircraft as an American
aircraft.
(x) American may, at its sole option and expense, deliver an Aircraft
after removing from such Aircraft any Passenger Parts. Any Passenger
Parts removed from an Aircraft by American in accordance with the
foregoing provisions shall be "AS IS" and may be retained by American,
along with the
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<PAGE> 34
Aircraft Records and other Data relating thereto, as its property,
free of any Lien of FedEx.
(b) EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, THE
AIRCRAFT SHALL BE DELIVERED BY AMERICAN AND ACCEPTED BY FEDEX "WHERE IS", "AS
IS" AND "WITH ALL FAULTS".
(c) American shall not be responsible for compliance with any
Airworthiness Directive outstanding with respect to any Aircraft on the
Scheduled Delivery Date for such Aircraft if the final date for compliance with
such Airworthiness Directive is after such date, provided that American shall
not discriminate against any of the Firm Aircraft or Put Option Aircraft in
connection with its compliance with Airworthiness Directives applicable to the
McDonnell Douglas Model MD-11 aircraft in its fleet. American will require any
lessee of an Aircraft that may be delivered to FedEx to comply with any
Airworthiness Directive applicable to such leased Aircraft in the same manner
as American complies with such Airworthiness Directive with respect to the
Aircraft in its fleet. With respect to any Aircraft delivered by American to
FedEx, American shall not have complied with or terminated any Airworthiness
Directive applicable to McDonnell Douglas Model MD-11 airframes and the
accessories thereto or General Electric CF6-80C2D1F engines by the use of
FAA-approved alternative means of compliance, unless FedEx expressly approves
compliance with or termination of such Airworthiness Directive by such
alternative means or FedEx's then current FAA-approved maintenance program
permits compliance with or termination of such Airworthiness Directive by such
alternative means of compliance.
Section 3.07. Adjustments to Purchase Price for Delivery
Condition. [ *
]
_________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 35
Section 3.08. Aircraft Delivery Certificate; Engine Delivery
Certificate. Subject to any discrepancies from the Delivery Condition expressly
noted by the Parties in the applicable Aircraft Delivery Certificate, FedEx's
execution and delivery of an Aircraft Delivery Certificate with respect to an
Aircraft as to which a Delivery occurs shall be a binding acknowledgment and
agreement by FedEx that the Aircraft delivered was in the Delivery Condition
upon its Delivery to FedEx. Subject to any discrepancies from the delivery
conditions set forth in Section 3.06 that are applicable solely to Engines that
are expressly noted by the Parties in the applicable Engine Delivery
Certificate, FedEx's execution and delivery of an Engine Delivery Certificate
with respect to an Engine or Spare Engine which is delivered to FedEx by
American shall be a binding acknowledgment and agreement by FedEx that such
Engine or Spare Engine, as the case may be, was in the condition required by
Section 3.06 upon its delivery to FedEx by American.
Section 3.09. Liability. FEDEX HEREBY RELEASES AMERICAN FROM AND
AMERICAN SHALL NOT BE LIABLE FOR ANY DEFECT, KNOWN OR UNKNOWN, LATENT OR PATENT,
IN SUCH AIRCRAFT, THE ENGINES, ANY PART OR COMPONENT OF SUCH AIRCRAFT AND ANY
SPARE PART DELIVERED TO IT ON SUCH DELIVERY DATE OR ANY OTHER DATE OR, EXCEPT AS
EXPRESSLY SET FORTH HEREIN WITH RESPECT TO THE AIRCRAFT RECORDS AND/OR THE DATA,
THE DATA, AND, EXCEPT AS EXPRESSLY AGREED BY THE PARTIES, ANY DELAYED DELIVERY
OF ANY AIRCRAFT, ANY DELAYED DELIVERY ENGINE OR ANY SPARE PART, AND FOR ANY
ACTUAL, INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY
DAMAGES SUSTAINED BY FEDEX AS A RESULT OF ANY SUCH DEFECT OR DELAYED DELIVERY,
INCLUDING, WITHOUT LIMITATION, LOSS OF REVENUE, LOSS OF USE OF THE AIRCRAFT, THE
ENGINES, THE SPARE PART, OR THE DATA OR ANY INTERRUPTION IN FEDEX'S BUSINESS
RESULTING FROM OR OCCASIONED BY FEDEX'S INABILITY TO USE THE AIRCRAFT, THE
ENGINES OR, EXCEPT AS EXPRESSLY SET FORTH HEREIN, WITH RESPECT TO THE AIRCRAFT
RECORDS, ENGINE RECORDS AND/OR THE DATA, THE DATA.
Section 3.10. Title and Risk of Loss. (a) Concurrently with each
Delivery of an Aircraft but not prior thereto, title to, and risk of loss of,
damage to or destruction of such Aircraft (other than to or for any
Non-Conforming Engine installed on such Aircraft, title to which American is not
conveying to FedEx) shall pass from American to FedEx. FedEx shall not, by
virtue of this Agreement
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<PAGE> 36
(including, without limitation, as a result of the payment of any Deposit, the
previous Delivery of another Aircraft or the delivery of any Spare Part by
American to FedEx pursuant to this Agreement, or the designation or
identification by American of any particular Aircraft as a Firm Aircraft, a Put
Option Aircraft or the Aircraft to be delivered by American to FedEx on a
particular Scheduled Delivery Date) acquire any insurable or other ownership
interest in an Aircraft prior to the Delivery of such Aircraft by American to
FedEx in accordance with the terms of this Agreement.
(b) Title to, and risk of loss of, damage to and destruction of each
Delayed Delivery Engine and each Replacement Engine delivered to FedEx by
American shall pass to FedEx upon the delivery of such Delayed Delivery Engine
or Replacement Engine to FedEx by American. Notwithstanding the foregoing, the
risk of loss of, damage to or destruction of (i) any Non-Conforming Engine to
which FedEx holds title shall be as set forth in Section 3.03(d) and (ii) any
other Non-Conforming Engine and any Delayed Delivery Engine shall be governed
by any applicable Engine Lease Agreement. Upon Delivery of an Aircraft, FedEx
shall take title to any fuel on board of the Aircraft at no additional cost to
FedEx.
ARTICLE 4
SPARE PARTS
Section 4.01. MD-11 Spare Parts List. (a) On the date of
execution of this Agreement, American will provide FedEx with the Spares List
which will be a list of rotable spare parts that American held in its inventory
as of January 20, 1995 and that are unique to McDonnell Douglas Model MD-11
aircraft or that can be used on the McDonnell Douglas Model MD-11 and Model
DC-10 aircraft but no other aircraft within American's fleet. The Spares List
will set forth for each type of MD-11 Spare Part, American's and the
manufacturer's part numbers for each type of MD-11 Spare Part, the quantity of
each type of MD-11 Spare Part held by American at the date on which the Spares
List is delivered and the Average Unit Price for each type of MD-11 Spare Part.
The Spares List will be provided via electronic storage media mutually
acceptable to American and FedEx. American will also provide FedEx with a hard
copy of the Spares List.
Section 4.02. MD-11 Spare Parts Purchase Obligation. (a) On each
date on which FedEx is obligated to accept delivery of a Firm Aircraft pursuant
to this Agreement, American will sell to FedEx, and FedEx will purchase from
American, MD-11 Spare Parts having an average, aggregate Average Unit Price of
$[ * ] for each Firm Aircraft as to which Delivery occurs or which FedEx
is obligated to
____________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 37
purchase; provided, however, that so long as the Delivery of three Aircraft
occurs in each of the years from 1996 through 1999 (i) the aggregate Average
Unit Prices of MD-11 Spare Parts that shall be sold by American to FedEx, and
purchased by FedEx from American, in each year from 1996 through 1999 shall be
$[ * ]. On each date on which FedEx is obligated to accept
delivery of a Put Option Aircraft pursuant to the exercise of a Put Option or a
Purchase Option Aircraft, American will sell to FedEx, and FedEx will purchase
from American, MD-11 Spare Parts having an aggregate Average Unit Price of $[ *
] for each of the first eighteen (18) Aircraft and $[ * ] for the
nineteenth (19th) Aircraft as to which Delivery occurs or which FedEx is
obligated to purchase.
(b) If the MD-11 Spare Parts are being purchased in conjunction with
the purchase by FedEx of a Firm Aircraft or an Aircraft as to which American
has exercised a Put Option, the Spares Purchase Price for such MD-11 Spare
Parts shall be as set forth in Section 1 of Exhibit Q. If the MD-11 Spare
Parts are being purchased in conjunction with the purchase by FedEx of any
Purchase Option Aircraft, the Spares Purchase Price for such MD-11 Spare Parts
shall be determined by reference to Section 2 of Exhibit Q. FedEx will pay to
American the Spares Purchase Price for the portion of the MD-11 Spare Parts
being purchased on the date such MD-11 Spare Parts are delivered to FedEx by
American.
(c) The MD-11 Spare Parts that American will sell to FedEx and FedEx
will purchase from American in any lot of MD-11 Spare Parts pursuant to the
first sentence of Section 4.02(a) will be a pro rata portion of each type of
MD-11 Spare Part, based on a total of nineteen Aircraft. If the number of a
particular type of MD-11 Spare Parts held by American on any Delivery Date does
not permit the mix of MD-11 Spare Parts sold to FedEx in each such lot to be a
perfectly pro rata portion of all of the various types of MD-11 Spare Parts,
American and FedEx shall cooperate to set the mix of MD-11 Spare Parts so that
the inventories of MD-11 Spare Parts of American and FedEx shall be as nearly
pro rata as possible at all times. If for operational reasons American or
FedEx shall desire to change the mix of MD-11 Spare Parts that American would
deliver on any date, American and FedEx shall attempt in good faith, but shall
not be obligated, to effect such change in the mix of MD-11 Spare Parts in
order to accommodate each other's operational requirements. If American and
FedEx shall change such a mix of MD-11 Spare Parts in any lot of MD-11 Spare
Parts delivered to FedEx by American, the mix of MD-11 Spare Parts delivered to
FedEx in the next lot shall contain such MD-11 Spare Parts as are necessary to
cause compliance with requirements of the first two sentences of this Section
4.02(c) once such MD-11 Spare Parts are purchased by and delivered to FedEx.
______________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 38
Section 4.03. Spare Engine, Spare APU and Spare Thrust Reverser
Purchase Obligation. (a) (i) American will sell to FedEx, and FedEx will
purchase from American, on the dates and for the Spares Purchase Prices set
forth in or determined as set forth in Exhibit Q, the Spare Engines set forth in
Exhibit Q. If FedEx desires to change the quick engine change configuration of
any Spare Engine delivered by American to FedEx, American shall provide to FedEx
in exchange for conveyance by FedEx to American of the Parts removed from the
Spare Engine in question, the Parts necessary to change the quick engine change
configuration of such Spare Engine to a tail configuration or a wing
configuration, as the case may be, if American has the necessary parts in its
inventory of spare Parts and such spare Parts are determined by American, in
good faith, to be surplus to its needs. If American delivers any such spare
Parts to FedEx, FedEx shall deliver to American any of the Parts removed from
such Spare Engine in connection with the change in the configuration of such
Spare Engine. Upon its delivery by American to FedEx, each of the first five (5)
Spare Engines delivered by American to FedEx will be in the condition an Engine
is required by Section 3.06(a)(i)(B), 3.06(a)(iii) and 3.06(a)(iv) to be in upon
its delivery by American to FedEx, and FedEx shall have the right to conduct an
engine borescope on each such Spare Engine delivered in accordance with Exhibit
R. The Spares Purchase Price for each of the first five (5) Spare Engines shall
be adjusted in accordance with Exhibit M.
(ii) American will, at its sole option, either (A) deliver each Spare
Engine to be sold to and purchased by FedEx on one of the last five (5) Spare
Engine delivery dates set forth in Exhibit Q (each a "Last Group Engine" and
collectively, the "Last Group Engines") without such Last Group Engine having
been operated on wing since its last EHM, in which case the Spares Purchase
Price for such Last Group Engine shall be adjusted in accordance with Exhibit
M, or (B) if any such Last Group Engine does not comply with the standard in
clause (A) of this sentence, adjust the Spares Purchase Price of such Last
Group Engine in accordance with the adjustment formula set forth in Exhibit T;
provided, however, that the obligation set forth in clause (A) of this sentence
shall be reduced as to and no longer apply to one (1) such Last Group Engine
for each Spare Engine among the first five (5) Spare Engines delivered by
American to FedEx that is delivered without having been operated on wing since
its last EHM. Upon delivery of any Last Group Engine to which the obligation
set forth in clause (A) of the first sentence of this Section 4.03(a)(ii) no
longer applies, the Spares Purchase Price of such Last Group Engine shall be
adjusted in accordance with Exhibit M (instead of Exhibit T). Each Last Group
Engine delivered will be in the condition required by Section 3.06(a)(iii) and
Section 3.06(a)(iv), and FedEx shall have the right to conduct an engine
borescope on each such Last Group Engine delivered in accordance with Exhibit
R. At the time of delivery of any Last Group Engine whose Spares Purchase
Price is adjusted in accordance with clause (B) of the foregoing
sentence, American will issue to
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<PAGE> 39
FedEx a credit memorandum for [ * ] of the cost of an EHM
(the "EHM Credit") on a General Electric CF6-80C2D1F engine operated by FedEx
which was acquired from American (a "Purchased Engine"). The EHM Credit will
be redeemable by FedEx at any time during the [ * ] period
commencing on the date it is issued to pay a portion of the cost of the EHM
performed on a Purchased Engine. Subject to the foregoing sentence, if any
Last Group Engine does not comply with the standard in clause (A) of the first
sentence of this Subsection 4.03(a)(ii), FedEx must use an EHM Credit, if one
is available to it, to pay a portion of the cost of an EHM on such Last Group
Engine to be accomplished by American when such Last Group Engine next requires
an EHM. FedEx may apply two EHM Credits previously issued to it to the payment
of the cost of the EHM on such engine. The cost of an EHM on an engine against
which an EHM Credit may be applied shall be the cost of an EHM as set forth in
Table A to Exhibit M for the year in which the EHM on such engine is
accomplished. The costs set forth in Table A to Exhibit M do not include the
cost of any Life Limited Parts replaced during an EHM. To use an EHM Credit,
FedEx must deliver its engine to American at TUL or such other location to
which American and FedEx mutually agree. Upon delivery of the engine to
American's maintenance facility, American will perform the EHM work on the
engine and provide the materials required in performing the EHM, other than
Life Limited Parts. American will invoice FedEx for the balance of the cost of
an EHM not covered by the application of the EHM Credit, including, without
limitation, the cost of the Life Limited Parts replaced, within 30 days of the
completion of the EHM. FedEx will pay the amount of American's invoice
promptly after receipt of such invoice. FedEx will be responsible for the
costs of packing and shipping the engines to and from American s maintenance
facility for such an EHM.
(b) American will sell to FedEx, and FedEx will purchase from
American, on the dates and for the Spares Purchase Prices set forth in or
determined as set forth in Exhibit Q, the Spare APU's set forth in Exhibit Q.
Upon its delivery by American to FedEx, such Spare APU's will (i) be in
serviceable condition with an American Serviceable Tag attached to it and (ii)
will not have been installed on an aircraft subsequent to the Spare APU's last
accomplished APU C&R (as defined below) or APU EHM (as defined below), which
APU C&R or APU EHM shall have been accomplished through an American repair shop
or a FAA-approved third party repair facility. "APU C&R" shall mean a check
and repair of a Spare APU involving disassembly only to the extent required to
correct malfunctions and/or obvious visual damage. "APU EHM" shall mean the
complete disassembly and refurbishment of the LP Compressor and LP Turbine
sections, HP Compressor and HP Turbine sections of a Spare APU and the check &
repair of the gearbox and all components of the Spare APU.
_____________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 40
(c) American will sell to FedEx, and FedEx will purchase from
American, on the date and for the Spares Purchase Prices set forth in or
determined as set forth in Exhibit Q, the Spare Thrust Reversers as set forth
in Exhibit Q. Upon its delivery by American to FedEx, each Spare Thrust
Reverser will (i) be in serviceable condition with an American Serviceable Tag
attached to it and (ii) will not have been installed on an aircraft subsequent
to the Spare Thrust Reversers last accomplished Reverser C&R (as defined
below) or RHM (as defined below), which Reverser C&R or RHM shall have been
accomplished through an American repair shop or a FAA-approved third party
repair facility. "Reverser C&R" shall mean a check and repair of the Spare
Thrust Reverser involving a complete tap check of the translating cowl and core
cowl for delamination, an overall check of the unit for external damage,
excessive wear or binding, a check of the flexdrive shaft cores and casings for
condition, a check of the condition of the ballscrew actuators, rig of
actuator/translating cowl system, and check of all latches and forward latch
ring. "RHM" shall mean the maintenance build level involving the disassembly
to the extent necessary to accomplish all the required checks and
reconditioning of a Spare Thrust Reverser as specified in the American Program
in which all components will be checked and repaired and sent to their
appropriate repair sources for repair processing.
Section 4.04. Effect of Expiration of Put Options on Certain Spare
Parts Purchase Obligations. If (i) any Put Option expires as to a Put Option
Aircraft or (ii) FedEx does not exercise a Purchase Option as to a Put Option
Aircraft which has a Scheduled Delivery Date on which a Spare Engine, Spare APU
or Spare Thrust Reversers is to be sold to FedEx, American will have no
obligation to sell, and FedEx will have no obligation to purchase, such Spare
Parts otherwise to be sold and purchased by the Parties on such Scheduled
Delivery Date. If any remaining Put Options are not cancelled by FedEx in
accordance with Section 2.02(d) after American fails to exercise a Put Option,
the Scheduled Delivery Date on which each of the remaining, unpurchased Spare
Engines, Spare APU's or Spare Thrust Reversers are to be sold by American to
FedEx, and purchased by FedEx from American as set forth in Exhibit Q (an
"Original Sale Date") shall be changed to be the Scheduled Delivery Date for a
Put Option Aircraft as set forth in Exhibit Q next scheduled to occur after the
Original Sale Date of each such Spare Engine, Spare APU or Spare Thrust
Reversers (a "Modified Sale Date") and the obligation of American to sell and of
FedEx to purchase the Spare Engines, Spare APU's and/or Spare Thrust Reversers
on the last remaining, uncancelled Scheduled Delivery Date for a Put Option
Aircraft as set forth in Exhibit Q shall be terminated and without further force
or effect. If American shall sell, and FedEx shall be obligated to purchase, a
Put Option Aircraft on the Modified Sale Date for any Spare Engine, Spare APU or
Spare Thrust Reversers, American shall sell such Spare Part or Spare Parts
scheduled to be sold and purchased by the Parties on such Modified Sale Date for
the Spares Purchase Price or Spares Purchase Prices, as the case may
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<PAGE> 41
be, on the Modified Sale Date as set forth in or determined in accordance with
Exhibit Q.
Section 4.05. Designation of MD-11 Spare Parts to be Acquired and
Delivery. At least [ * ] days prior to the proposed date for
the delivery of a lot of MD-11 Spares to be purchased by FedEx from American,
FedEx shall notify American in writing of the date on which it will take
delivery of such MD-11 Spare Parts, any particular mix of MD-11 Spare Parts that
it desires to have in such lot of MD-11 Spare Parts and the destination within
the forty-eight (48) contiguous United States to which the MD-11 Spare Parts are
to be shipped. As to any other Spare Parts, [ * ] days prior to the
proposed date of delivery FedEx shall give American written notice of the
destination within the United States to which such Spare Parts are to be
shipped. American shall ship all of the Spare Parts to Memphis, Tennessee,
unless it is mutually agreed in writing that any or all of the Spare Parts will
be shipped to another destination within the forty-eight (48) contiguous United
States.
Section 4.06. MD-11 Spare Parts Documentation. At the time of
delivery of the MD-11 Spare Parts sold by American to FedEx, the MD-11 Spare
Parts delivered will, to the best of American's then current knowledge, be free
and clear of all Liens and will be serviceable condition. Such MD-11 Spare
Parts will be packaged in accordance with ATA 300 specifications and be
accompanied by an American Serviceable Tag. Any Spare Parts delivered to FedEx
may be in a form modified by American in order to comply with applicable FAR's,
Airworthiness Directives, manufacturer's service bulletins and recommendations
for modification by the respective manufacturers of such Spare Parts. In
addition, any Spare Parts delivered to FedEx by American shall be in compliance
with any outstanding Airworthiness Directives and service bulletins required to
be complied with or terminated on or before the delivery date of such Spare
Parts. Upon FedEx's request at the time of the delivery of a particular MD-11
Spare Part, American will also provide FedEx with the last Shop Findings Report
which American has in its records with respect to that MD-11 Spare Part if
American regularly creates and retains Shop Findings Reports for such type of
MD-11 Spare Part pursuant to the American Program. FedEx will not be required
to accept any Spare Part tendered by American for sale to FedEx that does not
meet the applicable requirements of FAR Section 43.9. American will make no
representations or warranties with respect to the Spare Parts sold to FedEx
pursuant to this provision other than that such Spare Parts are free and clear
of all Liens and are serviceable. Subject to Section 7.01, American will assign
any manufacturer's warranties that it owns and that are assignable by American
without the consent or approval of the manufacturer (with the payment of no more
than nominal consideration) in connection with the Spare
_______________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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<PAGE> 42
Parts at the time the Spare Parts are sold to FedEx. EXCEPT AS OTHERWISE
EXPRESSLY SET FORTH IN THIS AGREEMENT, THE SPARE PARTS SHALL BE DELIVERED BY
AMERICAN AND ACCEPTED BY FEDEX "WHERE IS", "AS IS" AND "WITH ALL FAULTS".
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.01. American's Representations and Warranties.
(a) American hereby represents and warrants to FedEx as follows:
(i) Organization and Existence. American is a corporation
validly existing, duly organized and in good standing under the laws
of the State of Delaware and is qualified to do business as a foreign
corporation and is in good standing as such in the State of Texas.
(ii) Due Authorization. American has all requisite corporate
power and authority to execute and enter into this Agreement and to
perform its obligations under this Agreement. The execution and
delivery of this Agreement by American and the performance by American
of its obligations hereunder have been duly authorized by all
necessary corporate action, do not contravene any law, statute, rule,
regulation, ordinance, writ, decree, judgment or injunction applicable
to American, or result in the violation of, the breach of, or a
default or event of default under any indenture, agreement, mortgage,
contract, agreement, other instrument or document, or any contractual
restriction to which American is a party, which is binding on it,
which affects American or by which its assets are bound or affected to
the extent that the contravention, violation or breach thereof or the
occurrence of a default or event of default thereunder would have a
material adverse effect on the ability of American to satisfy its
obligations hereunder, and do not result in or require the creation of
any lien, security interest or other charge or encumbrance upon or
with respect to any of its assets.
(iii) Approvals. Except for the necessary approvals under
the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as amended,
all authorizations, consents, approvals, waivers and other actions
required by, and all notices to and filings required to be made with,
all governmental authorities and regulatory bodies for the due
execution, delivery and performance by American of this Agreement or
the consummation of the transactions contemplated by this Agreement
have been obtained.
(iv) Enforceability. This Agreement constitutes the legally
valid and binding obligation of American, enforceable against American
in accordance
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<PAGE> 43
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or other laws affecting creditors rights
generally or general equitable principles, whether applied in a court
of law or in a proceeding at equity.
(b) With respect to any Aircraft being delivered, American hereby
represents and warrants to FedEx that upon Delivery of such Aircraft:
(i) Except as expressly agreed to in writing by FedEx or as expressly
permitted in this Agreement, the Aircraft shall be in the Delivery
Condition;
(ii) American shall have full power and lawful authority to convey
its ownership interest in the Aircraft to FedEx; and
(iii) upon execution, filing and recordation with the FAA of the FAA
Bill of Sale and delivery of the Warranty Bill of Sale to FedEx, FedEx
shall have received good legal and beneficial title to the Aircraft,
including the Engines conveyed to FedEx in connection with such
Aircraft, free and clear of all Liens, other than Liens arising by,
through or under FedEx or any designee of FedEx that has taken title
to the Aircraft.
Section 5.02. No Warranties. EXCEPT FOR WARRANTIES OF TITLE AND
ANY ASSIGNED MANUFACTURERS' WARRANTIES AND EXCEPT AS OTHERWISE EXPRESSLY SET
FORTH HEREIN WITH RESPECT TO THE AIRCRAFT RECORDS, THE AIRCRAFT, THE ENGINES,
THE SPARE PARTS AND THE DATA SHALL BE PURCHASED "WHERE IS", "AS IS" AND "WITH
ALL FAULTS" AND WITHOUT WARRANTIES OR REPRESENTATIONS OF ANY KIND, EXPRESS OR
IMPLIED, AS TO ANY MATTER WHATSOEVER WITH RESPECT TO ANY AIRCRAFT, THE ENGINES,
THE SPARE PARTS OR DATA INCLUDING, BUT NOT LIMITED TO: ANY OBLIGATION OR
LIABILITY IN NEGLIGENCE, STRICT LIABILITY OR TORT; AIRWORTHINESS; THE CONDITION,
DESIGN, QUALITY OR CAPACITY OF THE AIRCRAFT OR THE DATA OR THEIR FITNESS FOR ANY
PARTICULAR PURPOSE; COMPLIANCE OF THE AIRCRAFT, THE ENGINES, THE SPARE PARTS OR
THE DATA WITH THE REQUIREMENTS OF ANY LAW, ORDER, RULE, REGULATION,
SPECIFICATION OR CONTRACT PERTAINING THERETO; PATENT INFRINGEMENT; OR ABSENCE
FROM KNOWN, PATENT OR LATENT DEFECTS. EXCEPT FOR WARRANTIES OF TITLE, AMERICAN
SHALL NOT BE DEEMED TO MAKE OR HAVE MADE AND DISCLAIMS, AND FEDEX SHALL
ACKNOWLEDGE AND CONFIRM THAT AMERICAN HAS NOT MADE ANY REPRESENTATIONS,
WARRANTIES OR GUARANTIES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, CONCERNING
THE AIRCRAFT, THE DATA, ANY ENGINE, ANY PART OR ANY COMPONENT, OR ANY SPARE PART
INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS
FOR ANY PARTICULAR PURPOSE.
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<PAGE> 44
AMERICAN IS NOT A MANUFACTURER OR A DEALER IN AIRCRAFT AND FEDEX HEREBY
ACKNOWLEDGES AND CONFIRMS TO AMERICAN THAT EACH AIRCRAFT IS OF A MAKE, SIZE,
DESIGN AND CAPACITY DESIRED BY FEDEX AND IS A USED AIRCRAFT.
EXCEPT FOR THE EXPRESS WARRANTIES OF TITLE GIVEN BY AMERICAN OR
MANUFACTURER'S WARRANTIES, FEDEX IRREVOCABLY AND UNCONDITIONALLY WAIVES THE
BENEFIT OF ANY WARRANTY OR REPRESENTATION AMERICAN MAY BE DEEMED TO MAKE OR
HAVE MADE AND ALL RIGHTS AND REMEDIES IT MAY HAVE AGAINST AMERICAN RELATING TO
ANY OTHER REPRESENTATIONS AND WARRANTIES MADE BY AMERICAN, IF ANY, WHETHER THE
REMEDIES ARISE BY LAW OR OTHERWISE, OR ARISE IN CONNECTION WITH ANY DAMAGES
SUSTAINED BY FEDEX, INCLUDING, WITHOUT LIMITATION, ANY ACTUAL, INDIRECT,
SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES, INCLUDING
WITHOUT LIMITATION, AS A RESULT OF ANY LOSS OF USE OF THE AIRCRAFT, THE
ENGINES, ANY SPARE PART OR THE DATA OR ANY INTERRUPTION IN FEDEX'S BUSINESS
RESULTING FROM OR OCCASIONED BY FEDEX'S INABILITY TO USE THE AIRCRAFT, THE
ENGINES, ANY SPARE PART OR THE DATA.
Section 5.03. FedEx's Representations. FedEx hereby represents and
warrants to American as follows:
(i) Organization and Existence. FedEx is a corporation
validly existing, duly organized and in good standing under the laws
of the State of Delaware and is qualified to do business as a foreign
corporation and is in good standing as such in the State of Texas.
(ii) Due Authorization. FedEx has all requisite corporate
power and authority to execute and enter into this Agreement and to
perform its obligations under this Agreement. The execution and
delivery of this Agreement by FedEx and the performance by FedEx of
its obligations hereunder have been duly authorized by all necessary
corporate action, do not contravene any law, statute, rule,
regulation, ordinance, writ, decree, judgment or injunction applicable
to FedEx, or result in the violation of, the breach of or a default or
event of default under any indenture, agreement, mortgage, contract,
agreement, other instrument or document, or any contractual
restriction to which FedEx is a party, which is binding on it, which
affects FedEx or by which its assets are bound or affected to the
extent that the contravention, violation or breach thereof or the
occurrence of a default or event of default thereunder would have a
material adverse effect on the ability of FedEx to satisfy its
obligations hereunder, and do not result in or require the creation of
any lien, security interest or other charge or encumbrance upon or
with respect to any of its assets.
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(iii) Approvals. Except for the necessary approvals under
the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as amended,
all authorizations, consents, approvals, waivers and other actions
required by, and all notices to and filings required to be made with,
all governmental authorities and regulatory bodies for the due
execution, delivery and performance by FedEx of this Agreement or the
consummation of the transactions contemplated by this Agreement have
been obtained.
(iv) Enforceability. This Agreement constitutes the legally
valid and binding obligation of FedEx, enforceable against FedEx in
accordance with its respective terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, insolvency,
fraudulent conveyance or transfer, moratorium or other laws affecting
creditors rights generally or general equitable principles whether
applied in a court of law or in a proceeding at equity.
(v) Use of Aircraft Acquired pursuant to Purchase Option.
Any Purchase Option Aircraft acquired by FedEx pursuant to an exercise
of a Purchase Option will be converted into a cargo configuration.
FedEx intends to operate any such Purchase Option Aircraft in its air
freight business.
ARTICLE 6
DOCUMENTATION
Section 6.01. Availability of Documentation. FedEx may, upon
giving American [ * ] review Aircraft and Engine specific
historical engineering, operational and maintenance records, manuals and
documentation forming a part of the Data and specific to the next Aircraft to be
delivered. Such review will occur during the [ * ] period prior to the
Scheduled Delivery Date for such Aircraft at American's Tulsa, Oklahoma
Maintenance and Engineering Center. Such review shall be done during normal
working hours and shall not unreasonably interfere with the business operations
of American at such site.
Section 6.02. Technical Data and Documents. (a) American shall
provide to FedEx all Data applicable to each Aircraft, Engine and Spare Engine
on or before the Delivery Date with respect to such Aircraft, provided, however,
that any Aircraft Records or Engine Records generated within the [ * ]
_________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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immediately prior to the Delivery Date may be delivered to FedEx within the
[ * ] next following the Delivery Date of the relevant Aircraft to FedEx. If
FedEx shall need any other information pertaining to the Aircraft or an Engine
thereon after the delivery of the Aircraft Records or Engine Records, as the
case may be, during the [ * ]
period immediately after the delivery of the Aircraft Records, upon FedEx's
written request, American will search its records for such information. If such
information is found, American shall deliver such information to FedEx at
American's expense. American shall not be required to create any records
regarding the Aircraft, any Engine or any Part that American is not required to
retain in its records by the FAA under the American Program. If American is
normally required by the FAA under the American Program to retain a particular
Aircraft Record or Engine Record respecting an Aircraft or any Part thereof,
but during the [ * ] period immediately after delivery of the Aircraft Records
or Engine Records, as the case may be, such Aircraft Record or Engine Record or
a part of such Aircraft Record or Engine Record is found to be missing,
incomplete or in error with respect to any Aircraft delivered to FedEx, American
will, at its sole option, either create an accurate and complete reconstruction
of such Aircraft Record or Engine Record, replace the Part or Parts on the
Aircraft as to which the missing, incomplete or erroneous Aircraft Record or
Engine Record relates or take such other corrective action as shall permit FedEx
to operate the Aircraft in accordance with its then current operations
specifications, as approved by the FAA primary maintenance inspector assigned to
FedEx.
(b) At the Delivery Date of any Aircraft, the Aircraft Records and/or
Engine Records relating to the Aircraft and Engines delivered to FedEx by
American as provided above shall be, to the best of American's knowledge,
accurate and complete in accordance with the aircraft records requirements of
FAR 121.380 at the time of the delivery of such Aircraft Records and/or Engine
Records to FedEx. To the extent any such Aircraft Record or Engine Record is
not accurate or complete, FedEx's sole remedy shall be to cause American, at
its sole option and expense, to research and correct such inaccurate or
incomplete Aircraft Record or Engine Record, replace the Part or Parts on the
Aircraft as to which the missing, incomplete or erroneous Aircraft Record or
Engine Record relates, or take such other corrective action as shall permit
FedEx to operate the Aircraft in accordance with its then current operations
specifications, as approved by the FAA primary maintenance inspector assigned
to FedEx.
(c) If the FAA changes the regulations or issues national policy
guidance related to existing regulations pertaining to any documentation
required to
_________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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substantiate Airworthiness Directive compliance, American shall provide to
FedEx, to the extent it is available, all such required documentation not
previously delivered for any previously delivered Aircraft, Engine, Gear or
APU.
(d) Except as noted in Exhibit D, American shall provide to FedEx (i)
one legible, reproducible copy of each item of Data that is not related to any
particular Aircraft (which shall be delivered on the Delivery Date for the
first Firm Aircraft) and the subsequent revisions thereto occurring prior to
the last Delivery Date (each of which revisions shall be delivered on the
Delivery Date next following the date on which the revision is issued), (ii)
one legible, reproducible copy of any item of Data (other than the Aircraft
Records) related to each Aircraft that is delivered to FedEx by American and
(iii) originals (or if an original copy is not available, one legible
reproducible copy) of the Aircraft Records with respect to each Aircraft that
is delivered to FedEx by American. All items of Data delivered shall be in
hard copy except as noted in Exhibit D. If American does not have hard copy,
the Data shall be provided on microfilm or by other agreed medium. At FedEx's
request, all manufacturer's manual revision services for the Aircraft, if any,
shall be transferred to FedEx.
(e) When Data are forwarded to FedEx, American shall include a list
of those items using the reference numbers in Exhibit D.
All Data not delivered with an Aircraft shall be forwarded to:
Federal Express Corporation
Tchulahoma Administration Building
3101 Tchulahoma Road
Memphis, Tennessee 38118
Attn: Manager, Fleet Development
ARTICLE 7
ASSIGNMENT OF WARRANTIES, SERVICE LIFE POLICIES
AND PATENT INDEMNITIES
Section 7.01. Assignment of Warranties. At Delivery of each
Aircraft, an Assignment of Assignable Manufacturer's Warranties in the form of
Exhibit G shall be executed by American and delivered to FedEx pursuant to which
American will assign to FedEx, effective upon Delivery of such Aircraft, all of
American's interests in any and all existing and assignable warranties, service
life policies and patent indemnities of manufacturers and maintenance and
overhaul providers relating to such Aircraft. Further, upon FedEx's request,
American shall (i) give written notice to any such manufacturers and maintenance
and overhaul providers of the assignment of such warranties, service life
polices and patent indemnities to FedEx,
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and (ii) at FedEx's expense, take all such actions as may be reasonably
requested by FedEx in assisting FedEx in the enforcement of its rights pursuant
to this Article 7. Notwithstanding the foregoing, to the extent American may
assign any warranty, service life policy and patent indemnity only with the
consent of the provider of such, American will use its commercially reasonable
efforts to obtain any required consent to such an assignment, provided,
however, that American shall not be required to make any payment, give up any
rights or make any other concession to any provider in order to obtain any such
consent. In connection with the assignment of the Aircraft Support Services
provisions of Exhibit C to the Purchase Agreement by and between the
Manufacturer of the Airframes and American, dated August 3, 1989, as amended
and supplemented (the "MD-11 Purchase Agreement"), FedEx agrees to be bound by
the terms and provisions of Article 13 of, and Exhibit C to, the MD-11 Purchase
Agreement, copies of which have been provided to FedEx.
ARTICLE 8
PAYMENT OF TAXES
Section 8.01. Payment of Taxes by FedEx. (a) The Purchase Price
of an Aircraft and the Spares Purchase Prices do not include the amount of any
sales, use, withholding, transfer or excise taxes whatsoever. Except as
provided in Section 8.01(b) and Section 8.02 hereof, any and all taxes, excises,
duties and assessments whatsoever (including any related penalty, interest or
other additions to tax) arising out of the sale, transfer or delivery of the
Aircraft or the Spare Parts under this Agreement, or the ownership, possession,
condition, maintenance, use, operation or disposition of the Aircraft after
Delivery or any Spare Parts after their delivery to FedEx, in any manner levied,
assessed or imposed by any government or subdivision or agency thereof having
jurisdiction, shall be the sole responsibility and liability of FedEx and FedEx
shall indemnify and hold American harmless from any and all such taxes, excises,
duties and assessments whatsoever. American and FedEx will cooperate in good
faith and take such reasonable actions as are practicable to minimize or, if
possible, eliminate any such taxes, excises, duties or assessments.
(b) The indemnity provided for in Section 8.01(a) shall not extend to
any of the following:
(i) taxes based upon, measured by or with respect to the net income,
gross receipts in the nature of an income tax not in the nature of a transfer
tax, items of tax preference or minimum tax or excess profits, capital,
franchise, net worth or conduct of business or other similarly-based taxes of
American;
(ii) any penalty, interest or other additions to taxes related to
taxes imposed on American that would not have been imposed, but for the willful
misconduct or gross negligence of American; or
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(iii) taxes, excises, duties or assessments imposed by the State of
[.* ]
(c) With respect to any tax which FedEx has assumed responsibility
for under this Article 8, FedEx shall either (i) pay (x) at the Delivery Date
for an Aircraft, (y) at the delivery date of any Engine sold to FedEx and not
conveyed by American to FedEx at the Delivery Date for an Aircraft, or (z) at
the delivery date for any Spare Parts sold by American to FedEx, all sales or
other similar taxes payable with respect to the sale and/or purchase of such
Aircraft, Engines or Spare Parts, respectively, or (ii) provide to American an
exemption certificate, resale certificate, or other evidence reasonably
acceptable to American that the sale and purchase of any Aircraft, Engine or
Spare Part is exempt from any such tax. Other evidence includes, but is not
limited to, a letter specifying the applicable taxing authority's statute,
regulation, rule or case law authority providing for such exemption; provided,
however, that acceptance of such certificates or other evidence by American
shall not constitute willful misconduct or gross negligence by American for
failure to collect taxes determined to be due.
(d) If any tax, excise, duty or assessment described in this Section
8.01 for which FedEx has assumed the responsibility for payment pursuant to
this Article 8 is levied, assessed or imposed upon American, American shall
promptly give FedEx notice of such levy, assessment or imposition, whereupon
FedEx shall promptly pay and discharge the same or, if permitted by law, may
contest or protest such liability before payment. If American fails to notify
FedEx, FedEx will be relieved of its indemnity obligations under this Section
8.01 with respect to that tax to the extent such failure materially adversely
impacts FedEx. Upon the written request and at the sole expense of FedEx,
American shall reasonably cooperate with FedEx in contesting or protesting the
validity or application of any such tax (including, but limited to, permitting
FedEx to proceed in American's name if required or permitted by law, provided,
in each case, that such contest does not involve, or can be separated from, the
contest of any tax or other issues unrelated to the transactions described in
this Agreement). If proceeding in American's name, FedEx must first receive a
power of attorney from American which American may not unreasonably withhold,
and, further, any retention of outside counsel to assist FedEx must be mutually
agreed upon by FedEx and American. In lieu of permitting FedEx to proceed
using American's name, American may, if permitted by law, assign its claim to
FedEx as the real party in interest with respect to such claim. FedEx also
shall have the right to participate in any contest conducted by American with
respect to a tax or other charge indemnifiable under this Article 8, including,
without limitation, the right to attend conferences with the taxing authority
and the right to review submissions to the taxing authority or any court to the
extent,
___________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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but only to the extent, such contest does not involve, or can be separated
from, the contest of any tax or issues unrelated to the transactions
contemplated in this Agreement. In the event American shall receive a refund
of all or any part of such tax, excise, duty or assessment (including a refund
of interest and penalties, if any, in connection therewith) which FedEx has
paid and discharged, the amount of such refund shall promptly be remitted to
FedEx by American, less any expenses of American associated with contesting
and/or protesting the validity or application thereof which have not been
previously reimbursed by FedEx.
Section 8.02. Tax Consequences of Certain Deliveries. (a) If the
delivery of the Aircraft at any destination other than one in [ * ] or [ *
] would result in an increased state, federal or local sales, transfer or
similar tax being payable by FedEx in connection with the delivery of the
Aircraft, FedEx may, in its sole discretion, withhold its consent to take the
Delivery of such Aircraft in that state unless American agrees to indemnify
FedEx for any such increased tax.
(b) If the delivery of the Aircraft to FedEx in [ * ] results in
any sales, transfer or similar tax being imposed on FedEx with respect to such
Aircraft as a result of the tender of the Aircraft in [ * ], American will
agree to indemnify FedEx or provide FedEx with a written statement from
the taxing authority in [ * ] that such sale is exempt from tax in [ *
] and that, if the exemption is lost, American will indemnify FedEx for any
tax due unless the loss was due to the negligence or willful misconduct of
FedEx.
(c) If any Spare Parts are delivered to FedEx at a location other
than Tennessee, American shall indemnify FedEx for any (or an increased)
federal, state or local sales, transfer or similar tax imposed on FedEx with
respect to such Spare Parts unless such other delivery location was mutually
agreed upon or was chosen at the request of FedEx in which case FedEx shall
indemnify American if the delivery of any of the Spare Parts to FedEx would
result in any or any increased federal, state or local sales, transfer or
similar tax to American. If the delivery of any Spares Parts to FedEx would
result in any (or an increased) federal, state or local sale, transfer or
similar tax to American or FedEx, as the case may be, American and FedEx will
choose a jurisdiction on FedEx's route system within the contiguous forty-eight
(48) United States in which to make such delivery or re-delivery to minimize
such tax or eliminate such tax, if possible.
(d) If the delivery of a Delayed Delivery Engine or Replacement
Engine by American to FedEx or the re-delivery of a Non-Conforming Engine to
American by FedEx at the location of the Aircraft on which the Delayed Delivery
Engine or Replacement Engine will be installed results in any (or an
increased) federal,
________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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foreign, state or local sales, transfer or similar tax being imposed on FedEx,
American will indemnify FedEx for the tax or the increased amount of the tax to
the extent, but only to the extent, that FedEx would not have been responsible
for the payment of an equivalent amount of tax if the Delayed Delivery Engine
or Replacement Engine had been installed on the Aircraft at the time of the
Delivery of such Aircraft.
Section 8.03. After-Tax Basis. Any payment of an indemnity pursuant
to this Article 8 shall be made on a basis such that any payment received or
deemed to have been received by an indemnified party shall be supplemented by a
further payment to such party so that the sum of the two payments, after
deduction of all taxes resulting from the receipt or accrual of such payments,
shall be equal to the payment received or deemed to have been received.
ARTICLE 9
EXCUSABLE DELAY
Section 9.01. Excusable Delay. (a) Subject to Section
3.05, neither Party shall be responsible to the other Party for any Excusable
Delay in the discharge and performance of its respective obligations and duties
under this Agreement or for any delay or failure in the discharge and
performance of its respective obligations and duties under this Agreement as a
result of the action or omission of the other Party.
Section 9.02. Time Limits on Excusable Delays. Notwithstanding the
provisions of Section 3.05, if an Excusable Delay shall have caused the delay of
the Delivery of an Aircraft on a Scheduled Delivery Date (i) until a date after
the Partial Casualty Delivery Date as to any Aircraft described in Section
3.05(c), (ii) until a date after the Casualty Delivery Date, as to any
substitute Aircraft as described in Section 3.05(d) or (iii) for a period of
more than twenty-eight (28) consecutive days after the Scheduled Delivery Date
in every other instance, the Party not claiming the right to delay performance
of its obligations shall have the right (x) to terminate its obligations with
respect to the Delivery of such Aircraft at any time prior to the Delivery of
such Aircraft or a substitute Aircraft therefor or (y) to permit the other Party
to complete its performance in connection with the Delivery of such Aircraft.
If a Party chooses to terminate its obligations with respect to the Delivery of
an Aircraft or a substitute Aircraft therefor, the Party claiming the Excusable
Delay shall have no further obligation with respect to the Delivery of the
Aircraft as to which the Excusable Delay occurred. To the extent an Excusable
Delay relates to the performance of any obligation other than one respecting the
Delivery of an Aircraft, such delay shall be an Excusable Delay for a period not
to exceed twenty-eight (28) consecutive days from the date that performance was
due.
ARTICLE 10
INDEMNIFICATION
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Section 10.01. FedEx's Indemnification. After the Delivery of an
Aircraft, Engines or Spare Parts to FedEx, FedEx shall defend, indemnify and
hold harmless American, its Affiliates and each of their respective directors,
officers, employees, independent contractors who are individuals, and permitted
assignees (collectively the "American Indemnitees") from and against all
claims, demands, suits, causes of action, obligations, liabilities, damages,
losses and judgments, costs and expenses, WHETHER OR NOT ARISING FROM THE
NEGLIGENCE OF SUCH INDEMNIFIED PARTIES, asserted against any of them by reason
of injury or death of any person, or by reason of loss of or damage to
property, including such Aircraft, Engines and Spare Parts, arising out of or
in any manner connected with any of the Aircraft, Engines and Spare Parts,
including, without limitation, the purchase, sale, ownership, possession, use,
operation, flight testing (if the event giving rise to the American
Indemnitees' right to indemnity involves the Aircraft and occurs while a pilot
who is an employee or an agent of FedEx is in control of the Aircraft being
flight tested), storage, maintenance, financing, sale, lease or sublease of any
Aircraft, Engine or Spare Part.
Section 10.02. American's Indemnification. American agrees to
defend, indemnify and hold harmless FedEx, its Affiliates, and each of their
respective directors, officers, employees, independent contractors who are
individuals and permitted assignees from and against all claims, demands,
suits, causes of action, obligations, liabilities, damages, losses and
judgments, costs and expenses, asserted against any of them by reason of any
claim adverse to FedEx's title to the Aircraft by any party claiming by or
through American.
ARTICLE 11
INSURANCE
Section 11.01. Liability Insurance. Commencing with the delivery of
the first Aircraft to FedEx, FedEx shall maintain until the [ * ]
anniversary of the Delivery Date of each Aircraft, with insurance carriers
reasonably acceptable to American, comprehensive airline liability insurance in
an amount not less than USD $[ * ] which shall: include aircraft
liability, cargo liability, and comprehensive general liability insurance;
insure, inter alia, FedEx's indemnification obligations to the American
Indemnitees; and name the American Indemnitees as additional insureds. The
insurers shall waive any right of subrogation, set-off or counterclaim against
the American Indemnitees as to the coverage of the American Indemnitees,
breaches of representations and warranties
____________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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by FedEx. In the event of cancellation of or material change in the policy,
such insurance shall continue in force for the benefit of the American
Indemnitees for at least thirty (30) days after written notice to American.
Section 11.02. Hull Insurance. If FedEx, or any successor to
FedEx's interest in the Aircraft, maintains hull insurance on the Aircraft,
FedEx shall require its, or its successor's, hull insurers to waive any and all
rights of subrogation, set-off, counterclaim and deduction, whether by
attachment or otherwise, which they may have against the American Indemnitees,
for any loss, damage or destruction of the Aircraft.
Section 11.03. Insurance Certificates. Upon Delivery, FedEx shall
furnish American with insurance certificates from certifying (a) that the
policies of insurance required by this Article 11 are in full force and effect
(together with required waivers of subrogation) and (b) that American shall be
given thirty (30) days' prior written notice by the insurers in the event of
either cancellation or material change in coverage or cancellation of the
waivers of subrogation, except in the event of war risk coverage, in which case
the notice period shall be seven (7) days or such other period as shall be
customary in the insurance market.
ARTICLE 12
DEFAULT AND REMEDIES
Section 12.01. American Events of Default. The following events
shall constitute Events of Default as to American:
(a) American shall fail to deliver the Aircraft in accordance with
the terms and conditions of this Agreement;
(b) American shall fail to perform any other covenant of American
contained in this Agreement, and such failure is not cured within [ *
] after written notice of such default is given by FedEx to American or, if
such failure cannot be cured within [ * ] is not
cured within [ * ] after receipt of such notice if
American promptly commences taking and diligently pursues all necessary actions
to cure such failure;
(c) If any representation or warranty made by American herein or made
in any statement or certificate furnished or required hereunder or in
connection with the execution and delivery of this Agreement, proves untrue in
any material adverse respect;
________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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(d) If American shall file a voluntary petition in bankruptcy, shall
be adjudicated as bankrupt or insolvent, shall file any petition or answer
seeking any reorganization, composition, readjustment, liquidation or similar
relief for itself under any present or future statute, law or regulation, shall
seek or consent to or acquiesce in the appointment of any trustee, shall make
any general assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due; or
(e) If a petition shall be filed against American seeking any
reorganization, composition, readjustment, liquidation or similar relief under
any present or future statutes, law or regulation, and shall remain undismissed
or unstayed for an aggregate of [ * ] (whether or not
consecutive), or if any trustee, receiver or liquidator of either Party is
appointed, which appointment shall remain unvacated or unstayed for an
aggregate of [ * ] (whether or not consecutive).
Section 12.02. FedEx Events of Default. The following events shall
constitute Events of Default as to FedEx:
(a) FedEx shall fail to accept delivery and pay the Purchase Price
for any Aircraft tendered by American for delivery to FedEx in accordance with
this Agreement;
(b) FedEx shall fail to perform any other covenant of FedEx contained
in this Agreement and such failure is not cured within [ *
] after written notice of such default is given by American to FedEx or, if
such failure cannot be cured within [ * ] is not
cured within [ * ] after receipt of such notice if FedEx
promptly commences taking and diligently pursues all necessary actions to cure
such failure;
(c) If any representation or warranty made by FedEx herein or made in
any statement or certificate furnished or required hereunder or in connection
with the execution and delivery of this Agreement proves untrue in any material
adverse respect;
(d) If FedEx shall file a voluntary petition in bankruptcy, shall be
adjudicated as bankrupt or insolvent, shall file any petition or answer seeking
any reorganization, composition, readjustment, liquidation or similar relief
for itself under any present or future statute, law or regulation, shall seek
or consent to or acquiesce in the appointment of any trustee, shall make any
general assignment for
________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
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the benefit of creditors, or shall admit in writing its inability to pay its
debts generally as they become due; or
(e) If a petition shall be filed against FedEx seeking any
reorganization, composition, readjustment, liquidation or similar relief under
any present or future statutes, law or regulation, and shall remain undismissed
or unstayed for an aggregate of [ * ] (whether or not
consecutive), or if any trustee, receiver or liquidator of either party is
appointed, which appointment shall remain unvacated or unstayed for an
aggregate of [ * ] (whether or not consecutive).
Section 12.03. Remedies. (a) Subject in all respects to
Article 13, upon the occurrence of an Event of Default by American, FedEx (i)
shall, at its option, be relieved from its obligation to accept delivery of and
pay the Purchase Price for the Aircraft or to purchase any Spare Parts from
American, (ii) may, at its option, terminate this Agreement and have the
Deposits returned to it to the extent they have not been previously applied to
the Purchase Price of an Aircraft, together with any interest thereon
calculated at the AMR Rate, and (iii) shall have all other rights and remedies
available to it at law and in equity, including, but not limited to, the
equitable remedy of specific performance.
(b) Subject in all respects to Article 13, upon the occurrence of an
Event of Default by FedEx, American (i) shall retain the Deposits and the
interest thereon relating to the Aircraft, (ii) may, at its option, be relieved
from its obligation to deliver any Aircraft or sell any Spare Parts to FedEx,
(iii) may, at its option, terminate this Agreement and (iv) shall have all
other rights and remedies available to it at law and in equity, including, but
not limited to, the equitable remedy of specific performance.
Section 12.04. Limitation of Damages. NEITHER PARTY SHALL HAVE ANY
LIABILITY FOR ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR
EXEMPLARY DAMAGES SUSTAINED BY THE OTHER PARTY ARISING OUT OF THE FIRST PARTY'S
DEFAULT UNDER THE TERMS OF THIS AGREEMENT. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY REMEDIES IT MAY HAVE AS A RESULT OF ITS INCURRENCE OF ANY INDIRECT,
SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES ARISING OUT
OF A DEFAULT BY THE OTHER PARTY UNDER THIS AGREEMENT.
__________________
*Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934.
ARTICLE 13
DISPUTE RESOLUTION
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Section 13.01. Dispute Resolution. American and FedEx desire to
resolve any dispute or alleged dispute that may arise in connection with the
interpretation of any provision in this Agreement or the performance by either
of them of their obligations under this Agreement (a "Dispute") without resort
to the courts. If any Dispute shall arise, American and FedEx agree to follow
the procedure set forth in this Article 13 (the "ADR Procedure") to resolve
such Dispute.
Section 13.02. Notice of Dispute. The Party believing a Dispute to
exist shall give the other Party written notice that the Dispute exists. Such
notice shall set forth in reasonable detail the facts alleged to give rise to
such Dispute, the provision or provisions of this Agreement giving rise to the
obligations implicated in the Dispute, the nature of any default claimed to
exist with respect to this Agreement and a statement of the manner in which
such Party believes the Dispute should be resolved. Within five (5) Business
Days after such notice is given the Party receiving such notice shall respond
in writing to the Party giving the notice. Such response (the "Response")
shall state whether the responding Party believes such Dispute exists, set
forth its view of the facts alleged to give rise to the Dispute and, if the
responding Party agrees that a Dispute exists, indicate what action the
responding Party believes should be taken with respect to the claim that a
Dispute exists.
Section 13.03. Dispute Resolution Through Negotiation. If the
Parties do not agree as to the action to be taken in resolution of the Dispute,
American and FedEx shall have a meeting no later than the fifth (5th) Business
Day following the date on which the Response is given. Such meeting shall be
held in the offices of the Party receiving the original notice of the Dispute
unless the Parties agree to meet elsewhere. Each of the Parties shall have in
attendance at such meeting an executive who shall have the authority to make
decisions and bind the Party he or she represents to any agreement that may be
made by the Parties at such meeting (a "Company Representative"), as well as
such other persons as the Parties may desire. At the meeting, the Parties
shall negotiate in good faith in an attempt to agree if a Dispute exists, upon
the exact nature of any Dispute agreed to exist, the manner in which any such
Dispute should be resolved and the date by which the resolution of any such
Dispute should be effected. If a resolution of such Dispute is not reached at
the initial meeting, before adjourning the meeting, the Parties shall determine
if an additional meeting or meetings should be held to negotiate further a
resolution of the Dispute. If American and FedEx determine an additional
meeting should be held, they shall agree to the time and place of such meeting.
Any agreement as to the resolution of such Dispute reached during such
negotiations shall be evidenced by a written agreement setting forth in
reasonable detail the actions that the Parties agree will be taken to resolve
or remedy the Dispute.
Section 13.04. Dispute Resolution Through Mediation. If American
and FedEx cannot resolve the Dispute pursuant to the procedure set forth in
Section 13.03 above (the "Negotiation Procedure") within ten (10) Business Days
after the
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first meeting held by the Parties pursuant to the Negotiation Procedure,
American and FedEx shall mediate the Dispute through a panel of three mediators
(the "Mediation Panel"). The Mediation Panel shall be appointed within ten
(10) Business Days after the date on which the Parties determine that they
cannot resolve the Dispute (the "Determination Date"). The Mediation Panel
shall consist of a professional mediator appointed by American, a professional
mediator appointed by FedEx and a professional mediator appointed by the two
mediators appointed by American and FedEx. When possible, each mediator shall
be familiar with the aircraft industry. The mediation shall take place on the
fifteenth (15th) Business Day after the Determination Date or such earlier
date as the Parties and the Mediation Panel may agree. Each Party shall
prepare and submit to the Mediation Panel at least two (2) Business Days before
the mediation occurs, written submissions setting forth their respective
positions with respect to the Dispute. Each Party shall send a Company
Representative and such other persons, including professional advisors, as they
desire to such mediation. The Parties agree to work in good faith to reach an
agreement settling the Dispute at the mediation. Any agreement as to the
resolution of such Dispute reached during such mediation shall be evidenced by
a written agreement setting forth in reasonable detail the actions that the
Parties agree will be taken to resolve the Dispute. The mediation shall be
deemed unsuccessful if so declared by the Mediation Panel.
Section 13.05. Dispute Resolution Through Arbitration. American and
FedEx agree that if they cannot resolve the Dispute pursuant to the Negotiation
Procedure or mediation as described in Section 13.04 above (the "Mediation")
within ten (10) Business Days after the commencement of the first meeting of
the Parties with the Mediation Panel, they will submit the Dispute to binding
arbitration (the "Arbitration") pursuant to the New York Arbitration Statute
and the American Arbitration Association's (the "AAA") Commercial Arbitration
Rules as in effect at the time of the submission of the Dispute to the AAA (the
"CAR"). American and FedEx shall submit the Dispute to the AAA for binding
arbitration within five (5) Business Days after the unsuccessful conclusion of
the Mediation Process. The arbitration shall take place (i) in Dallas, Texas
or such other place as American, FedEx and the arbitrators assigned to the case
shall agree and (ii) on such date and at such time as the arbitrators shall
establish. The Dispute shall be arbitrated by a panel of three arbitrators
(the "Panel") who shall, if possible, each be experienced in the aircraft
industry and who shall be chosen in accordance with the CAR. The Panel shall
issue a reasoned decision and award of damages, specific performance or
injunction. American and FedEx agree to abide by and perform any award
rendered by the Panel. American and FedEx intend that the Dispute will be
resolved by application of the laws of the State of New York and that the Panel
s authority to make any award in the arbitration of the Dispute shall be based
on and limited by the laws of the State of New York, the terms and conditions
of this Agreement and the CAR. The Panel's determination of facts shall be
final and binding on American and FedEx if there is substantial evidence in the
record of such arbitration to support such determination, it being the
intention of the Parties
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that the standard for any judicial review of the findings or award of the Panel
be the same standard as applies in the case of appeals to actions of
administrative agencies in the State of New York. Judgment on the award in the
arbitration may be entered by any court having jurisdiction of the Dispute.
Subject to the CAR, the Parties will endeavor in good faith to conclude the
arbitration by no later than thirty (30) Business Days after it commences.
Section 13.06. Forbearance During Resolution Process. American and
FedEx agree to forbear from pursuing any remedy under this Agreement or
otherwise available under law, including the institution of any lawsuit, while
the ADR Procedure is in operation with respect to any Dispute.
Section 13.07. Limitation of Remedies. American and FedEx agree
that, notwithstanding anything to the contrary herein, in the laws of the State
of New York, Tennessee or Texas or the CAR, the result of any agreement reached
by them in the Mediation or any award made by the Arbitration Panel in the
Arbitration shall be consistent with the terms and conditions of this Agreement
and that any award shall be only a remedy that would available to a Party to
this Agreement as a result of a breach of this Agreement had the ADR Procedure
not been in effect. IN NO EVENT SHALL THE PANEL AWARD ANY INDIRECT,
INCIDENTAL, CONSEQUENTIAL, PUNITIVE, SPECIAL, EXEMPLARY OR OTHER THAN DIRECT
DAMAGES.
Section 13.08. Expenses. Each of American and FedEx shall pay its
own out-of-pocket expenses in connection with the conduct of the ADR Procedure
as to any Dispute. The costs and expenses of any Mediation, other than
American's and FedEx's out-of-pocket expenses in connection therewith, shall
be borne equally by American and FedEx. The costs and expenses of any
Arbitration, other than American's and FedEx's out-of-pocket expenses in
connection therewith, shall be payable in accordance with the CAR.
ARTICLE 14
CONDITIONS
Section 14.01. Conditions to FedEx's Obligations. The obligation of
FedEx to accept any Aircraft and purchase any Spare Parts from American shall
be subject to the following conditions precedent:
(a) compliance by American with all applicable laws and regulations of
all jurisdictions which are applicable to the transactions contemplated hereby,
including, without limitation, the Hart-Scott-Rodino Anti-Trust Improvements
Act of 1974, as amended;
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<PAGE> 59
(b) receipt by FedEx of all necessary licenses, permits, approvals,
consents, waivers and authorities which are applicable to the transactions
contemplated hereby;
(c) receipt by FedEx of a satisfactory opinion of counsel to American,
which opinion may be rendered by in-house counsel, regarding due authorization,
no conflicts with organization documents, agreements and instruments to which
American is a party or its assets are bound or any court order, and
enforceability of this Agreement and any ancillary agreements, and such other
matters as may be reasonably requested. In such opinion, such counsel may
assume that the documents, agreements and instruments are governed by Texas law
and render their opinions based solely on the federal laws of the United
States, the corporate laws of the State of Delaware and the laws of the State
of Texas. Such opinion may be subject to the type of assumptions and
qualifications regularly included by experienced corporate counsel in similar
opinions;
(d) the execution of this Agreement and consummation of the
transactions contemplated by it shall not breach, or result in a default under,
any document, agreement, statute, treaty, regulation or other regulatory
directive, foreign or domestic, binding upon American or any of its respective
Affiliates;
(e) FedEx shall not be unable to perform its obligations with respect
to one or more of the Aircraft as the result of the occurrence of a Force
Majeure Event or other Excusable Delay (other than a Force Majeure Event or
other Excusable Delay which is a result of the fault, act or omission of
American);
(f) the Aircraft shall be in Delivery Condition; and
(g) the approval of this Agreement and the performance of the
transactions contemplated by this Agreement by FedEx's board of directors.
Section 14.02. Conditions to American's Obligations. The obligation
of American to deliver any Aircraft and sell any Spare Parts to FedEx shall be
subject to the following conditions precedent:
(a) compliance by FedEx with all applicable laws and regulations of
all jurisdictions which are applicable to the transactions contemplated hereby,
including, without limitation, the Hart-Scott-Rodino Anti-Trust Improvements
Act of 1974, as amended;
(b) receipt by American of all necessary licenses, permits, approvals,
consents, waivers, and authorities which are applicable to the transactions
contemplated hereby;
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(c) receipt by American of a satisfactory opinion of counsel to FedEx,
which opinion may be rendered by in-house counsel, regarding due authorization,
no conflicts with organizational documents, agreements and instruments to which
FedEx is a party or its assets are bound or any court order, and enforceability
of this Agreement and any ancillary agreements, and such other matters as may
be reasonably requested. In such opinion, such counsel may assume that the
documents, agreements and instruments are governed by Tennessee law and render
their opinions based solely on the federal laws of the United States, the
corporate laws of the State of Delaware and the laws of the State of Tennessee.
Such opinion may be subject to the type of assumptions and qualifications
regularly included by experienced corporate counsel in similar opinions;
(d) the execution of this Agreement and consummation of the
transactions contemplated by it shall not breach, or result in a default under,
any document, agreement, statute, treaty, regulation or other regulatory
directive, foreign or domestic, binding upon FedEx or any of its Affiliates;
(e) American shall not be unable to perform its obligations with
respect to one or more of the Aircraft as the result of the occurrence of a
Force Majeure Event, other Excusable Delay or the fault of FedEx; and
(f) the approval of this Agreement and the performance of the
transactions contemplated hereby by American's Chairman of the Board, Chief
Executive Officer and President.
ARTICLE 15
CONFIDENTIALITY
Section 15.01. Confidentiality Obligations. (a) Each of
American and FedEx agrees to keep the economic terms of this Agreement
confidential and not to disclose, transfer, use or otherwise make available
such information to any third party without the prior written consent of the
other Party. Each of American and FedEx agrees to exercise care that is at
least equal to the care it uses to protect the confidentiality of its own
confidential and proprietary information of similar importance to prevent the
disclosure to outside parties or unauthorized use of such information.
Notwithstanding the above, American and FedEx may disclose confidential
information to their respective officers, directors, employees and/or tax,
legal and other professional advisors who are informed of the confidential
nature of the information and of the restrictions on disclosure and use of the
information as set forth herein and may disclose confidential information as
required by law (including, but not limited to, pursuant to a request by the
Internal Revenue
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Service or a state taxing authority for information). In the event of a breach
of or a default under the terms of this Section 15.01, the non-breaching Party
shall be entitled to pursue and seek all legal and equitable remedies available
to it, including the equitable remedies of specific performance and injunction,
which remedies shall not be deemed exclusive, but shall be cumulative. If
either of the Parties desire to make a press release, information release or
otherwise provide information to any third party for release to the news media
with respect to the transactions contemplated by this Agreement, subject to its
obligations under applicable securities laws, the Party desiring to make the
release or provide the information shall provide the text of such release or
information to the other Party for its review at least three (3) Business Days
in advance of the proposed distribution of the release or information. Subject
to legal requirements and other legally compelled disclosures, each Party shall
obtain the prior written consent of the other Party to release of any such news
or press release or information and the text of any written or oral statement
or any release of information to be provided to the news media and the timing
of the distribution of such information.
(b) FedEx understands that certain of the information that may be
provided to FedEx by American concerning the Airframes is the subject of a
confidentiality agreement between American and the Manufacturer of the
Airframes (the "Manufacturer Confidentiality Agreement"). FedEx agrees for the
benefit of American and the Manufacturer of the Airframes (i) to be bound by
the terms and conditions of the Manufacturer Confidentiality Agreement, (ii)
that FedEx's use, possession and dissemination of such information to any
person shall be subject to and governed by the Manufacturer Confidentiality
Agreement and (iii) that the Manufacturer of the Airframes shall be a third
party beneficiary of this Section 15.01(b) and entitled to enforce its
respective rights under the Manufacturer Confidentiality Agreement against
FedEx as if it were a party to this Agreement.
ARTICLE 16
FURTHER ASSURANCES
Section 16.01. Further Assurances. (a) American recognizes that in
the course of (i) the conversion of the Aircraft from a passenger configuration
to a cargo configuration and (ii) the transition of the Aircraft from the
American Program to FedEx's FAA-approved maintenance program, issues will
arise in which American may possess information and expertise regarding the
Aircraft that FedEx would find useful, Aircraft Records or Engine Records that
may be necessary to the transition of the Aircraft to FedEx's maintenance
program, and other knowledge that will be useful to FedEx in connection with
such activities. Subject to any restrictions on the disclosure of confidential
information and consistent with the protection of its confidential information
and proprietary information, including, without limitation, any trade secrets,
American agrees to cooperate with FedEx and to assist FedEx by providing such
confidential, proprietary and trade secret
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information pursuant to a mutually acceptable non-disclosure agreement and any
non-confidential information regarding the Aircraft that American may possess
which would be helpful to FedEx in achieving its goals. American also agrees
to meet with representatives of FedEx and the FAA at mutually agreeable times
and locations to discuss the Aircraft and American's maintenance of the
Aircraft. In no event shall the assistance to be provided by American to FedEx
require the incurrence by American of more than nominal expense.
(b) American will provide to FedEx a supplemental type certificate (a
"STC") and the substantiating data covering any modification of an Aircraft
that is delivered to FedEx by American pursuant to this Agreement if that
modification is designed by American. FedEx may use such STC to make the same
modification covered by the STC to any other McDonnell Douglas Model MD-11
aircraft owned and operated by FedEx. American will not charge FedEx for the
use of such a STC by FedEx on any of FedEx's McDonnell Douglas Model MD-11
aircraft. AMERICAN SHALL NOT BE DEEMED TO MAKE OR HAVE MADE AND DISCLAIMS, AND
FEDEX SHALL ACKNOWLEDGE AND CONFIRM THAT AMERICAN HAS NOT MADE, ANY
REPRESENTATIONS, WARRANTIES OR GUARANTIES OF ANY KIND WHATSOEVER, EXPRESS OR
IMPLIED, OR THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT OR OTHER RIGHT OF ANY
THIRD PARTY CONCERNING ANY STC OR ANY MODIFICATION COVERED BY ANY STC.
ARTICLE 17
MISCELLANEOUS
Section 17.01. Notices. Unless otherwise specified in writing by
the affected Party, all notices, approvals, requests, consents and other
communications given pursuant to this Agreement shall be in writing and shall
be deemed effective when received if hand-delivered, sent by facsimile (which
facsimile shall be confirmed by the executed counterpart thereof being sent by
another means for giving notice specified herein), Federal Express priority
service (except for notices sent relating to defaults or Events of Default
under this Agreement or with respect to the Put Options or the Purchase
Options, which may be sent by any courier that provides a written confirmation
of delivery), or sent by United States certified or registered mail, addressed
as follows:
If to American: American Airlines, Inc.
4333 Amon Carter Boulevard, MD 5566
Fort Worth, Texas 76155
Attention: Vice President Corporate and Fleet Planning
Telephone No. (817) 967-1227
Facsimile No. (817) 967-2199
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<PAGE> 63
If to FedEx: Federal Express Corporation
2005 Corporate Avenue
Memphis, Tennessee 38132
Attention: Vice President, Fleet
Development and Acquisitions
Telephone No. (901) 395-3830
Facsimile No. (901) 395-3828
Section 17.02. Exhibits. All exhibits described in this Agreement
shall be deemed to be incorporated and made a part of this Agreement, except
that if there is any inconsistency between this Agreement and the provisions of
any Exhibit, the provisions of this Agreement shall control.
Section 17.03. Assignments. This Agreement, and American's rights
and obligations hereunder, shall not be assignable or delegable by American
without the prior written consent of FedEx, which consent may be withheld in
FedEx's sole discretion; provided, however, that American may assign its rights
and delegate its obligations under this Agreement to another Affiliate of AMR
Corporation without FedEx's consent so long as American shall remain primarily
liable for the obligations under this Agreement, with such continuing
obligations to be evidenced by such agreements and instruments as FedEx may
reasonably request. American acknowledges and agrees that FedEx, one of
FedEx's subsidiaries or a financial institution or other entity may be
designated by FedEx as the contracting party with American hereunder and that
this Agreement may be assigned by FedEx to any of such said entities without
restriction and upon written notice to American so long as FedEx shall remain
primarily liable for its obligations under this Agreement, with such continuing
obligations to be evidenced by such agreements and instruments as American may
reasonably request.
Section 17.04. No Offset. The amounts payable by either Party to
the other Party under this Agreement shall be absolute and unconditional and
shall not be subject to any abatement, reduction, set off, defense,
counterclaim or recoupment of or by the Party obligated to make such payment as
a result of any claim, cause of action or other rights that such Party may have
against the other Party.
Section 17.05. Binding Effect. This Agreement and the rights and
obligations of the Parties hereunder, shall be binding upon and inure to the
benefit of each of the Parties, their respective permitted successors, assigns
and legal representatives.
Section 17.06. Applicable Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York,
without regard to the laws of conflict of laws of the State of New York.
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Section 17.07. Entire Agreement. This Agreement shall constitute
the entire agreement between the Parties with respect to the transactions
contemplated herein and shall not in any manner be supplemented, amended or
modified except by a written instrument executed on behalf of each of the
Parties by their duly authorized representatives.
Section 17.08. Expenses. Each of the Parties hereto shall be
responsible for its own costs and expenses incurred in connection with the
negotiation, preparation and execution of this Agreement.
Section 17.09. Counterparts. This Agreement may be executed in
separate counterparts, each of which when so executed shall be deemed to be an
original and which, taken together, shall constitute one and the same
instrument.
Section 17.10. Brokers' Commissions. Each of FedEx and American
represent to the other Party that each has negotiated this Agreement directly
with the other and that no brokers are entitled to a commission as a result of
their actions. FedEx and American agree to indemnify and hold one another
harmless from and against all claims, demands, liabilities, damages, losses or
judgments which may be suffered by the other and which arise out of the actions
of or employment by the other with any agent or broker.
Section 17.11. No Remedy Exclusive. Except as expressly set forth
herein, no remedy herein conferred upon or reserved to a Party herein is
intended to be exclusive of any other available remedy or remedies, but each
and every such remedy shall be cumulative and in addition to every other remedy
given under this Agreement or now or hereafter existing at law, in equity or by
statute. Except as expressly set forth herein, no delay or omission to
exercise any right or power accruing upon any default shall impair any such
right or power or be construed to be a waiver thereof, but any such right and
power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle a Party to exercise any remedy reserved to it
in this Agreement, it shall not be necessary to give any notice other than such
notice as may be herein expressly required.
Section 17.12. Severability. If any provision of this Agreement or
any application of any provision of this Agreement to any person or
circumstances shall be invalid or unenforceable to any extent, the remainder of
this Agreement and the application of that provision to other persons or
circumstances shall not be affected by the invalidity or unenforceability of
the provision generally or as to any person or circumstance. The other
provisions of this Agreement shall be enforced to the greatest extent permitted
by applicable law and in a manner to give effect to the intent of the Parties
to the greatest extent possible.
Section 17.13. Survival of Provisions. The rights, benefits and
obligations of the Parties under Section 3.09, Section 3.10, Article 5, Article
8, Article 10, Article
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11, Article 12 and Article 13 shall survive the completion of performance of
this Agreement and its termination or expiration and continue in full force and
effect thereafter in accordance with their respective terms.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
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<PAGE> 66
IN WITNESS WHEREOF, American and FedEx do hereby execute this
Agreement on the day and year first above written.
FEDERAL EXPRESS CORPORATION
By: /S/ James R. Parker
--------------------------------------------
Name: James R. Parker
Title: Vice President-Fleet Development &
Acquisitions
AMERICAN AIRLINES, INC.
By: /S/ Jeffery M. Jackson
--------------------------------------------
Name: Jeffery M. Jackson
Title: Vice President-Corporate & Fleet Planning
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<PAGE> 67
EXHIBIT A
TO THE AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
AIRCRAFT SUBJECT TO AIRCRAFT PURCHASE AGREEMENT
The McDonnell Douglas Model MD-11 aircraft bearing the U.S.
Registration Numbers, Manufacturer's Serial Numbers, American
Nose Numbers and American Fuselage or Line Numbers set forth below are the
Aircraft subject to the Agreement.
<TABLE>
<CAPTION>
REGISTRATION MANUFACTURER'S NOSE FUSELAGE OR
NUMBER SERIAL NUMBER NUMBER LINE NUMBER
---------------- ----------------- ------ --------------
<S> <C> <C> <C>
N1750B 48419 1AA 450
N1751A 48420 1AB 451
N1752K 48421 1AC 452
N1753 48487 1AD 469
N1754 48489 1AE 492
N1755 48490 1AF 499
N1756 48491 1AG 503
N1757A 48505 1AH 462
N1758B 48527 1AJ 504
N1759 48481 1AK 482
N1760A 48550 1AM 526
N1761R 48551 1AN 527
N1762B 48552 1AP 530
N1763 48553 1AR 531
N1764B 48554 1AS 535
N1765B 48596 1AT 537
N1766A 48597 1AU 540
N1767A 48598 1AV 550
N1768D 48436 1AL 483
</TABLE>
A-1
<PAGE> 68
EXHIBIT B
TO THE AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
AIRCRAFT
DELIVERY CERTIFICATE
This Aircraft Delivery Certificate is given by American Airlines, Inc.
("American") and Federal Express Corporation ("FedEx") pursuant to the
Agreement. Any capitalized term used herein and not expressly defined herein
shall have the meaning ascribed to it in the Agreement.
TENDER OF THE AIRCRAFT BY AMERICAN.
American hereby tenders to FedEx for Delivery pursuant to the terms
and subject to the conditions of the Agreement, the McDonnell Douglas Model
MD-11 Aircraft described below:
Registration Number: N
--------------------
Manufacturer's Serial Number:
--------------------
American Fuselage or Line Number:
------------------
American Nose Number: ,
------------------
along with three (3) General Electric Company CF6-80C2D1F engines, bearing
Manufacturer's Serial Numbers:
Position (1)
-----------------
Position (2)
-----------------
Position (3)
-----------------,
(the "Delivered Aircraft") with the operating times and cycles as accumulated
on the Aircraft up to the time of Delivery and the EGT margins as of the last
test cell run accomplished immediately following the latest Engine Maintenance
accomplished on each such Engine as described on
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<PAGE> 69
Attachment 1 hereto and made a part hereof, together with the Aircraft Records,
listed on Attachment 2 hereto and made a part hereof. American hereby restates
and confirms each of its representations and warranties set forth in Section
5.01 of the Agreement.
As of the date of this Certificate, (i) the high-time and high-cycle
highest flight cycle Airframe not yet delivered by American to FedEx is the
Airframe bearing U.S. Registration No. ____________, and Manufacturer's Serial
No. _____________ and Nose No. _______________, and (ii) such Airframe
___________ flight hours and had ________________ flight cycles since it was
new.
Tender of the Aircraft is made by American at ________________________,
at _____ /a.m./p.m. ____________ time, on this ______ day of __________________,
___, _____.
AMERICAN AIRLINES, INC.
By:
-----------------------
Name:
---------------------
Title:
---------------------
ACCEPTANCE OF THE AIRCRAFT BY FEDEX.
FEDERAL EXPRESS CORPORATION ("FedEx") hereby accepts and acknowledges
receipt of the Delivered Aircraft from American, in accordance with the terms
and conditions of the Agreement, at _____________________, at _______/a.m./p.m.
__________ time, on ________________, ________, together with the Aircraft
Records listed in Attachment 2 hereto and made a part hereof.
By its execution and delivery of this Certificate, FedEx hereby (i)
restates and confirms each of its representations and warranties set forth in
Section 5.03 of the Agreement and (ii) acknowledges and agrees that upon
delivery by American to FedEx, except as to those
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<PAGE> 70
discrepancies expressly set forth in Attachment 1 and Attachment 3 to this
certificate, the Delivered Aircraft was in Delivery Condition.
FEDERAL EXPRESS CORPORATION
By:
---------------------------
Name:
-------------------------
Title:
------------------------
DISCREPANCIES FROM DELIVERY CONDITION.
American and FedEx hereby agree that the remaining discrepancy or
discrepancies of the Delivered Aircraft from the Delivery Condition, if any,
and the manner of, and deadline for, the correction of any such discrepancy or
discrepancies are as set forth in Attachment 3 hereto.
Dated: , .
--------------------- ---------
AMERICAN AIRLINES, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
FEDERAL EXPRESS CORPORATION
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
B-3
<PAGE> 71
ATTACHMENT 1 TO AIRCRAFT DELIVERY CERTIFICATE
AIRCRAFT HOURS AND CYCLES
AS OF ,
-------------------- ------------
MCDONNELL DOUGLAS MODEL MD-11 AIRCRAFT
REGISTRATION NUMBER: N_____; FUSELAGE OR LINE NUMBER ____;
MANUFACTURER'S SERIAL NUMBER _________ AND NOSE NUMBER ___.
A. AIRFRAME:
<TABLE>
<CAPTION>
TO FIRST
TOTAL SINCE TO NEXT INTERVAL TO SECOND INTERVAL
NEW DELIVERY C CHECK ITEMS ITEMS
<S> <C> <C> <C> <C>
FLIGHT HOURS
------------ ------------ ------------- --------------
FLIGHT CYCLES
------------ ------------ ------------- --------------
CALENDAR TIME
------------ ------------ ------------- --------------
</TABLE>
B. GENERAL ELECTRIC COMPANY CF6-80C2D1F ENGINES:
<TABLE>
<CAPTION>
TOTAL FLIGHT TOTAL CYCLES TOTAL CYCLES TOTAL CYCLES
ENGINE MANUFACTURE'S TOTAL FLIGHT HOURS SINCE SINCE LAST SINCE LAST SINCE LAST
POSITION SERIAL NUMBER CYCLES SINCE NEW HSM HSC EHM
<S> <C> <C> <C> <C> <C> <C>
1
---------- ---------- ---------- ----------- ---------- -----------
2
---------- ---------- ---------- ----------- ---------- -----------
3
---------- ---------- ---------- ----------- ---------- -----------
</TABLE>
The EGT margin of each of the Engines after (i) its last test cell run
accomplished immediately following the latest Engine Maintenance accomplished
on such Engine and (ii) the Power Assurance Run Test conducted pursuant to
Section 3.02(a) of the Agreement was as follows:
B-4
<PAGE> 72
<TABLE>
<CAPTION>
EGT MARGIN FOLLOWING EGT MARGIN FOLLOWING
ENGINE POSITION LAST TEST CELL RUN POWER ASSURANCE RUN TEST
--------------- ------------------ ------------------------
<S> <C> <C>
No. 1 degrees Celsius degrees Celsius
------- -------
No. 2 degrees Celsius degrees Celsius
------- -------
No. 3 degrees Celsius degrees Celsius
------- -------
</TABLE>
The flight cycles or flight hours remaining to the limitation on each
life limited part in each Engine are as set forth in Annex 1 to this Attachment
1 to the Aircraft Delivery Certificate.
C. LANDING GEAR
<TABLE>
<CAPTION>
TOTAL
MANUFACTURER'S FLIGHT CYCLES TOTAL DAYS TOTAL CYCLES TO TOTAL DAYS TO
POSITION SERIAL NUMBER SINCE NEW SINCE NEW NEXT OVERHAUL NEXT OVERHAUL
-------- ------------- --------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Nose
--------------- ---------- ----------- ------------ ---------
Left Main
--------------- ---------- ----------- ------------ ---------
Center Main
--------------- ---------- ----------- ------------ ---------
Right Main
--------------- ---------- ----------- ------------ ---------
</TABLE>
D. AUXILIARY POWER UNIT
APU INSTALLED IN THE DELIVERED AIRCRAFT:
MANUFACTURER'S SERIAL NUMBER
---------------------
NUMBER OF FLIGHT CYCLES SINCE NEW
---------------------
NUMBER OF FLIGHT HOURS SINCE NEW
---------------------
B-5
<PAGE> 73
LIFE LIMITED PARTS CONTAINED IN SUCH APU:
<TABLE>
<CAPTION>
MANUFACTURER'S TOTAL FLIGHT TOTAL FLIGHT NUMBER OF CYCLES OR
SERIAL CYCLES SINCE HOURS SINCE HOURS TO FIRST LIFE
PART DESCRIPTION NUMBER NEW NEW LIMITED PART LIMITATION
- ------------------------------------- -------------- ------------- ------------ -----------------------
<S> <C> <C> <C> <C>
First Stage Low Pressure Compressor
-------------- ------------- ------------ -----------------------
Second Stage Low Pressure Compressor
-------------- ------------- ------------ -----------------------
Third Stage Low Pressure Compressor
-------------- ------------- ------------ -----------------------
High Pressure Turbine
-------------- ------------- ------------ -----------------------
First Stage Low Pressure Turbine
-------------- ------------- ------------ -----------------------
Second Stage Low Pressure Turbine
-------------- ------------- ------------ -----------------------
</TABLE>
Dated: , .
-------------------------- ---------
AMERICAN AIRLINES, INC.
By:
-----------------------
Name:
---------------------
Title:
--------------------
B-6
<PAGE> 74
ANNEX 1 TO ATTACHMENT 1 TO
AIRCRAFT DELIVERY CERTIFICATE
FLIGHT CYCLES AND FLIGHT HOURS
REMAINING ON LIFE LIMITED PARTS ON ENGINES
<TABLE>
<CAPTION>
ENGINE NO. 1 ENGINE NO. 2 ENGINE NO. 3
FLIGHT HOURS FLIGHT HOURS FLIGHT HOURS
PART DESCRIPTION OR CYCLES OR CYCLES OR CYCLES
<S> <C> <C> <C>
FAN ROTOR PARTS
Disk, Fan Rotor Stage 1
----------- ------------ -----------
Spool, Fan Rotor Stages 2-5
----------- ------------ -----------
Fan, Forward Shaft
----------- ------------ -----------
Fan, Mid-Shaft
----------- ------------ -----------
HIGH PRESSURE
COMPRESSOR ROTOR PARTS
Disk, Stage 1
----------- ------------ -----------
Disk, Stage 2
----------- ------------ -----------
Disk, Stage 3-9
----------- ------------ -----------
Disk, Stage 10
----------- ------------ -----------
Spool/Shaft
----------- ------------ -----------
CDP Seal Disk
----------- ------------ -----------
HIGH PRESSURE
TURBINE ROTOR PARTS
Disk, Stage 1
----------- ------------ -----------
Disk, Stage 2
----------- ------------ -----------
Spacer/Impeller
----------- ------------ -----------
Vane, -Ring Diffuser
----------- ------------ -----------
LOW PRESSURE
TURBINE ROTOR PARTS
Disk, Stage 1
----------- ------------ -----------
Disk, Stage 2
----------- ------------ -----------
Disk, Stage 3
----------- ------------ -----------
Disk, Stage 4
----------- ------------ -----------
Disk, Stage 5
----------- ------------ -----------
Shaft, LPTR
----------- ------------ -----------
</TABLE>
B-7
<PAGE> 75
ATTACHMENT 2 TO AIRCRAFT DELIVERY CERTIFICATE
AIRCRAFT RECORDS AND ENGINE RECORDS DELIVERED
WITH DELIVERED AIRCRAFT
The following Aircraft Records (as defined in the Agreement) were
delivered with the Delivered Aircraft:
DRAWINGS/CHARTS:
1. Fuel Distribution Chart, Compass Correction Card, Major Avionic List,
Drawings: FDM1062 or FDM1058, DDM1079 or DDM1080, FDM1063 or FDM1072
RECORDS:
1. Aircraft Flight Log (includes Aircraft, Engines, Components) with
required certification
2. Heavy Maintenance Checks - History Log
3. Deferred Items List (Damage Log and FMR)
4. Last Bill-of-Work Prior to Delivery
5. Report 182Y (with required certification):
- Time-Control Components with 3500 Hrs. or less to go and
calendar
6. Report 188Y (with required certification):
- Time Control Components by Cycles to go
7. Report 190Y (with required certification):
- Airframe Time Control Components by Aircraft and Position
- Engine Item Time Control Components by Aircraft and Position
- Airframe Calendar Control Components by Aircraft and Position
8. Report ET026 (with required certification):
- Component Time Control Status by S/N of Parts
9. Report ET049 (with required certification):
- Component Time - Special Item by RSPAM
10. AD Summary Report with certification per attached Appendix 1,
including accomplishment documents for the last action taken and
stating specific method of compliance and any alternate means of
compliance, if any, including FAA approval
11. Report EC014:
- Modification History by AD/FAR Number
12. Report EC014:
- Modification History by AA Job Number and cross reference
13. Report EC015:
- Modification History by Service Bulletin Number -
Limited to AD/FAR
14. Report EC015:
- Modification History by Service Bulletin Number
15. Report D065:
- Engine Life Limited Parts/Life Limited Parts
16. Report D066 (with required certification):
- Engine Time Monitored Parts (including tags and tear-down
reports)
17. Report CML011:
- Engine Condition Monitoring - Last Run Before Delivery
18. Weight and Balance Report
19. Landing Gear Records
B-8
<PAGE> 76
20. Component Shop Records (including tags and tear-down reports)
21. APU Records
22. Engine Records
23. Aircraft Airframe Records
24. Accident Report or Accident-Free Certification Letter
ENGINE RECORDS:
1. Aircraft Flight Log (includes Aircraft, Engines, Components) with
certification per attached Appendix 1
2. Report 190Y (with required certification):
- Engine Item Time Control Components by Aircraft and Position
3. Report D065 (with required certification):
- Engine Life Limited Parts/Life Limited Parts
4. Airworthiness Directive Summary Report (with required certification)
B-9
<PAGE> 77
ATTACHMENT 3 TO AIRCRAFT DELIVERY CERTIFICATE
DISCREPANCIES OF DELIVERED AIRCRAFT FROM DELIVERY CONDITION
Any capitalized term used herein and not expressly defined herein
shall have the meaning ascribed to it in the Agreement.
The following remaining discrepancy or discrepancies from Delivery
Condition exist with respect to the Delivered Aircraft (as defined in the
Aircraft Delivery Certificate of which this Attachment 3 is a part):
B-10
<PAGE> 78
American and FedEx have agreed that the foregoing discrepancy or
discrepancies will be corrected in the following manner and by the following
date or dates:
Dated: , .
-------------------------- -------
AMERICAN AIRLINES, INC.
By:
------------------------
Name:
-----------------------
Title:
----------------------
FEDERAL EXPRESS CORPORATION
By:
------------------------
Name:
-----------------------
Title:
----------------------
B-11
<PAGE> 79
EXHIBIT C
TO THE AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
WARRANTY BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS:
THAT the undersigned, [INSERT TRANSFEROR'S CORPORATE NAME], a Delaware
Corporation ("Transferor"), has the power and right to convey the legal and
beneficial title to that:
[NOTE: INSERT THE FOLLOWING LANGUAGE IF THE WARRANTY BILL OF SALE RELATES TO
AN AIRCRAFT:] [certain McDonnell Douglas MD-11 aircraft bearing Federal
Aviation Administration Registration Number N_________ and Manufacturer s
Serial Number _______________, together with three (3) General Electric Company
CF6-80C2D1F turbofan jet engines [installed thereon], bearing Manufacturer's
Serial Numbers ____________________, _____________________, and
__________________________, together with all fixed equipment, parts,
components and accessories installed on said aircraft and engines.]
[NOTE: INSERT THE FOLLOWING LANGUAGE IF THE WARRANTY BILL OF SALE RELATES TO
A SPARE ENGINE, [* ], A REPLACEMENT ENGINE OR A DELAYED DELIVERY ENGINE:]
[certain General Electric Company CF6-80C2D1F turbofan jet engine, bearing
Manufacturer's Serial Number ____________________, together with all fixed
equipment, parts, components and accessories installed on said engine.]
THAT for and in consideration of the sum of Ten Dollars ($10) and
other valuable consideration, Transferee does, this ____ day of
________________, _________, grant, convey, transfer, bargain, sell, deliver
and set over all of its rights, title and interests to and in the above
described [aircraft, engines], [NOTE: INSERT THE FOREGOING WORD IF THE WARRANTY
BILL OF SALE RELATES TO AN AIRCRAFT] [engine] [NOTE: INSERT THE FOREGOING IF
THE WARRANTY BILL OF SALE RELATES TO AN ENGINE ALONE.], fixed equipment, parts,
components and accessories unto [INSERT TRANSFEREE'S CORPORATE NAME], a
Delaware corporation ("Transferee").
Transferor hereby warrants to Transferee, its successors and assigns,
that there is hereby conveyed to Transferee title to the aforesaid [aircraft,
engines]] [NOTE: INSERT THE FOREGOING WORD IF THE WARRANTY BILL OF SALE RELATES
TO AN AIRCRAFT], [engine,] [NOTE: INSERT THE FOREGOING IF THE WARRANTY BILL OF
SALE RELATES TO AN ENGINE ALONE.] fixed equipment, parts, components and
accessories free and clear of all liens, encumbrances and rights of others
arising by, through or under Transferor and that it shall warrant and defend
such title forever against all claims and demands whatsoever; and that this
bill of sale is made and delivered pursuant to the provisions of the Aircraft
Sales Agreement between Transferor and Transferee, dated April 7, 1995.
________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
C-1
<PAGE> 80
IN WITNESS WHEREOF, Transferor has executed this Warranty Bill of Sale
on the _____ day of __________________________, __________.
[INSERT TRANSFEROR'S CORPORATE NAME]
By:
---------------------------
Name:
-------------------------
Title:
-------------------------
C-2
<PAGE> 81
EXHIBIT D
TO THE AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
DATA RELATING TO THE AIRCRAFT AND ENGINES
TO BE DELIVERED BY AMERICAN TO FEDEX
PURSUANT TO ARTICLE 6 OF THE AGREEMENT
Originals or copies of the following items of Data will be supplied in
accordance with Section 6.02(d) on the specified medium or on microfiche,
microfilm, paper, disk or any then current medium or a combination of these
media, with revision updates revised as of the applicable Delivery Dates. The
required certifications for Aircraft time and cycles, life-limited parts,
Airworthiness Directives and hard-time components for Airframes and Engines
shall be signed by a manager or higher management personnel in the
Airworthiness, Quality Assurance, Quality Control or Aircraft/Powerplant
Records department of American. Any required certification of any item of Data
shall be in the form attached as Appendix 1 to this Exhibit D.
MANUALS:
1. FAA Approved Aircraft Flight Manual
2. Aircraft Maintenance Manual (Microfilm)
3. Aircraft Overhaul Manual (Microfilm)
4. Aircraft Wiring Manual (Microfilm)
5. Aircraft Structure Repair Manual (Microfilm)
6. Aircraft Illustrated Parts Catalog (Microfilm)
7. Aircraft Weight and Balance Manual, Loading Manual, Basic & Supplement
8. McDonnell Douglas Procedure for Actual Weighing/Balancing of MD-11
Series Aircraft
9. Aircraft Minimum Equipment List & Configuration
10. McDonnell Douglas Aircraft Readiness Log
11. McDonnell Douglas Aircraft Detail Specification
12. CF6 Maintenance Manual (Microfilm-See Aircraft MM)
13. CF6 Overhaul Manual (Microfilm)
14. CF6 Illustrated Parts Catalog (Microfilm)
15. CF6 Service Bulletin (Microfilm)
16. Maintenance Check Manual (Microfilm)
17. Engineering Specification Maintenance Manual
18. AA Part Number versus Mfgr's Part Number (Fiche)
D-1
<PAGE> 82
DOCUMENTS:
1. Certificate of Airworthiness (on Aircraft)
2. Certificate of Registration (on Aircraft)
3. Sanitary Certificate (on Aircraft)
4. [Radio Station License (on Aircraft)]
DRAWINGS/CHARTS:
1. Fuel Distribution Chart, Compass Correction Card, Major Avionic List,
Drawings: FDM1062 or FDM1058, DDM1079 or DDM1080, FDM1063 or FDM1072
RECORDS:
1. Aircraft Flight Log (includes Aircraft, Engines, Components) with
certification per attached Appendix 1
2. Heavy Maintenance Checks - History Log
3. Deferred Items List (Damage Log and FMR)
4. Last Bill-of-Work Prior to Delivery
5. Report 182Y (with certification per attached Appendix 1):
- Time-Control Components with 3500 Hrs. or less to go and
calendar
6. Report 188Y (with certification per attached Appendix 1):
- Time Control Components by Cycles to go
7. Report 190Y (with certification per attached Appendix 1):
- Airframe Time Control Components by Aircraft and Position
- Engine Item Time Control Components by Aircraft and Position
- Airframe Calendar Control Components by Aircraft and Position
8. Report ET026 (with certification per attached Appendix 1):
- Component Time Control Status by S/N of Parts
9. Report ET049 (with certification per attached Appendix 1):
- Component Time - Special Item by RSPAM
10. AD Summary Report with certification per attached Appendix 1,
including accomplishment documents for the last action taken and
stating specific method of compliance and any alternate means of
compliance, if any, including FAA approval
11. Report EC014:
- Modification History by AD/FAR Number
12. Report EC014:
- Modification History by AA Job Number and cross reference
13. Report EC015: - Modification History by Service Bulletin Number
- Limited to AD/FAR
14. Report EC015:
- Modification History by Service Bulletin Number
15. Report D065:
- Engine Life Limited Parts/Life Limited Parts
16. Report D066 (with certification per attached Appendix 1):
- Engine Time Monitored Parts (including tags and tear-down
reports)
17. Report CML011:
- Engine Condition Monitoring - Last Run Before Delivery
18. Weight and Balance Report
19. Landing Gear Records
20. Component Shop Records (including tags and tear-down reports)
D-2
<PAGE> 83
21. APU Records
22. Engine Records
23. Aircraft Airframe Records
24. Accident Report or Accident-Free Certification Letter
ENGINE RECORDS:
1. Aircraft Flight Log (includes Aircraft, Engines, Components) with
certification per attached Appendix 1
2. Report 190Y (with certification per attached Appendix 1):
- Engine Item Time Control Components by Aircraft and Position
3. Report D065 (with certification per attached Appendix 1):
- Engine Life Limited Parts/Life Limited Parts
4. Airworthiness Directive Summary Report (with the certification per
attached Appendix 1)
D-3
<PAGE> 84
APPENDIX 1 TO EXHIBIT D
AIRCRAFT REGISTRATION NO. ____________
MANUFACTURER'S SERIAL NO. __________
DATE:__________________, ________
[TITLE]
I HEREBY CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD TO THE BEST OF MY
KNOWLEDGE.
<TABLE>
<S> <C>
- ------------------------------------------- ------------------------------------------
SIGNATURE DATE
- ------------------------------------------- ------------------------------------------
PRINTED NAME TITLE
AIR CARRIER
- ------------------------------------------- ----------------------------------
COMPANY NAME COMPANY CERTIFICATE TYPE
AA4A025A
- -------------------------------------------
COMPANY CERTIFICATE NUMBER
</TABLE>
D-4
<PAGE> 85
EXHIBIT E
TO THE AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
DESIGNATION OF AN AIRFRAME FOR DELIVERY
ON SCHEDULED DELIVERY DATE
Any capitalized term used herein shall have the meaning ascribed to it
in the Agreement.
1. The Scheduled Delivery Date for which the Designated Airframe
(as defined below) is being designated is ________________________________.
2. The following are the identification numbers of the Airframe
designated for delivery on the Scheduled Delivery Date set forth in Paragraph
1. above (the "Designated Airframe"):
FAA Registration Number: N
---------------------
Manufacturer's Serial Number:
---------------------------------
Nose Number:
-----------------------
Fuselage or Line Number:
------------------------------
3. The total flight hours and flight cycles on the Designated
Airframe since delivery of the Designated Airframe by the Manufacturer to
American and the number of flight hours and flight cycles remaining on the
Designated Airframe to certain C Checks as of the date and time of this
Designation are as follows:
<TABLE>
<CAPTION>
TOTAL SINCE TO NEXT TO FIRST INTERVAL TO SECOND INTERVAL
NEW C CHECK ITEMS ITEMS
<S> <C> <C> <C> <C>
FLIGHT HOURS
----------- ----------- ----------- -----------
FLIGHT CYCLES
----------- ----------- ----------- -----------
CALENDAR TIME
----------- ----------- ----------- -----------
</TABLE>
4. The total flight hours and flight cycles remaining to the next
major overhaul of each of the Gears that are installed on the Designated
Airframe at the date and time of this Designation are as follows:
E-1
<PAGE> 86
<TABLE>
<CAPTION>
TOTAL
MANUFACTURER'S FLIGHT CYCLES TOTAL DAYS TOTAL CYCLES TO TOTAL DAYS TO
POSITION SERIAL NUMBER SINCE NEW SINCE NEW NEXT OVERHAUL NEXT OVERHAUL
-------- ------------- --------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Nose
------------ ---------- ----------- ------------ -----------
Left Main
------------ ---------- ----------- ------------ -----------
Center Main
------------ ---------- ----------- ------------ -----------
Right Main
------------ ---------- ----------- ------------ -----------
</TABLE>
5. The total flight hours or flight cycles since new for (x) the
APU installed on the Designated Airframe and (y) the Life Limited Parts
contained in such APU and the flight cycles or flight hours remaining to the
first limit of the Life Limited Parts contained in the APU installed on the
Designated Airframe at the date and time of this Designation are as follows:
APU INSTALLED ON THE DESIGNATED AIRFRAME:
MANUFACTURER S SERIAL NUMBER
--------------------
NUMBER OF FLIGHT CYCLES SINCE NEW
--------------------
NUMBER OF FLIGHT HOURS SINCE NEW
--------------------
LIFE LIMITED PARTS CONTAINED IN SUCH APU:
<TABLE>
<CAPTION>
MANUFACTURER'S TOTAL FLIGHT TOTAL FLIGHT NUMBER OF CYCLES OR
SERIAL CYCLES SINCE HOURS SINCE HOURS TO FIRST LIFE
PART DESCRIPTION NUMBER NEW NEW LIMITED PART LIMITATION
- ----------------------------------- -------------- ------------ ------------ ------------------------
<S> <C> <C> <C> <C>
First Stage Low Pressure Compressor
---------- --------- --------- --------------------
Second Stage Low Pressure Compressor
---------- --------- --------- --------------------
Third Stage Low Pressure Compressor
---------- --------- --------- --------------------
High Pressure Turbine
---------- --------- --------- --------------------
First Stage Low Pressure Turbine
---------- --------- --------- --------------------
Second Stage Low Pressure Turbine
---------- --------- --------- --------------------
</TABLE>
6. The estimated usage of the Aircraft from the date of this
Designation until the Scheduled Delivery Date is __________________ flight
cycles and _____________ flight hours.
This Designation is made by American on the ____ day of _____________,
_____ at _________, [a.m.] [p.m.], _______________________ time.
E-2
<PAGE> 87
AMERICAN AIRLINES, INC.
By:
------------------------
Name:
----------------------
Title:
---------------------
E-3
<PAGE> 88
EXHIBIT F
TO THE AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
DESIGNATION OF A SUBSTITUTE AIRFRAME FOR DELIVERY
ON SCHEDULED DELIVERY DATE
1. This Designation of a Substitute Airframe for delivery on a
Scheduled Delivery Date (this "Change Designation") is being provided by
American to FedEx in order to designate an Airframe for delivery on the
Scheduled Delivery Date indicated below in substitution for an Airframe
previously designated by American for delivery to FedEx on such Scheduled
Delivery Date (the "Previously Designated Airframe"). Any capitalized term
used herein and not expressly defined herein shall have the meaning ascribed to
it in the Agreement.
2. The Scheduled Delivery Date for which the Previously
Designated Airframe was to be delivered and for which the Substitute Airframe
(as defined below) is now being designated for delivery and sale to FedEx is
________________________________.
3. The following are the identification numbers of the Previously
Designated Airframe:
FAA Registration Number: N
-------------------------
Manufacturer's Serial Number:
--------------------------
Nose Number:
--------------------------
Fuselage or Line Number:
---------------------------
4. The following are the identification numbers of the Airframe
being substituted for the Previously Designated Airframe which is hereby
designated for delivery on the Scheduled Delivery Date set forth in Paragraph
2. above in the stead of the Previously Designated Airframe (the "Substitute
Airframe"):
F-1
<PAGE> 89
FAA Registration Number: N
--------------------------
Manufacturer's Serial Number:
------------------------
Nose Number:
------------------------
Fuselage or Line Number:
-------------------------
5. The total flight hours and flight cycles on the Substitute
Airframe since delivery of the Substitute Airframe by the Manufacturer to
American and the number of flight hours and flight cycles remaining on the
Substitute Airframe to the certain C Checks as of the date and time of this
Change Designation are as follows:
<TABLE>
<CAPTION>
TOTAL SINCE TO NEXT TO FIRST INTERVAL TO SECOND INSPECTION
NEW C CHECK ITEMS ITEMS
<S> <C> <C> <C> <C>
FLIGHT HOURS
----------- ----------- ----------- -----------
FLIGHT CYCLES
----------- ----------- ----------- -----------
CALENDAR TIME
----------- ----------- ----------- -----------
</TABLE>
6. The total flight hours and flight cycles remaining to the next
major overhaul of each of the Gears that are installed on the Substitute
Airframe at the date and time of this Designation are as follows:
<TABLE>
<CAPTION>
TOTAL
MANUFACTURER'S FLIGHT CYCLES TOTAL DAYS TOTAL CYCLES TO TOTAL DAYS TO
POSITION SERIAL NUMBER SINCE NEW SINCE NEW NEXT OVERHAUL NEXT OVERHAUL
-------- ------------- --------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Nose
----------- --------- --------- ----------- ---------
Left Main
----------- --------- --------- ----------- ---------
Center Main
----------- --------- --------- ----------- ---------
Right Main
----------- --------- --------- ----------- ---------
</TABLE>
7. The total flight hours or flight cycles since new for (x) the
APU installed on the Substitute Airframe and (y) the Life Limited Parts
contained in such APU and the flight cycles or flight hours remaining to the
first limit of the Life Limited Parts contained in the APU installed on the
Substitute Airframe at the date and time of this Change Designation are as
follows:
F-2
<PAGE> 90
APU INSTALLED ON THE SUBSTITUTE AIRFRAME:
MANUFACTURER'S SERIAL NUMBER
---------------------
NUMBER OF FLIGHT CYCLES SINCE NEW
---------------------
NUMBER OF FLIGHT HOURS SINCE NEW
---------------------
LIFE LIMITED PARTS CONTAINED IN SUCH APU:
<TABLE>
<CAPTION>
MANUFACTURER'S TOTAL FLIGHT TOTAL FLIGHT NUMBER OF CYCLES OR
SERIAL CYCLES SINCE HOURS SINCE HOURS TO FIRST LIFE
PART DESCRIPTION NUMBER NEW NEW LIMITED PART LIMITATION
- ----------------------------------- -------------- ------------ ------------ -----------------------
<S> <C> <C> <C> <C>
First Stage Low Pressure Compressor
----------- ---------- --------- -------------------
Second Stage Low Pressure Compressor
----------- ---------- --------- -------------------
Third Stage Low Pressure Compressor
----------- ---------- --------- -------------------
High Pressure Turbine
----------- ---------- --------- -------------------
First Stage Low Pressure Turbine
----------- ---------- --------- -------------------
Second Stage Low Pressure Turbine
----------- ---------- --------- -------------------
</TABLE>
This Change Designation is made by American on the ____ day of
_____________, _____ at _________, [a.m.] [p.m.], _______________________ time.
AMERICAN AIRLINES, INC.
By:
------------------------
Name:
----------------------
Title:
---------------------
F-3
<PAGE> 91
EXHIBIT G
TO THE AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
FORM OF
ASSIGNMENT OF ASSIGNABLE MANUFACTURER'S WARRANTIES
In connection with delivery of the Aircraft described in Annex A
hereto, including the Engines conveyed therewith (the "Aircraft") by American
Airlines, Inc. ("American") to Federal Express Corporation ("FedEx"), American
hereby assigns and conveys to FedEx, its successors, assigns and legal
representatives, all of American's right, title and interest in and to any and
all of the manufacturer's, vendor's and other warranties relating to the
Aircraft, including the Engines conveyed therewith (but not with respect to any
Non-Conforming Engine) to the extent, but only to the extent, that such
warranties are assignable without consent of the grantor of any such warranty
or the payment of consideration to the grantor of any such warranty (the
"Warranties") and all rights to enforce, exercise any rights with respect to or
retain any recovery or benefit with respect to the Warranties, except to the
extent that such rights and recoveries relate to work completed or to be
completed by American or any of its affiliates in connection with its
performance of its obligations under the Aircraft Sales Agreement between FedEx
and American dated April 7, 1995 (the "Agreement") prior to or in connection
with the Delivery (as defined in the Agreement) of the Aircraft.
Notwithstanding the foregoing, American does not assign or convey to FedEx any
outstanding claims or rights, whether liquidated or contingent, or know or
unknown, that it may have against the grantor of any of the Warranties arising
prior to the tender of the Aircraft by American for Delivery pursuant to the
Agreement.
Dated : , .
-------------- ---------
AMERICAN AIRLINES, INC.
By:
----------------------------
Name:
---------------------------
Title:
--------------------------
G-1
<PAGE> 92
ANNEX A TO ASSIGNMENT OF
ASSIGNABLE MANUFACTURER'S WARRANTIES
One McDonnell Douglas Model MD-11 Aircraft described below:
Registration Number: N
--------------------------
Manufacturer's Serial Number:
--------------------------
American Fuselage or Line Number:
------------------------------
American Nose Number: ,
-----------------------------------
along with three (3) General Electric Company CF6-80C2D1F engines, bearing
Manufacturer's Serial Numbers:
Position (1)
--------------------
Position (2)
--------------------
Position (3)
--------------------
G-2
<PAGE> 93
EXHIBIT H
TO THE AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
DESIGNATION OF ENGINES FOR CONVEYANCE ON SCHEDULED DELIVERY DATE
Any capitalized term used in this Designation of Engines for
conveyance on a Scheduled Delivery Date shall have the meaning ascribed to it
in the Agreement unless expressly defined herein.
1. The Scheduled Delivery Date for which the Designated Airframe
(as defined below) is being designated is ________________________________.
2. The following are the identification numbers of the Airframe
designated for delivery on the Scheduled Delivery Date set forth in Paragraph
1. above (the "Designated Airframe"):
FAA Registration Number: N Nose Number:
-------- -----
Manufacturer's Serial No.: Fuselage or Line Number:
---------------- -------
3. The following are the Engines to be conveyed with the Designated
Airframe on the Scheduled Delivery Date set forth in Paragraph 1. above (the
"Designated Engines"):
GENERAL ELECTRIC COMPANY CF6-80C2D1F ENGINES:
<TABLE>
<CAPTION>
TOTAL FLIGHT TOTAL FLIGHT TOTAL CYCLES TOTAL CYCLES TOTAL CYCLES
ENGINE MANUFACTURER'S CYCLES HOURS SINCE SINCE LAST SINCE LAST SINCE LAST
POSITION SERIAL NUMBER SINCE NEW NEW HSM HSC EHM
<S> <C> <C> <C> <C> <C> <C>
1
------------ ---------- ----------- ---------- ----------- -----------
2
------------ ---------- ----------- ---------- ----------- -----------
3
------------ ---------- ----------- ---------- ----------- -----------
</TABLE>
H-1
<PAGE> 94
4. The flight cycles or flight hours remaining to the limitation
on each life limited part in each Engine are as set forth in Annex 1 to this
Designation of Engines for Delivery on Scheduled Delivery Date.
5. The EGT margin of each of the Designated Engines after (i) its
last test cell run accomplished immediately following the latest Engine
Maintenance accomplished on each such Designated Engine and (ii) the Power
Assurance Run Test conducted pursuant to Section 3.02(a) of the Agreement was
as follows:
<TABLE>
<CAPTION>
EGT MARGIN FOLLOWING EGT MARGIN FOLLOWING
ENGINE POSITION LAST TEST CELL RUN POWER ASSURANCE RUN TEST
- --------------- --------------------------- ------------------------
<S> <C> <C>
No. 1 degrees Celsius degrees Celsius
------- -------
No. 2 degrees Celsius degrees Celsius
------- -------
No. 3 degrees Celsius degrees Celsius
------- -------
</TABLE>
6. As of the date of this Engine Designation, (i) the highest
flight cycle Airframe not yet delivered by American to FedEx is the Airframe
bearing U.S. Registration No. __________________ and Manufacturer's Serial No.
_________________ and (ii) such Airframe had ________________ flight cycles
since it was new.
This Engine Designation is made by American on the ____ day of
_____________, _____ at _________, [a.m.] [p.m.], _______________________ time.
AMERICAN AIRLINES, INC.
By:
--------------------------
Name:
------------------------
Title:
-----------------------
H-2
<PAGE> 95
ANNEX 1 TO
DESIGNATION OF ENGINES FOR DELIVERY ON SCHEDULED DELIVERY DATE
REMAINING FLIGHT CYCLES AND FLIGHT HOURS
REMAINING ON LIFE LIMITED PARTS ON ENGINES
<TABLE>
<CAPTION>
ENGINE NO. 1 ENGINE NO. 2 ENGINE NO. 3
FLIGHT HOURS FLIGHT HOURS FLIGHT HOURS
PART DESCRIPTION OR CYCLES OR CYCLES OR CYCLES
<S> <C> <C> <C>
FAN ROTOR PARTS
Disk, Fan Rotor Stage 1
----------- ------------ -----------
Spool, Fan Rotor Stages 2-5
----------- ------------ -----------
Fan, Forward Shaft
----------- ------------ -----------
Fan, Mid-Shaft
----------- ------------ -----------
HIGH PRESSURE
COMPRESSOR ROTOR PARTS
Disk, Stage 1
----------- ------------ -----------
Disk, Stage 2
----------- ------------ -----------
Disk, Stage 3-9
----------- ------------ -----------
Disk, Stage 10
----------- ------------ -----------
Spool/Shaft
----------- ------------ -----------
CDP Seal Disk
----------- ------------ -----------
HIGH PRESSURE
TURBINE ROTOR PARTS
Disk, Stage 1
----------- ------------ -----------
Disk, Stage 2
----------- ------------ -----------
Spacer/Impeller
----------- ------------ -----------
Vane, -Ring Diffuser
----------- ------------ -----------
LOW PRESSURE
TURBINE ROTOR PARTS
Disk, Stage 1
----------- ------------ -----------
Disk, Stage 2
----------- ------------ -----------
Disk, Stage 3
----------- ------------ -----------
Disk, Stage 4
----------- ------------ -----------
Disk, Stage 5
----------- ------------ -----------
Shaft, LPTR
----------- ------------ -----------
</TABLE>
H-3
<PAGE> 96
EXHIBIT I
TO THE AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
PUT OPTION EXERCISE
1. This Put Option Exercise is provided by American to FedEx
pursuant to Section 2.02(b) of the Agreement. Any capitalized term used in
this Put Option Exercise shall have the meaning ascribed to it in the
Agreement.
2. American hereby exercises a Put Option granted by FedEx as set
forth in Section 2.02 of the Agreement for the sale of a Put Option Aircraft to
FedEx with respect to the following Scheduled Delivery Date:____________________
_______________________________, ______. A Designation and an Engine
Designation will be provided by American to FedEx in accordance with Section
2.04 of the Agreement designating the Airframe and the Engines that will be
tendered by American to FedEx on such Scheduled Delivery Date.
This Put Option Exercise is made by American on the ____ day of
_____________, _____.
AMERICAN AIRLINES, INC.
By:
--------------------
Name:
------------------
Title:
-----------------
I-1
<PAGE> 97
EXHIBIT J
TO THE AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
PURCHASE OPTION NOTICE
1. Pursuant to Section 2.03(a) of the Agreement, American hereby
notifies FedEx that American intends to offer for sale _________________
[specify number of Put Option Aircraft] of the Put Option Aircraft. Any
capitalized term used in this Purchase Option Notice shall have the meaning
ascribed to it in the Agreement.
2. The Scheduled Delivery Dates for the Put Option Aircraft that
American will be marketing are as follows:
1. ,
------------------------------------- --------
2. ,
------------------------------------- --------
3. ,
------------------------------------- --------
4. ,
------------------------------------- --------
5. ,
------------------------------------- --------
6. ,
------------------------------------- --------
7. ,
------------------------------------- --------
Please be advised that pursuant to Section 2.03(a) of the Agreement,
FedEx has a period of fourteen (14) days after its receipt of this Purchase
Option Notice in which to exercise its Purchase Option under the terms of the
Agreement.
This Purchase Option Notice is given by American on the ____ day of
_____________, _____.
AMERICAN AIRLINES, INC.
By:
-------------------------
Name:
-----------------------
Title:
----------------------
J-1
<PAGE> 98
EXHIBIT K
TO THAT CERTAIN
AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
PURCHASE OPTION EXERCISE
1. This Purchase Option Exercise is provided by FedEx to American
pursuant to Section 2.03(a) of the Agreement. Any capitalized term used in this
Purchase Option Exercise shall have the meaning ascribed to it in the
Agreement.
2. FedEx hereby exercises the Purchase Options granted by
American as set forth in Section 2.03 of the Agreement for the purchase of
_______________[specify number] Put Option Aircraft from American on the
following Scheduled Delivery Date(s) as specified in American's Purchase Option
Notice, dated _________________________, __________:
1. ,
------------------------------------- --------
2. ,
------------------------------------- --------
3. ,
------------------------------------- --------
4. ,
------------------------------------- --------
5. ,
------------------------------------- --------
6. ,
------------------------------------- --------
7. ,
------------------------------------- --------
3. A Deposit of [* ] as required by Section 2.06 of the
Agreement is hereby tendered with this Purchase Option Exercise with respect to
each Purchase Option Aircraft.
4. FedEx hereby restates and confirms its representation and
warranty to American in Section 5.03(v) of the Agreement.
__________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
K-1
<PAGE> 99
This Purchase Option Exercise is given by FedEx on the ____ day of
_____________, _____.
FEDERAL EXPRESS CORPORATION
By:
---------------------------
Name:
-------------------------
Title:
------------------------
K-2
<PAGE> 100
EXHIBIT L
TO THAT CERTAIN
AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
PURCHASE PRICE ADJUSTMENT FORMULA -- AIRFRAME
Any capitalized term used herein and not expressly defined herein
shall have the meaning ascribed to it in the Agreement.
[*
]
*
______________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
L-1
<PAGE> 101
*
[*
]
_____________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
L-2
<PAGE> 102
TABLE A TO EXHIBIT L
AMERICAN AIRLINES, INC.
AIRFRAME MAINTENANCE
The following table sets forth the estimated maintenance cost for
accomplishment of a C Check, First Interval Items and Second Interval Items in
twelve-month periods noted below.
<TABLE>
<CAPTION>
TWELVE-MONTH
PERIOD ENDED C CHECK FIRST INTERVAL SECOND INTERVAL
MAY 31 COST ITEMS COST ITEMS COST
<S> <C> <C> <C>
* * * *
</TABLE>
_____________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
L-3
<PAGE> 103
EXHIBIT M
TO THAT CERTAIN
AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
PURCHASE PRICE ADJUSTMENT FORMULA -- ENGINES
Any capitalized term used herein and not expressly defined herein
shall have the meaning ascribed to it in the Agreement.
[*
]
*
______________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
M-1
<PAGE> 104
*
[*
]
______________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
M-2
<PAGE> 105
TABLE A TO EXHIBIT M
AMERICAN AIRLINES, INC.
ENGINE HEAVY MAINTENANCE
The following table sets forth the estimated maintenance cost for an
HSM, HSC and EHM in the calendar years noted below.
<TABLE>
<CAPTION>
CALENDAR
YEAR EHM HSC HSM
-------- ------- ------- ---------
<S> <C> <C> <C>
* * * *
</TABLE>
_____________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
M-3
<PAGE> 106
EXHIBIT N
TO THAT CERTAIN
AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
PURCHASE PRICE ADJUSTMENT FORMULA -- GEAR
Any capitalized term used herein and not expressly defined herein
shall have the meaning ascribed to it in the Agreement.
[*
]
___________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
N-1
<PAGE> 107
*
[*
]
____________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
N-2
<PAGE> 108
EXHIBIT O
TO THAT CERTAIN
AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
PURCHASE PRICE ADJUSTMENT FORMULA -- APU
Any capitalized term used herein and not expressly defined herein
shall have the meaning ascribed to it in the Agreement.
[*
]
*
[*
]
________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
O-1
<PAGE> 109
EXHIBIT P
TO THAT CERTAIN
AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
ENGINE
DELIVERY CERTIFICATE
This Engine Delivery Certificate is given by American Airlines, Inc.
("American") and Federal Express Corporation ("FedEx") pursuant to the
Agreement. Any capitalized term used herein and not expressly defined herein
shall have the meaning ascribed to it in the Agreement.
TENDER OF EACH ENGINE.
____________________ ("Tenderor") hereby tenders to
____________________ ("Recipient") for delivery pursuant to the terms and
subject to the conditions of the Agreement, ______ [specify number of engines]
General Electric Company CF6-80C2D1F engines, bearing Manufacturer's Serial
Number(s):
------------------------
------------------------
------------------------
(each a "Delivered Engine" and collectively, if applicable, the "Delivered
Engines") with (i) if American is the Tenderor, the operating times and cycles
as accumulated on each Engine up to the time of Delivery as described on
Attachment 1A hereto and made a part hereof or (ii) if FedEx is the Tenderor,
the operating times and cycles as accumulated on each Engine from the time
FedEx took delivery of the Delivered Engine or Delivered Engines, as the case
may be, from American up to the time of delivery of such Delivered Engine or
Delivered Engines, as the case may be, pursuant to this Engine Delivery
Certificate described on Attachment 1B hereto and made a part hereof, at
_______/a.m./p.m. ____________ time, on ____________________, _________,
together with any Data, listed on Attachment 2 hereto and made a part hereof.
Tenderor hereby restates and confirms each of its representations and
warranties set forth in Article 5 of the Agreement.
P-1
<PAGE> 110
Tender of each Engine is made by _________________ this ____ day of
_____________________, _____.
[AMERICAN AIRLINES, INC.]
[FEDERAL EXPRESS CORPORATION]
By:
---------------------------
Title:
---------------------
ACCEPTANCE OF EACH ENGINE.
Recipient hereby accepts and acknowledges receipt of each Delivered
Engine from Tenderor in accordance with the terms and conditions of the
Agreement, which Delivered Engine or Delivered Engines has or have, as the case
may be, the operating times and flight cycles as accumulated on the Aircraft up
to the time of delivery as described on Attachment 1 hereto and made a part
hereof, at ___________________, at _________/a.m./p.m. ____________ time, on
___________________, __________, together with the Data listed in Attachment 2
hereto and made a part hereof. Recipient hereby restates and confirms each of
its representations set forth in Article 5 of the Agreement.
If it is FedEx which is executing the Acceptance portion of this
Engine Delivery Certificate and accepting a Delayed Delivery Engine or
Replacement Engine, by its execution and delivery of this Certificate, FedEx
hereby acknowledges and agrees that upon delivery by American to FedEx, except
as to those discrepancies expressly set forth in Attachment 1 to this
certificate, the Delivered Engine met the requirements for the condition of the
Engines upon delivery as set forth in the Agreement.
Acceptance of each Delivered Engine is made by _____________________
this _____ day of ______________________, ______.
[FEDERAL EXPRESS CORPORATION]
[AMERICAN AIRLINES, INC.]
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
HIGHEST FLIGHT CYCLE AIRFRAME CERTIFICATION.
As of the date of this Certificate, (i) the highest flight cycle
Airframe not yet delivered by American to FedEx is the Airframe bearing U.S.
Registration No. __________________ and Manufacturer's Serial No.
_________________ and (ii) such Airframe has _______________ flight cycles
since it was new.
AMERICAN AIRLINES, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
P-2
<PAGE> 111
ATTACHMENT 1A TO ENGINE DELIVERY CERTIFICATE
ENGINE INFORMATION
AS OF ___________________, ______
GENERAL ELECTRIC COMPANY CF6-80C2D1F ENGINES:
<TABLE>
<CAPTION>
TOTAL FLIGHT TOTAL FLIGHT TOTAL CYCLES TOTAL CYCLES TOTAL CYCLES
ENGINE MANUFACTURER'S CYCLES HOURS SINCE SINCE LAST SINCE LAST SINCE LAST
POSITION SERIAL NUMBER SINCE NEW NEW HSM HSC EHM
<S> <C> <C> <C> <C> <C> <C>
1
------------ ---------- ----------- ---------- ----------- -----------
2
------------ ---------- ----------- ---------- ----------- -----------
3
------------ ---------- ----------- ---------- ----------- -----------
</TABLE>
The EGT margin of each of the Delivered Engines after (i) its last
test cell run accomplished immediately following the latest Engine Maintenance
accomplished with respect to each such Delivered Engine and (ii) the Power
Assurance Run Test conducted pursuant to Section 3.02(a) of the Agreement was
as follows:
<TABLE>
<CAPTION>
EGT MARGIN FOLLOWING EGT MARGIN FOLLOWING
ENGINE POSITION LAST TEST CELL RUN POWER ASSURANCE RUN TEST
--------------- -------------------------- ------------------------
<S> <C> <C>
No. 1 degrees Celsius degrees Celsius
------- -------
No. 2 degrees Celsius degrees Celsius
------- -------
No. 3 degrees Celsius degrees Celsius
------- -------
</TABLE>
The flight cycles or flight hours remaining to the limitation on each
life limited part in each Engine are as set forth in Annex 1 to this Attachment
1 to the Engine Aircraft Delivery Certificate.
P-3
<PAGE> 112
Dated: , .
-------------------------- ---------
AMERICAN AIRLINES, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
P-4
<PAGE> 113
ANNEX 1 TO ATTACHMENT 1A TO
ENGINE DELIVERY CERTIFICATE
REMAINING FLIGHT CYCLES AND FLIGHT HOURS
REMAINING ON LIFE LIMITED PARTS ON ENGINES
<TABLE>
<CAPTION>
ENGINE NO. 1 ENGINE NO. 2 ENGINE NO. 3
FLIGHT HOURS FLIGHT HOURS FLIGHT HOURS
PART DESCRIPTION OR CYCLES OR CYCLES OR CYCLES
FAN ROTOR PARTS
<S> <C> <C> <C>
Disk, Fan Rotor Stage 1
----------- ------------ -----------
Spool, Fan Rotor Stages 2-5
----------- ------------ -----------
Fan, Forward Shaft
----------- ------------ -----------
Fan, Mid-Shaft
----------- ------------ -----------
HIGH PRESSURE
COMPRESSOR ROTOR PARTS
Disk, Stage 1
----------- ------------ -----------
Disk, Stage 2
----------- ------------ -----------
Disk, Stage 3-9
----------- ------------ -----------
Disk, Stage 10
----------- ------------ -----------
Spool/Shaft
----------- ------------ -----------
CDP Seal Disk
----------- ------------ -----------
HIGH PRESSURE
TURBINE ROTOR PARTS
Disk, Stage 1
----------- ------------ -----------
Disk, Stage 2
----------- ------------ -----------
Spacer/Impeller
----------- ------------ -----------
Vane, -Ring Diffuser
----------- ------------ -----------
LOW PRESSURE
TURBINE ROTOR PARTS
Disk, Stage 1
----------- ------------ -----------
Disk, Stage 2
----------- ------------ -----------
Disk, Stage 3
----------- ------------ -----------
Disk, Stage 4
----------- ------------ -----------
Disk, Stage 5
----------- ------------ -----------
Shaft, LPTR
----------- ------------ -----------
</TABLE>
P-5
<PAGE> 114
ATTACHMENT 1B TO ENGINE DELIVERY CERTIFICATE
ENGINE FLIGHT CYCLES AND FLIGHT HOURS
AS OF ,
------------------- ------
GENERAL ELECTRIC COMPANY CF6-80C2D1F ENGINES:
<TABLE>
<CAPTION>
TOTAL FLIGHT CYCLES TOTAL FLIGHT HOURS
ENGINE MANUFACTURER ACCUMULATED WHILE IN FEDEX'S ACCUMULATED WHILE IN FEDEX'S
POSITION SERIAL NUMBER CONTROL CONTROL
<S> <C> <C> <C>
1
------------------ ---------------- ---------------
2
------------------ ---------------- ---------------
3
------------------ ---------------- ---------------
</TABLE>
Dated: , .
-------------------------- ---------
FEDERAL EXPRESS CORPORATION
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
P-6
<PAGE> 115
ATTACHMENT 2 TO ENGINE DELIVERY CERTIFICATE
ENGINE RECORDS DELIVERED
WITH DELIVERED ENGINE
1. Aircraft Flight Log (includes Aircraft, Engines, Components) with
required certification
2. Report 190Y (with required certification ):
- Engine Item Time Control Components by Aircraft and Position
3. Report D065 (with required certification):
- Engine Life Limited Parts/Life Limited Parts
4. Airworthiness Directive Summary Report (with required certification)
P-7
<PAGE> 116
EXHIBIT Q TO AIRCRAFT SALES AGREEMENT BETWEEN
AMERICAN AIRLINES, INC. ("AMERICAN:) AND
FEDERAL EXPRESS CORPORATION ("FEDEX")
DATED APRIL 7, 1995 (THE "AGREEMENT")
SECTION 1--MD-11 SPARE PARTS PURCHASE DATES,
PURCHASE OBLIGATIONS, AND DELIVERY OBLIGATIONS
TO BE PURCHASED IN CONJUNCTION WITH DELIVERIES
OF FIRM AIRCRAFT AND PUT OPTION AIRCRAFT SOLD PURSUANT TO THE PUT OPTIONS
<TABLE>
<CAPTION>
SPARES
PURCHASE
SPARES PRICE OF
SPARES PURCHASE A PAIR OF
PURCHASE PRICE OF SPARE
SCHEDULED AVERAGE PRICE TO BE NUMBER OF A SPARE SPARE THRUST
DATE OR UNIT PRICE PAID FOR SPARE APU THRUST REVERSERS
YEAR FOR THE MD-11 OF MD-11 MD-11 APU'S PURCHASED REVERSERS PURCHASED
PURCHASE OF SPARE SPARE PARTS SPARE SCHEDULED ON SCHEDULE ON THE
THE MD-11 PARTS TO BE PARTS TO BE TO BE THE DATE TO BE DATE
SPARE PARTS PERCENTAGE PURCHASED PURCHASED PURCHASED SHOWN* PURCHASED SHOWN*
- ----------- ---------- --------- --------- --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
* * * * * * * *
</TABLE>
[*
]
[*
]
_____________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
Q-1
<PAGE> 117
EXHIBIT Q TO AIRCRAFT SALES AGREEMENT BETWEEN
AMERICAN AIRLINES, INC. ("AMERICAN:) AND
FEDERAL EXPRESS CORPORATION ("FEDEX")
DATED APRIL 7, 1995 (THE "AGREEMENT")
SECTION 2--MD-11 SPARE PARTS PURCHASE DATES,
PURCHASE OBLIGATIONS, AND DELIVERY OBLIGATIONS
TO BE PURCHASED IN CONJUNCTION WITH DELIVERIES
OF PURCHASE OPTION AIRCRAFT SOLD PURSUANT TO THE PURCHASE OPTIONS
Any capitalized term used herein shall have the meaning ascribed to it
in the Agreement unless expressly defined herein.
[*
]
<TABLE>
<CAPTION>
MD-11 MD-11
SPARE SPARE MD-11
MONTH PARTS MONTH PARTS MONTH SPARE PARTS
AND YEAR PERCENTAGE AND YEAR PERCENTAGE AND YEAR PERCENTAGE
-------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
* * * * * *
</TABLE>
___________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
Q-2
<PAGE> 118
EXHIBIT Q TO AIRCRAFT SALES AGREEMENT BETWEEN
AMERICAN AIRLINES, INC. ("AMERICAN:) AND
FEDERAL EXPRESS CORPORATION ("FEDEX")
DATED APRIL 7, 1995 (THE "AGREEMENT")
SECTION 3--SPARE ENGINE PURCHASE DATES AND PURCHASE PRICES
Any capitalized term used herein shall have the meaning ascribed to it
in the Agreement unless expressly defined herein.
The dates on which FedEx shall purchase from American and American
shall sell the Spare Engines to FedEx in conjunction with the sale of the Firm
Aircraft and the Spares Purchase Price for each such Spare Engine are as
follows:
<TABLE>
<CAPTION>
SPARE PURCHASE PRICE
SPARE ENGINE PURCHASE DATE FOR SPARE ENGINE
-------------------------- ----------------
<S> <C>
* *
</TABLE>
In the event that all the Put Option Aircraft are purchased pursuant
to an exercise of the Put Options by American or the Purchase Options by FedEx,
FedEx will purchase from American and American will sell to FedEx on the
following Spare Engines on the following dates:
<TABLE>
<CAPTION>
SPARE PURCHASE PRICE
ORIGINAL SALE DATE FOR SPARE ENGINE
------------------ ----------------
<S> <C>
* *
</TABLE>
[*
]
_______________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
Q-3
<PAGE> 119
EXHIBIT R
TO THAT CERTAIN
AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
PROCEDURES FOR ENGINE BORESCOPE INSPECTIONS CONDUCTED PURSUANT TO SECTION
3.02(A) OF THE AGREEMENT
The borescope inspections of Engines to be conducted by FedEx pursuant
to Section 3.02(a) of the Agreement shall be conducted in accordance with the
procedures set forth in the following Maintenance Work Cards that are set forth
in Section 7 (Maintenance Visits, Power Plant Inspect) of the American MD-11
Maintenance Check Manual, copies of which have been previously provided to
FedEx by American (the "Work Cards"). Any capitalized term used herein and not
expressly defined herein shall have the meaning ascribed to it in the
Agreement.
<TABLE>
<CAPTION>
CARD NO 4419 CARD NO. 4429 CARD NO. 4439
ENGINE #1 ENGINE #2 ENGINE #3
CARD CARD PAGE CARD
PAGE NO. REVISION DATE NO. REVISION DATE. PAGE NO. REVISION DATE.
<S> <C> <C> <C> <C>
1 February 8, 1995 1 February 8, 1995 1 February 8, 1995
2 April 21, 1993 2 April 21, 1993 2 April 21, 1993
3 May 4, 1994 3 May 4, 1994 3 May 4, 1994
4 January 19, 1994 4 April 21, 1993 4 April 21. 1993
5 January 19, 1994 5 January 19, 1994 5 January 19, 1994
6 August 19, 1992 6 Sept. 30, 1992 6 Sept. 30, 1992
7 January 19, 1994 7 January 19, 1994 7 January 19, 1994
8 August 19, 1992 8 August 19, 1992 8 August 19, 1992
9 October 6, 1993 9 August 19, 1992 9 Sept. 1, 1994
10 January 19, 1994 10 August 19, 1992 10 August 19, 1992
11 April 10, 1991 11 January 19, 1994 11 January 19, 1994
12 April 10, 1991 12 April 10, 1991 12 April 10, 1991
13 January 19, 1994 13 April 10, 1991 13 April 10, 1991
14 March 25, 1992 14 January 19, 1994 14 January 19, 1994
15 January 19, 1994 15 March 25, 1992 15 March 25, 1992
16 April 10, 1991 16 January 19, 1994 16 January 19, 1994
17 April 10, 1991 17 April 10, 1994
</TABLE>
The procedures set forth in the Work Cards shall not be revised for
purposes of determining the procedures to be followed by FedEx in conducting
borescope inspections pursuant to Section 3.02(a) of the Agreement with respect
to any Engine even if the Work Cards are subsequently revised by American.
R-1
<PAGE> 120
EXHIBIT S
TO THAT CERTAIN
AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
FORM OF [* ] AGREEMENT
____________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
S-1
<PAGE> 121
*
___________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
S-2
<PAGE> 122
*
__________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
S-3
<PAGE> 123
*
_______________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
S-4
<PAGE> 124
*
_____________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
S-5
<PAGE> 125
EXHIBIT T
TO THAT CERTAIN
AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
Any capitalized term used herein and not expressly defined herein
shall have the meaning ascribed to it in the Agreement.
[*
]
*
____________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
T-1
<PAGE> 126
*
[*
]
___________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
T-2
<PAGE> 127
TABLE A TO EXHIBIT T
AMERICAN AIRLINES, INC.
ENGINE HEAVY MAINTENANCE
The following table sets forth the estimated maintenance cost for an
HSM, HSC and EHM in the years noted below.
<TABLE>
<CAPTION>
YEAR EHM HSC HSM
---- --- --- ---
<S> <C> <C> <C>
* * * *
</TABLE>
____________________
*Blank space contained information which has been filed separately with the
Securities and Exchange Commission pursuant to rule 24b-2 under the Securities
Exchange Act of 1934.
T-3
<PAGE> 128
EXHIBIT U
TO THAT CERTAIN
AIRCRAFT SALES AGREEMENT BETWEEN
FEDERAL EXPRESS CORPORATION ("FEDEX") AND
AMERICAN AIRLINES, INC. ("AMERICAN")
DATED APRIL 7, 1995 (THE "AGREEMENT")
CERTIFICATE OF HIGH-HOUR AND HIGH-CYCLE AIRFRAME
This Certificate of High-Hour and High-Cycle Airframe is given by
Federal Express Corporation ("FedEx") pursuant to the Agreement. Any
capitalized term used herein and not expressly defined herein shall have the
meaning ascribed to it in the Agreement.
FedEx hereby certifies that as of the date of this Certificate, (i)
the highest flight cycle Airframe delivered to FedEx by American and accepted
by FedEx pursuant to the Agreement was the Airframe bearing U.S. Registration
No. ________________ and Manufacturer's Serial No. ______________ and (ii) such
Airframe had _______________ flight cycles since it was new. In making the
determination and certification of the number of flight hours and flight cycles
on such Airframe, FedEx is relying, without investigation, on the information
concerning the number of flight hours and flight cycles on the Airframe on its
Delivery Date contained in the Aircraft Delivery Certificate that American
delivered to FedEx in connection with the Delivery of the Aircraft of which the
Airframe identified above is a part.
Dated:
---------------------------------------
FEDERAL EXPRESS CORPORATION
By:
----------------------------------
Name:
---------------------------------
Title:
--------------------------------
U-1
<PAGE> 1
EXHIBIT 11.1
FEDERAL EXPRESS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
Net income applicable to common and common equivalent shares and the
weighted average number of shares used in the calculation of earnings per share
for the years ended May 31 were as follows (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
YEAR ENDED MAY 31
-------------------------------
1995 1994 1993
-------- -------- -------
<S> <C> <C> <C>
Income before cumulative effect
of change in accounting principle......... $ 297,588 $204,370 $109,809
Cumulative effect of change in accounting
principle, net of tax benefit............. - - (55,943)
--------- -------- --------
Net income applicable to common and
common equivalent shares.................. $ 297,588 $204,370 $ 53,866
========= ======== ========
Average shares of common stock
outstanding............................... 55,988 55,333 54,370
Common Equivalent Shares:
Assumed exercise of outstanding
dilutive options........................ 2,438 2,867 2,213
Less shares repurchased from proceeds of
assumed exercise of options............. (1,932) (2,188) (1,864)
--------- -------- --------
Average common and common equivalent
shares.................................... 56,494 56,012 54,719
========= ======== ========
Earnings per share:
Before cumulative effect of change in
accounting principle.................... $ 5.27 $ 3.65 $ 2.01
Cumulative effect of change in
accounting principle.................... - - (1.03)
--------- -------- --------
Net earnings per share...................... $ 5.27 $ 3.65 $ .98
========= ======== ========
</TABLE>
- - The computation of the number of shares repurchased from the proceeds of
the assumed exercise of outstanding dilutive options is based upon the
average market price of the Company's common stock during the periods.
Common equivalent shares are excluded in periods in which their assumed
exercise would have an anti-dilutive effect.
- - Fully diluted earnings per share are substantially the same as earnings per
share for the years ended May 31, 1995, 1994, and 1993.
<PAGE> 1
Exhibit 12.1
FEDERAL EXPRESS CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
<TABLE>
<CAPTION>
Year Ended May 31,
------------------------------------------------
1991 1992 1993 1994 1995
-------- --------- -------- -------- -------
(In thousands, except ratios)
<S> <C> <C> <C> <C> <C>
Earnings:
Income (loss) before
income taxes.................. $ 40,942 $(146,828) $203,576 $378,462 $522,084
Add back:
Interest expense, net of
capitalized interest........ 196,982 176,321 168,762 152,170 130,923
Amortization of debt
issuance costs.............. 1,634 2,570 4,906 2,860 2,493
Portion of rent expense
representative of interest
factor...................... 292,840 299,012 262,724 285,261 329,370
-------- --------- -------- -------- --------
Earnings as adjusted............ $532,398 $ 331,075 $639,968 $818,753 $984,870
======== ========= ======== ======== ========
Fixed Charges:
Interest expense, net of
capitalized interest.......... $196,982 $ 176,321 $168,762 $152,170 $130,923
Capitalized interest............ 35,442 26,603 31,256 29,738 27,381
Amortization of debt
issuance costs................ 1,634 2,570 4,906 2,860 2,493
Portion of rent expense
representative of interest
factor........................ 292,840 299,012 262,724 285,261 329,370
-------- --------- -------- -------- --------
$526,898 $ 504,506 $467,648 $470,029 $490,167
======== ========= ======== ======== ========
Ratio of Earnings to Fixed
Charges 1.0 (A) 1.4 1.7 2.0
======== ========= ======== ======== ========
</TABLE>
(A) Earnings were inadequate to cover fixed charges by $173.4 million for the
year ended May 31, 1992.
<PAGE> 1
EXHIBIT 13.1
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
In 1995, the Company achieved record-high net income and earnings per share for
the second consecutive year. Consolidated net income for 1995 was $298 million
($5.27 per share) compared with net income of $204 million ($3.65 per share) in
1994 and $54 million ($.98 per share) in 1993. Excluding the effect of adopting
the new accounting standard for postretirement benefits other than pensions,
1993's net income would have been $110 million ($2.01 per share).
Management has expanded and refined the Company's unparalleled worldwide
network of express delivery services, which resulted in exceptional
year-over-year increases in net income and earnings per share for the past
three years. The Company has strategically invested in programs designed to
promote long-term growth and overall profitability and provide the Company with
the ability to effectively adapt to a continually changing business
environment. Investments in aircraft, advanced technologies and employee
productivity have been an integral part of the Company's history of providing
competitively superior express delivery services. The Company's customers have
increasingly required express services on a worldwide basis. Management
recognized this demand and created a global express distribution network. The
Company will continue to manage its resources to capture the greatest overall
economic benefit in a growing worldwide express market. Consistent with the
Company's global approach, management believes that the clearest method for
evaluating results is on a consolidated basis.
Revenues
The following table shows a comparison of revenues for the years ended May
31:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
In millions Percent Change
--------------
1995/ 1994/
1995 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C>
U.S. domestic express $6,700 $6,142 $5,556 + 9 +11
International Priority (IP) 1,680 1,339 1,117 +25 +20
International Express Freight (IXF)
and Airport-to-Airport (ATA) 580 505 570 +15 -11
Charter 115 113 112 + 1 + 1
Logistics services 106 248 263 -57 - 6
Other* 211 132 190 +59 -30
- ------------------------------------------------------------------
$9,392 $8,479 $7,808 +11 + 9
=================================================================================
</TABLE>
*Includes sales of engine noise reduction kits
18
<PAGE> 2
Federal Express Corporation and Subsidiaries
The following table shows a comparison of selected express and airfreight
(IXF/ATA) statistics for the years ended May 31:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
In thousands, except dollar amounts Percent Change
--------------
1995/ 1994/
1995 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C>
U.S. domestic express:
Average daily packages 2,084 1,792 1,596 +16 +12
Revenue per package $ 12.61 $ 13.33 $ 13.65 - 5 - 2
IP:
Average daily packages 164 133 115 +23 +16
Revenue per package $ 40.28 $ 39.21 $ 38.18 + 3 + 3
IXF/ATA:
Average daily pounds 2,153 1,844 2,050 +17 -10
Revenue per pound $ 1.06 $ 1.06 $ 1.09 -- - 3
- ---------------------------------------------------------------------------------
</TABLE>
Different economic and competitive conditions in the domestic and
international express delivery markets have affected the Company during the
past three years.
Beginning in 1991 and continuing to the present, the Company has contended
with intense competitive pressure in the U.S. domestic express market. Price
has become a dominant consideration in choosing express delivery services. In
an effort to increase volume, the Company offered new, lower-priced deferred
services and increased the level of discounting. As a result, U.S. domestic
average daily volumes increased as did express revenues. Revenue on a per
package basis (yield) declined significantly.
In contrast, the market for the Company's IP services is comparatively
new. The Company benefits from its EXPRESSfreighter system which provides
customers with reduced transit times, later drop-off opportunities and daily
service on a worldwide basis that is generally unmatched by competitors. The
combination of its EXPRESSfreighter system, aggressive marketing efforts and a
recent improvement in global economic activity has resulted in significant
year-over-year growth in average daily volume, revenue and yield.
Significant growth in the Company's airfreight services played an
important role in improving 1995 earnings. This improvement is primarily
attributable to a favorable global airfreight market. In markets with high
demand but limited capacity, the space-confirmed aspect of IXF (a
higher-priced, time-definite service) creates competitive advantages over ATA
(a lower-priced, space-available service). Additionally, management actions in
1994 and 1995 narrowed the price difference between IXF and ATA. Customers
responded by using IXF rather than ATA, resulting in higher-yielding IXF
comprising a greater percentage of airfreight pounds transported by the
Company.
19
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS
The decrease in Logistics services revenue in 1995 is due to the sale,
effective May 1994, of the Company's German logistics subsidiary and the
January 1995 sale of two dedicated warehousing and contract distribution
companies in the United Kingdom. (See additional discussion in Other Income and
Expense and Income Taxes below.)
The increase in Other revenues in 1995 is due primarily to increased sales
of engine noise reduction kits. The decrease in other revenues in 1994 is due
primarily to the sale of a U.S. domestic subsidiary.
Operating Expenses
Operating expenses for the years 1993, 1994 and 1995 have increased primarily
because of increasing volumes. Presented below is the detail for the
year-over-year percentage change in operating expenses:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Percent Change
--------------
1995/ 1994/
1994 1993
<S> <C> <C>
Salaries and employee benefits + 8 + 8
Rentals and landing fees +16 + 7
Depreciation and amortization + 9 + 3
Fuel + 6 - 5
Maintenance and repairs +17 +15
Other +16 + 8
Total operating expenses +11 + 7
- -----------------------------------------------------------------------------
</TABLE>
The increases in Salaries and employee benefits are primarily due to
volume-related growth in the Company's U.S. domestic employment levels. A
portion of the increase from 1993 to 1995 is attributable to increased
provisions under the Company's variable incentive compensation plans which
reflect increased earnings and, in 1995, a significant gain from the sale of
certain businesses. (See Revenues above and Other Income and Expense and Income
Taxes below for additional information.) Management expects this trend of
increasing salaries and employee benefits to continue because of rising U.S.
domestic express volumes.
The increases in Rentals and landing fees for 1995 and 1994 are due to the
leasing of additional aircraft. In 1995, the Company added, by operating lease,
ten Airbus A310 and seven Airbus A300 aircraft. In 1994, the Company added, by
operating lease, six MD-11 and two Airbus A300 aircraft. Management expects
year-over-year increases in lease expense to continue as the Company enters
into additional aircraft rental agreements during 1996 and thereafter.
The increase in Fuel for 1995 is primarily attributable to increases in
total flight hours (9%) and gallons consumed (10%), partially offset by a
decline in average jet fuel price per gallon (5%). The decrease in fuel expense
for 1994 reflects a reduction in gallons consumed (1%) and a decline in average
jet fuel price per gallon (7%). Under the Omnibus Budget Reconciliation Act of
1993, a 4.3 cents per gallon increase in the excise tax on
20
<PAGE> 4
Federal Express Corporation and Subsidiaries
aviation fuel will become effective beginning in October 1995. Based upon 1995
consumption levels, this increase in excise tax would have increased the
Company's annual aircraft fuel expense by approximately $27 million.
Maintenance and repairs expense increased due to engine maintenance on
B-727 and MD-11 aircraft. During 1994, regulatory directives required the
Company to assess the engines of both aircraft types and, where applicable,
take corrective action. The initial cycle of scheduled engine maintenance on
the Company's MD-11 fleet, which began in 1994, also contributed to increased
maintenance and repairs expense. As of the end of 1995, the Company had fully
complied with the maintenance directive on the B-727 engines. Management
expects to address the maintenance directive on the MD-11 engines concurrently
with scheduled maintenance. Management believes the recent trend of increasing
maintenance expense will subside in 1996 and then rise in 1997 as DC-10
aircraft begin a new cycle of scheduled engine maintenance.
The increase in Other operating expenses for 1995 and 1994 is generally
due to year-over-year volume growth. Advertising expense, temporary manpower,
and expenses related to the transportation of packages by outside vendors
comprise the most significant portion of these expenses. The cost of sales for
engine noise reduction kits also caused an increase in other operating expenses
in 1995.
Operating Income
The Company's operating income increased 11% in 1995 and 41% in 1994. U.S.
domestic results were essentially flat in 1994 and declined significantly in
1995 because of lower margins attributable to the decrease in U.S. domestic
express yields. In contrast, the Company's international results improved
markedly in 1994 and 1995 because of growing IP and airfreight services. In
1995, the Company's international operations achieved the first full year of
profitability. For additional information on the Company's U.S. domestic and
international operations, see Note 10 of Notes to Consolidated Financial
Statements.
Other Income and Expense and Income Taxes
Decreases in net interest expense of 19% and 12% in 1995 and 1994,
respectively, are due to lower debt levels and reduced interest rates on
borrowings.
Other, net for 1995 includes a pre-tax gain of $35.7 million from the sale
of two dedicated warehousing and distribution companies in the United Kingdom.
This transaction resulted in an after-tax impact of $.27 per share, including
the effect of additional variable compensation expenses. Other, net also
includes $9.7 million received in 1995 from the bankruptcy estate of a firm
engaged by the Company in 1990 to remit employee payroll taxes to appropriate
authorities. These payments are a partial recovery of a $32 million loss
recorded by the Company in 1991 caused by the failure of this firm to remit
certain taxes. The Company may receive additional distributions from the firm's
bankruptcy estate depending on the outcome of preference litigation and other
pending bankruptcy matters against the firm.
21
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company's effective tax rate for 1995 was 43.0% compared with 46.0%
and 46.1% for 1994 and 1993, respectively. In each year, the effective tax rate
was greater than the statutory U.S. federal tax rate primarily because of state
income taxes and the impact of foreign operations. During 1995, the Company
changed the structure of its foreign entity in Mexico. This change permitted
the one-time deduction in 1995 of certain items for U.S. federal income tax
purposes that were not deductible in prior years and contributed to the lower
1995 tax rate. Based upon anticipated levels of income, capital acquisitions
and other factors, the Company's effective tax rate for 1996 is expected to
remain at a level similar to the 1995 rate, and the Company does not expect to
be subject to the alternative minimum tax in future years.
Outlook
Management believes the competitive nature of the U.S. domestic express
delivery market limits the Company's near-term ability to increase prices
generally. Nonetheless, the Company continues to work to slow the rate of
decline in its U.S. domestic yield through actions which include targeting
selected customers for review and realignment of their discount levels, seeking
higher yielding customers and promoting heavier package weights. However,
reducing unit costs at a rate greater than the rate of yield decline continues
to be the Company's primary focus for improving operating margins. Management
intends to further reduce unit costs by applying information technologies that
better coordinate the processing and delivery of packages. These technologies
map courier routes, streamline station operations and balance flight schedules
with expected demand. In addition, the Company is undertaking a comprehensive
review of its procurement practices in order to optimize the value of goods and
services purchased.
The Airport Improvements Act, effective January 1995, eliminated many of
the intrastate transportation regulations that restricted the use of the
Company's lower-cost ground transportation system. Management believes that an
expanded and well-directed use of trucking, which includes investments in hub
automation and larger load carrying vehicles, will provide long-term cost
savings. The Company is also developing regional hubs that will serve as
distribution points for expanded trucking operations.
Management believes that continued growth in the Company's international
operations is a pivotal factor in improving overall earnings. As discussed
above, the Company's international express business benefits from competitive
advantages in certain markets. The Company has established an intra-Asian
transloading facility at Subic Bay, Philippines. This facility will position
the Company to capture more of the growing Far East express market. In addition
to the Subic Bay facility, the Company plans to add new EXPRESSfreighter
flights to locations in Europe and the Far East. These expansions will entail
start-up costs which may restrain short-term profitability. In addition, from
time to time, the regulatory environment for global aviation rights may impair
the ability of the Company to operate its air network in the most efficient
manner. With respect to airfreight, the
22
<PAGE> 6
Federal Express Corporation and Subsidiaries
Company believes that a forecasted increase in overall market capacity in 1996
for airfreight may slow the volume growth in IXF but provide additional
opportunities for ATA.
The Company manages its aircraft fleet to achieve improving efficiencies
in unit costs for fuel consumption, maintenance and crew manning. MD-11 and
Airbus A300 and A310 aircraft acquisitions are designed to support this
improvement. These aircraft are expected to produce long-term benefits, despite
their higher ownership cost.
FINANCIAL CONDITION
Liquidity
Cash and cash equivalents totaled $358 million, a decrease of $35 million
during 1995 compared with increases of $237 million and $77 million in 1994 and
1993, respectively. Cash provided from operations during 1995 was $1.0 billion
compared with $767 million in 1994 and $725 million in 1993. The increase in
cash provided from operations in 1995 is primarily due to higher net income in
1995 compared to 1994 and 1993. The Company currently has available a $1
billion revolving bank credit facility that is generally used to finance
temporary operating cash requirements and to provide support for the issuance
of commercial paper. Management believes that cash flow from operations, its
commercial paper program and the revolving bank credit facility will adequately
meet its working capital needs for the foreseeable future.
Capital Resources
The Company's operations are capital intensive, characterized by significant
investments in aircraft, package handling facilities, sort equipment, vehicles,
and computer and telecommunication equipment. The amount and timing of capital
additions are dependent on various factors including volume growth, new or
enhanced services, geographical expansion of services, competition and
availability of satisfactory financing.
Capital expenditures for 1995 totaled $1.1 billion and included four
A310-200 aircraft, 15 Cessna 208 aircraft, deposits on future Airbus A300
aircraft, vehicles and ground support equipment, and customer automation and
computer equipment. In comparison, prior year expenditures also totaled $1.1
billion and included five MD-11 aircraft, three B-727-200 aircraft, deposits on
future Airbus A300 aircraft, vehicle and ground support equipment, and customer
automation and computer equipment. All of the MD-11 aircraft acquired in 1994,
along with a sixth aircraft acquired in 1993, were subsequently sold and leased
back. For information on the Company's purchase commitments, see Note 11 of
Notes to Consolidated Financial Statements.
The Company has historically financed its capital investments through the
use of lease, debt and equity financing in addition to the use of internally
generated cash from operations. Management's practice in recent years with
respect to funding aircraft acquisitions has been to finance such aircraft
through long-term lease transactions that qualify as off balance sheet
operating leases under applicable accounting rules. Management
23
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS
has determined that these operating leases have provided economic benefits
favorable to ownership with respect to market values, liquidity and after-tax
cash flows. In the future, alternative approaches to financing the Company's
aircraft acquisitions, such as capitalized leases or other forms of secured
financing, may be pursued when management determines that such financing best
meets the Company's needs. The Company has been successful in obtaining
investment capital, both domestic and international, for long-term leases on
terms acceptable to it, although the marketplace for such capital can become
restricted depending on a variety of economic factors beyond the control of the
Company. See Note 3 of Notes to Consolidated Financial Statements for
additional information concerning the Company's debt and credit facilities.
In November 1994, the Company filed a shelf registration statement with
the Securities and Exchange Commission relating to $465 million of equipment
trust and pass through certificates. The Company can use these certificates to
finance the purchase of aircraft or to finance the acquisition of aircraft in
leveraged lease transactions.
The Company believes its capital resources provide access to the most
efficient capital markets with respect to any particular aircraft acquisition
and are adequate for its future capital needs. These resources include backstop
financing for 16 Airbus A300 aircraft, $465 million of equipment trust and pass
through certificates, $210 million under an interim loan facility, $100 million
of unsecured notes available under a June 1992 shelf registration and the
public and private debt markets for leveraged lease financing.
OTHER MATTERS
Deferred Tax Assets
At May 31, 1995, the Company had a net cumulative deferred tax asset of $60
million consisting of $440 million of deferred tax assets and $380 million of
deferred tax liabilities. The reversals of deferred tax liabilities in future
periods will offset similar amounts of deferred tax assets. Based upon
historical levels of taxable income, the Company believes that it is more
likely than not that sufficient levels of future taxable income will be
generated to realize the remaining deferred tax asset.
24
<PAGE> 8
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME Federal Express Corporation and Subsidiaries
Years ended May 31
- ------------------------------------------------------------------------------------------
In thousands, except per share amounts 1995 1994 1993
<S> <C> <C> <C>
REVENUES $ 9,392,073 $ 8,479,456 $ 7,808,043
- ------------------------------------------------------------------------------------------
OPERATING EXPENSES:
Salaries and employee benefits (Notes 8 and 9) 4,425,202 4,104,800 3,807,493
Rentals and landing fees (Note 4) 818,599 703,028 658,138
Depreciation and amortization 652,287 599,357 579,896
Fuel 502,417 472,786 495,384
Maintenance and repairs 544,170 464,557 404,639
Other 1,858,254 1,604,296 1,485,320
- ------------------------------------------------------------------------------------------
8,800,929 7,948,824 7,430,870
- ------------------------------------------------------------------------------------------
OPERATING INCOME 591,144 530,632 377,173
- ------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
Interest, net (Note 1) (114,687) (142,392) (160,923)
Other, net (Note 13) 45,627 (9,778) (12,674)
- ------------------------------------------------------------------------------------------
(69,060) (152,170) (173,597)
- ------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES
AND CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 522,084 378,462 203,576
PROVISION FOR INCOME TAXES (Note 7) 224,496 174,092 93,767
- ------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 297,588 204,370 109,809
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF
TAX BENEFIT OF $34,287 (Note 9) -- -- (55,943)
- ------------------------------------------------------------------------------------------
NET INCOME $ 297,588 $ 204,370 $ 53,866
==========================================================================================
EARNINGS PER SHARE (Note 6):
Before cumulative effect of change in
accounting principle $ 5.27 $ 3.65 $ 2.01
Cumulative effect of change in
accounting principle (Note 9) -- -- (1.03)
- ------------------------------------------------------------------------------------------
$ 5.27 $ 3.65 $ .98
==========================================================================================
AVERAGE SHARES OUTSTANDING (Note 6) 56,494 56,012 54,719
==========================================================================================
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
25
<PAGE> 9
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
May 31
- --------------------------------------------------------------------------------------------------
In thousands 1995 1994
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 357,548 $ 392,923
Receivables, less allowance for doubtful accounts of $31,173 and $33,933 1,130,254 1,020,511
Spare parts, supplies and fuel 193,251 173,993
Deferred income taxes (Note 7) 115,801 113,035
Prepaid expenses and other 72,228 61,234
- --------------------------------------------------------------------------------------------------
Total current assets 1,869,082 1,761,696
- --------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, AT COST (Notes 1, 3, 4 and 11):
Flight equipment 3,006,693 2,828,021
Package handling and ground support equipment 1,841,108 1,583,428
Computer and electronic equipment 1,224,050 966,906
Other 1,625,860 1,511,870
- --------------------------------------------------------------------------------------------------
7,697,711 6,890,225
Less accumulated depreciation and amortization 3,982,467 3,441,132
- --------------------------------------------------------------------------------------------------
Net property and equipment 3,715,244 3,449,093
- --------------------------------------------------------------------------------------------------
OTHER ASSETS:
Goodwill (Note 1) 397,272 415,178
Equipment deposits and other assets (Note 11) 451,774 366,531
- --------------------------------------------------------------------------------------------------
Total other assets 849,046 781,709
- --------------------------------------------------------------------------------------------------
$6,433,372 $5,992,498
==================================================================================================
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these balance sheets.
26
<PAGE> 10
<TABLE>
<CAPTION>
Federal Express Corporation and Subsidiaries
- ----------------------------------------------------------------------------------
1995 1994
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Current portion of long-term debt (Note 3) $ 255,448 $ 198,180
Accounts payable 618,621 518,849
Accrued expenses (Note 2) 904,466 819,399
- ----------------------------------------------------------------------------------
Total current liabilities 1,778,535 1,536,428
- ----------------------------------------------------------------------------------
LONG-TERM DEBT, LESS CURRENT PORTION (Note 3) 1,324,711 1,632,202
- ----------------------------------------------------------------------------------
DEFERRED INCOME TAXES (Note 7) 55,956 3,563
- ----------------------------------------------------------------------------------
OTHER LIABILITIES (Note 1) 1,028,601 895,600
- ----------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (Notes 4, 11 and 12)
COMMON STOCKHOLDERS' INVESTMENT (Note 6):
Common Stock, $.10 par value; 200,000 shares authorized;
56,174 and 55,885 shares issued 5,617 5,589
Additional paid-in capital 775,255 759,229
Retained earnings 1,466,427 1,162,160
- ----------------------------------------------------------------------------------
2,247,299 1,926,978
Less treasury stock and deferred compensation 1,730 2,273
- ----------------------------------------------------------------------------------
Total common stockholders' investment 2,245,569 1,924,705
- ----------------------------------------------------------------------------------
$6,433,372 $5,992,498
==================================================================================
</TABLE>
27
<PAGE> 11
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS Federal Express Corporation and Subsidiaries
Years ended May 31
- ------------------------------------------------------------------------------------------------------------
In thousands 1995 1994 1993
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 297,588 $ 204,370 $ 53,866
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 652,287 599,357 579,896
Provision for uncollectible accounts 36,334 45,763 33,552
Provision for deferred income taxes and other 25,976 3,810 19,910
Gain from disposals of property and equipment (39,997) (11,897) (5,648)
Cumulative effect of accounting change -- -- 55,943
Changes in assets and liabilities, net of effects
from purchases and dispositions of businesses:
Increase in receivables (167,319) (173,902) (41,535)
Increase in other current assets (24,101) (7,826) (5,813)
Increase in accounts payable, accrued
expenses and other liabilities 258,373 110,508 13,651
Other, net (8,424) (2,905) 21,259
- ------------------------------------------------------------------------------------------------------------
Cash provided by operating activities 1,030,717 767,278 725,081
- ------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchases of property and equipment, including deposits
on aircraft of $113,073, $112,138 and $177,564 (1,060,761) (1,087,708) (1,023,723)
Proceeds from dispositions of property and equipment:
Sale-leaseback transactions -- 581,400 216,444
Reimbursements of A300 deposits 138,203 38,794 --
Other dispositions 59,523 46,148 5,984
Other, net 87,925 27,843 1,992
- ------------------------------------------------------------------------------------------------------------
Cash used in investing activities (775,110) (393,523) (799,303)
- ------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from debt issuances 45,460 10,777 878,499
Principal payments on debt (349,523) (198,243) (737,334)
Proceeds from stock issuances 13,081 53,759 24,512
Other, net -- (2,581) (14,176)
- ------------------------------------------------------------------------------------------------------------
Cash provided by (used in) financing activities (290,982) (136,288) 151,501
- ------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
Increase (decrease) during the year (35,375) 237,467 77,279
Balance at beginning of year 392,923 155,456 78,177
- ------------------------------------------------------------------------------------------------------------
Balance at end of year $ 357,548 $ 392,923 $ 155,456
============================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest (net of capitalized interest) $ 138,833 $ 158,149 $ 162,648
Income taxes 185,964 167,209 188,943
Non-cash investing and financing activities:
In November 1992, approximately $73,000,000 of secured debt related to a portion of the purchase price of
one MD-11 aircraft acquired by the Company was assumed by a third party in a sale-leaseback of the aircraft.
In March 1995, the Company issued three series of loan certificates totaling $50,300,000 in exchange for a
leased B-747 aircraft. (See Note 3 Long-Term Debt for additional information.)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
28
<PAGE> 12
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CHANGES IN Federal Express Corporation and Subsidiaries
COMMON STOCKHOLDERS' INVESTMENT
- --------------------------------------------------------------------------------------------------------------
In thousands, except shares Additional
Common Paid-in Retained Treasury Deferred
Stock Capital Earnings Stock Compensation
<S> <C> <C> <C> <C> <C>
BALANCE AT MAY 31, 1992 $5,410 $672,727 $ 906,555 $ (32) $(4,938)
Purchase of treasury stock -- -- -- (472) --
Forfeiture of restricted stock -- -- -- (63) --
Issuance of common and treasury stock
under employee incentive plans
(655,938 shares) 64 26,658 (85) 531 (393)
Amortization of deferred compensation -- -- -- -- 2,374
Foreign currency translation adjustment -- -- 9,179 -- --
Net income -- -- 53,866 -- --
- --------------------------------------------------------------------------------------------------------------
BALANCE AT MAY 31, 1993 5,474 699,385 969,515 (36) (2,957)
Purchase of treasury stock -- -- -- (185) --
Forfeiture of restricted stock -- -- -- (1,224) --
Issuance of common and treasury stock
under employee incentive plans
(1,153,248 shares) 115 59,844 -- 670 (8)
Amortization of deferred compensation -- -- -- -- 1,467
Foreign currency translation adjustment -- -- (11,725) -- --
Net income -- -- 204,370 -- --
- --------------------------------------------------------------------------------------------------------------
BALANCE AT MAY 31, 1994 5,589 759,229 1,162,160 (775) (1,498)
Forfeiture of restricted stock -- -- -- (231) --
Issuance of common stock under employee
incentive plans (288,724 shares) 28 16,026 -- -- --
Amortization of deferred compensation -- -- -- -- 774
Foreign currency translation adjustment -- -- 6,679 -- --
Net income -- -- 297,588 -- --
- --------------------------------------------------------------------------------------------------------------
BALANCE AT MAY 31, 1995 $5,617 $775,255 $ 1,466,427 $(1,006) $ (724)
==============================================================================================================
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
29
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation. The consolidated financial statements include the
accounts of Federal Express Corporation and its wholly-owned subsidiaries (the
"Company"). All significant intercompany accounts and transactions have been
eliminated.
Property and equipment. Expenditures for major additions, improvements, flight
equipment modifications, and certain overhaul costs are capitalized.
Maintenance and repairs are charged to expense as incurred, except for B-747
airframe and engine overhaul maintenance which is accrued and charged to
expense on the basis of hours flown. The cost and accumulated depreciation of
property and equipment disposed of are removed from the related accounts and
any gain or loss reflected in the results of operations.
For financial reporting purposes, depreciation and amortization of
property and equipment is provided on a straight-line basis over the asset's
service life or related lease term as follows:
Flight equipment 7 to 20 years
Package handling and ground support equipment 5 to 30 years
Computer and electronic equipment 3 to 10 years
Other 2 to 30 years
Aircraft airframes and engines are assigned residual values ranging from
10% to 20% of asset cost. All other property and equipment have no assigned
residual values. Vehicles, which are included in Package handling and ground
support equipment, are depreciated on a straight-line basis over 5 to 10 years.
For income tax purposes, depreciation is generally computed using
accelerated methods.
Deferred gains. Gains on the sale and leaseback of aircraft and other property
and equipment are deferred and amortized over the life of the lease as a
reduction of rent expense. Included in Other Liabilities at May 31, 1995 and
1994 were deferred gains of $293,000,000 and $230,234,000, respectively.
Deferred lease obligations. While certain of the Company's aircraft and
facility leases contain fluctuating or escalating payments, the related rent
expense is recorded on a straight-line basis over the lease term. Included in
Other Liabilities at May 31, 1995 and 1994 were $216,683,000 and $185,508,000,
respectively, representing the cumulative difference between rent expense and
rent payments.
Self-insurance reserves. The Company is self-insured up to certain levels for
workers' compensation, employee health care and vehicle liabilities. Reserves
are based on the actuarially estimated cost of claims. Included in Other
Liabilities at May 31, 1995 and 1994, were $294,000,000 and $270,000,000,
respectively, representing self-insurance reserves for the Company's workers'
compensation and vehicle liabilities.
Capitalized interest. Interest on funds used to finance the acquisition and
modification of aircraft and construction of certain facilities up to the date
the asset is placed in service is capitalized and included in the cost of the
asset. Capitalized interest was $27,381,000, $29,738,000 and $31,256,000, for
1995, 1994 and 1993, respectively.
30
<PAGE> 14
Federal Express Corporation and Subsidiaries
Cash equivalents. Cash equivalents are cash in excess of current operating
requirements invested in short-term, interest-bearing instruments with
maturities of three months or less at the date of purchase and are stated at
cost, which approximates market value. Interest income was $16,236,000 in 1995,
$9,778,000 in 1994, and $7,839,000 in 1993.
Spare parts, supplies and fuel. Spare parts, supplies and fuel are stated
principally at standard cost (approximates actual cost on a first-in, first-out
basis) which is not in excess of current replacement cost.
Goodwill. Goodwill is the excess of purchase price over the fair value of net
assets of businesses acquired. It is amortized on a straight-line basis over
periods ranging up to 40 years. Accumulated amortization was $100,527,000 and
$87,202,000 at May 31, 1995 and 1994, respectively.
Foreign currency translation. The Company conducts a significant amount of its
business and has a number of operating facilities in countries outside the
United States. Translation gains and losses of foreign operations that use
local currencies as the functional currency are accumulated and reported as a
separate component of common stockholders' investment. Transaction gains and
losses that arise from exchange rate fluctuations on transactions denominated
in a currency other than the local functional currency are included in the
results of operations.
Income taxes. Deferred income taxes are provided for the tax effect of
temporary differences between the tax basis of assets and liabilities and their
reported amounts in the financial statements. The Company uses the liability
method to account for income taxes, which requires deferred taxes to be
recorded at the statutory rate expected to be in effect when the taxes are
paid.
The Company has not provided taxes on its foreign subsidiaries' earnings
that are deemed to be permanently reinvested. Quantification of the deferred
tax liability, if any, associated with permanently reinvested earnings is not
practicable.
Revenue recognition. Revenue is generally recognized upon delivery of
shipments. For shipments in transit, revenue is recorded based on the
percentage of service completed.
Earnings per share. Earnings per share is computed based on the weighted
average number of common and common equivalent shares outstanding during the
period. Common equivalent shares are the shares of common stock that would be
issued upon the exercise of all dilutive outstanding stock options, less the
assumed repurchase of treasury shares. Earnings per share assuming full
dilution is substantially the same as earnings per share as stated and,
accordingly, is not shown separately.
Reclassifications. Certain amounts for 1994 and 1993 have been reclassified to
conform to the 1995 presentation.
31
<PAGE> 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2: ACCRUED EXPENSES
<TABLE>
<CAPTION>
May 31
- -------------------------------------------------------------------------------------------
In thousands 1995 1994
<S> <C> <C>
Compensated absences $192,785 $180,105
Insurance 176,806 156,906
Taxes other than income taxes 137,037 130,801
Employee benefits 127,870 86,352
Salaries 100,024 82,563
Aircraft overhaul 53,540 50,933
Other 116,404 131,739
- -------------------------------------------------------------------------------------------
$904,466 $819,399
===========================================================================================
</TABLE>
NOTE 3: LONG-TERM DEBT
<TABLE>
<CAPTION>
May 31
- -------------------------------------------------------------------------------------------
In thousands 1995 1994
<S> <C> <C>
Unsecured notes payable, interest rates of 6.25% to 10.57%,
due through 2013 $1,187,413 $1,384,942
- -------------------------------------------------------------------------------------------
Unsecured sinking fund debentures, interest rate of 9.63%,
due through 2020 98,323 98,254
- -------------------------------------------------------------------------------------------
Capital lease obligations and tax exempt bonds, due through 2017,
interest rates of 6.75% to 8.30% 255,100 255,100
Less bond reserve funds 11,096 11,096
- -------------------------------------------------------------------------------------------
244,004 244,004
- -------------------------------------------------------------------------------------------
Other debt, interest rates of 9.68% to 9.98% 50,419 103,182
- -------------------------------------------------------------------------------------------
1,580,159 1,830,382
Less current portion 255,448 198,180
- -------------------------------------------------------------------------------------------
$1,324,711 $1,632,202
===========================================================================================
</TABLE>
The Company has a revolving credit agreement with domestic and foreign
banks that provides for a commitment of $1,000,000,000 through May 31, 2000,
all of which was available at May 31, 1995. Interest rates on borrowings under
this agreement are generally determined by maturities selected and prevailing
market conditions. The agreement contains certain covenants and restrictions,
none of which are expected to significantly affect operations or the ability to
pay dividends. As of May 31, 1995, approximately $692,000,000 was available for
the payment of dividends. Commercial paper borrowings are backed by unused
commitments under the revolving credit agreement and reduce the amount
available under the agreement.
Tax exempt bonds were issued by the Memphis-Shelby County Airport
Authority ("MSCAA") and the City of Indianapolis. A lease agreement with the
MSCAA and a loan agreement with the City of Indianapolis covering
32
<PAGE> 16
Federal Express Corporation and Subsidiaries
the facilities and equipment financed with the bond proceeds obligate the
Company to pay rentals and loan payments, respectively, equal to principal and
interest due on the bonds.
In connection with the acquisition of four Airbus A310 aircraft, the
Company issued, in March 1995, three series of loan certificates totaling
$50,300,000 at rates of 9.68% to 9.98% with maturity dates from March 2002 to
September 2007. These certificates relate to the buyout of a lease on a B-747
aircraft and are secured by a DC-10-30 aircraft.
Scheduled annual principal maturities of long-term debt for the five years
subsequent to May 31, 1995, are as follows: $255,400,000 in 1996; $26,200,000
in 1997; $126,600,000 in 1998; $257,400,000 in 1999 and $14,900,000 in 2000.
The Company's long-term debt, exclusive of capital leases, had carrying
values of $1,390,000,000 and $1,630,000,000 at May 31, 1995 and 1994,
respectively, compared with fair values of approximately $1,470,000,000 and
$1,740,000,000 at those dates. The estimated fair values were determined based
on quoted market prices or on the current rates offered for debt with similar
terms and maturities.
NOTE 4: LEASE COMMITMENTS
The Company utilizes certain aircraft, land, facilities and equipment under
capital and operating leases which expire at various dates through 2024. In
addition, supplemental aircraft are leased under agreements which generally
provide for cancellation upon 30 days' notice.
Property and equipment recorded under capital leases at May 31 was as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
In thousands 1995 1994
<S> <C> <C>
Package handling and ground support equipment $378,438 $372,194
Facilities 133,435 133,435
Computer and electronic equipment and other 7,175 7,152
- --------------------------------------------------------------------------------
519,048 512,781
Less accumulated amortization 347,738 330,155
- --------------------------------------------------------------------------------
$171,310 $182,626
================================================================================
</TABLE>
Rent expense under operating leases for the years ended May 31 was as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
In thousands 1995 1994 1993
<S> <C> <C> <C>
Minimum rentals $707,182 $621,174 $563,646
Contingent rentals 43,005 21,540 35,353
- --------------------------------------------------------------------------------
$750,187 $642,714 $598,999
================================================================================
</TABLE>
Contingent rentals are based on mileage under supplemental aircraft
leases.
33
<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of future minimum lease payments under capital leases and
non-cancelable operating leases (principally aircraft and facilities) with an
initial or remaining term in excess of one year at May 31, 1995 follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
In thousands Capital Leases Operating Leases
<S> <C> <C>
1996 $ 15,561 $ 645,572
1997 15,561 649,557
1998 15,561 609,832
1999 15,561 578,107
2000 15,561 540,459
Thereafter 371,643 6,287,674
- --------------------------------------------------------------------------------
$ 449,448 $9,311,201
================================================================================
</TABLE>
At May 31, 1995, the present value of future minimum lease payments for
capital lease obligations was $199,004,000.
NOTE 5: PREFERRED STOCK
The Certificate of Incorporation authorizes the Board of Directors, at its
discretion, to issue up to 4,000,000 shares of Series Preferred Stock. The
stock is issuable in series which may vary as to certain rights and preferences
and has no par value. As of May 31, 1995, none of these shares had been issued.
34
<PAGE> 18
Federal Express Corporation and Subsidiaries
NOTE 6: COMMON STOCKHOLDERS' INVESTMENT
Under the provisions of the Company's stock incentive plans, options may be
granted to certain key employees (and, under the 1993 plan, to directors who
are not employees of the Company) to purchase common stock of the Company at a
price not less than its fair market value at the date of grant. The following
summarizes information for the past three years with respect to those plans:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number of Shares Option Price
Under Option Per Share
<S> <C> <C>
Outstanding at May 31, 1992 3,653,803 $23.59-$70.19
Granted 260,750 36.88- 56.25
Exercised (643,563) 23.59- 56.63
Canceled (123,947) 34.31- 70.19
- --------------------------------------------------------------------------------
Outstanding at May 31, 1993 3,147,043 $30.56-$70.19
Granted 982,750 54.31- 70.81
Exercised (1,142,249) 30.56- 70.19
Canceled (111,758) 34.31- 62.94
- --------------------------------------------------------------------------------
Outstanding at May 31, 1994 2,875,786 $30.56-$70.81
Granted 671,800 56.13- 75.88
Exercised (288,724) 30.56- 62.94
Canceled (89,997) 30.56- 75.88
- --------------------------------------------------------------------------------
Outstanding at May 31, 1995 3,168,865 $30.56-$75.88
================================================================================
Exercisable at May 31, 1995 1,478,089 $30.56-$70.81
================================================================================
</TABLE>
At May 31, 1995, there were 198,005 shares available for future grants
under the above-mentioned stock incentive plans.
Under the terms of the Company's 1986 Restricted Stock Plan, shares of the
Company's common stock are granted to key employees. Restrictions on the shares
expire over a period of two to five years from their date of grant. The value
of shares issued related to this plan is recorded as a reduction of common
stockholders' investment and is being amortized to compensation expense as
restrictions on such shares expire. The shares granted under this plan were
11,000 in 1994 and 12,500 in 1993. There were no shares granted in 1995. During
1995, 1994 and 1993, 3,750, 18,438 and 1,500 shares, respectively, were
forfeited. At May 31, 1995, there were 14,688 shares available for future
grants under this plan.
At May 31, 1995, there were 3,381,558 shares of common stock reserved for
issuance under the above-mentioned plans.
In 1988, the Board of Directors authorized the purchase of up to
approximately 5,300,000 shares of the Company's common stock on the open
market. As of May 31, 1995, a total of 2,765,243 shares at an average cost of
$41.68 per share had been purchased and substantially all reissued under the
above-mentioned plans.
35
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7: INCOME TAXES
The components of the provision for income taxes for the years ended May 31
were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
In thousands 1995 1994 1993
<S> <C> <C> <C>
Current provision:
Federal $ 137,041 $ 131,724 $64,130
Foreign 29,787 16,387 9,318
State 23,405 26,862 3,170
- --------------------------------------------------------------------------------
190,233 174,973 76,618
- --------------------------------------------------------------------------------
Deferred provision (credit):
Federal 24,058 2,263 6,899
Foreign 9,072 2,524 --
State 1,133 (5,668) 10,250
- --------------------------------------------------------------------------------
34,263 (881) 17,149
- --------------------------------------------------------------------------------
$ 224,496 $ 174,092 $93,767
================================================================================
</TABLE>
The Company's operations included the following income (loss) with respect
to entities in foreign locations for the years ended May 31:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
In thousands 1995 1994 1993
<S> <C> <C> <C>
Entities with pre-tax income $ 149,000 $ 127,000 $ 67,000
Entities with pre-tax losses (173,000) (210,000) (247,000)
- --------------------------------------------------------------------------------
$ (24,000) $ (83,000) $(180,000)
================================================================================
</TABLE>
Income (losses) from entities which are structured as foreign subsidiaries
are not included in the U.S. consolidated income tax return. Approximately
$29,000,000 and $14,000,000 of net foreign subsidiary income were not taxable
for federal income tax purposes in 1995 and 1994, respectively. In 1993,
approximately $7,000,000 of net foreign subsidiary losses were not deductible
for federal income tax purposes. Income taxes have been provided for foreign
operations based upon the various tax laws and rates of the countries in which
the Company's operations are conducted. There is no direct relationship between
the Company's overall foreign income tax provision and foreign pre-tax book
income due to the different methods of taxation used by countries throughout
the world.
36
<PAGE> 20
Federal Express Corporation and Subsidiaries
A reconciliation of the statutory federal income tax rate to the Company's
effective income tax rate for the years ended May 31 follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
1995 1994 1993
<S> <C> <C> <C>
Statutory U.S. income tax rate 35.0% 35.0% 34.0%
Increase resulting from:
Goodwill amortization 1.0 1.3 2.5
Foreign operations 0.9 3.5 1.3
State income taxes, net of federal benefit 3.1 3.6 4.4
Other, net 3.0 2.6 3.9
- ----------------------------------------------------------------------------
43.0% 46.0% 46.1%
============================================================================
</TABLE>
The Omnibus Budget Reconciliation Act of 1993 increased the statutory U.S.
income tax rate from 34% to 35% retroactive to January 1, 1993. The adverse
impact of the increase in the statutory rate was offset in 1994 by a
corresponding revaluation of the Company's deferred tax assets in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting
for Income Taxes." The net impact of these adjustments was immaterial.
At May 31, 1995, the Company had fully utilized the alternative minimum
tax credit carryovers from 1991, 1992 and 1993.
The significant components of deferred tax assets and liabilities as of
May 31 were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
In thousands 1995 1994
- -----------------------------------------------------------------------------------------------------
Deferred Deferred Deferred Deferred
Tax Assets Tax Liabilities Tax Assets Tax Liabilities
<S> <C> <C> <C> <C>
Depreciation $ -- $303,088 $ -- $285,524
Deferred gains on sales of assets 67,912 -- 45,969 --
Alternative minimum tax credits -- -- 55,844 --
Employee benefits 69,563 -- 66,875 --
Self-insurance reserves 165,197 -- 148,426 --
Other 137,063 76,802 137,205 59,323
- -----------------------------------------------------------------------------------------------------
$439,735 $379,890 $454,319 $344,847
=====================================================================================================
</TABLE>
NOTE 8: PENSION AND PROFIT SHARING PLANS
The Company sponsors pension plans covering substantially all employees. The
largest plan covers U.S. domestic employees age 21 and over, with at least one
year of service and provides benefits based on final average earnings and years
of service. Plan funding is actuarially determined, subject to certain tax law
limitations.
International defined benefit plans provide benefits primarily based on
final earnings and years of service and are funded in accordance with local
laws and income tax regulations.
37
<PAGE> 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table sets forth the funded status of the plans as of May
31:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
In thousands 1995 1994
<S> <C> <C>
Actuarial present value of the projected benefit obligation
for service rendered to date $ 1,972,009 $ 1,800,187
Less plan assets at fair value 2,093,422 1,733,446
- ----------------------------------------------------------------------------------------------
Projected benefit obligation in excess of (less than) plan assets (121,413) 66,741
Unrecognized net gains from past experience different from
that assumed and effects of changes in assumptions 123,929 21,555
Prior service cost not yet recognized in net periodic cost 6,449 (31,581)
Unrecognized transition amount (3,679) (797)
- ----------------------------------------------------------------------------------------------
Pension liability $ 5,286 $ 55,918
==============================================================================================
Accumulated benefit obligation $ 1,203,126 $ 1,106,076
==============================================================================================
Vested benefit obligation $ 1,140,545 $ 998,024
==============================================================================================
</TABLE>
Net periodic pension cost for the years ended May 31 included the
following components:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
In thousands 1995 1994 1993
<S> <C> <C> <C>
Service cost - benefits earned during the period $ 182,617 $ 176,861 $ 161,100
Interest cost on projected benefit obligation 143,408 127,959 117,086
Actual return on plan assets (192,939) (82,019) (160,977)
Net amortization and deferral 19,333 (64,727) 36,055
- ----------------------------------------------------------------------------------------------
$ 152,419 $ 158,074 $ 153,264
==============================================================================================
</TABLE>
The weighted-average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 8.6% and 6.0%, respectively, in 1995, 8.1%
and 6.0%, respectively, in 1994 and 8.0% and 6.0%, respectively, in 1993. The
expected long-term rate of return on assets was 9.5% in 1995, 1994 and 1993.
Plan assets consist primarily of marketable equity securities and fixed income
instruments.
The Company also has a profit sharing plan, which covers substantially all
U.S. domestic employees age 21 and over, with at least one year of service with
the Company as of the contribution date, as defined. The plan provides for
discretionary contributions by the Company which are determined annually by the
Board of Directors. Profit sharing expense was $52,200,000 in 1995, $36,800,000
in 1994 and $21,900,000 in 1993.
38
<PAGE> 22
Federal Express Corporation and Subsidiaries
NOTE 9: POSTRETIREMENT BENEFIT PLANS
The Company offers medical and dental coverage to all eligible U.S. domestic
retirees and their eligible dependents. Vision coverage is provided for
retirees only. Substantially all of the Company's U.S. domestic employees
become eligible for these benefits at age 55 and older, if they have permanent,
continuous service with the Company of at least 10 years after attainment of
age 45 if hired prior to January 1, 1988, or at least 20 years after attainment
of age 35, if hired on or after January 1, 1988. Life insurance benefits are
provided only to retirees of the former Tiger International, Inc. who retired
prior to acquisition.
Effective June 1, 1992, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions." This standard
requires that the expected cost of providing postretirement benefits be charged
to expense during the years employees render service. Prior to the adoption of
SFAS No. 106, the Company charged retiree benefits to expense when paid. These
amounts were not significant. The cumulative effect of adopting this standard
was $90,230,000 before taxes ($55,943,000 after tax benefit, or $1.03 per
share).
The following table sets forth the accrued postretirement benefit cost as
of May 31:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
In thousands 1995 1994
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 35,816 $ 34,581
Fully eligible active employees 24,400 25,698
Other active employees, not fully eligible 60,769 66,472
- --------------------------------------------------------------------------------
120,985 126,751
Unrecognized net gain (loss) 25,421 (958)
- --------------------------------------------------------------------------------
$146,406 $ 125,793
================================================================================
</TABLE>
Net postretirement benefit expense for the years ended May 31 was as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
In thousands 1995 1994 1993
<S> <C> <C> <C>
Service cost $12,870 $ 12,392 $ 9,161
Interest cost 10,617 10,174 8,434
Transition obligation -- -- 90,230
- --------------------------------------------------------------------------------
$23,487 $ 22,566 $107,825
================================================================================
</TABLE>
Future medical benefit costs were estimated to increase at an annual rate
of 11.0% during 1996, decreasing to an annual growth rate of 6.8% in 2005 and
thereafter. Future dental benefit costs were estimated to increase at an annual
rate of 8.8% during 1996, decreasing to an annual growth rate of 6.8% in 2004
and thereafter. The Company's cost is capped at 150% of 1993 employer cost and,
therefore, will not be subject to medical and dental trends after the capped
cost is attained, projected to be in 1998. Primarily because of the cap on the
Company's cost, a 1% increase in these annual trend rates would not have a
significant impact on the accumulated postretirement benefit obligation at May
31, 1995, or 1995 benefit expense. The weighted average discount
39
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
rates used in estimating the accumulated postretirement obligation were 8.6%
and 7.7% at May 31, 1995 and 1994, respectively. The Company pays claims as
incurred.
NOTE 10: BUSINESS SEGMENT INFORMATION
The Company is in a single line of business - the worldwide transportation and
distribution of goods and documents. For reporting purposes, operations are
classified into two geographic areas, U.S. domestic and international.
Shipments which either originate in or are destined to locations outside the
U.S. are categorized as international.
A summary of selected financial information for U.S. domestic and
international operations for the years ended May 31 follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
In thousands U.S. Total
Domestic International Worldwide
<S> <C> <C> <C>
Revenues:
1995 $6,839,418 $ 2,552,655 $9,392,073
1994 6,199,940 2,279,516 8,479,456
1993 5,667,964 2,140,079 7,808,043
Operating Income (Loss):
1995 $ 465,527 $ 125,617 $ 591,144
1994 559,629 (28,997) 530,632
1993 559,140 (181,967) 377,173
Identifiable Assets:
1995 $5,321,811 $ 1,111,561 $6,433,372
1994 4,883,644 1,108,854 5,992,498
1993 4,432,578 1,360,486 5,793,064
- --------------------------------------------------------------------------------
</TABLE>
Identifiable assets used jointly in U.S. domestic and international
operations (principally aircraft) have been allocated based on estimated usage.
International revenues related to services originating in the U.S. totaled
$1,201,100,000, $1,020,000,000 and $928,600,000 for the years ended May 31,
1995, 1994 and 1993, respectively.
40
<PAGE> 24
Federal Express Corporation and Subsidiaries
NOTE 11: COMMITMENTS AND CONTINGENCIES
The Company's annual purchase commitments under various contracts as of May 31,
1995 are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
In thousands Aircraft-
Aircraft Related(1) Other(2) Total
<S> <C> <C> <C> <C>
1996 $499,500 $135,400 $425,500 $1,060,400
1997 429,800 19,100 43,200 492,100
1998 486,000 15,300 33,700 535,000
1999 242,300 18,100 15,600 276,000
2000 124,200 9,900 -- 134,100
- --------------------------------------------------------------------------------
</TABLE>
(1) Primarily aircraft modifications, rotables, and development and upgrade of
aircraft simulators.
(2) Primarily facilities, vehicles, computer and other equipment.
The Company is committed to purchase 16 Airbus A300, three Airbus A310, 12
MD-11 and 35 Cessna 208B aircraft to be delivered through 2000. At May 31,
1995, deposits and progress payments of $318,983,000 had been made toward these
purchases. At May 31, 1995, the Company had options to purchase up to 44
additional Airbus A300 for delivery beginning in 1999. In addition, the Company
may be required to purchase seven MD-11 aircraft for delivery beginning no
later than 2000 under a put option agreement.
The Company has entered into contracts which are designed to limit its
exposure to fluctuations in jet fuel prices. Under these contracts, the Company
makes (or receives) payments based on the difference between a specified upper
(or lower) limit and the market price of jet fuel, as determined by an index of
spot market prices representing various geographic regions. The difference is
recorded as an increase or decrease in fuel expense. At May 31, 1995, the
Company had contracts with various financial institutions covering a total
notional volume of 97.4 million gallons (approximately 16% of the Company's
annual jet fuel consumption), with some contracts extending through August
1996. As of May 31, 1995, the Company had neither received nor made any
payments related to these contracts. Based on current market prices, the fair
value of these contracts at May 31, 1995, was approximately $141,000.
NOTE 12: LEGAL PROCEEDINGS
The Internal Revenue Service ("IRS") issued an Examination Report on October
31, 1991 asserting the Company underpaid federal excise taxes for the calendar
quarters ended December 31, 1983 through March 31, 1987. The Examination Report
contains a primary position and a mutually exclusive alternative position
asserting the Company underpaid federal excise taxes by $54,000,000 and
$26,000,000, respectively. Disagreeing with essentially all of the proposed
adjustments contained in the Examination Report, the Company filed a Protest on
March 16, 1992, which set forth the Company's defenses to both IRS positions
and a claim for refund of overpaid federal excise taxes of $23,500,000. On
March 19, 1993, the IRS issued another Examination Report to the Company
asserting the Company underpaid federal excise taxes by $105,000,000 for the
calendar quarters ended June 30, 1987 through March 31, 1991. On June 17, 1993,
the Company filed a Protest contesting the March 19 Examination Report which
set forth the Company's defenses to the IRS position and a claim for refund of
overpaid federal excise taxes of $46,500,000. Interest would be payable on the
amount of any refunds by the
41
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
IRS to the Company or underpaid federal excise taxes payable by the Company to
the IRS at statutorily determined rates. The interest rates payable by the
Company for underpaid taxes are higher than the rates payable by the IRS on
refund amounts.
The Company is vigorously pursuing its Protests administratively with the
IRS Appeals Division. If it is unsuccessful with the IRS Appeals Division, the
Company intends to pursue its position in court. Pending resolution of this
matter, the IRS can be expected to take positions similar to those taken in
their Examination Reports for periods after March 31, 1991.
Given the inherent uncertainties in the excise tax matter, management is
currently unable to predict with certainty the outcome of this matter or the
ultimate effect, if any, its resolution would have on the Company's financial
condition or results of operations. No amount has been reserved for this
contingency.
The Company is subject to other legal proceedings and claims which arise
in the ordinary course of its business. In the opinion of management, the
aggregate liability, if any, with respect to these other actions will not
materially adversely affect the financial position or results of operations of
the Company.
NOTE 13: UNUSUAL EVENTS
In January 1995, the Company sold two dedicated warehousing and contract
distribution companies in the United Kingdom. A gain of $35,700,000 was
recorded from the sale.
In 1995, the Company received $9,700,000 from the bankruptcy estate of a
firm engaged by the Company in 1990 to remit payments of employee withholding
taxes. This amount is a partial recovery of a $32,000,000 loss incurred by the
Company in 1991 that resulted from the firm's failure to remit certain of these
tax payments to appropriate authorities. The Company may receive additional
distributions from the firm's bankruptcy estate depending on the outcome of
preference litigation and other pending bankruptcy matters against the firm.
NOTE 14: SUMMARY OF QUARTERLY OPERATING RESULTS (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
In thousands, except earnings per share First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
1995
Revenues $2,231,127 $2,358,765 $2,332,594 $2,469,587
Operating income 142,985 176,376 97,672 174,111
Income before income taxes 107,267 151,120 110,714 152,983
Net income 61,142 86,139 63,107 87,200
Earnings per share $ 1.08 $ 1.53 $ 1.12 $ 1.54
Average shares outstanding 56,614 56,385 56,374 56,601
1994
Revenues $2,015,725 $2,121,525 $2,077,414 $2,264,792
Operating income 101,907 149,718 85,317 193,690
Income before income taxes 60,835 110,539 57,717 149,371
Net income 32,851 59,691 31,167 80,661
Earnings per share $ .60 $ 1.07 $ .55 $ 1.43
Average shares outstanding 55,186 55,850 56,445 56,569
- ------------------------------------------------------------------------------------------
</TABLE>
42
<PAGE> 26
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Federal Express Corporation:
We have audited the accompanying consolidated balance sheets of Federal Express
Corporation (a Delaware corporation) and subsidiaries as of May 31, 1995 and
1994, and the related consolidated statements of income, common stockholders'
investment and cash flows for each of the three years in the period ended May
31, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Federal Express Corporation
and subsidiaries as of May 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
May 31, 1995, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Memphis, Tennessee
June 29, 1995
43
<PAGE> 27
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Years ended May 31
- ----------------------------------------------------------------------------------------------------
In thousands, except per share data and other operating data 1995 1994 1993
<S> <C> <C> <C>
OPERATING RESULTS
Revenues $9,392,073 $8,479,456 $7,808,043
Operating income 591,144 530,632 377,173
Income (loss) before income taxes 522,084 378,462 203,576
Income (loss) from continuing operations 297,588 204,370 109,809
Net income (loss) $ 297,588 $ 204,370 $ 53,866
PER SHARE DATA
Earnings (loss) per share:
Continuing operations $ 5.27 $ 3.65 $ 2.01
Discontinued operations -- -- --
Cumulative effect of changes in accounting principles -- -- (1.03)
- ----------------------------------------------------------------------------------------------------
Net earnings (loss) per share $ 5.27 $ 3.65 $ .98
Average shares outstanding 56,494 56,012 54,719
Cash dividends -- -- --
FINANCIAL POSITION
Property and equipment, net $3,715,244 $3,449,093 $ 3,476,268
Total assets 6,433,372 5,992,498 5,793,064
Long-term debt 1,324,711 1,632,202 1,882,279
Common stockholders' investment 2,245,569 1,924,705 1,671,381
OTHER OPERATING DATA
Express package:
Average daily package volume 2,247,594 1,925,105 1,710,561
Average pounds per package 6.3 6.0 5.8
Average revenue per pound* $ 2.31 $ 2.51 $ 2.62
Average revenue per package* $ 14.62 $ 15.12 $ 15.30
Airfreight:
Average daily pounds 2,153,041 1,844,270 2,050,033
Average revenue per pound $ 1.06 $ 1.06 $ 1.09
Operating weekdays 255 257 255
Aircraft fleet:
Airbus A300-600 9 2 --
Airbus A310-200 15 -- --
Boeing 747-100 -- -- --
Boeing 747-200 5 6 8
McDonnell Douglas MD-11 13 13 8
McDonnell Douglas DC-10-10 13 11 11
McDonnell Douglas DC-10-30 22 19 19
McDonnell Douglas DC-8 -- -- --
Boeing 727-100 68 69 80
Boeing 727-200 90 90 87
Cessna 208A 10 10 10
Cessna 208B 219 206 206
Fokker F-27 32 32 32
Vehicle fleet 35,900 30,900 28,100
Average number of employees (based on a
standard full-time workweek) 94,201 88,502 84,104
- ----------------------------------------------------------------------------------------------------
</TABLE>
*Beginning in 1995, certain service fee revenues were classified as
package-related revenue. Data for prior periods has been restated where
applicable to conform to this presentation.
44
<PAGE> 28
<TABLE>
<CAPTION>
Federal Express Corporation and Subsidiaries
- ---------------------------------------------------------------------------------------------
1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C>
$ 7,550,060 $7,688,296 $7,015,069 $5,166,967 $3,882,817 $ 3,178,308 $ 2,573,229
22,967 252,126 387,355 414,787 379,452 364,743 344,021
(146,828) 40,942 218,423 298,332 302,328 311,885 305,085
(113,782) 5,898 115,764 166,451 187,716 166,952 192,671
$ (113,782) $ 5,898 $ 115,764 $ 184,551 $ 187,716 $ (65,571) $ 131,839
$ (2.11) $ .11 $ 2.18 $ 3.18 $ 3.56 $ 3.21 $ 3.86
-- -- -- -- -- (4.48) (1.22)
-- -- -- .35 -- -- --
- ---------------------------------------------------------------------------------------------
$ (2.11) $ .11 $ 2.18 $ 3.53 $ 3.56 $ (1.27) $ 2.64
53,961 53,350 53,161 52,272 52,670 51,905 49,840
-- -- -- -- -- -- --
$ 3,411,297 $3,624,026 $3,566,321 $3,431,814 $2,231,875 $ 1,861,432 $ 1,551,845
5,463,186 5,672,461 5,675,073 5,293,422 3,008,549 2,499,511 2,276,362
1,797,844 1,826,781 2,148,142 2,138,940 838,730 744,914 561,716
1,579,722 1,668,620 1,649,187 1,493,524 1,330,679 1,078,920 1,091,714
1,472,642 1,310,890 1,234,174 1,059,882 877,543 704,392 550,306
5.7 5.6 5.4 5.4 5.3 5.1 5.3
$ 2.90 $ 3.08 $ 3.13 $ 3.04 $ 3.10 $ 3.33 $ 3.40
$ 16.38 $ 17.33 $ 16.76 $ 16.28 $ 16.32 $ 16.97 $ 17.92
2,258,303 2,650,204 3,148,290 4,019,353 -- -- --
$ 1.22 $ 1.20 $ 1.13 $ 1.06 -- -- --
254 255 255 255 257 254 254
-- -- -- -- -- -- --
-- -- -- -- -- -- --
4 8 9 9 -- -- --
9 10 10 12 -- -- --
4 1 -- -- -- -- --
11 11 10 8 8 8 6
17 16 16 16 13 11 9
-- -- 6 6 -- -- --
85 92 89 80 47 39 35
66 57 41 26 21 21 18
10 10 37 38 38 39 34
206 183 147 109 71 27 --
32 26 19 7 5 -- --
30,400 32,800 31,000 28,900 21,000 18,700 14,500
84,162 81,711 75,102 58,136 48,556 41,047 31,582
- ---------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE> 29
<TABLE>
<CAPTION>
BOARD OF DIRECTORS Federal Express Corporation and Subsidiaries
<S> <C>
ROBERT H. ALLEN (2) J.R. HYDE, III (2)
Private Investor and Managing Partner Chairman and Chief Executive Officer
Challenge Investment Partners AutoZone,Inc.
Investment firm Auto parts retail chain
HOWARD H. BAKER, JR. (1) CHARLES T. MANATT (2)
Partner Senior Partner
Baker, Donelson, Bearman & Caldwell Manatt, Phelps & Phillips
Law firm Law firm
ANTHONY J.A. BRYAN (1) GEORGE J. MITCHELL (1)
Chairman, Executive Committee Special Counsel
Hospital Corporation International Verner, Liipfert, Bernhard, McPherson and Hand
Owns, manages and builds hospitals and health-related Law firm
facilities in various countries around the world
JACKSON W. SMART, JR. (2*)
ROBERT L. COX (1) Chairman and Chief Executive Officer
Partner MSP Communications, Inc.
Waring Cox Radio broadcasting company
Law firm
FREDERICK W. SMITH
RALPH D. DENUNZIO (2) Chairman, President and Chief Executive Officer
President Federal Express Corporation
Harbor Point Associates, Inc.
Private investment and consulting firm
DR. JOSHUA I. SMITH (1)
Chairman, President and Chief Executive Officer
JUDITH L. ESTRIN The MAXIMA Corporation
President and Chief Executive Officer Information and data processing firm
Precept Software, Inc.
Computer software company
PETER S. WILLMOTT (1)
Chairman and Chief Executive Officer
PHILIP GREER (1*) Willmott Services, Inc.
Senior Managing Principal Retail and consulting firm
Weiss, Peck & Greer, L.L.C.
Diversified investment management and securities firm (1) Audit Committee
(2) Compensation Committee
(*) Committee Chairman
</TABLE>
46
<PAGE> 30
<TABLE>
<CAPTION>
SENIOR OFFICERS Federal Express Corporation and Subsidiaries
<S> <C>
FREDERICK W. SMITH JAMES A. MCKINNEY
Chairman, President and Senior Vice President
Chief Executive Officer President, FedEx Logistics Services
WILLIAM J. RAZZOUK GILBERT D. MOOK
Executive Vice President Senior Vice President
Worldwide Customer Operations Central Support Services
DAVID J. BRONCZEK JAMES A. PERKINS
Senior Vice President Senior Vice President and
Europe, Middle East and Africa Chief Personnel Officer
T. MICHAEL GLENN DAVID F. REBHOLZ
Senior Vice President Senior Vice President
Marketing, Customer Service and Global Sales and Trade Services
Corporate Communications
TRACY G. SCHMIDT
ALAN B. GRAF, JR. Senior Vice President
Senior Vice President and Air Ground Terminals and Transportation
Chief Financial Officer
MARY ALICE TAYLOR
DENNIS H. JONES Senior Vice President
Senior Vice President and Americas and Caribbean
Chief Information Officer
THEODORE L. WEISE
KENNETH R. MASTERSON Senior Vice President
Senior Vice President, Air Operations
General Counsel and Secretary
JAMES S. HUDSON
JOSEPH C. MCCARTY, III Vice President, Controller and
Senior Vice President Chief Accounting Officer
Asia Pacific
</TABLE>
47
<PAGE> 31
CORPORATE INFORMATION
Form 10-K: A copy of the Company's Annual Report on Form 10-K (excluding
exhibits), filed with the Securities and Exchange Commission is available free
of charge. You will be mailed a copy upon request to Thomas L. Holland, Investor
Relations Department, Federal Express Corporation, Box 727, Dept. 1854, Memphis,
Tennessee 38194, (901) 395-3478.
Stock listing: The Company's common stock is listed on The New York Stock
Exchange under the ticker symbol FDX.
Stockholders: At July 13, 1995, there were 8,243 stockholders of record.
Market information: Following are high and low closing prices, by quarter, for
Federal Express Corporation common stock in fiscal 1995 and 1994. No cash
dividends have been declared.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Closing prices of common stock First Quarter Second Quarter Third Quarter Fourth Quarter
<S> <C> <C> <C> <C>
FY 1995
HIGH $ 80.75 $ 70.75 $ 65.25 $ 69.63
LOW 64.00 56.50 53.88 59.88
- ---------------------------------------------------------------------------------------------
FY 1994
High $ 60.25 $ 71.50 $ 77.50 $ 77.25
Low 44.63 55.25 68.25 64.88
- ---------------------------------------------------------------------------------------------
</TABLE>
Annual meeting: The annual meeting of stockholders will be held at The Memphis
Marriott, 2625 Thousand Oaks Boulevard, Memphis, Tennessee, on Monday, September
25, 1995, at 10:00 a.m., CDT.
Registrar and transfer agent: First Chicago Trust Company of New York,
Shareholder Services, P.O. Box 2500, Jersey City, NJ 07303-2500, (800) 446-2617
/ Michael Phalen (312) 407-4885.
Corporate headquarters: 2005 Corporate Avenue, Memphis, Tennessee 38132, (901)
369-3600.
Inquiries: For financial information, contact Thomas L. Holland, Manager of
Investor Relations, Federal Express Corporation, Box 727, Dept. 1854,
Memphis, Tennessee 38194, (901) 395-3478. For general information, contact
Shirlee M. Clark, Manager of Media Relations, Federal Express Corporation, Box
727, Dept. 1850, Memphis, Tennessee 38194, (901) 395-3463.
Auditors: Arthur Andersen LLP, Memphis, Tennessee.
Equal Employment Opportunity: Federal Express Corporation is firmly committed
to afford Equal Employment Opportunity to all individuals regardless of age,
sex, race, color, religion, national origin, citizenship, disability, or status
as a Vietnam era or special disabled veteran. We are strongly bound to this
commitment because adherence to Equal Employment Opportunity principles is the
only acceptable way of life. We adhere to those principles not just because
they're the law, but because it's the right thing to do.
Service Marks: Federal Express, the Federal Express logo, FedEx, FedEx
International Economy, FedEx PowerShip, FedEx PowerShip 3, FedEx PowerShip 2,
FedEx Drop Box and FedEx Cosmos are registered service marks of Federal Express
Corporation. Reg. U.S. Pat. & Tm. Off. The World On Time, FedEx SameDay,
1-800-Go-FedEx, FedEx World Service Center, FedEx ShipSite and FedEx Authorized
ShipCenter are service marks and FedEx Ship is a trademark of Federal Express
Corporation.
[LOGO] Portions of this Annual Report were printed on recycled paper.
<PAGE> 1
EXHIBIT 21.1
<TABLE>
FEDERAL EXPRESS CORPORATION
JURISDICTION OF
ORGANIZATION OR
REGISTRATION STATUS
----------------- ------
<S> <C> <C> <C>
I. Federal Express Aviation Services, Incorporated Delaware Active
-----------------------------------------------
A. Federal Express Aviation Delaware Active
Services International,
Ltd.
II. Federal Express Canada Ltd. Canada Active
--------------------------
III. Federal Express International, Delaware Active
------------------------------
Inc.
---
A. Dencom Investments Northern Ireland Inactive
Limited
1. Dencom Freight Northern Ireland Inactive
Holdings Limited
a. Federal Express Northern Ireland Inactive
(N.I.) Limited
b. Fedex (Ireland) Ireland Inactive
Limited
c. F.E.D.S. (Ireland) Ireland Inactive
Limited
B. Federal Express Australia Active
(Australia) PTY Ltd.
C. Federal Express Europe, Delaware Active
Inc.
1. Federal Express Belgium Active
Europe, Inc. & Co.,
V.O.F/S.N.C.
2. Federal Express Delaware Active
European Services,
Inc.
3. PIK Holdings Limited United Kingdom Active
</TABLE>
1
<PAGE> 2
<TABLE>
JURISDICTION OF
ORGANIZATION OR
REGISTRATION STATUS
----------------- ------
<S> <C> <C> <C>
D. Federal Express Delaware Inactive
Europlex, Inc.
E. Federal Express Delaware Active
Holdings, S.A.
1. Federal Express Antigua Active
(Antigua) Limited
2. Federal Express French West Indies Active
(Antilles Francaises)
S.A.R.L.
3. Federal Express Bahamas Active
(Bahamas) Limited
4. Federal Express Barbados Active
(Barbados) Limited
5. Federal Express Bermuda Active
(Bermuda) Limited
6. Federal Express Cayman Islands Active
Cayman Limited
7. Federal Express Dominican Republic Active
(Dominicana) S.A.
a. Inversiones Dominican Republic Active
Geminis, S.A.
b. Inversiones Piscis, Dominican Republic Active
S.A.
c. Inversiones Dominican Republic Active
Sagitario, S.A.
8. Federal Express Brazil Inactive
Entregas Rapidas,
Ltd.
9. Federal Express Grenada Active
(Grenada) Limited
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
JURISDICTION OF
ORGANIZATION OR
REGISTRATION STATUS
----------------- ------
<S> <C> <C> <C>
10. Federal Express Haiti Inactive
(Haiti) S.A.
11. Federal Express Mexico Active
Holdings y
Compania (Mexico)
S.N.C. de C.V.
12. Federal Express Jamaica Active
(Jamaica) Limited
13. Federal Express (St. St. Kitts Active
Kitts) Limited
14. Federal Express (St. St. Lucia Active
Lucia) Limited
15. Federal Express (St. Netherland Antilles Active
Maarten) N.V.
a. Federal Express Netherland Antilles Active
(Aruba) N.V.
16. Federal Express Turks & Caicos Active
(Turks & Caicos) Islands
Limited
17. Federal Express U.S. Virgin Active
Virgin Islands, Inc. Islands
F. Federal Express (Hong Hong Kong Liquidation
Kong) Limited
G. Federal Express France Active
International (France)
SNC
H. Federal Express Mexico Active
International Y
Compania S.N.C. de
C.V.
I. Federal Express Italy Delaware Inactive
Inc.
</TABLE>
3
<PAGE> 4
<TABLE>
<CAPTION>
JURISDICTION OF
ORGANIZATION OR
REGISTRATION STATUS
----------------- ------
<S> <C> <C> <C>
1. Federal Express Italia Italy Liquidation
SpA
J. Federal Express (Japan) Japan Active
K.K.
K. Federal Express Limited United Kingdom Liquidation
1. Federal Express United Kingdom Inactive
Finance P.L.C.
2. Federal Express United Kingdom Inactive
International Limited
3. Federal Express Parcel United Kingdom Inactive
Services Limited
4. Federal Express (U.K.) United Kingdom Active
Limited
a. Federal Express United Kingdom Active
(U.K.) Pension
Trustees Ltd.
5. Winchmore United Kingdom Inactive
Developments Ltd.
a. Concorde United Kingdom Inactive
Advertising
Limited
L. Federal Express Delaware Active
Luxembourg, Inc.
M. Federal Express Pacific, Delaware Active
Inc.
1. Federal Express Malaysia Active
Services (M) Sdn.
Bhd.
2. Udara Express Malaysia Active
Courier Services Sdn.
Bhd.
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
JURISDICTION OF
ORGANIZATION OR
REGISTRATION STATUS
----------------- ------
<S> <C> <C> <C>
N. Federal Express Singapore Active
(Singapore) PTE, LTD.
O. Federal Express Thailand Active
(Thailand) Limited
P. Fedex (N. I.) Limited Northern Ireland Inactive
IV. Federal Express Leasing Delaware Active
-----------------------
Corporation
-----------
V. Federal Express Logistics, Inc. Delaware Inactive
-------------------------------
VI. Federal Express Missouri Inactive
---------------
Redevelopment Corporation
-------------------------
VII. FEDEX Aeronautics Delaware Active
-----------------
Corporation
-----------
VIII. Fedex Customs Brokerage Delaware Inactive
-----------------------
Corporation
-----------
IX. Fedex Foreign Sales Corporation U. S. Virgin Islands Active
-------------------------------
X. Fedex International Delaware Active
-------------------
Transmission Corporation
------------------------
XI. Fedex Partners, Inc. Delaware Active
--------------------
XII. Tiger International Insurance Ltd. Cayman Islands Active
----------------------------------
XIII. Tiger Trading Company Delaware Inactive
---------------------
</TABLE>
5
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in Federal Express Corporation's previously filed
Form S-8 Registration Statements Nos. 2-74000, 2-95720, 33-20138, 33-38041
and 33-55055 and Form S-3 Registration Statements Nos. 33-47176, 33-50013,
33-51623 and 33-56569 of our reports dated June 29, 1995, included (or
incorporated by reference) in Federal Express Corporation's Form 10-K for the
year ended May 31, 1995.
/S/ARTHUR ANDERSEN LLP
----------------------
ARTHUR ANDERSEN LLP
Memphis, Tennessee,
August 1, 1995
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and James S. Hudson,
and each of them, with full power of substitution and resubstitution, his true
and lawful attorneys-in-fact and agents, with full power and authority to
execute in the name and on behalf of the undersigned as such Director, the
Corporation's Annual Report on Form 10-K with respect to the Corporation's
fiscal year ended May 31, 1995, and any and all amendments thereto; and hereby
ratifies and confirms all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of June,
1995.
/s/ ROBERT H. ALLEN
----------------------------------
Robert H. Allen
STATE OF TEXAS
COUNTY OF HARRIS
I, Earlene L. Barbeau, a Notary Public in and for said County,
in the aforesaid State, do hereby certify that Robert H. Allen, personally
known to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person, and acknowledged that he
signed and delivered the said instrument as his free and voluntary act, for the
uses and purposes therein set forth.
/s/ EARLENE L. BARBEAU
----------------------------------
Notary Public
My Commission Expires:
March 8, 1997
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and James S. Hudson,
and each of them, with full power of substitution and resubstitution, his true
and lawful attorneys-in-fact and agents, with full power and authority to
execute in the name and on behalf of the undersigned as such Director, the
Corporation's Annual Report on Form 10-K with respect to the Corporation's
fiscal year ended May 31, 1995, and any and all amendments thereto; and hereby
ratifies and confirms all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 5th day of July,
1995.
/s/ HOWARD H. BAKER, JR.
------------------------------------
Howard H. Baker, Jr.
STATE OF TENNESSEE
COUNTY OF SCOTT
I, Cathy J. Burke, a Notary Public in and for said County, in
the aforesaid State, do hereby certify that Howard H. Baker, Jr., personally
known to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person, and acknowledged that he
signed and delivered the said instrument as his free and voluntary act, for the
uses and purposes therein set forth.
/s/ CATHY J. BURKE
------------------------------------
Notary Public
My Commission Expires:
June 24, 1998
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and James S. Hudson,
and each of them, with full power of substitution and resubstitution, his true
and lawful attorneys-in-fact and agents, with full power and authority to
execute in the name and on behalf of the undersigned as such Director, the
Corporation's Annual Report on Form 10-K with respect to the Corporation's
fiscal year ended May 31, 1995, and any and all amendments thereto; and hereby
ratifies and confirms all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day of June,
1995.
/s/ ANTHONY J. A. BRYAN
-------------------------------------
Anthony J. A. Bryan
STATE OF FLORIDA
COUNTY OF PALM BEACH
I, Patricia A. Gmyrek, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Anthony J. A. Bryan, personally known
to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person, and acknowledged that he
signed and delivered the said instrument as his free and voluntary act, for the
uses and purposes therein set forth.
/s/ PATRICIA A. GMYREK
-------------------------------------
Notary Public
My Commission Expires:
March 30, 1997
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and James S. Hudson,
and each of them, with full power of substitution and resubstitution, his true
and lawful attorneys-in-fact and agents, with full power and authority to
execute in the name and on behalf of the undersigned as such Director, the
Corporation's Annual Report on Form 10-K with respect to the Corporation's
fiscal year ended May 31, 1995, and any and all amendments thereto; and hereby
ratifies and confirms all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of June,
1995.
/s/ ROBERT L. COX
-------------------------------------
Robert L. Cox
STATE OF TENNESSEE
COUNTY OF SHELBY
I, Lillian W. Powers, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Robert L. Cox, personally known to me
to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/ LILLIAN W. POWERS
-------------------------------------
Notary Public
My Commission Expires:
April 29, 1997
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and James S. Hudson,
and each of them, with full power of substitution and resubstitution, his true
and lawful attorneys-in-fact and agents, with full power and authority to
execute in the name and on behalf of the undersigned as such Director, the
Corporation's Annual Report on Form 10-K with respect to the Corporation's
fiscal year ended May 31, 1995, and any and all amendments thereto; and hereby
ratifies and confirms all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of June,
1995.
/s/ RALPH D. DENUNZIO
-------------------------------------
Ralph D. DeNunzio
STATE OF NEW YORK
COUNTY OF NEW YORK
I, Pauline E. Kalahele, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Ralph D. DeNunzio, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/ PAULINE E. KALAHELE
-------------------------------------
Notary Public
My Commission Expires:
February 28, 1996
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and James S. Hudson,
and each of them, with full power of substitution and resubstitution, her true
and lawful attorneys-in-fact and agents, with full power and authority to
execute in the name and on behalf of the undersigned as such Director, the
Corporation's Annual Report on Form 10-K with respect to the Corporation's
fiscal year ended May 31, 1995, and any and all amendments thereto; and hereby
ratifies and confirms all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of July,
1995.
/s/ JUDITH L. ESTRIN
-------------------------------------
Judith L. Estrin
STATE OF PENNSYLVANIA
COUNTY OF ALLEGHENY
I, Patricia Ann Power, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Judith L. Estrin, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that she signed and
delivered the said instrument as her free and voluntary act, for the uses and
purposes therein set forth.
/s/ PATRICIA ANN POWER
-------------------------------------
Notary Public
My Commission Expires:
December 6, 1996
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and James S. Hudson,
and each of them, with full power of substitution and resubstitution, his true
and lawful attorneys-in-fact and agents, with full power and authority to
execute in the name and on behalf of the undersigned as such Director, the
Corporation's Annual Report on Form 10-K with respect to the Corporation's
fiscal year ended May 31, 1995, and any and all amendments thereto; and hereby
ratifies and confirms all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of June,
1995.
/s/ PHILIP GREER
-----------------------------------
Philip Greer
STATE OF NEW YORK
COUNTY OF NEW YORK
I, Kathleen M. Rode, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Philip Greer, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/ KATHLEEN M. RODE
--------------------------------------
Notary Public
My Commission Expires:
May 31, 1996
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and James S. Hudson,
and each of them, with full power of substitution and resubstitution, his true
and lawful attorneys-in-fact and agents, with full power and authority to
execute in the name and on behalf of the undersigned as such Director, the
Corporation's Annual Report on Form 10-K with respect to the Corporation's
fiscal year ended May 31, 1995, and any and all amendments thereto; and hereby
ratifies and confirms all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of June,
1995.
/s/ J. R. HYDE, III
-------------------------------------
J. R. Hyde, III
STATE OF TENNESSEE
COUNTY OF SHELBY
I, Nancy C. Phillips, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that J. R. Hyde, III, personally known to me
to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/ NANCY C. PHILLIPS
-------------------------------------
Notary Public
My Commission Expires:
October 24, 1995
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and James S. Hudson,
and each of them, with full power of substitution and resubstitution, his true
and lawful attorneys-in-fact and agents, with full power and authority to
execute in the name and on behalf of the undersigned as such Director, the
Corporation's Annual Report on Form 10-K with respect to the Corporation's
fiscal year ended May 31, 1995, and any and all amendments thereto; and hereby
ratifies and confirms all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of July,
1995.
/s/ CHARLES T. MANATT
-------------------------------------
Charles T. Manatt
DISTRICT OF COLUMBIA
CITY OF WASHINGTON
I, Zandra R. Williams, a Notary Public in and for the District of
Columbia, do hereby certify that Charles T. Manatt, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/ ZANDRA R. WILLIAMS
-------------------------------------
Notary Public
My Commission Expires:
March 14, 1996
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and James S. Hudson,
and each of them, with full power of substitution and resubstitution, his true
and lawful attorneys-in-fact and agents, with full power and authority to
execute in the name and on behalf of the undersigned as such Director, the
Corporation's Annual Report on Form 10-K with respect to the Corporation's
fiscal year ended May 31, 1995, and any and all amendments thereto; and hereby
ratifies and confirms all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 8th day of June,
1995.
/s/ GEORGE J. MITCHELL
-------------------------------------
George J. Mitchell
DISTRICT OF COLUMBIA
CITY OF WASHINGTON
I, Victoria K. Wolf, a Notary Public in and for the District of
Columbia, do hereby certify that George J. Mitchell, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/ VICTORIA K. WOLF
-------------------------------------
Notary Public
My Commission Expires:
August 31, 1997
<PAGE> 11
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and James S. Hudson,
and each of them, with full power of substitution and resubstitution, his true
and lawful attorneys-in-fact and agents, with full power and authority to
execute in the name and on behalf of the undersigned as such Director, the
Corporation's Annual Report on Form 10-K with respect to the Corporation's
fiscal year ended May 31, 1995, and any and all amendments thereto; and hereby
ratifies and confirms all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of June,
1995.
/s/ JACKSON W. SMART, JR.
-------------------------------------
Jackson W. Smart, Jr.
STATE OF ILLINOIS
COUNTY OF COOK
I, Esperanza Acosta, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Jackson W. Smart, Jr., personally known
to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person, and acknowledged that he
signed and delivered the said instrument as his free and voluntary act, for the
uses and purposes therein set forth.
/s/ ESPERANZA ACOSTA
-------------------------------------
Notary Public
My Commission Expires:
February 8, 1997
<PAGE> 12
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and James S. Hudson,
and each of them, with full power of substitution and resubstitution, his true
and lawful attorneys-in-fact and agents, with full power and authority to
execute in the name and on behalf of the undersigned as such Director, the
Corporation's Annual Report on Form 10-K with respect to the Corporation's
fiscal year ended May 31, 1995, and any and all amendments thereto; and hereby
ratifies and confirms all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of June,
1995.
/s/ JOSHUA I. SMITH
-------------------------------------
Joshua I. Smith
STATE OF MARYLAND
COUNTY OF PRINCE GEORGE'S
I, Bertha A. Davies, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Joshua I. Smith, personally known to me
to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/ BERTHA A. DAVIES
-------------------------------------
Notary Public
My Commission Expires:
May 1, 1996
<PAGE> 13
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, a Director of FEDERAL EXPRESS CORPORATION (the
"Corporation"), a Delaware corporation, does hereby constitute and appoint
Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and James S. Hudson,
and each of them, with full power of substitution and resubstitution, his true
and lawful attorneys-in-fact and agents, with full power and authority to
execute in the name and on behalf of the undersigned as such Director, the
Corporation's Annual Report on Form 10-K with respect to the Corporation's
fiscal year ended May 31, 1995, and any and all amendments thereto; and hereby
ratifies and confirms all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 12th day of June,
1995.
/s/ PETER S. WILLMOTT
-------------------------------------
Peter S. Willmott
STATE OF ILLINOIS
COUNTY OF COOK
I, Joan L. Noble, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Peter S. Willmott, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/ JOAN L. NOBLE
-------------------------------------
Notary Public
My Commission Expires:
March 5, 1999
<PAGE> 14
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, the Chief Financial Officer of FEDERAL EXPRESS
CORPORATION (the "Corporation"), a Delaware corporation, does hereby constitute
and appoint Frederick W. Smith, William J. Razzouk and James S. Hudson, and
each of them, with full power of substitution and resubstitution, his true and
lawful attorneys-in-fact and agents, with full power and authority to execute
in the name and on behalf of the undersigned as such officer, the Corporation's
Annual Report on Form 10-K with respect to the Corporation's fiscal year ended
May 31, 1995, and any and all amendments thereto; and hereby ratifies and
confirms all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes may lawfully do or cause to be done by virtue
of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 5th day of June
1995.
/s/ ALAN B. GRAF, JR.
-------------------------------------
Alan B. Graf, Jr.
STATE OF TENNESSEE
COUNTY OF SHELBY
I, Edna M. Kennon, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Alan B. Graf, Jr., personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/ EDNA M. KENNON
-------------------------------------
Notary Public
My Commission Expires:
October 24, 1995
<PAGE> 15
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, the Executive Vice President, Worldwide Customer
Operations, of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware
corporation, does hereby constitute and appoint Frederick W. Smith, Alan B.
Graf, Jr. and James S. Hudson, and each of them, with full power of
substitution and resubstitution, his true and lawful attorneys-in-fact and
agents, with full power and authority to execute in the name and on behalf of
the undersigned as such officer, the Corporation's Annual Report on Form 10-K
with respect to the Corporation's fiscal year ended May 31, 1995, and any and
all amendments thereto; and hereby ratifies and confirms all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes may lawfully do or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of June,
1995.
/s/ WILLIAM J. RAZZOUK
-------------------------------------
William J. Razzouk
STATE OF TENNESSEE
COUNTY OF SHELBY
I, Sharon A. Smith, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that William J. Razzouk, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/ SHARON A. SMITH
-------------------------------------
Notary Public
My Commission Expires:
March 16, 1997
<PAGE> 16
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, the principal executive officer and a director
of FEDERAL EXPRESS CORPORATION (the "Corporation"), a Delaware corporation,
does hereby constitute and appoint William J. Razzouk, Alan B. Graf, Jr. and
James S. Hudson, and each of them, with full power of substitution and
resubstitution, his true and lawful attorneys-in-fact and agents, with full
power and authority to execute in the name and on behalf of the undersigned as
such officer and director, the Corporation's Annual Report on Form 10-K with
respect to the Corporation's fiscal year ended May 31, 1995, and any and all
amendments thereto; and hereby ratifies and confirms all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes may lawfully do or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 5th day of June,
1995.
/s/ FREDERICK W. SMITH
-------------------------------------
Frederick W. Smith
STATE OF TENNESSEE
COUNTY OF SHELBY
I, Joyce J. Jones, a Notary Public in and for said County, in the
aforesaid State, do hereby certify that Frederick W. Smith, personally known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered the said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
/s/ JOYCE J. JONES
-------------------------------------
Notary Public
My Commission Expires:
August 12, 1998
<PAGE> 17
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned, the principal accounting officer of FEDERAL
EXPRESS CORPORATION (the "Corporation"), a Delaware corporation, does hereby
constitute and appoint Frederick W. Smith, William J. Razzouk and Alan B. Graf,
Jr., and each of them, with full power of substitution and resubstitution, his
true and lawful attorneys-in-fact and agents, with full power and authority to
execute in the name and on behalf of the undersigned as such officer, the
Corporation's Annual Report on Form 10-K with respect to the Corporation's
fiscal year ended May 31, 1995, and any and all amendments thereto; and hereby
ratifies and confirms all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes may lawfully do or cause to be
done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of July,
1995.
/s/ JAMES S. HUDSON
-------------------------------------
James S. Hudson
STATE OF TENNESSEE
COUNTY OF SHELBY
I, Delores M. Wolfmeyer, a Notary Public in and for said County, in
the aforesaid State, do hereby certify that James S. Hudson, personally known
to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person, and acknowledged that he
signed and delivered the said instrument as his free and voluntary act, for the
uses and purposes therein set forth.
/s/ DELORES M. WOLFMEYER
-------------------------------------
Notary Public
My Commission Expires:
December 1, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF INCOME AND THE CONSOLIDATED BALANCE SHEETS ON PAGES
25 - 27 OF EXHIBIT 13.1 OF THE COMPANY'S FORM 10-K FOR THE YEAR ENDED MAY 31,
1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1994
<PERIOD-END> MAY-31-1995
<CASH> 357,548
<SECURITIES> 0
<RECEIVABLES> 1,161,427
<ALLOWANCES> 31,173
<INVENTORY> 193,251
<CURRENT-ASSETS> 1,869,082
<PP&E> 7,697,711
<DEPRECIATION> 3,982,467
<TOTAL-ASSETS> 6,433,372
<CURRENT-LIABILITIES> 1,778,535
<BONDS> 1,324,711
<COMMON> 5,617
0
0
<OTHER-SE> 2,239,952
<TOTAL-LIABILITY-AND-EQUITY> 6,433,372
<SALES> 0
<TOTAL-REVENUES> 9,392,073
<CGS> 0
<TOTAL-COSTS> 8,800,929
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 114,687
<INCOME-PRETAX> 522,084
<INCOME-TAX> 224,496
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 297,588
<EPS-PRIMARY> 5.27
<EPS-DILUTED> 5.27
</TABLE>
